4 Stipulation and Agreement of Settlement 08/17/2004

UNITED STATES DISTRICT COURTDISTRICT OF MASSACHUSETT S

IN RE RAYTHEON COMPANYSECURITIES LITIGATION

THIS DOCUMENT RELATES TO :ALL ACTIONS

Civil Action No.99-12142-PB S

STIPULATION AND AGREE MENT OF SETTLEMENT

This stipulation and agreement of settlement (the "Stipulation") is submitted pursuant to

Rule 23 of the Federal Rules of Civil Procedure. Subject to the approval of the Court, this

Stipulation is entered into among Lead Plaintiff, the New York State Common Retirement Fund

(the "NYSCRF"), on behalf of itself and the Class (as hereinafter defined), and Defendants

Raytheon Company ("Raytheon") and Dennis J . Picard, Daniel P . Burnham, Peter R. D'Angelo,

Franklyn A . Caine, Shay D . Assad, and William H . Swanson (the "Individual Defendants")

(Raytheon and the Individual Defendants are collectively referred to hereinafter as the "Raytheon

Defendants"), and PricewaterhouseCoopers LLP ("PwC"), by and through their respective

counsel . The Raytheon Defendants and PwC are collectively referred to hereinafter as th e

"Defendants."

WHEREAS :

A. Beginning on October 14, 1999, twelve class actions alleging violations of federa l

securities laws - Meisel v. Raytheon Co., et al . , Case No. 99CV12142 (PBS) ; Roth v. Raytheon

Co., et al . , Case No . 99CV 12143 (NG) ; Johnson v . Raytheon Co ., et al ., Case No. 99CV 12146

(PBS) ; Gelfand v. Raytheon Co., et al . , Case No. 99CV12154 (JLT) ; Albrecht v . Raytheon Co .,

et al . , Case No. 99CV 12178 (PBS) ; Rice v. Raytheon Co ., et al . , Case No. 99CV12185 (NG);

DeForrest v . Raytheon Co., et al . , Case No. 99CV12222 (PBS) ; Rocks v . Raytheon Co ., et al . ,

Case No. 99CV 12225 (PBS) ; Isaac v. Raytheon Co., et al . , Case No. 99CV 12297 (PBS) ;

Fleischman v. Raytheon Co., et al . , Case No. 99CV12339 (PBS) ; Lasensky Paper Stock v.

Raytheon Co ., et al ., Case No. 99CV 12463 (NG) ; and Osprey Partners Investment Management

LLC v. Raytheon Co ., et al . , Case No. 99CV 12539 (PBS) - were filed in this Court and were

subsequently consolidated under the above caption by Order dated March 20, 2000, and are

hereinafter collectively referred to as the "Action." On March 20, 2000 the Court appointed

NYSCRF as the Lead Plaintiff and appointed Milberg Weiss Bershad Hynes & Lerach LLP (now

known as Milberg Weiss Bershad & Schulman LLP) as Plaintiff's Lead Counsel . A

Consolidated and Amended Class Action Complaint was filed on June 12, 2000 ;

B . On September 8, 2000, the Raytheon Defendants and PwC both moved to dismiss

the Consolidated and Amended Class Action Complaint . Lead Counsel filed opposition papers

on December 12, 2000. The Raytheon Defendants and PwC both filed their replies on

February 2, 2001 . The Court held a hearing on the motions to dismiss on February 9, 2001 .

Lead Counsel filed supplemental authority on February 21, 2001 . The Raytheon Defendants

filed a reply/response to the supplemental authority on February 27, 2001 ;

C. By Memorandum and Order dated August 29, 2001, the Court denied, in part, and

granted, in part, the Raytheon Defendants' motion to dismiss and allowed PwC's motion to

dismiss without prejudice;

D. On October 2, 2001, the Raytheon Defendants filed an answer to the Consolidated

and Amended Class Action Complaint denying any liability;

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E. On November 15, 2001, Lead Plaintiff moved to certify the Action as a clas s

action. After obtaining discovery from Lead Plaintiff, the Raytheon Defendants did not oppos e

Class certification;

F. By Order dated March 22, 2002, the Court certified the Action to proceed as a

class action, certified NYSCRF as class representative on behalf of a Cl ass consisting of all

persons or entities who, during the period from October 7, 1998 through October 12, 1999 ,

inclusive (the "Class Period"), purchased Raytheon Company Class A and/or Class B common

stock and were allegedly damaged thereby. Excluded from the Class are Defendants, all of the

officers, directors, and partners thereof, members of their immediate families, and their lega l

representatives, heirs, successors or assigns and any entity in which any of the foregoing have o r

had a controlling interest . A notice of the Pendency of this Action as a class action (the "Notice

of Pendency") dated September 13, 2002 was mailed to Class Members on or about October 11 ,

2002 and a summary notice was published in the national edition of The Wall Street Journal on

October 21, 2002 . In response to the Notice of Pendency, ninety-one requests for exclusion fro m

the Class were received and were filed with the Court (see Affidavit of Jan Lipert dated Februar y

11, 2003). A list of those ninety-one persons and entities who requested exclusion is annexe d

hereto as Exhibit 1 to Exhibit B ;

G. On March 17, 2003, Lead Plaintiff filed its Second Consolidated and Amended

Class Action Complaint (the "Complaint") which generally alleged, among other things, that th e

Raytheon Defendants issued false and misleading statements regarding Raytheon's financia l

condition during the Class Period . The Complaint also alleged that PwC issued a false an d

misleading unqualified audit report on the Company's 1998 financial statements . The Complaint

alleged that PwC's audit report was false and misleading in that, in violation of Generall y

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Accepted Auditing Standards, PwC issued an unqualified audit report on Raytheon's 199 8

financial statements which were not presented in accordance with Generally Accepted

Accounting Principles ;

H. The Complaint further claimed that Lead Plaintiff and other Class Members

purchased Raytheon Class A and/or Class B common stock during the Class Period at prices

artificially inflated as a result of Defendants' alleged dissemination of false and misleading

statements regarding Raytheon in violation of Sections 10(b) and 20(a) of the Securities

Exchange Act of 1934, and Rule IOb-5 promulgated thereunder ;

I. On April 24, 2003, PwC moved to dismiss the claims asserted against it in the

Complaint . Lead Counsel filed opposition papers to PwC's motion to dismiss on May 1, 2003 .

PwC filed its reply on May 8, 2003 . Lead Counsel filed sur-reply papers on May 15, 2003 . The

Court held a hearing on PwC's motion to dismiss the Complaint on May 19, 2003 ;

J. By Order dated May 21, 2003, the Court denied in part and granted in part PwC' s

motion to dismiss the Complaint ;

K. On April 28, 2003, the Raytheon Defendants filed their answer to the Complain t

denying any liability;

L. On June 30, 2003, PwC filed its answer to the Complaint denying any liability ;

M. On February 20, 2004, the Raytheon Defendants and PwC both moved fo r

summary judgment . Lead Counsel filed opposition papers on March 5, 2004 . The Raytheon

Defendants and PwC both filed their replies on March 12, 2004 . Lead Counsel filed sur-reply

papers on March 26, 2004. The Court held a hearing on the summary judgment motions on

April 8, 2004;

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N. By Memorandum and Order dated April 20, 2004, the Court denied the Raytheo n

Defendants' motion for summary judgment ;

0. By Memorandum and Order dated April 26, 2004, the Court denied PwC' s

motion for summary judgment ;

P. By Order dated April 26, 2004, upon PwC's motion, which the Lead Plaintiff

opposed, the Court dismissed the Section 10(b) claims against PwC for stock purchases befor e

March 30, 1999, which was the date on which PwC's unqualified report was published. The

Court also modified its March 22, 2002 class certification order as to PwC to limit the clas s

period against PwC to March 30, 1999 through October 12, 1999 ;

Q. The parties have undertaken extensive discovery relating to the claims and

defenses concerning the underlying events and transactions alleged in the Complaint, complete d

expert discovery and briefed and argued numerous motions in limine . Lead Counsel conducte d

an extensive investigation, reviewed hundreds of thousands of documents produced b y

Defendants and numerous non-parties, and deposed over thirty witnesses . Settlement with th e

Raytheon Defendants was not reached until May 11, 2004, the eve of trial, after the Court' s

decisions on summary judgment and only after repeated mediations, the first involving session s

with a federal judge in Boston and the second involving multiple sessions with a retired federa l

judge. Settlement with PwC was not reached until May 25, 2004, the second day of trial, after

the empanelment of a jury and before opening statements ;

R. Lead Counsel and Defendants' Counsel have analyzed the evidence adduced

during pretrial discovery and have researched the applicable law with respect to the claims o f

Lead Plaintiff and the Class against Defendants and the Defendants' actual and potential

defenses thereto ;

S. With the assistance of retired United States District Judge Nicholas H . Politan

acting as a special mediator, Lead Plaintiff, with its counsel, has conducted discussions an d

arm's length negotiations first with counsel for the Raytheon Defendants and later with counsel

for PwC with respect to a compromise and settlement of the Action with a view to the issues i n

dispute and achieving the best relief possible consistent with the interests of the Class ;

T. Based upon their investigation and extensive pretrial discovery as set forth above ,

Lead Plaintiff and Lead Counsel have concluded that the terms and conditions of this Stipulatio n

are fair, reasonable and adequate to Lead Plaintiff and the Class, and in their best interests, an d

Lead Plaintiff has agreed to settle the claims raised in the Action pursuant to the terms an d

provisions of this Stipulation, after considering (a) the benefits that Lead Plaintiff and th e

members of the Class will receive from settlement of the Action, (b) the attendant risks of

litigation, and (c) the desirability of permitting the Settlement to be consummated as provided b y

the terms of this Stipulation. Nothing in this Stipulation or any other aspect of the Settlement i s

or shall be construed or deemed to be evidence of or an admission or concession on the pa rt of

Lead Plaintiff of any infirmity in the claims asserted in the Action ;

U. Defendants deny any wrongdoing and nothing in this Stipulation or any other

aspect of the Settlement is or shall be construed or deemed to be evidence of or an admission o r

concession on the part of any Defendant with respect to any claim or of any fault or liability or

wrongdoing or damage whatsoever, or any infirmity in the defenses that Defendants hav e

asserted. Nonetheless, recognizing the cost, distraction and the attendant risks of litigation an d

without conceding the merits of any of the claims asserted by Lead Plaintiff and the Class, the

Defendants have agreed to settle the claims which were or could have been raised in the Actio n

pursuant to the terms of this Stipulation ; and

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V. The parties to this Stipulation do not dispute that the Action has been filed by

Lead Plaintiff and defended by Defendants in good faith and with adequate basis in fact under

Federal Rule of Civil Procedure 11, that the Action is being voluntarily settled after advice of

counsel, and that the terms of the settlement are fair, adequate and reasonable .

NOW THEREFORE, without any admission or concession on the part of Lead Plaintiff

of any lack of merit of the Action whatsoever , and without any admission or concession of any

liability or wrongdoing or lack of me rit in the defenses whatsoever by Defend ants, it is hereby

STIPULATED AND AGREED, by and among the parties to this Stipulation , through their

respective attorneys, subject to approval of the Court pursuant to Rule 23(e) of the Federal Rules

of Civil Procedure , in consideration of the benefits flowing to the parties hereto from the

Settlement, that all Settled Claims (as defined below) as against the Released Part ies (as defined

below) and all Settled Defendants ' Claims (as defined below) shall be compromised , settled,

released and dismissed with prejudice , upon and subject to the following terms and conditions :

CERTAIN DEFINITIONS

As used in this Stipulation, the following terms shall have the followin g

meanings :

(a) "Authorized Claimant" means a Class Member who submits a timely and

valid Proof of Claim form to the Claims Administrator .

(b) "Claims Administrator" means the firm of Analytics Incorporated which

was retained by Lead Counsel on behalf of the Class to administer the Settlement .

(c) "Class" and "Class Members" means all persons or entities who purchased

Class A and/or Class B common stock of Raytheon Company during the period from October 7,

1998 through October 12, 1999, inclusive, and who were allegedly damaged thereby . Excluded

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from the Class are Defendants, all of the officers, directors, and partners thereof, members o f

their immediate families, their legal representatives, heirs, successors or assigns and any entity in

which any of the foregoing have or had a controlling interest . Also excluded from the Class are

the persons and/or entities who previously excluded themselves from the Class in accordance

with the requirements set forth in the Notice of Pendency, as listed on Exhibit 1 to the Order an d

Final Judgment .

(d) "Class Distribution Order" means an order approving the Claims

Administrator's administrative determinations concerning the acceptance and rejection of th e

Proofs of Claim submitted herein and directing payment of the Net Cash Settlement Funds and

Net Settlement Warrants to Authorized Claimants in proportion to the Authorized Claimants '

Recognized Claims .

(e) "Class Period" means the period from October 7, 1998 through October

12, 1999, inclusive .

(f) "Defendants" means Raytheon Company, Dennis J . Picard, Daniel P .

Burnham , Peter R . D'Angelo, Franklyn A. Caine, Shay D . Assad , William H . Swanson, and

PricewaterhouseCoopers LLP.

(g) "Defendants' Counsel" means the law firm of Wilmer Cutler Pickerin g

Hale and Don LLP for the Raytheon Defendants and the law firm of Foley Hoag LLP for PwC .

(h) "Effective Date of Settlement" or "Effective Date" means the date upon

which the Settlement contemplated by this Stipulation shall become effective, as set forth in

paragraph 23 below.

(i) "Final Order" means an order as to which there is no pending appeal, stay ,

motion for reconsideration or motion to vacate or similar request for relief, and as to which th e

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period of time for a party to seek any such appeal, stay, motion for reconsideration, or motion to

vacate or similar request for relief has expired . For purposes hereof if no appeal or motion fo r

reconsideration, to vacate, or for similar relief is filed within sixty-three (63) days after entry o f

the order in the Dist rict Court, the order shall be deemed to be a Final Order.

(j) "Gross Cash Settlement Funds" means the Raytheon Defendants' Cash

Settlement Amount, the PwC Cash Settlement Amount, and any interest thereon, as set forth i n

paragraph 6(a) hereof.

(k) "Individual Defendants" means Dennis J . Picard, Daniel P . Burnham,

Peter R. D'Angelo, Franklyn A . Caine, Shay D. Assad and William H. Swanson .

(1) "Lead Counsel" means the law firm of Milberg Weiss Bershad &

Schulman LLP .

(m) "Net Cash Settlement Funds" means the Gross Cash Settlement Funds

net of the amounts for items as set forth in paragraph 6(b) hereof.

(n) "Net Settlement Warrants" means all the Settlement Warrants (defined

below) less such Settlement Warrants as are awarded to Plaintiff's Counsel as and for their

attorneys' fees .

(o) "Net Settlement Warrant Distribution Plan" means a written plan o f

allocation of the Net Sett lement Warrants prepared by the Claims Administrator as authorized b y

the Class Distribution Order which identifies the name, address, and social security or ta x

identification number of each Authorized Claimant, and the number of Settlement Warrants to b e

distributed to each Authorized Claimant. The Net Settlement Warrant Distribution Plan shall no t

provide for the distribution of warrants for fractional shares of stock .

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(p) "Order and Final Judgment" means the order to be entered approving th e

Settlement substantially in the form proposed and attached hereto as Exhibit B .

(q) "Order for Notice and Hearing" means the order preliminarily approvin g

the Settlement and directing notice thereof to the Class substantially in the form proposed an d

attached hereto as Exhibit A .

(r) "Plaintiff's Counsel" means Lead Counsel and all other counse l

representing Lead Plaintiff or other plaintiffs in the Action .

(s) "Publication Notice" means the summary notice of proposed Settlemen t

and hearing for publication substantially in the form attached as Exhibit 3 to Exhibit A .

(t) "PwC Cash Settlement Amount" means the sum of $50,000,000 as se t

forth in paragraph 5 hereof.

(u) "PwC Settlement" means the settlement between PwC and the Lead

Plaintiff and the Class as set forth in this Stipulation and Agreement of Settlement .

(v) "Raytheon Defendants" means Raytheon Company and the Individual

Defendants .

(w) "Raytheon Defendants' Cash Settlement Amount " means the sum of

$210,000,000 as set forth in paragraph 4(a) hereof.

(x) "Raytheon Settlement" means the settlement between the Raytheo n

Defendants and the Lead Plaintiff and the Class as set forth in this Stipulation and Agreement o f

Settlement .

(y) "Released Parties" means the Released Raytheon Parties, the Release d

Individual Defendant Parties and the Released PwC Parties .

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(z) "Released Individual Defendant Parties" means any and all of the

Individual Defendants, and their past, present, or future partners, agents, attorneys, employees,

heirs, successors in interest or assigns, administrators, executors and personal representatives,

and shall include any insurer who contributes to or reimburses Raytheon and/or the Individual

Defendants for a portion of its or their contribution to the Raytheon Settlement and who receives

a release from the Individual Defendants in connection with the Settlement. Released Individual

Defendant Parties does not mean or include the Released Raytheon Parties or the Released PwC

Parties .

(aa) "Released Lead Plaintiff Parties" means Alan G. Hevesi, Comptroller of

the State of New York, NYSCRF, the New York State and Local Retirement Systems, and the

past, present, or future officers and employees of any of the foregoing and their predecessors,

successors and assigns, and the heirs, administrators, executors and personal representatives of

each .

(bb) "Released Raytheon Parties" means Raytheon and any and all of its past ,

present and future, direct and indirect subsidiaries, parents, affiliates, successors and

predecessors, and each of their respective officers, directors, agents, employees, assigns ,

partners, principals, divisions, representatives, affiliates, attorneys, advisors, investment advisors,

accountants and any person, firm, trust, corporation, officer, director or other individual or entity

in which Raytheon has a controlling interest or which is related to or affiliated with Raytheon,

and shall include any insurer who contributes to or reimburses Raytheon for a portion its

contribution to the Raytheon Settlement and who receives a release from Raytheon in connection

with the Settlement . Released Raytheon Parties does not mean or include the Released

Individual Defendant Parties or the Released PwC Parties .

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(cc) "Released PwC Parties" means P ricewaterhouseCoopers LLP and all of its

past, present and future parent entities, direct and indirect subsidiaries, affiliates, predecessors

(including , without limitation, Coopers & Lybrand, L .L.P., and Price Waterhouse LLP) and

successors, and each of their respective past, present and future directors, officers, partners ,

principals, employees, agents, representatives, affiliates, advisers, investment advisers, insurers,

servants, accountants, attorneys and any person, firm, trust, corporation, officer, director or othe r

individual or entity in which PwC has or had a controlling interest or which is or was related to

or affiliated with PwC, and their respective representatives, heirs, successors in interest an d

assigns . Released PwC Parties does not mean or include the Released Individual Defendan t

Parties or the Released Raytheon Parties .

(dd) "Settled Claims" means any and all claims, debts, demands, rights or

causes of action or liabilities whatsoever (including, but not limited to, any claims for damages ,

interest, attorneys' fees, expert or consulting fees, and any other costs, expenses, liability o r

relief whatsoever), whether based on federal, state, local, statutory or common law or any othe r

law, rule or regulation, whether fixed or contingent, accrued or un-accrued, liquidated o r

un-liquidated, foreseen or not foreseen, raised or not raised, matured or un-matured, at law or i n

equity, whether direct, class or individual in nature , including both known claims and Unknow n

Claims, (i) that have been asserted in the Action by the Class Members or any of them agains t

any of the Released Parties, or (ii) that could have been asserted in any forum by the Class

Members or any of them against any of the Released Parties which (a) arise out of, relate in an y

way to, or are based upon the allegations , transactions , facts , matters or occurrences ,

representations or omissions involved, set forth, or referred to in the Complaint or Action, an d

relate to the purchase, sale, or holding of shares of Class A and/or Class B common stock of

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Raytheon Company during the Class Period, or (b) that arise out of or relate in any way to the

defense or settlement of the Action (except for claims to enforce the Settlement) .

(ee) "Settled Raytheon Defendants' Claims" means any and all claims, rights

or causes of action or liabilities whatsoever, whether based on federal, state, local, statutory or

common law or any other law, rule or regulation, including both known claims and Unknown

Claims, that have been or could have been asserted in the Action or any forum by the Released

Raytheon Parties and the Released Individual Defendant Parties, or any of them, against any of

the Released Lead Plaintiff Parties, any Class Members or their attorneys, which arise out of or

relate in any way to the institution, prosecution, or settlement of the Action (except for claims to

enforce the Settlement) .

(ff) "Settled PwC Defendants' Claims" means any and all claims, rights or

causes of action or liabilities whatsoever, whether based on federal, state, local, statutory or

common law or any other law, rule or regulation, including both known claims and Unknown

Claims, that have been or could have been asserted in the Action or any forum by the Released

PwC Parties or any of them against any of the Released Lead Plaintiff Parties, any Class

Members or their attorneys, which arise out of or relate in any way to the institution, prosecution,

or settlement of the Action (except for claims to enforce the Settlement) .

(gg) "Settled Defendants' Claims" means the Settled Raytheon Defendants'

Claims and the Settled PWC Defendants' Claims .

(hh) "Settlements" means the settlements contemplated by this Stipulation .

(ii) "Settlement Notice" means the Notice of Proposed Settlement of Class

Action, Motion for Attorneys' Fees and Settlement Fairness Hearing, which is to be sent t o

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members of the Class substantially in the form proposed and attached hereto as Exhibit I to

Exhibit A .

(jj) "Settlement Warrants" means one or more freely tradable warrants givin g

the holder of each Settlement Warrant the right to purchase from Raytheon one share o f

Raytheon common stock at a price of $37 .50 per share for a period of five (5) years starting o n

the Warrant Issuance Date . Raytheon shall cause the Settlement Warrants to be listed on the

New York Stock Exchange for trading. The terms of the Settlement Warrants are set forth in th e

Warrant Agreement annexed hereto as Exhibit C and are fully incorporated herein by reference .

As set forth more fully below, the Settlement Warrants shall have a total value calculated as se t

forth in paragraph 4(b) as of the Warrant Valuation Date of Two Hundred Million Dollars

($200,000,000) .

(kk) "Unknown Claims" means any and all claims which the Class, the Lead

Plaintiff or any Class Member does not know or suspect to exist in his, her or its favor at the tim e

of the release of the Released Parties, and any claims which any Defendant does not know or

suspect to exist in his, her or its favor at the time of the release of the Released Lead Plaintiff

Parties . With respect to any and all Settled Claims and Settled Defendants' Claims, the parties

stipulate and agree that upon the Effective Date, the Lead Plaintiff and the Defendants shall

expressly, and each Class Member shall be deemed to have, and by operation of the Judgment

shall have, expressly waived any and all provisions, rights and benefits conferred by any law o r

any state or territory of the United States , or principle of common law, which is similar,

comparable, or equivalent to Cal . Civ . Code § 1542, including without limitation Cal . Civ . Code

§ 1542, which provides :

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A general release does not extend to claims which the creditor does not know or suspectto exist in his favor at the time of executing the release, which if known by him musthave materially affected his settlement with the debtor .

Lead Plaintiff and Defendants acknowledge, and the Class and the Class Members by operation

of law shall be deemed to have acknowledged, that the inclusion of "Unknown Claims" in th e

definition of Settled Claims and Settled Defendants' Claims is a key element of the Settlement .

(11) "Warrant Agreement" means, an agreement between American Stock

Transfer & Trust Company and Raytheon setting forth the terms and conditions associated with

the Settlement Warrants as part of this settlement, in substantially the same form as Exhibit C

hereto to be executed by American Stock Transfer & Trust Company and Raytheon as soon as

practicable following the Effective Date and in no event later than three (3) business days prio r

to the Warrant Issuance Date .

(mm) "Warrant Issuance Date" means the date on which Raytheon initiall y

distributes the Net Settlement Warrants to the Authorized Claimants .

(nn) "Warrant Valuation Date" means the date five (5) business days after th e

later of the following to occur : (a) the Effective Date, or (b) the date the Class Distribution Order

becomes a Final Order ; provided, however, that in the event that because the Registration

Statement covering the shares which may be purchased upon the exercise of the Settlement

Warrants has not become effective the distribution of the Settlement Warrants under th e

provisions of paragraph 20(b) is not made within sixty (60) days after the occurrence of all of th e

events specified in paragraph 20(b)(i) - (v), then the "Warrant Valuation Date" shall be the

earlier of. (i) the date such Registration Statement becomes effective, or (ii) eighty-five (85) day s

after the occurrence of all of the events specified in paragraph 20(b)(i) - (v) .

SCOPE AND EFFECT OF SETTLEMENT

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2 . The obligations incurred pursuant to this Stipulation shall be in full and fina l

disposition of the Action as against Defendants and of any and all Settled Claims as against al l

Released Parties and of any and all Settled Defendants' Claims .

3 . (a) Upon the Effective Date, Lead Plaintiff and all Class Members, on behal f

of themselves, their heirs, agents, personal representatives, executors, administrators, successor s

and assigns, shall, with respect to each and every Settled Claim, release and forever discharge ,

and shall forever be enjoined from prosecuting, any Settled Claims against any of the Release d

Raytheon Parties and/or Released Individual Defendant Parties .

(b) Upon the Effective Date, Raytheon and each of the Individual Defendants ,

on behalf of themselves and the Released Raytheon Parties and the Released Individua l

Defendant Parties, respectively, shall release and forever discharge each and every of the Settle d

Raytheon Defendants' Claims, and shall forever be enjoined from prosecuting any Settled

Raytheon Defendants' Claims against the Lead Plaintiff and all Class Members .

(c) Upon the Effective Date, Lead Plaintiff and all Class Members, on behal f

of themselves, their heirs, agents, personal representatives, executors, administrators, successor s

and assigns, shall , with respect to each and every Settled Claim , release and forever discharge ,

and shall forever be enjoined from prosecuting, any Settled Claims against any of the Release d

PwC Parties .

(d) Upon the Effective Date, PwC, on behalf of itself and the Released Pw C

Parties, shall release and forever discharge each and every of the Settled PwC Defendants '

Claims, and shall forever be enjoined from prosecuting any Settled PwC Defendants' Claim s

against the Lead Plaintiff and all Class Members .

THE SETTLEMENT CONSIDERATIO N

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4. In consideration of the release of the Settled Claims against the Release d

Raytheon Parties and the Released Individual Defendant Parties by Lead Plaintiff and all Clas s

Members :

(a) Within three (3) business days of entry of the Order for Notice an d

Hearing, the Raytheon Defendants shall pay or cause to be paid the sum of $210,000,000 in cas h

(the "Raytheon Defendants' Cash Settlement Amount") into escrow for the benefit of the Class .

(b) In addition, Raytheon will issue and deliver two hundred million dollar s

($200,000,000) worth of Settlement Warrants for the benefit of the Class at the time specified in

paragraph 20(b) . The number of Settlement Warrants having a value of $200 million as of th e

Warrant Valuation Date shall be determined according to the Black-Scholes methodology a s

calculated using the criteria specified in Exhibit D hereto . The part ies hereto shall seek the

Court's approval of the issu ance of the Settlement Warrants as freely-tradable securities under

Section 3 (a)(10) of the Securities Act of 1933, 15 U .S .C. § 77c(a)(10) as provided in Exhibits A,

A-1 and B. At the time specified in paragraph 20(b), Raytheon shall issue and dist ribute the Net

Settlement Warrants to the Authorized Claimants in accordance with the terms of the Warrant

Agreement and as specified in the Net Settlement Warrant Distribution Plan . The Class

Distribution Order and the Net Settlement Warrant Distribution Plan shall specify that no

warrants for fractional shares of stock shall be issued or distributed . At the same time as the Net

Settlement Warrants are issued to the Authorized Claimants, Raytheon shall issue and delive r

any Settlement Warrants awarded by the Court to Plaintiff's Counsel in accordance wit h

instructions from Lead Counsel . Any costs associated with the issuance and distribution of any

Settlement Warrants shall be borne solely by Raytheon, except that any costs associated with th e

physical mailing to Authorized Claimants of a prospectus associated with the Settlemen t

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Warrants and either a Settlement Warrant Certificate or a Notice indicating that Settlement

Warrants were issued in electronic or book entry form (which prospectuses, certificates and

notices shall be provided without charge by Raytheon) shall be paid from the Raytheon

Defendants' Cash Settlement Amount . With respect to the underlying shares which may be

purchased upon the exercise of the Settlement Warrants, Raytheon shall cause a Registration

Statement to be filed and shall use its reasonable best efforts to cause such Registratio n

Statement to become effective prior to the later of (i) the Effective Date, or (ii) the date the Class

Distribution Order becomes a Final Order, and shall also use its reasonable best efforts to

maintain the effectiveness of such Registration Statement for as long as the Settlement Warrants

are outstanding ; provided, however, that Raytheon shall be entitled to suspend the availability of

such Registration Statement from time to time as provided in Section 5.02 of the Warrant

Agreement .

5 . In consideration of the release of the Settled Claims against the Released PwC

Parties by Lead Plaintiff and all Class Members, within three (3) business days of entry of the

Order for Notice and Hearing, PwC shall pay the sum of $50,000,000 in cash (the "PwC Cash

Settlement Amount") into escrow for the benefit of the Class .

6. (a) The Raytheon Defendants' Cash Settlement Amount, the PwC Cash

Settlement Amount, and any interest earned thereon shall be the "Gross Cash Settlement Funds ."

(b) The Gross Cash Settlement Funds shall be used to pay (i) the Taxes (a s

defined below) on the income on the Gross Cash Settlement Funds, (ii) the Notice and

Administration Costs referred to in paragraph 8 hereof and the costs of issuing and distributing

the Net Cash Settlement Funds, (iii) the cash portion of the attorneys' fee and expense award

referred to in paragraph 9 hereof; (iv) the costs associated with the physical mailing t o

18

Authorized Claimants of a prospectus associated with the Settlement Warrants and either a

Settlement Warrant Certificate or a Notice indicating that Settlement Warrants were issued in

electronic or book entry form (which prospectuses, certificates and notices shall be provided

without charge by Raytheon) as referred to in paragraph 4(b) hereof; and (v) the remaining

administration expenses referred to in paragraph 10 hereof. The balance of the Gross Cash

Settlement Funds after the above payments shall be the "Net Cash Settlement Funds ." The Net

Cash Settlement Funds shall be distributed to the Authorized Claimants as provided i n

paragraphs 11-13 hereof. Any cash sums required to be held in escrow hereunder prior to the

Effective Date shall be held by Milberg Weiss Bershad & Schulman LLP ("Milberg Weiss") as

Escrow Agent for the Gross Cash Settlement Funds . All funds held by the Escrow Agent shall

be deemed to be in the custody of the Court and shall remain subject to the jurisdiction of the

Court until such time as the funds shall be distributed or returned to the persons paying the sam e

pursuant to this Stipulation and/or further order of the Court. The Escrow Agent shall invest any

funds in excess of $100,000 in short term United States Agency or Treasury Securities (or a

mutual fund invested solely in such instruments), and shall collect and reinvest all interest

accrued thereon. Any funds held in escrow in an amount of less than $100,000 may be held in an

interest bearing bank account insured by the FDIC . The parties hereto agree that the Gross Cash

Settlement Funds are intended to be a single Qualified Settlement Fund within the meaning of

Treasury Regulation § 1 .468B-1 and that the Escrow Agent, is designated as the administrator of

the Gross Cash Settlement Funds within the meaning of Treasury Regulation § 1 .468B-2(k)(3) .

The Escrow Agent, as administrator, shall satisfy the requirements of Treasury Regulatio n

§ 1 .468B-2, including, but not limited to, obtaining a taxpayer identification number, timely filing

tax returns for the Gross Cash Settlement Funds, satisfying any applicable information reportin g

19

requirements, and paying from the Gross Cash Settlement Funds any Taxes owed with respect to

the Gross Cash Settlement Funds . Upon written request by the Escrow Agent, Defendants agree

to provide to the Escrow Agent the statement described in Treasury Regulation § 1 .468B-3(e) .

(c) All (i) taxes on the income of the Gross Cash Settlement Funds and (ii)

expenses and costs incurred in connection with the taxation of the Gross Cash Settlement Funds

(including, without limitation, expenses of tax attorneys and accountants) (collectively "Taxes")

shall be paid out of the Gross Cash Settlement Funds, shall be considered to be a cost o f

administration of the settlement and shall be timely paid by the Escrow Agent without prior

Order of the Court .

ADMINISTRATIO N

7. The Claims Administrator shall administer the Settlement subject to the

jurisdiction of the Court . Except as stated in paragraph 15 hereof, Defendants shall have no

responsibility for or role in the administration or dist ribution of the Se tt lement and shall have no

liability to the Class in connection with such administration or dist ribution . Defendants' Counsel

shall cooperate in the administration of the Settlement to the extent re asonably necessary to

effectuate its terms and Raytheon has already provided all information from Raytheon 's transfer

records concerning the identity of Class Members and their transactions .

8. Lead Plaintiff may pay ratably from the Gross Cash Settlement Funds, without

further approval from Defendants or the Court, the reasonable costs and expenses associated with

identifying members of the Class and effecting mail Notice and Publication Notice to the Class,

and the administration of the Settlement, including without limitation, the actual costs of

publication, printing and mailing the Settlement Notice, reimbursements to nominee owners for

forwarding notice to their beneficial owners, and the administrative expenses incurred and fees

20

charged by the Claims Administrator in connection with providing notice and processing th e

submitted claims . In no event shall the Released Parties bear any responsibility or liability for

such fees, costs and expenses . These reasonable costs and expenses of notice and administration

will be paid from the Gross Cash Settlement Funds in proportion to Defendants' payment s

pursuant to paragraphs 4 and 5

ATTORNEYS' FEES AND EXPENSES

9. (a) Lead Counsel, on behalf of itself and Plaintiff's Counsel, with th e

approval of Lead Plaintiff, will apply to the Court for an award of attorneys' fees in the amount

of nine percent (9%) of each of the Gross Cash Settlement Funds and Gross Settlement Warrants .

Lead Counsel, on behalf of itself and Plaintiffs Counsel, subject to the approval of Lead

Plaintiff, shall also apply to the Court for reimbursement of expenses not to exceed $8,250,000,

plus interest on such expenses (at the same net interest rate as is earned on the Gross Cash

Settlement Funds from the date the Gross Cash Settlement Funds are deposited into escrow to

the date of payment), payable ratably from the Gross Cash Settlement Funds . Such cash

attorneys' fees, expenses, and interest as are awarded by the Court shall be payable upon th e

Effective Date. Such Settlement Warrants as are awarded for attorneys' fees by the Court shal l

be distributed to Plaintiffs Counsel at the same time as the Net Settlement Warrants are

distributed to Authorized Claimants .

(b) Lead Plaintiff will apply to the Court for an award from the Gross Cas h

Settlement Funds of not to exceed $10,000 for reimbursement of its reasonable costs and

expenses directly relating to its representation of the Class, plus interest on such expenses (at the

same net interest rate as is earned on the Gross Cash Settlement Funds from the date the Gross

Cash Settlement Funds are deposited into escrow to the date of payment) .

21

(c) The motion and application for an award of, or any amounts for Lead Counsel' s

or any Plaintiffs' Counsels' fees, costs, expenses or interest , or for any Lead Plaintiff' s costs ,

expenses or interest are not necessary terms of this Stipulation and it is not a condition of thi s

Stipulation that any such amounts be approved or awarded by the Court . Any order, or any

objection to or appeal from any order, approving the award of Lead Counsel's or any Plaintiff' s

Counsel's fees, costs, expenses or interest, or of Lead Plaintiff's costs, expenses or interest shal l

in no way disturb or affect the Order and Final Judgment and shall be considered separately from

the Settlement .

ADMINISTRATION EXPENSES

10. Lead Plaintiff will apply to the Court, on notice to Defendants' Counsel, for a n

order (the "Class Distribution Order") approving the Claims Administrator' s administrative

determinations concerning the acceptance and rejection of the claims submitted herein and

approving any fees and expenses not previously applied for, including the fees and expenses o f

the Claims Administrator, from the Gross Cash Settlement Funds and, if the Effective Date ha s

occurred, directing payment of the Net Cash Settlement Funds and Net Settlement Warrants to

Authorized Claimants .

DISTRIBUTION TO AUTHORIZED CLAIMANT S

11 . The Claims Administrator shall determine each Authorized Claimant's fro rat a

portions of the Net Cash Settlement Funds and Net Settlement Warrants based upon each

Authorized Claimant's Recognized Claim (as defined in the Plan of Allocation described in th e

Settlement Notice annexed hereto as Exhibit 1 to Exhibit A, or in such other Plan of Allocatio n

as the Court approves, except that no Plan of Allocation shall provide for the issuance o r

distribution of a warrant for a fractional share of stock) .

22

12. The Plan of Allocation proposed in the Se ttlement Notice is not a necessary term

of this Stipulation and it is not a condition of this Stipulation that any particular Plan o f

Allocation be approved. Any order, or any objection to or appeal from any order, approving the

Plan of Allocation shall in no way disturb or affect the Order and Final Judgment and shall b e

considered separately from the Settlements .

13 . This is not a claims-made settlement . Defendants shall not be entitled to get back

any of the settlement monies paid, or reduce the amount of Settlement Warrants payable, onc e

the Settlement becomes Effective . The Released Parties shall have no involvement in or

responsibility or liability for reviewing or challenging claims .

ADMINISTRATION OF THE SETTLEMENT

14 . Any member of the Class who does not submit a valid Proof of Claim will not b e

entitled to receive any of the proceeds from the Settlements but will otherwise be bound by all o f

the terms of this Stipulation and the Settlements, including the terms of the Order and Fina l

Judgment to be entered in the Action and the releases provided for herein, and will be foreve r

barred and enjoined from bringing any action against the Released Parties concerning the Settle d

Claims .

15 . The Claims Administrator shall process the Proofs of Claim and, after entry of the

Class Distribution Order, distribute the Net Cash Settlement Funds to the Authorized Claimants .

Raytheon shall distribute the Net Settlement Warrants to the Authorized Claimants as determine d

by the Claims Administrator and approved by the Class Distribution Order and as specified i n

the Net Settlement Warrant Distribution Plan, and to Plaintiff's Counsel in the amount awarded

by the Court and allocated as provided by Lead Counsel, however neither such distribution no r

the Class Distribution Order nor the Net Settlement Warrant Distribution Plan shall include th e

23

issuance or distribution of any warrants for a fractional share of stock . Except for PwC's

obligation to pay the PwC Cash Settlement Amount, and for the Raytheon Defendants'

obligations to (i) pay the Raytheon Defendants' Cash Settlement Amount, (ii) cooperate in the

production of information with respect to the identification of Class Members from Raytheon's

shareholder transfer records, (iii) issue the Net Settlement Warrants in accordance with the Net

Settlement Warrant Distribution Plan to be provided by the Claims Administrator, and (iv) issue

any Settlement Warrants awarded to Plaintiffs' Counsel in accordance with the instructions of

Lead Counsel, the Released Parties shall have no role in, responsibility for, or liability based on,

arising from, or in any way related to, the form, substance, method or manner of administration

or distribution to the Class, including, without limitation, the administration, processing or

payment of claims, the allocation of Net Cash Settlement Funds and the Settlement Warrants,

determinations as to the validity of proofs of claims, the amounts of claims, distributions of the

Net Cash Settlement Funds and Settlement Warrants, or any loss, liabilities, or obligations of the

Escrow Agent or the Claims Administrator. Lead Plaintiff shall have the right, but not the

obligation, to advise the Claims Administrator to waive what Lead Plaintiff deems to be formal

or technical defects in any Proofs of Claim submitted in the interests of achieving substantial

justice .

16. For purposes of determining the extent, if any, to which a Class Member shall be

entitled to be treated as an "Authorized Claimant," the following conditions shall apply :

(a) Each Class Member shall be required to submit a Proof of Claim (see

attached Exhibit 2 to Exhibit A), supported by such documents as are designated therein,

including proof of the transactions claimed and the losses incurred thereon, or such other

documents or proof as the Claims Administrator, in its discretion may deem acceptable ;

24

(b) All Proofs of Claim must be submitted by the date specified in the

Settlement Notice unless such period is extended by Order of the Court . Any Class Membe r

who fails to submit a Proof of Claim by such date shall be forever barred from receiving any

payment pursuant to this Stipulation (unless, by Order of the Court, a later submitted Proof o f

Claim by such Class Member is approved), but shall in all other respects be bound by all of the

terms of this Stipulation and the Settlement including the terms of the Order and Final Judgmen t

to be entered in the Action and the releases provided for herein, and will be barred from bringin g

any action against the Released Parties concerning the Settled Claims . Provided that it is

received before the motion for the Class Distribution Order is filed, a Proof of Claim shall b e

deemed to have been submitted when posted, if received with a postmark indicated on th e

envelope and if mailed by first-class mail and addressed in accordance with the instruction s

thereon. In all other cases, the Proof of Claim shall be deemed to have been submitted whe n

actually received by the Claims Administrator;

(c) Each Proof of Claim shall be submitted to and reviewed by the Claim s

Administrator, who shall determine in accordance with this Stipulation the extent, if any, t o

which each claim shall be allowed, subject to review by the Court pursuant to subparagraph (e )

below;

(d) Proofs of Claim that do not meet the submission requirements may b e

rejected . Prior to rejection of a Proof of Claim, the Claims Administrator shall communicate

with the Claimant in order to attempt to remedy the curable deficiencies in the Proof of Claim s

submitted. The Claims Administrator shall notify, in a timely fashion and in writing, al l

Claimants whose Proofs of Claim they propose to reject in whole or in part, setting forth the

reasons therefor, and shall indicate in such notice that the Claimant whose claim is to be rejected

25

has the right to a review by the Court if the Claimant so desires and complies with th e

requirements of subparagraph (e) below ;

(e) If any Claimant whose claim has been rejected in whole or in part desire s

to contest such rejection, the Claimant must, within twenty (20) days after the date of mailing of

the notice required in subparagraph (d) above, serve upon the Claims Administrator a notice an d

statement of reasons indicating the Claimant's grounds for contesting the rejection along with

any support ing documentation, and requesting a review thereof by the Court . If a dispute

concerning a claim cannot be otherwise resolved, Lead Counsel shall thereafter present th e

request for review to the Court ; and

(f) The administrative determinations of the Claims Administrator acceptin g

and rejecting claims shall be presented to the Court, on notice to Defendants' Counsel, for

approval by the Court in the Class Distribution Order .

17 . Each Claimant shall be deemed to have submitted to the jurisdiction of the Cour t

with respect to the Claimant's claim, and the claim will be subject to investigation and discovery

under the Federal Rules of Civil Procedure, provided that such investigation and discovery shal l

be limited to that Claimant' s status as a Class Member and the validity and amount of th e

Claimant's claim. No discovery shall be allowed on the merits of the Action or Settlement in

connection with processing of the Proofs of Claim.

18. Payment pursuant to this Stipulation shall be deemed final and conclusive agains t

all Class Members . All Class Members whose claims are not approved by the Court shall b e

barred from participating in any distributions from the Settlement, but otherwise shall be boun d

by all of the terms of this Stipulation and the Settlement, including the terms of the Order and

Final Judgment to be entered in the Action and the releases provided for herein, and will b e

26

forever barred and enjoined from bringing any action against the Released Parties concernin g

the Settled Claims .

19. All proceedings with respect to the administration, processing and determinatio n

of claims described by paragraph 16 of this Stipulation and the determination of all controversies

relating thereto, including disputed questions of law and fact with respect to the validity of

claims , shall be subject to the exclusive jurisdiction of the Court .

20. (a) The Net Cash Settlement Funds shall be distributed to Authorized Claimant s

by the Claims Administrator only after the Effective Date and after all of the following have

occurred: (i) all Claims have been processed, and all Claimants whose Claims have bee n

rejected or disallowed, in whole or in part, have been notified and provided the opportunity to be

heard concerning such rejection or disallowance ; (ii) all objections with respect to all rejected or

disallowed claims have been resolved by the Court, and all appeals therefrom have been resolve d

or the time therefor has expired ; (iii) all matters with respect to attorneys' fees, costs, and

disbursements have been resolved by the Court, all appeals therefrom have been resolved or th e

time therefor has expired ; (iv) all costs of administration have been paid ; and (v) the Clas s

Distribution Order becomes a Final Order .

(b) Raytheon shall distribute the Net Settlement Warrants to Authorize d

Claimants as specified in the Class Distribution Order only after the Effective Date and withi n

ten (10) business days after all of the following have occurred : (i) all Claims have been

processed, and all Claimants whose Claims have been rejected or disallowed, in whole or in part ,

have been notified and provided the opportunity to be heard concerning such rejection or

disallowance ; (ii) all objections with respect to all rejected or disallowed claims have bee n

resolved by the Court, and all appeals therefrom have been resolved or the time therefor has

27

expired; (iii) all matters with respect to attorneys' fees, costs, and disbursements have been

resolved by the Court, all appeals therefrom have been resolved or the time therefor has expired;

(iv) the Class Distribution Order becomes a Final Order; (v) receipt by Raytheon's General

Counsel of the Net Settlement Warrant Distribution Plan from the Claims Administrator ; and (vi)

the earlier of either (a) there is an effective Registration Statement covering the shares which

maybe purchased upon the exercise of the Settlement Warrants, or (b) 90 days have passed since

the last of items (i) through (v) of this paragraph 20(b) have occurred . Raytheon shall distribute

any warrants awarded to Plaintiff's Counsel as part of an attorneys' fees award when it

distributes the Net Settlement Warrants to Authorized Claimants .

TERMS OF ORDER FOR NOTICE AND HEARIN G

21 . Promptly after this Stipulation has been fully executed, Lead Plaintiff and

Defendants jointly shall apply to the Court for entry of an Order for Notice and Hearing,

substantially in the form annexed hereto as Exhibit A .

TERMS OF ORDER AND FINAL JUDGMEN T

22. If the Settlement contemplated by this Stipulation is approved by the Court,

counsel for the parties shall request that the Court enter an Order and Final Judgment

substantially in the form annexed hereto as Exhibit B .

EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION

23 . The Effective Date of Settlement shall be the date when all the following shall

have occurred :

(a) approval by the Court of the Settlement, following notice to the Class and

a hearing, as prescribed by Rule 23 of the Federal Rules of Civil Procedure ; and

28

(b) entry by the Court of an Order and Final Judgment, substantially in the

form set forth in Exhibit B annexed hereto, and the expiration of any time for appeal or review of

such Order and Final Judgment, or, if any appeal is filed and not dismissed, after such Order and

Final Judgment is upheld on appeal in all material respects and is no longer subject to review

upon appeal or review by writ of certiorari, or, in the event that the Court enters an order and

final judgment in form other than that provided above ("Alternative Judgment") and none of the

parties hereto elect to terminate this Settlement, the date that such Alternative Judgment becomes

final and no longer subject to appeal or review.

24. Subject to paragraph 27, the Raytheon Defendants, PwC and Lead Plaintiff, b y

and through their respective counsel, shall each have the right to terminate their participation in

the Settlement and this Stipulation by providing written notice of their election to do so

("Termination Notice") to all other parties hereto within thirty (30) days of . (a) the Court's

declining to enter the Order for Notice and Hearing in any material respect ; (b) the Court's

refusal to approve this Stipulation or any material part of it ; (c) the Court's declining to enter the

Order and Final Judgment in any material respect ; (d) the date upon which the Order and Final

Judgment is modified or reversed in any material respect by the Court of Appeals or the Supreme

Court; or (e) the date upon which an Alternative Judgment is entered, or, if an Alternative

Judgment is accepted by the parties, the date upon which an Alternative Judgment is modified or

reversed in any material respect by the Court of Appeals or the Supreme Court .

25 . In the event that there is any non-delivery by Raytheon of any of the Settlement

Warrants required to be delivered hereunder within ten (10) business days after the time

specified in paragraph 20(b), then, unless such non-delivery is cured within ten (10) business

days after receipt by Raytheon's General Counsel of written notice of such non-delivery, Lea d

29

Plaintiff shall have the options to move the Court on three ( 3) business day's notice to Raytheon ,

and the only defense Raytheon shall be permitted to raise to such motion shall be a defense o f

force majeure , for (i ) entry of an order and judgment directing specific perform ance of

Raytheon's obligation to issue and deliver the Settlement Warrants (ii) entry of an order and

judgment against Raytheon for $200,000,000, or (iii) for any other damages or equitable relief a s

may be available for such breach of this Stipulation. In the event that the Court determines that

Raytheon is prevented from issuing the Settlement Warrants by reason of a force majeure, and i f

Lead Plaintiff has not obtained alternative relief by the first date that the force majeure no longer

prevents Raytheon from issuing the Sett lement Warrants, then Raytheon shall issue the

Settlement Warrants within ten (10) business days after the first date that the force majeure no

longer prevents Raytheon from issuing the Settlement Warrants .

26. Except as otherwise provided herein, in the event that the Raytheon Defendants ,

or Lead Plaintiff terminate their participation in the Settlement under any of the provision s

allowing them to terminate as set forth in paragraph 24 above, or in the event that Pw C

terminates its participation in the Settlement under any of the provisions allowing it to terminat e

as set forth in paragraphs 24 or 28, or the Raytheon Settlement and/or the PwC Settlement fail s

to become effective for any reason, then the parties to this Stipulation affected by the termination

or failure shall be deemed to have reverted to their respective status in the Action immediatel y

prior to May 11, 2004 in the case of the Raytheon Defendants and May 25, 2004 in the case o f

PwC, and, except as otherwise expressly provided , the parties affected by the termination or

failure shall proceed in all respects as if this Stipulation and any related orders had not been '

entered, and any portion of the Cash Settlement Funds previously paid by the affecte d

Defendants, together with any interest earned thereon, less any Taxes due with respect to suc h

30

income, and less reasonable costs of administration and notice actually incurred and paid o r

payable from the Cash Settlement Amount paid by or on behalf of the affected Defendant(s) as

provided in paragraph 8 above, shall be returned to the persons paying the same, and if th e

sett lement with the Raytheon Defendants is terminated or fails, then Raytheon's obligation to

issue the Settlement Warrants shall be terminated (and if any Settlement Warrants have bee n

issued they shall be returned to Raytheon) . The affected parties shall jointly request that the

Court resume the trial schedule with respect to the affected parties as promptly as practicable i n

the event the Settlement is terminated or fails to become effective for any reason . The

Settlement shall proceed as to those parties who do not terminate or for whom there is no failure

of the Settlement .

27. The parties hereto intend that the Raytheon Sett lement, on the one hand, and the

PwC Settlement, on the other, are independent and separate contracts , the existence,

performance, enforceability and/or approval of neither being dependent on the existence ,

performance, enforceability and/or approval of the other. Likewise, neither failure nor ground

for termination of one constitutes failure or ground for termination of the other .

PWC TERMINATION RIGH T

28 . Simultaneously herewith Lead Counsel and PwC's Counsel are executing a

"Supplemental Agreement" setting forth certain conditions under which the PwC Settlemen t

provisions of this Stipulation may be terminated by PwC ifputative Class Members who

purchased in excess of a certain number of shares of Raytheon Class A and/or Class B common

stock during the Class Period exclude themselves from the PwC Settlement . The Supplemental

Agreement shall not be filed prior to the Settlement Fairness Hearing . In the event of a

termination of the PwC Settlement pursuant to and in accordance with the Supplemental

31

Agreement, this Stipulation, to the extent of the PwC Settlement, shall become null and void an d

of no further force and effect and the provisions of paragraph 26 shall apply .

NO ADMISSION OF WRONGDOIN G

29. This Stipulation, whether or not consummated, and any proceedings take n

pursuant to it :

(a) shall not be offered or received in any legal proceeding against any of th e

Defendants as evidence of or construed as or deemed to be evidence of any presumption,

concession, .or admission by any of the Defendants with respect to the truth of any fact alleged b y

any of the plaintiffs or the validity of any claim that has been or could have been asserted in the

Action or in any litigation, or the deficiency of any defense that has been or could have been

asserted in the Action or in any litigation, or of any liability, negligence, fault, or wrongdoing of

any of the Defendan ts ;

(b) shall not be offered or received in any legal proceeding against any of th e

Defendants as evidence of a presumption, concession or admission of any fault,

misrepresentation or omission with respect to any statement or written document approved o r

made by any Defendant ;

(c) shall not be offered or received in any legal proceeding against any of th e

Defendants as evidence of a presumption , concession or admission with respect to any liability,

negligence, fault or wrongdoing, or in any way referred to for any other reason as against any o f

the Defendants, in any other civil, criminal or administrative action or proceeding, other than

such proceedings as may be necessary to effectuate the provisions of this Stipulation ; provided,

however, that if this Stipulation is approved by the Court, Defendants may refer to it to effectuat e

the liability protection granted them hereunder ;

32

(d) shall not be construed in any legal proceeding against any of the

Defendants as an admission or concession that the consideration to be given hereunder represents

the amount which could be or would have been recovered after trial ; and

(e) shall not be construed as or received in evidence in any legal proceeding

as an admission, concession or presumption against any of the Released Lead Plaintiff Parties o r

any of the Class Members that any of their claims are without merit, or that any defenses asserte d

by any of the Defendants have any merit, or that damages recoverable under the Complain t

would not have exceeded the total value of the Gross Cash Settlement Funds and Settlemen t

Warrants .

MISCELLANEOUS PROVISIONS

30. All of the exhibits attached hereto are hereby incorporated by reference as though

fully set forth herein .

31 . Each Defendant warrants as to himself or itself that, as to the payments made by

or on behalf of him or it, at the time of such payment that Defendant made or caused to be made

pursuant to paragraph 4 or paragraph 5 above, he or it was not insolvent nor did nor will th e

payment required to be made by or on behalf of him or it render such Defendant insolvent within

the mean ing of and/or for the purposes of the United States Bankruptcy Code, including §§ 10 1

and 547 thereof. This warranty is made by each such Defendant and not by such Defendant's

Counsel .

32. (a) If a case is commenced in respect of any Raytheon Defendant (or an y

insurer contributing funds to the Raytheon Defendants' Cash Settlement Amount on behalf o f

any Raytheon Defendant) under Title 11 of the United States Code (Bankruptcy), or a trustee ,

receiver or conservator is appointed under any similar law, and in the event of the entry of a fina l

33

order of a court of competent jurisdiction determining the transfer of the Raytheon Defendants

Cash Settlement Amount or any portion thereof by or on behalf of such Raytheon Defendant to

be a preference, voidable transfer, fraudulent transfer or similar transaction and any portion

thereof is required to be returned, and such amount is not promptly deposited to the Gross Cash

Settlement Funds by others, then, Lead Plaintiff shall be entitled to move the Court, and the

Raytheon Defendants shall not oppose such motion, to vacate and set aside the releases given

and Judgment entered in favor of the Raytheon Defendants, which releases and Judgment shall

be null and void with respect to the Raytheon Defendants and their respective released parties,

and the Raytheon Defendants and Lead Plaintiff and the Class shall be restored to their

respective positions in the litigation as of May 11, 2004 and any portion of the Gross Cash

Settlement Funds paid on behalf of such Raytheon Defendants shall be returned as provided in

paragraph 26 above, and Raytheon's obligation to issue the Settlement Warrants shall be

terminated (and if any Settlement Warrants have been issued they shall be returned to Raytheon) .

(b) If a case is commenced in respect of PwC (or any insurer contributing funds to th e

PwC Cash Settlement Amount) under Title 11 of the United States Code (Bankruptcy), or a

trustee, receiver or conservator is appointed under any similar law, and in the event of the entry

of a final order of a court of competent jurisdiction determining the transfer of the PwC Cash

Settlement Amount or any portion thereof by or on behalf of such Defendant to be a preference,

voidable transfer, fraudulent transfer or similar transaction and any portion thereof is required t o

be returned by Lead Plaintiff, any Class Member, or Plaintiff's Counsel, and such amount is not

promptly deposited to the Gross Cash Settlement Funds by others, then, Lead Plaintiff, shall be

entitled to move the Court, and PwC shall not oppose such motion, to vacate and set aside the

releases given and Judgment entered in favor of PwC and the PwC Released Parties, whic h

34

releases and Judgment shall be null and void with respect to PwC and the PwC Released Parties,

and PwC and Lead Plaintiff and the Class shall be restored to their respective positions in the

litigation as of May 25, 2004, and any cash amounts in the Gross Cash Settlement Funds from or

paid on behalf of PwC shall be returned as provided in paragraph 26 above .

33 . The parties to this Stipulation intend the Settlement to be a final and complet e

resolution of all disputes asserted or which could be asserted by the Released Lead Plaintiff

Parties, the Class, or any of the Class Members against the Released Parties with respect to the

Settled Claims, and by the Released Parties against . the Released Lead Plaintiff Parties or any of

the Class Members with respect to the Settled Defendants' Claims . Accordingly, Lead Plaintiff

and Defendants agree not to assert in any forum that the litigation was brought by plaintiffs or

defended by Defendants in bad faith or without a reasonable basis . The parties hereto shall

assert no claims of any violation of Rule 11 of the Federal Rules of Civil Procedure relating to

the prosecution, defense, or settlement of the Action. The parties agree that the amount paid and

the other terms of the Settlement were negotiated at arm's length in good faith by the parties, and

reflect a settlement that was reached voluntarily after consultation with experienced legal

counsel .

34. This Stipulation may not be modified or amended, nor may any of its provisions

be waived except by a writing signed by all parties hereto or their successors-in-interest .

35 . The headings herein are used for the purpose of convenience only and are not

meant to have legal effect .

36 . The administration and consummation of the Settlement as embodied in this

Stipulation shall be under the authority of the Court and the Court shall retain the exclusiv e

35

jurisdiction for the purpose of entering orders providing for awards of attorneys' fees and

expenses to Plaintiff's Counsel and enforcing the terms of this Stipulation.

37 . The waiver by one party of any breach of this Stipulation by any other party shall

not be deemed a waiver of any other prior or subsequent breach of this Stipulation .

38. This Stipulation, its exhibits , and the Supplemental Agreement referred to i n

paragraph 25 hereof, constitute the entire agreement among the part ies hereto concern ing the

Settlement of the Action, and no representations, warranties, or inducements have been made b y

any party hereto concerning this Stipulation and its exhibits other than those contained and

memorialized in such documents .

39. This Stipulation may be executed in one or more counterparts. All executed

counterparts and each of them shall be deemed to be one and the same instrument provided that

counsel for the parties to this Stipulation shall exchange among themselves original signed

counterparts .

40. This Stipulation shall be binding upon, and inure to the benefit of, the successors

and assigns of the parties hereto .

41 . The construction , interpretation , operation, effect and validity of this Stipulation,

and all documents necessary to effectuate it, shall be governed by the internal laws of the

Commonwealth of Massachusetts without regard to conflicts of laws, except to the extent that

federal law requires that federal law governs . The parties agree that the United States Distric t

Court for the District of Massachusetts shall retain exclusive jurisdiction over the parties, the

Class, and the Class Members for all matters relating to this Action , including the administration ,

interpretation, effectuation or enforcement of the Stipulation and its terms .

36

42. This Stipulation shall not be construed more strictly against one party than

another merely by virtue of the fact that it, or any part of it, may have been prepared by counse l

for one of the parties, it being recognized that it is the result of arm's-length negotiation s

between the parties and all parties have contributed substantially and materially to the

preparation of this Stipulation.

43 . All counsel and any other person executing this Stipulation and any of the

exhibits hereto, or any related settlement documents, warrant and represent that they have the ful l

authority to do so and that they have the authority to take appropriate action required o r

permitted to be taken pursuant to the Stipulation to effectuate its terms .

44. Lead Plaintiff and Defendants agree to cooperate fully with one another i n

seeking Court approval of the proposed Order for Notice and Hearing, the Stipulation and th e

Settlement, and to promptly agree upon and execute all such other documentation as may b e

reasonably required to obtain final approval by the Court of the Settlement.

DATED : August f_, 2004

& SCHULMAN LLP

By:Mely 1. WeissSteven . SchulmanSalvat re J . Graziano

Jared SpecthrieCharles S . Hellman

One Pennsylvania PlazaNew York, New York 10119-0165Telephone: (212) 594-5300Facsimile : (212) 868-1229

Lead Counsel for Lead Plaintiff and the Clas s

MOULTON & GANS, P .C.Nancy Freeman Gans (BBO No. 184540)33 Broad Street

37

Boston, Massachusetts 02109-4216Telephone: (617) 369-7979Facsimile : (617) 369-7980

Special Local Counsel to Lead Counsel

WILMER CUTLER PICKERING HALE and DORRLLP

By :j(.

B atter III (BBO No. 3430)Gabrie e R . Wolohojian (BBO No . 555704)John utts (BBO No. 643201)

60 State S treetBoston, Massachusetts 02109Telephone : (617) 526-6000Facsimile : (617) 526-5000

Counsel for Defendant Raytheon Company and theIndividual Defendants Dennis J . Picard, Daniel P.Burnham, Peter R . D'Angelo, Franklyn A. Caine, ShayD. Assad, and William H. Swanson

Jay B. Stephen sSenior Vice President and General CounselRaytheon Company870 Winter StreetWaltham, MA 02451(781) 522-300 0

FOLEY HOAG LL P

By:Christian M. Hoffman (BBO No . 236940)Peter M. Casey (BBO No . 553309)Matthew C. Baltay (BBO No. 638722)Kevin B . Currid (BBO No . 644413)

Seaport World Trade Center West155 Seaport Boulevard

38

Boston, Massachusetts 02109-4216Telephone: (617) 369-7979Facsimile: (617) 369-798 0



By :John F. Batter III (BBO No . 033430)Gabrielle R. Wolohojian (BBO No. 555704)John J . Butts (BBO No. 643201)

60 State StreetBoston, Massachusetts 02109Telephone: (617) 526-6000Facsimile: (617) 526-5000

Counsel for Defendant Raytheon Company and theIndividual Defendants Dennis J . Picard, Daniel P .Burnham, Peter R . D'Angelo, Franklyn A. Caine, ShayD. Assad, and William H. Swanson

Jay B. StephenSenior Vice President and General CounselRaytheon Company870 Winter StreetWaltham, MA 02451(781) 522-3000

FOLEY HOAG LLP

By:Christian M. Hoffman (BBO No. 236940)Peter M. Casey (BBO No . 553309)Matthew C. Baltay (BBO No . 638722)Kevin B. Currid (BBO No . 644413 )


38

Boston, Massachusetts 02109-4216Telephone: (617) 369-7979Facsimile : (617) 369-798 0



By:John F . Batter III (BBO No . 033430)Gabrielle R. Wolohojian (BBO No. 555704)John J. Butts (BBO No . 643201 )

60 State StreetBoston, Massachusetts 02109Telephone: (617) 526-6000Facsimile : (617) 526-500 0

Counsel for Defendant Raytheon Company and theIndividual Defendants Dennis J. Picard, Daniel P.Burnham, Peter R. D'Angelo, Franklyn A. Caine, ShayD. Assad, and William H. Swanson

Jay B. StephensSenior Vice President and General CounselRaytheon Company870 Winter StreetWaltham, MA 02451(781) 522-3000

FOLEY HOA LLP

By:Christian M. Hoffman (BB . 236940)Peter M. Casey (BBO No . 551309)Matthew C. Baltay (BBO No . 638722)Kevin B . Currid (BBO No . 644413 )


38

Boston, Massachusetts 02110-2660Telephone: (617) 832-1000Facsimile : (617) 832-7000

Counsel for Defendant PricewaterhouseCoopers LL P

39

EXHIBIT A

UNITED STATES DISTRICT COURTDISTRICT OF MASSACHUSETTS

IN RE RAYTHEON COMPANY : Civil Action No .SECURITIES LITIGATION : 99-12142-PBS


PRELIMINARY ORDER IN CONNECTIONWITH SETTLEMENT PROCEEDINGS

WHEREAS, on August `, 2004, the parties to the above-entitled action (the "Action")

entered into a Stipulation and Agreement of Settlement (the "Stipulation") which is subject t o

review under Rule 23 of the Federal Rules of Civil Procedure and which, together with th e

exhibits thereto, sets forth the terms and conditions for proposed settlements of the Action and

the claims alleged in the Second Consolidated and Amended Class Action Complaint date d

March 17, 2003 (the "Complaint") on the merits and with prejudice as against the Defendants ;

WHEREAS, pursuant to Federal Rule of Civil Procedure 23(b)(3) and by Order date d

March 22, 2002, as modified by an Order dated April 26, 2004, and as further modified herein ,

this Action has been certified as a class action on behalf ofall persons or entities who purchased

the Class A and/or Class B common stock of Raytheon Company ("Raytheon") during the pe riod

from October 7, 1998 through October 12, 1999, inclusive (the "Class Period"), and who wer e

allegedly damaged thereby. Excluded from the Class are the Defendants, all of the officers ,

directors, and partners thereof, members of their immediate families, and their lega l


had a controlling interest. A notice of the pendency of this Action as a class action (the "Notic e

of Pendency") was previously distributed to the Class . In response to the Notice of Pendency,

ninety-one requests for exclusion from the Class were received and were filed with the Court ;

and

WHEREAS, the Court having read and considered the Stipulation and the accompanying

documents ; and the parties to the Stipulation having consented to the entry of this Order ; and al l

capitalized terms used herein having the meanings defined in the Stipulation ;

NOW, THEREFORE, IT IS HEREBY ORDERED, this day of

2004 that :

1 . A hearing (the "Settlement Fairness Hearing") pursuan t to Rule 23(e) of the

Federal Rules of Civil Procedure is hereby scheduled to be held before the Cou rt on

2004, at _.m. for the following purposes :

(a) to determine whether the proposed Settlements are fair, reasonable, an d

adequate, and should be approved by the Court;

(b) to determine whether the Order and Final Judgment as provided under th e

Stipulation should be entered, dismissing the Complaint filed herein, on the merits and wit h

prejudice, as against the Defendants and to determine whether the release by the Class of the

Settled Claims, as set forth in the Stipulation, should be provided to the Released Parties ;

(c) to determine whether the proposed Plan of Allocation for the proceeds o f

the Settlements is fair and reasonable, and should be approved by the Court ;

(d) to consider Lead Counsel's application, on behalf of itself and Plaintiff s

Counsel, for an award of attorneys' fees and expenses ;

2

(e) to consider Lead Plaintiff application for reimbursement of its reasonable

costs and expenses directly relating to its representation of the Class ; and

(f) to rule upon such other matters as the Court may deem approp riate .

2. For the purposes of the PwC Settlement , the Order of April 26, 2004, is modified

solely to strike Paragraph II thereof, such that, as to PwC, the Class certified is as provided in th e

Order of March 22, 2002 . The Orders of April 26, 2004 and March 22, 2002 otherwise are no t

amended or modified .

3 . The Court recognizes and acknowledges that one consequence of a determination

of fairness at the Settlement Fairness Hearing is that, pursuant to Section 3(a)(10) of th e

Securities Act of 1933, 15 U .S .C. § 77c(a)(10), the Settlement Warrants maybe dist ributed to

Class Members without registration and compliance with the prospectus delivery requirements o f

the securities laws.

4. The Court reserves the right to approve the Settlements with or without

modification and with or without further notice of any kind . The Court further reserves the right

to enter its Order and Final Judgment approving the Stipulation and dismissing the Complaint o n

the merits and with prejudice regardless of whether it has approved the Plan of Allocation or

awarded attorneys' fees and expenses .

5 . The Court approves the form, substance and requirements of the Notice o f

Proposed Se ttlements of Cl ass Action, Motion for Attorneys' Fees and Settlement Fairness

Hearing (the "Settlement Notice"), and the Proof of Claim form annexed hereto as Exhibits 1 an d

2 respectively .

3

6. The Court approves the appointment of Analytics Incorporated as the Claim s

Administrator . The Claims Administrator shall cause the Settlement Notice and the Proof o f

Claim, substantially in the forms annexed hereto, to be mailed, by first class mail, postag e

prepaid, on or before , 2004, to all Class Members who can be identified with

reasonable effort, including all persons who were previously mailed the Notice of Pendency

dated September 13, 2002, except for those persons who previously requested exclusion in

accordance with the requirements set forth in the Notice of Pendency. Raytheon has provided

information from its transfer records and shareholder information to the Lead Plaintiff which wil l

allow the Claims Administrator to identify members of the Class and give them notice of the

Settlements . The Claims Administrator shall use reasonable efforts to give notice to nominee

owners such as brokerage firms and other persons or entities who purchased Raytheon Class A

and/or Class B common stock during the Class Pe riod as record owners but not as beneficial

owners . Such nominee purchasers are directed to either forward copies of the Settlement Notic e

and Proof of Claim to their beneficial owners within seven (7) days of receipt of the Settlement

Notice, or, if they have not already done so in response to the Notice of Pendency, to provide th e

Claims Administrator with lists of the names and addresses of the beneficial owners, and the

Claims Administrator is ordered to send the Settlement Notice and Proof of Claim promptly to

such beneficial owners . Nominee purchasers who elect to send the Settlement Notice and Proo f

of Claim to their beneficial owners shall send a statement to the Claims Administrator

confirming that the mailing was made as directed . Additional copies of the Settlement Notic e

shall be made available to any record holder requesting such for the purpose of distribution to

beneficial owners, and such record holders shall be reimbursed from the Gross Cash Settlemen t

Fund, upon receipt by the Claims Administrator of proper documentation, for the reasonabl e

4

expense of sending the Settlement Notices and Proofs of Claim to beneficial owners . Plaintiff' s

Lead Counsel shall, at or before the Settlement Fairness Hearing, file with the Court proof o f

mailing of the Settlement Notice and Proof of Claim .

7. The Court approves the form of Publication Notice of the proposed Settlements i n

substantially the form and content annexed hereto as Exhibit 3 and directs that Plaintiffs Lea d

Counsel shall cause the Publication Notice to be published in the national edition ofThe Wall

Street Journal within ten days of the mailing of the Settlement Notice . Plaintiff's Lead Counsel

shall, at or before the Settlement Fairness Hearing, file with the Court proof of publication of the

Publication Notice .

8 . The form and content of the Settlement Notice, and the method set forth herein o f

notifying the Class of the Settlements and their terms and conditions, meet the requirements o f

Rule 23 of the Federal Rules of Civil Procedure, Section 21D(a)(7) of the Securities Exchang e

Act of 1934, 15 U.S.C. 78u-4(a)(7) as amended by the Private Secu rities Litigation Reform Act

of 1995, and due process, constitute the best notice practicable under the circumstances, and

shall constitute due and sufficient notice to all persons and entities entitled thereto .

9. In order to be entitled to participate in the Net Settlement Funds or Net Settlemen t

Warrants, in the event the Settlements are effected in accordance with all of the terms an d

conditions set forth in the Stipulation, each Class Member shall take the following actions and b e

subject to the following conditions :

(a) A properly executed Proof of Claim (the "Proof of Claim"), substantiall y

in the form attached hereto as Exhibit 2, must be submitted to the Claims Administrator, at th e

Post Office Box indicated in the Settlement Notice, postmarked not later than

2005 . Such deadline may be further extended by Court Order . Each Proof of Claim shall be

deemed to have been submitted when postmarked (if properly addressed and mailed by first class

mail, postage prepaid) provided such Proof of Claim is actually received prior to the motion for

an order of the Court approving distribution of the Net Settlement Fund. Any Proof of Claim

submitted in any other manner shall be deemed to have been submitted when it was actually

received at the address designated in the Settlement Notice .

(b) The Proof of Claim submitted by each Class Member must satisfy the

following conditions: (i) it must be properly completed, signed and submitted in a timely

manner in accordance with the provisions of the preceding subparagraph; (ii) it must be

accompanied by adequate supporting documentation for the transactions reported therein, in the

form of broker confirmation slips, broker account statements, an authorized statement from the

broker containing the transactional information found in a broker confirmation slip, or such other

documentation as is deemed adequate by the Claims Administrator ; (iii) if the person executing

the Proof of Claim is acting in a representative capacity, a certification of his current authority to

act on behalf of the Class Member must be included in the Proof of Claim ; and (iv) the Proof of

Claim must be complete and contain no material deletions or modifications of any of the printed

matter contained therein and must be signed under penalty of perjury .

(c) As part of the Proof of Claim, each Class Member shall submit to the

jurisdiction of the Court with respect to the claim submitted, and shall (subject to effectuation of

the Settlement) release all Settled Claims as provided in the Stipulation .

10. Class Members shall be bound by all determinations and judgment in this Action

with respect to the Raytheon Settlement, whether favorable or unfavorable, unless such person s

6

have previously requested exclusion from the Class in response to the Notice of Pendency . The

persons and entities who requested exclusion from the Class in response to the Notice of

Pendency are excluded from the Class and shall not be entitled to submit any Proof of Clai m

forms and shall not share in the Net Settlement Funds or Net Settlement Warrants . Except as to

the PwC Settlement, no further opportunity to request exclusion need be given in this Action .

11 . With respect to the PwC Settlement, Class Members shall be bound by al l

determinations and judgments in this Action, whether favorable or unfavorable, unless such

persons request exclusion from the Class in a timely and proper manner, as hereinafter provided .

A Class Member wishing to be excluded from the Class with respect to PwC and the Pw C

Settlement shall mail the request in written form by first class mail postmarked no later than

2004 to the address designated in the Notice . Such request for exclusion

shall clearly indicate the name, address and telephone number of the person seeking exclusion ,

that the sender requests to be excluded from the Class with respect to the PwC Settlement in the

In re Raytheon Securities Litigation, and must be signed by such person. Such persons

requesting exclusion are also directed to state : the date(s), price(s), and number(s) of shares o f

all purchases and sales of Raytheon Class A and/or Class B common stock during the Clas s

Period. The request for exclusion shall not be effective unless it provides the require d

information and is made within the time stated above, or the exclusion is otherwise accepted by

the Court .

12. The Court will consider comments and/or objections to the Settlements, the Plan

of Allocation, or the award of attorneys' fees and reimbursement of expenses only if suc h

comments or objections and any supporting papers are filed in writing with the Clerk of th e

Court, United States District Court, John Joseph Moakley United States Courthouse, 1

7

Courthouse Way, Boston, Massachusetts 02210, and copies of all such papers are served, on o r

before , 2004, upon each of the following: Salvatore J . Graziano, Esq . ,

Milberg Weiss Bershad & Schulman LLP, One Pennsylvania Plaza, New York, New Yor k

10119-0165, on behalf of Lead Plaintiff and the Class ; and John F . Batter III, Esq., Wilmer

Cutler Pickering Hale and Dorr LLP, 60 State Street , Boston, Massachusetts 02109, on behalf of

the Raytheon Defendants, and Peter M. Casey, Esq., Foley Hoag LLP, Seaport World Trade

Center West, 155 Seaport Boulevard, Boston, Massachusetts 02110-2660 on behalf of PwC.

Attendance at the hearing is not necessary ; however, persons wishing to be heard orally i n

opposition to the approval of the Settlements, the Plan of Allocation, and/or the request fo r

attorneys' fees are required to indicate in their written objection their intention to appear at the

hearing. Persons who intend to object to the Settlements , the Plan of Allocation, and/or

counsel's application for an award of attorneys' fees and expenses and desire to present evidenc e

at the Settlement Fairness Hearing must include in their written objections the identity of an y

witnesses they may call to testify and exhibits they intend to introduce into evidence at the

Settlement Fairness Hearing . Class Members do not need to appear at the hearing or take an y

other action to indicate their approval .

13. Pending final determination of whether the Settlements should be approved, th e

Lead Plaintiff, all Class Members, and each of them, and anyone who acts or purports to act o n

their behalf, shall not institute, commence or prosecute any action which asserts Settled Claim s

against any Released Party.

14. As provided in the Stipulation, Lead Counsel may pay the Claims Administrato r

the reasonable and customary fees and costs associated with giving notice to the Class and the

8

review of claims and administration of the Settlements out of the Gross Cash Settlement Fun d

without further order of the Court .

15. (a) If the PwC Settlement is terminated by PwC pursuant to paragraph 28 of

the Stipulation, then the provisions of the Stipulation relating to the PwC Settlement and the

provisions of this Preliminary Order certifying the Class for purposes of the PwC Settlemen t

shall be null and void, of no further force or effect, and without prejudice to any party;

(b) If any specified condition set forth in the Stipulation is not satisfied, and a s

provided in paragraph 24 of the Stipulation, any or all of the Raytheon Defendants, PwC or th e

Lead Plaintiff elect to terminate their participation in the Raytheon Settlement and/or the PwC

Settlement, then, in any such event, the Raytheon Settlement and/or the PwC Settlemen t

provided for in the Stipulation, including any amendment(s) thereof, and the provisions of thi s

Preliminary Order concerning the terminated settlement shall be null and void, of no furthe r

force or effect, and without prejudice to the parties to the terminated settlement, and may not b e

introduced as evidence or referred to in any actions or proceedings by any person or entity, an d

each party to the terminated settlement shall be restored to his, her or its respective position as i t

existed immediately prior to the execution of the memorandum of understanding on May 11 ,

2004, in the case of the Raytheon Defendants and May 25, 2004 in the case of PwC .

16 . The Court retains exclusive jurisdiction over the Action to consider all furthe r

matters arising out of or connected with the Settlements, including jurisdiction over the fund s

held in escrow by the Escrow Agent as provided in paragraph 6(b) of the Stipulation .

Dated: Boston, Massachusetts.2004

9

Honorable Patti B . SarisUnited States District Judg e

10

EXHIBIT 1


IN RE RAYTHEON COMPANY : Civil Action No .SECURITIES LITIGATION : 99-12142-PBS


NOTICE OF PROPOSED SETTLEMENTS OF CLASS ACTION,MOTION FOR ATTORNEYS' FEES

AND SETTLEMENT FAIRNESS HEARING

If you purchased Raytheon Company Class A and/or Class B common stock during theperiod from October 7, 1998 through October 12, 1999, inclusive (the "Class Period"), an d

were damaged thereby, then you may be entitled to a payment from class actionsettlements .

A federal court authorized this notice . This is not a solicitation from a lawyer.

• The settlements provide for a total recovery of $460 million for the Class describedherein, including $260 million in cash settlement funds and $200 million worth ofRaytheon Company ("Raytheon") warrants .

The settlements resolve the lawsuit which alleged Raytheon, certain of its officers anddirectors, and Raytheon's outside auditor, PricewaterhouseCoopers LLP ("PwC"), misledinvestors about Raytheon's financial condition, claims which PwC, Raytheon and itsofficers and directors have denied .

• Your legal rights are affected whether you act, or do not act. Read this notice carefully.

YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT :

SUBMIT A CLAIM FORM The only way to get a payment.

EXCLUDE YOURSELFWITH RESPECT TO THEPwC SETTLEMENT

Get no payment from and not be bound by the PwCSe tt lement .

OBJECT Write to the Court about why you do not like either or both o fthe settlements .

GO TO A HEARING Ask to speak in Court about the fairness of the settlement .

Error! Unknown document property name .

YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT:

DO NOTHING Get no payment . Give up rights .

These rights and options - and the deadlines to exercise them - are explained in this

notice .

SUMMARY NOTICE

Statement of Plaintiff Recover y

The settlement described herein actually represents two separate settlements : one between theClass and the Raytheon Defendants and the other between the Class and PwC . Court approval isbeing sought for both settlements, however, and they are described jointly herein as "thesettlement" (see Questions 4 and 12 below) . The Settlement provides a total of $460 million forthe Class, consisting of $260 million in Cash Settlement Funds ($210 million from the RaytheonDefendants and $50 million from PwC) and $200 million worth of five year warrants to purchaseRaytheon common stock at a price of $37 .50 per share (the "Settlement Warrants") . Plaintiff'sLead Counsel estimate that there were approximately 51 .4 million shares of Raytheon Class Acommon stock and 99.0 million shares of Raytheon Class B common stock traded during theClass Period which may have been damaged . Plaintiff's Lead Counsel estimate that the averagerecovery per damaged share under the settlement is $3.06 (including both the cash and the valueof the Settlement Warrants) before deduction of Court-awarded attorneys' fees and expenses . AClass Member's actual recovery will be a proportion of the Net Cash Settlement Fund and NetSettlement Warrants determined by his, her or its Recognized Claim as compared to the totalRecognized Claims of all Class Members who submit acceptable Proofs of Claim (See the Planof Allocation at page , below for details) .

Statement of Potential Outcome of Case

The parties disagreed on both liability and damages and do not agree on the average amount of

damages per share that would be recoverable if Lead Plaintiff were to have prevailed on each

claim alleged. Defendants deny that they are liable to the Lead Plaintiff or the Class and deny

that Lead Plaintiff or the Class have suffered any damages .

Statement of Attorneys' Fees and Costs Sought

Plaintiff' s Lead Counsel , on behalf of themselves and other Plaintiffs Counsel , are moving theCourt to award attorneys' fees in the amount of nine percent (9%) of the cash Se ttlement Fundsand the Settlement Warrants , and for reimbursement from the c ash Settlement Funds of expensesincurred in connection with the prosecution of this Action in an amount not to excee d$8,250,000. Application will also be made for reimbursement to the Lead Plaintiff for anamount not to exceed $ 10,000 for reimbursement of its reasonable costs and expenses directlyrelating to its representation of the Class . The requested fees and expenses would amount to anaverage of approximately $0.33 per damaged share (as estimated by Plaintiff's Lead Counsel) i n

2


total for fees and expenses . Plaintiff's Lead Counsel have expended considerable time and effortin the prosecution of this litigation on a contingent fee basis, and have advanced the expenses ofthe litigation, in the expectation that if they were successful in obtaining a recovery for the Classthey would be paid from such recovery. In this type of litigation it is customary for counsel to beawarded a percentage of the common fund recovery as their attorneys' fees .

Further Information

Further information regarding the Action and this Settlement Notice may be obtained bycontacting Plaintiffs Lead Counsel: Salvatore J . Graziano, Esq., Milberg Weiss Bershad &Schulman LLP, One Pennsylvania Plaza, New York, New York 10119-0165, Telephone (212)594-5300. DO NOT CONTACT THE COURT

Reasons for the Settlement

The principal reason for the settlement is the substantial amounts of cash and SettlementWarrants to be provided to the Class now, and to avoid the risks and uncertainty of continuedlitigation.

[END OF COVER PAGE]

3

Error! Unknown document property name.

WHAT THIS SETTLEMENT NOTICE CONTAIN S

Table of Contents

Page

SUMMARY NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Statement of Plaintiff Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Statement of Potential Outcome of Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Statement of Attorneys ' Fees and Costs Sought . . . . . . . . . . . . . . . . . . . . . .. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Reasons for the Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1 . Why did I get this notice package? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2. What is this lawsuit about? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3. Why is this a class action? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

4. Why is there a se tt lement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

WHO IS IN THE SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

5. How do I know if I am part of the settlement ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

6. Are there exceptions to being included ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

7. What if I am still not sure if I am included? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

THE SETTLEMENT BENEFITS - WHAT YOU GET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0

8. What benefits does the sett lement provide?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0

9. How much will my payment be? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 0

HOW YOU GET A PAYMENT - SUBMITTING A CLAIM FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1

10. How can I get a payment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1

11 . When would I get my payment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1

4


12. What am I giving up in exchange for the payment? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1

EXCLUSION FROM THE CLASS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

13 . Can I exclude myself from the Class now? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 3

THE LAWYERS REPRESENTING YOU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

14. Do I have a lawyer in this case?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : .1 4

15. How will the lawyers be paid?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 4

OBJECTING TO THE SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 4

16. How do I tell the Court that I do not like the proposed settlement? . . . . . . . . . .1 4

THE COURT'S FAIRNESS HEARING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5

17. When and where will the Court decide whether to approve th eproposed settlements ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 5

18. Do I have to come to the hearing? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 6

19. May I speak at the hearing? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 6

IF YOU DO NOTHING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 6

20. What happens if I do nothing at all? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 6

GETTING MORE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 7

21 . Are there more details about the proposed settlement ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 7

22. How do I get more information?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 7

PLAN OF ALLOCATION OF NET SETTLEMENT FUND AMONG CLAS SMEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES . . . . . . . . . . . . . . . . . . . . . . . .30

5


BASIC INFORMATION

1 . Why did I get this notice package?

You or someone in your family may have purchased shares of Raytheon Company Class Aand/or Class B common stock during the period from October 7, 1998 through October 12, 1999,

inclusive .

The Court directed that this Settlement Notice be sent to Class Members because they have aright to know about a proposed settlement of a class action lawsuit, and about all of their options,before the Court decides whether to approve the settlement . If the Court approves theSettlement, and after objections and appeals are resolved, an administrator appointed by theCourt will make the cash payments that the settlement allows, and Raytheon will issueSettlement Warrants to Class Members who submit acceptable Proofs of Claim .

This package explains the lawsuit, the settlement, Class Members' legal rights, what benefits areavailable, who is eligible for them, and how to get them .

The Court in charge of the case is the United States District Court for the District of

Massachusetts, and the case is known as In re Raytheon Company Securities Litigation, Civil

Action No . 99-12142 (PBS). This case was assigned to United States District Judge Patti B .

Saris . The people who sued are called plaintiffs, and the company and the persons they sued,

Raytheon, certain of its officers and directors (the "Individual Defendants" as defined below),

and its outside accountant, PricewaterhouseCoopers LLP ("PwC"), are called Defendants.

The "Individual Defendants" are Dennis J . Picard (former Chief Executive Officer, President ofRaytheon and Chairman of the Board of Raytheon), Daniel P . Burnham (former President, ChiefOperating Officer, Chief Executive Officer and Chairman of the Board of Raytheon), Peter R .D'Angelo (former Executive Vice President and Chief Financial Officer of Raytheon), FranklynA. Caine (former Senior Vice President and Chief Financial Officer of Raytheon), Shay D .Assad (a former Executive Vice President of Raytheon and Chairman and Chief ExecutiveOfficer of the Raytheon Engineers & Constructors business segment), and William H . Swanson(currently President, Chairman and Chief Executive Officer of Raytheon) .

•

2. What is this lawsuit about?

The Second Consolidated and Amended Class Action Complaint dated March 17, 2003 (the"Second Amended Complaint") alleges that Raytheon and the Individual Defendants misledinvestors by knowingly or recklessly overstating its financial condition , and that PwC knowinglyor recklessly misrepresented that Raytheon 's audited 1998 financial statements fairly presented

its financial condition in accordance with Generally Accepted Accounting P rinciples ("GAAP")

and that PwC had audited Raytheon 's financial statements in accordance with Generally

Accepted Auditing Standards ("GAAS") . The lawsuit also claims that Raytheon issuedstatements that had false and misleading information about Raytheon ' s income and earn ings pershare during the Class Pe riod. All Defendants deny they did anything wrong and have assertednumerous defenses to the lawsuit 's allegations throughout the litigation and settlement.

3. Why is this a class action?

In a class action, one or more people called Class Representatives (in this case Lead Plaintiff, theNew York State Common Retirement Fund ("NYSCRF")), sue on behalf of people who havesimilar claims . All these people are a Class or Class Members . One court resolves the issues forall Class Members, except for those who exclude themselves from the Class .

4. Why is there a settlement?

Beginning on October 14, 1999, twelve class actions alleging violations of federal securities lawswere filed in this court and then consolidated into this Action on March 20, 2000 . On March 20,2000 the Court appointed NYSCRF as the Lead Plaintiff and appointed Milberg Weiss Bershad& Schulman LLP as Lead Counsel. A Consolidated and Amended Complaint was filed on June12, 2000 .

On September 8, 2000, both the Raytheon Defendants and PwC moved to dismiss theConsolidated and Amended Complaint . After full briefing by Lead Plaintiff and Defendants anda February 9, 2001 hearing on the motions to dismiss, the Court, by Memorandum and Orderdated August 29, 2001, denied, in part, and granted, in part, the Raytheon Defendants' motion todismiss. The Raytheon Defendants filed an answer to the Consolidated and Amended Complainton October 2, 2001 denying liability. The Court granted PwC's motion to dismiss, but withoutprejudice, which allowed Lead Plaintiff to re-plead claims against PwC, which it did in theSecond Amended Complaint filed March 17, 2003 .

Lead Plaintiff moved to certify the Action as a class action on November 15, 2001 . The Court,

by Order dated March 22, 2002, certified the Action to proceed as a class action, and certifiedLead Plaintiff New York State Common Retirement Fund as class representative on behalf of a

Class consisting of all persons or entities who, during the period from October 7, 1998 throughOctober 12, 1999, inclusive, purchased Raytheon Company Class A and/or Class B common

stock and were allegedly damaged thereby. Excluded from the Class are Defendants, all of theofficers, directors, and partners thereof, members of their immediate families, and their legal

representatives, heirs, successors or assigns and any entity in which any of the foregoing have or

had a controlling interest . A notice of the Pendency of this Action as a class action (the "Noticeof Pendency") dated September 13, 2002 was mailed to Class Members on or about October 11,

2002 and a summary notice was published in the national edition of The Wall Street Journal on

October 21, 2002. In response to the Notice of Pendency, ninety-one requests for exclusion fro m

7

the Class were received and were filed with the Court . Persons who previously requestedexclusion from the Class are excluded and may not now file a Proof of Claim .

The Second Amended Complaint was filed March 17, 2003 . It generally alleges, among otherthings, that the Raytheon Defendants issued false and misleading press releases and otherstatements regarding Raytheon's financial condition during the Class Period - from October 7,1998 through and including October 12, 1999. The Second Amended Complaint also allegedthat PwC's audit report was false and misleading in that, in violation of GAAS, PwC issued anunqualified audit report on Raytheon's 1998 financial statements which were not presented inaccordance with GAAP . The Complaint further alleges that Lead Plaintiff and other ClassMembers purchased Raytheon Class A and/or Class B common stock during the Class Period atprices artificially inflated as a result of Defendants' dissemination of false and misleadingstatements regarding Raytheon in violation of Sections 10(b) and 20(a) of the SecuritiesExchange Act of 1934, and Rule 10b-5 promulgated thereunder .

PwC moved to dismiss the claims asserted in the Second Amended Complaint on April 24, 2003 .

After full briefing by Lead Plaintiff and PwC and a May 19, 2003 hearing on PwC's motion todismiss, the Court, by Order dated May 21, 2003, denied PwC's motion to dismiss the SecondAmended Complaint in substantial part .

The Raytheon Defendants and PwC filed answers to the Second Amended Complaint denyingany liability on April 28, 2003 and June 30, 2003, respectively .

Both the Raytheon Defendants and PwC moved for summary judgment on February 20, 2004 .

After full briefing by Lead Plaintiff and Defendants and an April 8, 2004 hearing on the

summary judgment motions, the Court denied the Raytheon Defendants' motion on April 20,

2004 and PwC's motion on April 26, 2004 . In an April 26, 2004 Order, the Court dismissed

(upon PwC's motion, which Lead Plaintiff opposed) the Section 10(b) claims against PwC for

purchases before March 30, 1999, which was the date on which PwC's unqualified audit report

was published. The Court also modified its March 22, 2002 class certification order as to PwC

to limit the class period against PwC to March 30, 1999 through October 12, 1999 . For purposes

of the PwC Settlement the Court has again modified the class certification with respect to PwC to

include the entire Class Period. By the proposed Settlements claims will be settled as to all

defendants for the entire Class Period, October 7, 1998 through October 12, 1999 inclusive .

Plaintiff's Lead Counsel have conducted an extensive investigation relating to the claims,

defenses and the underlying events and transactions alleged in the Complaint . Defendants'

Counsel have done the same. Plaintiff's Lead Counsel and Defendants' Counsel have reviewed

hundreds of thousands of documents produced by defendants and numerous non-parties, deposed

over thirty (30) witnesses and completed expert discovery . Plaintiff's Lead Counsel successfully

opposed defendants' motions for summary judgment and several motions in limine before

settlements were reached . The settlement with the Raytheon Defendants was not reached until

May 11, 2004, the eve of trial, after repeated mediations, first with a federal judge in Boston and

secondly with a retired federal judge . The settlement with PwC was not reached until May 25,

2004, after empanelment of a jury and before opening statements . Plaintiff's Lead Counsel have

analyzed the evidence adduced during pretrial discovery and have researched the applicable la w

8

with respect to the claims of Lead Plaintiff and the Class against the Defendants and the potentialdefenses thereto .

The Court did not finally decide in favor of Lead Plaintiff or Defendants who continue to denyliability. Instead, Lead Plaintiff and the Raytheon Defendants agreed to a settlement on May 11,2004 and thereafter Lead Plaintiff and PwC agreed to a Settlement on May 25, 2004. By settlingthe parties avoid the risks and additional costs of the trial, and the affected Class Members willget compensation . The Lead Plaintiff and Plaintiff's Lead Counsel think the Raytheonsettlement and the PwC settlement are best for all Class Members .

WHO IS IN THE SETTLEMENT

To see if you will get money from this settlement, you first have to decide if you are a ClassMember .

5. How do I know if I am part of the settlement?

The Court decided that everyone who fits this description is a Class Member : all persons orentities who, during the period from October 7, 1998 through October 12, 1999, inclusive (the"Class Period'), purchased Raytheon Class A and/or Class B common stock and who wereallegedly damaged thereby.

6 . Are there exceptions to being included ?

Excluded from the Class are Defendants, all of the officers, directors, and partners thereof,members of their immediate families, and their legal representatives, heirs, successors or assignsand any entity in which any of the foregoing have or had a controlling interest . Also excludedfrom the Class are the persons and/or entities who previously excluded themselves from theClass in accordance with the requirements set forth in the Notice of Pendency .

A prior Notice of Pendency of this action as a class action was mailed commencing October 11,2002. If you submitted a request for exclusion from the Class in accordance with the Notice ofPendency, then you are excluded from the Class and you may not submit a Proof of Clai mherein . As described further below (see "Exclusion From the Class") Class Members mayexclude themselves at this time with respect to the PwC Settlement Only .

If one of your mutual funds owns shares of Raytheon Class A and/or Class B common stock, thatalone does not make you a Class Member . You are a Class Member only if you directlypurchased shares of Raytheon Class A and/or Class B common stock . Contact your broker to seeif you purchased Raytheon Class A and/or Class B common stock during the Class Period.

9

If you sold Raytheon Class A and/or Class B common stock during the period from October 7,1998 through October 12, 1999, inclusive, that alone does not make you a Class Member. You

are a Class Member only if you purchased your shares of Raytheon Class A and/or Class Bcommon stock during the period from October 7, 1998 through October 12, 1999, inclusive, andwere damaged thereby.

7. What if I am still not sure if I am included?

If you are still not sure whether you are included, you can ask for free help . You can call 1-888-

300-2319 or visit www.raytheonsettlement.com for more information . Or you can fill out andreturn the claim form described on page [_], in question 10 below, to see if you qualify.

THE SETTLEMENT BENEFITS - WHAT YOU GET

8 . What benefits does the settlement provide ?

Defendants have agreed to pay a total of $460 million to the Class, including $260 million incash ($210 million from the Raytheon Defendants and $50 million from PwC) and Raytheon hasagreed to issue for the benefit of the Class $200 million worth of Settlement Warrants . The cashand Settlement Warrants, net of fees and expenses, are to be divided among all Class Memberswho send in a valid Proof of Claim form ("Authorized Claimants") . Proof of Claim forms are

required to be submitted by 200_.

The Settlement Warrants shall have an exercise price of $37 .50 per share and shall have a five

(5) year term from the date of their original issuance . The number of Settlement Warrants thatwill equal a value of $200,000,000 shall be calculated under the Black-Scholes methodologyusing specified assumptions and an average of trading prices shortly before the SettlementWarrants are actually issued to Authorized Claimants, as more specifically set forth in theStipulation. Settlement Warrants will not be issued for fractional shares of stock .

The Settlement Warrants shall be freely tradable and Raytheon shall cause the SettlementWarrants to be listed on the New York Stock Exchange for trading . As a consequence, after thedate of issuance, the value of the Settlement Warrants will be determined by the market and maydecrease or increase over time .

9. How much will my payment be?

Your allocable portions of the Net Cash Settlement Funds and Settlement Warrants will dependon the number of valid claim forms that Class Members send in, how many shares of Raytheo n

10

Class A and/or Class B common stock you bought, and when and at what prices you boughtthem and whether you sold them during the Class Period and, if so, when and at what price .

You can calculate what is called your Recognized Claim by following the instructions on page[_~ of this Notice . It is unlikely that you will get payments equal to all of your RecognizedClaim. After all Class Members have sent in their Proof of Claim forms , the payments you getwill be a part of the Net Cash Settlement Funds and a part of the Net Settlement Warr ants equalto your Reco gn ized Claim divided by the total of everyone's Recognized Claim .

HOW YOU GET A PAYMENT - SUBMITTING A CLAIM FORM

10. How can I get a payment?

To qualify for a payment, you must send in a Proof of Claim form . A Proof of Claim form isbeing circulated with this Settlement Notice. You may also get a Proof of Claim form on theInternet at www.raytheonsettlement.com. Read the instructions carefully, fill out the form,include all the documents the form asks for, sign it, and mail it postmarked no later than

9200 ._

11 . When would I get my payment?

The Court will hold a hearing on , 2004, to decide whether to approve thesettlement with the Raytheon Defendants and/or with PwC . If the Court approves the settlement,there may be appeals . It is always uncertain whether any appeals can be resolved, and resolvingthem can take time, perhaps more than a year . It also takes time for all the Proofs of Claim to beprocessed.

12 . What am I giving up in exchange for the payment?

If the settlement is approved with respect to both the Raytheon Defendants and with PwC youwill release all "Settled Claims" (as defined below) against the "Released Parties" (as definedbelow). If the settlement is approved with respect to the Raytheon Defendants only, you willrelease all "Settled Claims" against the "Released Raytheon Parties" and "Released IndividualDefendant Parties." If the settlement is approved with respect to PwC only, you will release all"Settled Claims" against the "Released PwC Parties ."

"Settled Claims" means any and all claims, debts, demands, rights or causes of action orliabilities whatsoever (including, but not limited to, any claims for damages, interest, attorneys'fees, expert or consulting fees, and any other costs, expenses, liability or relief whatsoever) ,

11

whether based on federal, state, local, statutory or common law or any other law, rule orregulation, whether fixed or contingent, accrued or un-accrued, liquidated or un-liquidated,foreseen or not foreseen, raised or not raised, matured or un-matured, at law or in equity, whetherdirect, class or individual in nature, including both known claims and Unknown Claims, (i) thathave been asserted in the Action by the Class Members or any of them against any of theReleased Parties, or (ii) that could have been asserted in any forum by the Class Members or anyof them against any of the Released Parties which (a) arise out of, relate in any way to, or arebased upon the allegations, transactions, facts, matters or occurrences, representations oromissions involved, set forth, or referred to in the Complaint or Action, and relate to thepurchase, sale, or holding of shares of Class A and/or Class B common stock of RaytheonCompany during the Class Period, or (b) that arise out of or relate in any way to the defense orsettlement of the Action (except for claims to enforce the Settlement) .

"Released Parties" means the Released Raytheon Parties, the Released Individual DefendantParties and the Released PwC Parties .

"Released Individual Defendant Parties" means any and all of the Individual Defendants, and

their past, present, or future partners, agents, attorneys, employees, heirs, successors in interest orassigns, administrators, executors and personal representatives, and shall include any insurer who

contributes to or reimburses Raytheon and/or the Individual Defendants for a portion of its or

their contribution to the Raytheon Settlement and who receives a release from such IndividualDefendants in connection with the Settlement . Released Individual Defendant Parties does no t

mean or include the Released Raytheon Parties or the Released PwC Parties .

"Released Raytheon Parties" means Raytheon and any and all of its past, present and future,direct and indirect subsidiaries, parents, affiliates, successors and predecessors, and each of theirrespective officers, directors, agents, employees, assigns, partners, principals, divisions,representatives, affiliates, attorneys, advisors, investment advisors, accountants and any person,firm, trust, corporation, officer, director or other individual or entity in which Raytheon has acontrolling interest or which is related to or affiliated with Raytheon, and shall include anyinsurer who contributes to or reimburses Raytheon for a portion of its contribution to theRaytheon Settlement and who receives a release from Raytheon in connection with theSettlement. Released Raytheon Parties does not mean or include the Released IndividualDefendant Parties or the Released PwC Parties .

"Released PwC Parties" means PricewaterhouseCoopers LLP and all of its past, present andfuture parent entities, direct and indirect subsidiaries, affiliates, predecessors (including, withoutlimitation, Coopers & Lybrand, L .L.P., and Price Waterhouse LLP) and successors, and each oftheir respective past, present and future directors, officers, partners, principals, employees,agents, representatives, affiliates, advisers, investment advisers, insurers, servants, accountants,attorneys and any person, firm, trust, corporation, officer, director or other individual or entity inwhich PwC has or had a controlling interest or which is or was related to or affiliated with PwC,and their respective representatives, heirs, successors in interest and assigns . Released PwCParties does not mean or include the Released Individual Defendant Parties or the Release dRaytheon Parties .

12

If you remain a member of the Class, all of the Court's orders will apply to you and legally bindyou.

EXCLUSION FROM THE CLAS S

As described in the Notice of Pendency of Class Action dated September 13, 2002, ClassMembers were previously provided the opportunity, until January 15, 2003, to elect to excludethemselves from the Class for all purposes . The Settlement does not provide for any right to beexcluded from the Class with respect to the Raytheon Defendants . The action proceeded to thepoint of trial as against the Raytheon Defendants on behalf of the Class . If the RaytheonSettlement is approved, the proposed Settlement will be binding on all Class Members .

If you previously submitted a request for exclusion from the Class in accordance with the priorNotice of Pendency, then you are excluded from the Class and you may not submit a Proof ofClaim with respect to either Settlement herein .

Shortly before the point of trial the definition of the Class was modified by the Court withrespect to the claims against PwC . The definition of the Class was amended again in connectionwith the PwC Settlement to again coincide with the originally defined Class . Persons andentities who meet the class definition for the PwC Settlement, and who did not previouslyrequest exclusion, may now request exclusion with respect to the PwC Settlement .

13. Can I exclude myself from the Class now?

Persons and entities who are within the definition of the Class may only exclude themselves withrespect to the PwC Settlement at this time . Pursuant to the prior Notice of Pendency, ClassMembers were allowed to request exclusion until January 15, 2003 . The Raytheon Settlementdoes not provide another opportunity to request exclusion . As described in question 16 below,Class Members may object to the Settlement .

If you do not wish to remain a member of the Cl ass as to the PwC Settlement, you may exclude

yourself. Persons who exclude themselves will NOT receive any share of the PwC Sett lement

proceeds and will not be bound by the PwC Settlement. To exclude yourself from the PwC

Settlement, you must send a written request for exclusion from the PwC Settlement by first class

mail, postmarked no later than , 2004 to In re Raytheon Comp any Securities

Litigation -- Exclusion Requests , c/o Analytics Incorporated, Post Office Box 2003, Chanhassen,

MN. 55317-2003 . No person may exclude himself from the PwC Settlement after that date . In

order to be valid, such request for exclusion shall clearly indicate the name, address andtelephone number of the person seeking exclusion , state that the sender "requests to be excluded

from the Class with respect to the PwC Settlement in the In re Raytheon Securities Litigation,

Index No . 99-12142-PBS"and must be signed by such person . Such persons requesting

exclusion are also directed to state : the date (s), price(s), and number(s) of shares of all purch ases

and sales of Raytheon Class A and/or Class B common stock during the Class Period. The

request for exclusion shall not be effective unless it provides the required information and is

13

made within the time stated above, or the exclusion is otherwise accepted by the Court .Defendant PwC may terminate the PwC Settlement if putative Class Members with more than acertain amount of purchases exclude themselves from the Class in the PwC Settlement .

THE LAWYERS REPRESENTING YOU

14. Do I have a lawyer in this case?

The Court ordered that the law firm of Milberg Weiss Bershad & Schulman LLP in New York,New York will represent you and the other Class Members . These lawyers are called Plaintiff's

Lead Counsel. You will not be charged for these lawyers . If you want to be represented by yourown lawyer, you may hire one at your own expense.

15 . How will the lawyers be paid?

Plaintiff's Lead Counsel, on behalf of themselves and other Plaintiff's Counsel, are moving theCourt to award attorneys' fees from the Settlement Funds in the amount of nine percent (9%) ofeach of the Gross Cash Settlement Funds and Settlement Warrants and for reimbursement fromthe Gross Cash Settlement Funds of their reasonable expenses up to a maximum amount of $8 .25

million, plus interest on such expenses at the same rate as earned by the Gross Cash SettlementFunds. Plaintiff's Lead Counsel, without further notice to the Class, shall subsequently apply tothe Court for the fees and expenses of the Claims Administrator incurred in connection withadministering and distributing the settlement proceeds to the members of the Class and for anyproceedings subsequent to the Settlement Fairness Hearing .

At the Settlement Fairness Hearing Lead Plaintiff will also apply to the Court for an award fromthe Gross Cash Settlement Funds of up to $10,000 for reimbursement of its reasonable costs andexpenses directly relating to its representation of the Clas s

OBJECTING TO THE SETTLEMENT

You can tell the Court that you do not agree with the settlement or some part of it .

16. How do I tell the Court that I do not like the proposed settlement ?

If you are a Class Member, you can object to either or both of the proposed settlements if you donot like any part of them. You can give reasons why you think the Court should not approveeither or both of the Settlements .

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Persons who previously excluded themselves from the Class are not affected by the Settlementsand may not object to either Settlement .

Persons who elect to exclude themselves from the Class with respect to the PwC Settlement maynot object to the PwC Settlement, but, unless they previously excluded themselves from theClass in connection with the prior Notice of Pendency, will still be bound by, and are entitled toobject to, the Raytheon Settlement .

If you are a Class Member, the Court will consider your views . To object, you must send a

signed letter saying that you object to the proposed settlement(s) in the In re Raytheon Company

Securities Litigation . Be sure to include your name, address, telephone number, and yoursignature, identify the date(s), price(s), and number(s) of shares of all purchases and sales of theClass A and/or Class B common stock of Raytheon you made during the Class Period, and statethe reasons why you object to the proposed settlement(s) . Mail the objection to each of thefollowing addresses postmarked no later than , 2004 :

COURT PLAINTIFF'S LEADCOUNSEL

RAYTHEON DEFENDANTS'COUNSEL

Clerk of the CourtUnited States District Court

for the District ofMassachusettsJohn Joseph Moakley United

States Courthouse

1 Courthouse WayBoston, MA 02210

Salvatore J. Graziano, Esq .Milberg Weiss Bershad &Schulman LLPOne Pennsylvania PlazaNew York, NY 10119-0165

John F. Batter III, Esq .Wilmer Cutler Pickering Hale andDorr LLP60 State StreetBoston, MA 0210 9

PwC'S COUNSE L

Peter M. Casey, Esq .Foley Hoag LLPSeaport World Trade Center West155 Seaport BoulevardBoston, MA 02110-266 0

THE COURT'S FAIRNESS HEARING

The Court will hold a hearing to decide whether to approve the proposed settlements with theRaytheon Defendants and/or with PwC. You may attend and you may ask to speak, but you do

not have to .

17. When and where will the Court decide whether to approve the proposed settlements ?

The Court will hold a Fairness Hearing at _: _.m. on day,2004, at the United States District Court for the District of Massachusetts, John Joseph MoakleyUnited States Courthouse, 1 Courthouse Way, Boston, Massachusetts 02210, in Courtroom

. At this hearing the Court will consider whether the settlements with the Raytheo n

15

Defendants and with PwC are fair, reasonable and adequate . If there are objections, the Courtwill consider them. The Court will listen to people who have asked to speak at the hearing . TheCourt may also decide how much to pay to Plaintiffs' Counsel . After the hearing, the Court willdecide whether to approve the settlement with the Raytheon Defendants and/or with PwC . Wedo not know how long these decisions will take .

18 . Do I have to come to the hearing?

No . Plaintiff's Lead Counsel will answer questions the Court may have . But, you are welcometo come at your own expense . If you send an objection, you do not have to come to Court to talkabout it. As long as you mailed your written objection on time, the Court will consider it . Youmay also hire your own lawyer at your own expense to attend, but it is not necessary that youhave a lawyer attend .

19. May I speak at the hearing?

If you object to the Settlement with the Raytheon Defendants and/or with PwC, you may ask theCourt for permission to speak at the Settlement Fairness Hearing. To do so, you must includewith your objection (see question 16 above) a statement saying that it is your "Notice ofIntention to Appear in the In re Raytheon Company Securities Litigation ." You cannot speak at

the hearing if you excluded yourself. Persons who intend to object to the Settlement, the Plan ofAllocation, and/or counsel's application for an award of attorneys' fees and expenses and desireto present evidence at the Settlement Fairness Hearing must include in their written objectionsthe identity of any witnesses they may call to testify and exhibits they intend to introduce intoevidence at the Settlement Fairness Hearing .

IF YOU DO NOTHING

20. What happens if I do nothing at all ?

If you do nothing, you will get no money or warrants from this settlement . You must submit aProof of Claim form in order to share in the Net Settlement Funds and Net Settlemen t

Warrants.

The Final Order and Judgment approving the Settlement will dismiss the Action and settle andrelease all Class Members' "Settled Claims" as against all the "Released Parties" (as defined inresponse to question 12 above) . Whether or not they submit a Proof of Claim, all Clas sMembers will be barred and enjoined from starting a lawsuit, continuing with a lawsuit, or bein g

16

part of any other lawsuit against Raytheon, the Individual Defendants, PwC and the otherReleased Parties about the Settled Claims, ever again .

GETTING MORE INFORMATIO N

21 . Are there more details about the proposed se ttlement?

This notice summarizes the proposed settlement . More details are in a Stipulation andAgreement of Settlement dated August _, 2004 (the "Stipulation") . You can get a copy of theStipulation by writing to Salvatore J . Graziano, Esq ., Milberg Weiss Bershad & Schulman LLP,One Pennsylvania Plaza, New York, New York 10119-0165, or by visitingwww.raytheonsettlement.com .

You also can call the Claims Administrator toll free at 1-888-300-2319 ; write to In re RaytheonCompany Securities Litigation, Post Office Box 2003, Chanhassen, MN . 55317-2003; or visit thewebsite at www.raytheonsettlement.com, where you will find answers to common questionsabout the settlement, a claim form, plus other information to help you determine whether you area Class Member and whether you are eligible for a payment .

22. How do I get more information ?

For even more detailed information concerning the matters involved in this Action, reference ismade to the pleadings, to the Stipulation, to the Orders entered by the Court and to the otherpapers filed in the Action, which may be inspected at the Office of the Clerk of the United StatesDistrict Court for the District of Massachusetts, John Joseph Moakley United States Courthouse,1 Courthouse Way, Boston, Massachusetts 02210, during regular business hours .

PLAN OF ALLOCATION OF NET SETTLEMENT FUND AMONG CLASS MEMBERS

The $210,000,000 Raytheon Defendants' Cash Settlement Amount, the $50,000,000 PwC CashSettlement Amount, and any interest earned thereon shall be the "Gross Cash Settlement Funds ."The Gross Cash Settlement Funds, less all taxes, approved costs, fees and expenses (the "NetCash Settlement Funds") shall be distributed by the Claims Administrator to members of theClass who submit acceptable Proofs of Claim ("Authorized Claimants") .

The $200,000,000 in Settlement Warrants, less all approved attorneys' fees payable inSettlement Warrants, shall be the "Net Settlement Warrants ." The Net Settlement Warrants shallbe distributed to Authorized Claimants by Raytheon in accordance with the Court approvedDistribution Order and the Net Settlement Warrant Distribution Plan prepared by the ClaimsAdministrator .

17

The following proposed Plan of Allocation reflects Plaintiff's Lead Counsel's proposition thatthe decreases in the price of Raytheon Class A and Class B common stock occurring upon therevelations made by Raytheon around September 16, 1999 and on October 12, 1999 reflected theelimination of the alleged artificial inflation that the Defendants' purported misrepresentationsmay have caused. Plaintiffs' damages expert reported that, in his opinion, during the ClassPeriod until September 13, 1999 the price of Raytheon common stock was inflated artificially byapproximately 28 .4%; that the alleged artificial inflation reduced to 25 .4% on September 14, and15 ; 17.65% on September 16 ; 13 .4% on September 17; and was 9 .5% from September 18through the time trading was suspended on October 12, 1999; after which no artificial inflation isalleged to have affected the price of Raytheon common stock .

With respect to the recovery from PwC, the proposed Plan also takes into account the fact thatthe Court has dismissed the claims made against PwC with respect to the period prior to March30, 1999, and had indicated an intention to dismiss the claims made against PwC with respect tothe period after September 16, 1999 and the fact that while there is a right to appeal suc hdeterminations, such claims face a greater hurdle to recovery than claims against PwC relating topurchases made during the period March 30, 1999 through September 16, 1999 inclusive .

Defendants do not agree with any of the Plaintiff's damage experts' opinions that there was anyartificial inflation .

The Claims Administrator shall determine each Authorized Claimant's pro rata shares of the NetCash Settlement Fund and Net Settlement Warrants from the Settlement with the RaytheonDefendants based upon each Authorized Claimant's "Recognized Claim ." The ClaimsAdministrator shall determine each Authorized Claimant's fro rata shares of the Net CashSettlement Fund from the Settlement with PwC based upon each Authorized Claimant's"Recognized PwC Claim ." The Recognized Claim formulae are not intended to be an estimate ofthe amount of what a Class Member might have been able to recover after a trial ; nor are theyestimates of the amount that will be paid to Authorized Claimants pursuant to the settlement .The Recognized Claim formulae are the basis upon which the Net Cash Settlement Funds and

Net Settlement Warrants will be proportionately allocated to the Authorized Claimants .

Allocation of Settlement Proceeds from Raytheon Defendants for Class B Shares :

For purposes of allocating the Net Settlement Fund from the Raytheon Defendants and the NetSettlement Warrants, the Claims Administrator shall determine each Authorized Claimant's prorata share of the Net Settlement Fund from the Raytheon Defendants and the Net SettlementWarrants based upon each Authorized Claimant's "Recognized Claim" calculated as follows :

(A) For Class B shares of Raytheon common stock purchased during the period October 7,1998 through September 13, 1999, inclusive , and

18

1) Sold at a loss on or before September 13, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50%1 of the difference between (x) 28 .4% of the Purchase PricePaid (including commissions , etc .) (the "PPP"), and (y) 28 .4% of the Sales Proceeds Received(net of commissions, etc .) (The "SPR") ;

2) Sold at a loss on September 14 or 15, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50% of the difference between (x) 28 .4% of the PPP, and (y)25 .4% of the SPR ;

3) Sold at a loss on September 16, 1999 , an Authorized Claimant's "RecognizedClaim" shall mean the difference between (x) 28 .4% of the PPP, and (y) 17 .65% of the SPR ;

4) Sold at a loss on September 17, 1999 , an Authorized Claimant's "RecognizedClaim" shall mean the difference between (x) 28 .4% of the PPP, and (y) 13 .4% of the SPR ;

5) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999 , an Authorized Claimant's "Recognized Claim" shall mean the differencebetween (x) 28 .4% of the PPP, and (y) 9 .5% of the SPR;

6) Still owned as of the suspension of trading on October 12, 1999, an AuthorizedClaimant's "Recognized Claim" shall mean 28 .4% of the PPP .

(B) For Class B shares of Raytheon common stock purchased on September 14 or 15, 1999,and

1) Sold at a loss on or before September 15, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50% of the difference between (x) 25 .4% of the PPP, and (y)25 .4% of SPR;

2) Sold at a loss on September 16, 1999 , an Authorized Claimant's "RecognizedClaim" shall mean the difference between (x) 25.4% of the PPP, and (y) 17 .65% of the SPR ;

3) Sold at a loss on September 17, 1999, an Authorized Claimant's "RecognizedClaim" shall mean the difference between (x) 25.4% of the PPP, and (y) 13 .4% of the SPR;

4) Sold at a loss from September 18, 1999 through the suspension of trading oOctober 12, 1999 , an Authorized Claimant's "Recognized Claim" shall mean the differencebetween (x) 25 .4% of the PPP, and (y) 9 .5% of the SPR;

5) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized Claim" shall mean 25 .4% of the PPP .

(C) For Class B shares of Raytheon common stock purchased on September 16, 1999 , and

' This discount is intended to reflect that Class Members who sold their stock prior to achange in the available disclosures would face a greater difficulty showing that their loss wascaused by such misrepresentation .

19

1) Sold at a loss on or before September 16, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50% of the difference between (x) 17 .65% of the PPP, and (y)17.65% of SPR ;

2) Sold at a loss on, September 17, 1999 , an Authorized Claimant's "RecognizedClaim" shall mean 50% of the difference between (x) 17 .65% of the PPP, and (y) 13 .4% of the

SPR;

3) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999 , an Authorized Claimant's "Recognized Claim" shall mean 50% of thedifference between (x) 17 .65% of the PPP, and (y) 9 .5% of the SPR;


(D) For Class B shares of Raytheon common stock purchased on September 17, 1999, and

1) Sold at a loss on or before September 17, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50% of the difference between (x) 13 .4% of the PPP, and (y)13 .4% of SPR ;

2) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999 , an Authorized Claimant's "Recognized Claim" shall mean 50% of thedifference between (x) 13 .4% of the PPP, and (y) 9 .5% of the SPR ;


(E) For Class B shares of Raytheon common stock purchased from September 18, 1999through the suspension of trading on October 12, 1999 , and

1) Sold at a loss on or before the suspension of trading on October 12, 1999 , anAuthorized Claimant's "Recognized Claim" shall mean 50% of the difference between (x) 9 .5%of the PPP, and (y) 9 .5% of SPR;


Allocation of Settlement Proceeds from Raytheon Defendants for Class A Shares :

For purposes of allocating the Net Settlement Fund from the Raytheon Defendants and the NetSettlement Warrants, the Claims Administrator shall determine each Authorized Claimant's prorata share of the Net Settlement Fund from the Raytheon Defendants and the Net SettlementWarrants based upon each Authorized Claimant's "Recognized Claim" calculated as follows :

(A) For Class A shares of Raytheon common stock purchased during the period October 7,1998 through September 13, 1999, inclusive , and

20

1) Sold at a loss on or before September 13, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50%2 of the difference between (x) 30 .1% of the Purchase PricePaid (including commissions, etc.) (the "PPP"), and (y) 30 .1% of the Sales Proceeds Received(net of commissions, etc .) (The "SPR") ;

2) Sold at a loss on September 14 or 15, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50% of the difference between (x) 30 .1% of the PPP, and (y)

27 .3% of the SPR;

3) Sold at a loss on September 16, 1999, an Authorized Claimant's "RecognizedClaim" shall mean the difference between (x) 30 .1% of the PPP, and (y) 19 .7% of the SPR;

4) Sold at a loss on September 17, 1999 , an Authorized Claimant's "Recognize dClaim" shall mean the difference between (x) 30 .1% of the PPP, and (y) 15 .6% of the SPR;

5) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999, an Authorized Claimant's "Recognized Claim" shall mean the differencebetween (x) 30 .1% of the PPP, and (y) 10 .9% of the SPR;

6) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized Claim" shall mean 30 .1 % of the PPP .

(B) For Class A shares of Raytheon common stock purchased on September 14 or 15, 1999 ,and

1) Sold at a loss on or before September 15, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50% of the difference between (x) 27.3% of the PPP, and (y)27.3% of SPR;

2) Sold at a loss on September 16, 1999 , an Authorized Claimant's "RecognizedClaim" shall mean the difference between (x) 27 .3% of the PPP, and (y) 19 .7% of the SPR;

3) Sold at a loss on September 17, 1999 , an Authorized Claimant's "RecognizedClaim" shall mean the difference between (x) 27 .3% of the PPP, and (y) 15 .6% of the SPR;

4) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999 , an Authorized Claimant's "Recognized Claim" shall mean the difference

between (x) 27 .3% of the PPP, and (y) 10 .9% of the SPR;

5) Still owned as of the suspension of trading on October 12, 1999 , an Authorized

Claimant's "Recognized Claim" shall mean 27 .3% of the PPP .

(C) For Class A shares of Raytheon common stock purchased on September 16, 1999 , and

2 This discount is intended to reflect that Class Members who sold their stock prior to achange in the available disclosures would face a greater difficulty showing that their loss wascaused by such misrepresentation.

21

1) Sold at a loss on or before September 16, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50% of the difference between (x) 19 .7% of the PPP, and (y)19.7% of SPR;

2) Sold at a loss on September 17, 1999 , an Authorized Claimant's "RecognizedClaim" shall mean 50% of the difference between (x) 19 .7% of the PPP, and (y) 15 .6% of theSPR;

3) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999, an Authorized Claimant's "Recognized Claim" shall mean 50% of thedifference between (x) 19 .7% of the PPP, and (y) 10 .9% of the SPR;


(D) For Class A shares of Raytheon common stock purchased on September 17, 1999, and

1) Sold at a loss on or before September 17, 1999 , an Authorized Claimant's"Recognized Claim" shall mean 50% of the difference between (x) 15.6% of the PPP, and (y)15 .6% of SPR;

2) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999, an Authorized Claimant's "Recognized Claim" shall mean 50% of thedifference between (x) 15 .6% of the PPP, and (y) 10 .9% of the SPR ;


(E) For Class A shares of Raytheon common stock purchased from September 18, 1999through the suspension of trading on October 12, 1999 , and

1) Sold at a loss on or before the suspension of trading on October 12, 1999, anAuthorized Claimant's "Recognized Claim" shall mean 50% of the difference between (x)10.9% of the PPP, and (y) 10 .9% of SPR ;


Allocation of Settlement Proceeds from PwC for Class B Shares :

For purposes of allocating the Net Settlement Fund from PwC, the Claims Administrator shalldetermine each Authorized Claimant's pro rata share of the Net Settlement Fund from PwCbased upon each Authorized Claimant's "Recognized PwC Claim" calculated as follows :

(A) For Class B shares of Raytheon common stock purchased during the period October 7,1998 through the close of trading on March 29, 1999, inclusive , and

22

1) Sold at a loss on or before September 13, 1999, an Authorized Claimant's"Recognized PwC Claim" shall mean 25%3 of the difference between (x) 23 .2% of the Purchase

Price Paid (including commissions, etc.) (the "PPP"), and (y) 23 .2% of the Sales Proceeds

Received (net of commissions, etc .) (The "SPR") ;

2) Sold at a loss on September 14 or 15, 1999, an Authorized Claimant's"Recognized PwC Claim" shall mean 25% of the difference between (x) 23 .2% of the PPP, and(y) 20.0% of the SPR ;

3) Sold at a loss on September 16, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean 50%4 of the difference between (x) 23 .2% of the PPP, and (y) 11 .6% ofthe SPR ;

4) Sold at a loss on September 17, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean 50% of the difference between (x) 23 .2% of the PPP, and (y) 7 .1% ofthe SPR ;

5) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999 , an Authorized Claimant's "Recognized PwC Claim" shall mean 50% of thedifference between (x) 23 .2% of the PPP, and (y) 2 .8% of the SPR ;

6) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized PwC Claim" shall mean 50% of 22 .5% (i .e . 23 .2%- 25% of 2 .8%) ofthe PPP .

(B) For Class B shares of Raytheon common stock purchased during the period March 30,1999 through September 13, 1999, inclusive , and

1) Sold at a loss on or before September 13, 1999 , an Authorized Claimant's"Recognized PwC Claim" shall mean 50%5 of the difference between (x) 23 .2% of the PurchasePrice Paid (including commissions, etc .) (the "PPP"), and (y) 23 .2% of the Sales ProceedsReceived (net of commissions, etc .) (The "SPR") ;

3 This discount is intended to reflect both (a) that Class Members who sold their stock priorto a change in the available disclosures would face a greater difficulty showing that their losswas caused by such misrepresentation, and (b) the fact that the Court dismissed the Class actionclaims against PwC for purchases prior to March 30, 1999 ; 50% of 50% = 25% .

4 This Discount is intended to reflect the fact that the Court dismissed the Class actionclaims against PwC for purchases prior to March 30, 1999 .

5 This discount is intended to reflect that Class Members who sold their stock prior to achange in the available disclosures would face a greater difficulty showing that their loss wascaused by such misrepresentation .

23

2) Sold at a loss on September 14 or 15, 1999 , an Authorized Claimant's"Recognized PwC Claim" shall mean 50% of the difference between (x) 23 .2% of the PPP, and(y) 20.0% of the SPR;

3) Sold at a loss on September 16, 1999, an Authorized Claimant's "RecognizedPwC Claim" shall mean the difference between (x) 23 .2% of the PPP, and (y) 11 .6% of the SPR;

4) Sold at a loss on September 17, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean the difference between (x) 23 .2% of the PPP, and (y) 7 .1% of the SPR;

5) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999 , an Authorized Claimant's "Recognized PwC Claim" shall mean the differencebetween (x) 23 .2% of the PPP, and (y) 2 .8% of the SPR;

6) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized PwC Claim" shall mean 22 .5% (i .e. 23.2%- 25% of 2 .8%) of the PPP .

(C) For Class B shares of Raytheon common stock purchased on September 14 or 15, 1999 ,and

1) Sold at a loss on or before September 15, 1999 , an Authorized Claimant's"Recognized PwC Claim" shall mean 50%6 of the difference between (x) 20 .0% of the PPP, and(y) 20.0% of SPR;

2) Sold at a loss on September 16, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean the difference between (x) 20 .0% of the PPP, and (y) 11 .6% of the SPR ;

3) Sold at a loss on September 17, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean the difference between (x) 20.0% of the PPP, and (y) 7 .1 % of the SPR ;

4) Sold at a loss from September 18, 1999 through the suspension of trading oOctober 12, 1999 , an Authorized Claimant's "Recognized PwC Claim" shall mean the differencebetween (x) 20 .0% of the PPP, and (y) 2 .8% of the SPR ;

5) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized PwC Claim" shall mean 19 .3% (i .e. 20.0%- 25% of 2 .8%) of the PPP .

(D) For Class B shares of Raytheon common stock purchased on September 16, 1999 , and

1) Sold at a loss on or before September 16, 1999 , an Authorized Claimant' s"Recognized PwC Claim" shall mean 50%7 of the difference between (x) 11 .6% of the PPP, and(y) 11 .6% of SPR;


24

2) Sold at a loss on September 17, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean 50% of the difference between (x) 11 .6% of the PPP, and (y) 7 .1% ofthe SPR ;

3) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999 , an Authorized Claimant's "Recognized PwC Claim" shall mean 50% of thedifference between (x) 11 .6% of the PPP, and (y) 2 .8% of the SPR ;

4) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized PwC Claim" shall mean 10 .9% (i .e. 11 .6%- 25% of 2 .8%) of the PPP .

(E) For Class B shares of Raytheon common stock purchased on September 17, 1999, and

1) Sold at a loss on or before September 17, 1999 , an Authorized Claimant' s"Recognized PwC Claim" shall mean 37 .5%8 of the difference between (x) 7 .1% of the PPP, and(y) 7 .1 % of SPR;

2) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999, an Authorized Claimant's "Recognized PwC Claim" shall mean 37 .5% of thedifference between (x) 7 .1% of the PPP, and (y) 2 .8% of the SPR ;

3) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized PwC Claim" shall mean 75%9 of 6.4% (i .e. 7.1% - 25% of 2 .8%) of thePPP .

(F) For Class B shares of Raytheon common stock purchased from September 18, 1999through the suspension of trading on October 12, 1999, and

1) Sold at a loss on or before the suspension of trading on October 12, 1999 , anAuthorized Claimant's "Recognized PwC Claim" shall mean 37 .5%10 of the difference between(x) 2.8% of the PPP, and (y) 2 .8% of SPR;

This discount is intended to reflect that Class Members who sold their stock p rior to achange in the available disclosures would face a greater difficulty showing that their loss w ascaused by such misrepresentation.

8 This discount is intended to reflect both (a) that Class Members who sold their stock p riorto a change in the available disclosures would face a greater difficulty showing that their losswas caused by such misrepresentation , and (b) the fact that the Court indicated that it woulddismiss the Class action claims against PwC for purchases after September 16, 1999; 50% of75% = 37.5% .

9 This discount is intended to reflect the fact that the Court indicated that it would dismissthe Class action claims against PwC for purchases after September 16, 1999 .

10 This discount is intended to reflect both (a) that Class Members who sold their stock priorto a change in the available disclosures would face a greater difficulty showing that their los s

25

2) Still owned as of the suspension of trading on October 12, 1999, an AuthorizedClaimant's "Recognized PwC Claim" shall mean 75% of 2 .1% (i .e . 2.8% - 25% of 2 .8%) of the

PPP.

Allocation of Settlement Proceeds from PwC for Class A Shares :

For purposes of allocating the Net Settlement Fund from PwC, the Claims Administrator shalldetermine each Authorized Claimant's pro rata share of the Net Settlement Fund from PwCbased upon each Authorized Claimant's "Recognized PwC Claim" calculated as follows :

(A) For Class A shares of Raytheon common stock purchased during the period October 7,1998 through the close of trading on March 29, 1999, inclusive , and

1) Sold at a loss on or before September 13, 1999 , an Authorized Claimant's"Recognized PwC Claim" shall mean 25%11 of the difference between (x) 24 .1 % of the Purchase

Price Paid (including commissions, etc.) (the "PPP"), and (y) 24 .1 % of the Sales ProceedsReceived (net of commissions, etc .) (The "SPR") ;

2) Sold at a loss on September 14 or 15, 1999 , an Authorized Claimant's"Recognized PwC Claim" shall mean 25% of the difference between (x) 24 .1% of the PPP, and

(y) 21 .0% of the SPR ;

3) Sold at a loss on September 16, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean 50%12 of the difference between (x) 24 .1% of the PPP, and (y) 12 .8% of

the SPR ;

4) Sold at a loss on September 17, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean 50% of the difference between (x) 24 .1% of the PPP, and (y) 8 .4% of

the SPR ;

5) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999, an Authorized Claimant's "Recognized PwC Claim" shall mean 50% of thedifference between (x) 24 .1% of the PPP, and (y) 3 .2% of the SPR ;

was caused by such misrepresentation, and (b) the fact that the Court indicated that it woulddismiss the Class action claims against PwC for purchases after September 16, 1999 ; 50% of

75% = 37 .5% .

" This discount is intended to reflect both (a) that Class Members who sold their stock priorto a change in the available disclosures would face a greater difficulty showing that their losswas caused by such misrepresentation, and (b) the fact that the Court dismissed the Class actionclaims against PwC for purchases prior to March 30, 1999 .

12 This discount is intended to reflect the fact that the Court dismissed the Class actionclaims against PwC for purchases prior to March 30, 1999

26

6) Still owned as of the suspension of trading on October 12, 1999, an AuthorizedClaimant's "Recognized PwC Claim" shall mean 50% of 23 .3% (i.e. 24.1%- 25% of 3 .2%) ofthe PPP .

(B) For Class A shares of Raytheon common stock purchased during the period March 30,1999 through September 13, 1999, inclusive, and

1) Sold at a loss on or before September 13, 1999 , an Authorized Claimant's"Recognized PwC Claim" shall mean 50%13 of the difference between (x) 24 .1 % of the PurchasePrice Paid (including commissions, etc .) (the "PPP"), and (y) 24 .1% of the Sales ProceedsReceived (net of commissions, etc .) (The "SPR") ;

2) Sold at a loss on September 14 or 15, 1999 , an Authorized Claimant's"Recognized PwC Claim" shall mean 50% of the difference between (x) 24.1% of the PPP, and(y) 21 .0% of the SPR;

3) Sold at a loss on September 16, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean the difference between (x) 24 .1% of the PPP, and (y) 12 .8% of the SPR;

4) Sold at a loss on September 17, 1999 , an Authorized Claimant's "RecognizedPwC Claim" shall mean the difference between (x) 24 .1 % of the PPP, and (y) 8 .4% of the SPR;

5) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999, an Authorized Claimant's "Recognized PwC Claim" shall mean the differencebetween (x) 24 .1 % of the PPP, and (y) 3 .2% of the SPR;

6) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized PwC Claim" shall mean 23 .3% (i .e. 24.1%- 25% of 3.2%) of the PPP .

(C) For Class A shares of Raytheon common stock purchased on September 14 or 15, 1999,

and

1) Sold at a loss on or before September 15, 1999 , an Authorized Claimant's"Recognized PwC Claim" shall mean 50%1 of the difference between (x) 21 .0% of the PPP, and(y) 21 .0% of SPR;




27


4) Sold at a loss from September 18, 1999 through the suspension of trading on

October 12, 1999, an Authorized Claimant's "Recognized PwC Claim" shall mean the difference

between (x) 21 .0% of the PPP, and (y) 3 .2% of the SPR;

5) Still owned as of the suspension of trading on October 12, 1999, an AuthorizedClaimant's "Recognized PwC Claim" shall mean 20 .2% (i .e . 21 .0%- 25% of 3 .2%) of the PPP .

(D) For Class A shares of Raytheon common stock purchased on September 16, 1999, and

1) Sold at a loss on or before the close of trading on September 16, 1999 , anAuthorized Claimant's "Recognized PwC Claim" shall mean 50%15 of the difference between(x) 12.8% of the PPP, and (y) 12 .8% of SPR;

2) Sold at a loss on September 17, 1999, an Authorized Claimant's "RecognizedPwC Claim" shall mean 50% of the difference between (x) 12 .8% of the PPP, and (y) 8 .4% of

the SPR ;

3) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999, an Authorized Claimant's "Recognized PwC Claim" shall mean 50% of thedifference between (x) 12 .8% of the PPP, and (y) 3.2% of the SPR;

4) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized PwC Claim" shall mean 12 .0% (i .e . 12.8%- 25% of 3 .2%) of the PPP .

(E) For Class A shares of Raytheon common stock purchased on September 17, 1999 , and

1) Sold at a loss on or before the close of trading on September 17, 1999 , anAuthorized Claimant's "Recognized PwC Claim" shall mean 37 .5%16 of the difference between(x) 8.4% of the PPP, and (y) 8 .4% of SPR;

2) Sold at a loss from September 18, 1999 through the suspension of trading onOctober 12, 1999, an Authorized Claimant's "Recognized PwC Claim" shall mean 37 .5% thedifference between (x) 8 .4% of the PPP, and (y) 3 .2% of the SPR;


16 This discount is intended to reflect both (a) that Class Members who sold their stock priorto a change in the available disclosures would face a greater difficulty showing that their losswas caused by such misrepresentation, and (b) the fact that the Court indicated that it woulddismiss the Class action claims against PwC for purchases after September 16, 1999 .

28

3) Still owned as of the suspension of trading on October 12, 1999, an AuthorizedClaimant's "Recognized PwC Claim" shall mean 75% of 7 .6% (i .e. 8 .4% - 25% of 3.2%) of thePPP .

(F) For Class A shares of Raytheon common stock purchased from September 18, 1999through the suspension of trading on October 12, 1999, and

1) Sold at a loss on or before the suspension of trading on October 12, 1999 , anAuthorized Claimant's "Recognized PwC Claim" shall mean 37 .5%I7 of the difference between(x) 3 .2% of the PPP, and (y) 3 .2% of SPR;

2) Still owned as of the suspension of trading on October 12, 1999 , an AuthorizedClaimant's "Recognized PwC Claim" shall mean 75% of 2 .4% (i.e . 3 .2% - 25% of 3 .2%) of thePPP .

General Provisions :

To the extent a Claimant had a gain from his, her or its overall transactions in Raytheon Class Aand/or Class B common stock during the Class Period, the value of the Recognized Claim will bezero. To the extent that a Claimant suffered an overall loss on his, her or its overall transactionsin Raytheon Class A and/or Class B common stock during the Class Period, but that loss was lessthan the Recognized Claim calculated above, then the Recognized Claim and Recognized PwCClaim shall be limited to the amount of the actual loss .

For purposes of determining whether a Claimant had a gain from his, her or its overall

transactions in Raytheon Class A and/or Class B common stock during the Class Period or

suffered a loss, the Claims Administrator shall : (i) total the amount paid for all Raytheon ClassA and/or Class B common stock purchased during the Class Period by the claimant (the "Total

Purchase Amount") ; (ii) match any sales of Raytheon Class A and/or Class B common stock

during the Class Period first against the Claimant's opening position in the stock (the proceeds of

those sales will not be considered for purposes of calculating gains or losses) ;-(iii) total the

amount received for sales of the remaining shares of Raytheon Class A and/or Class B commonstock sold during the Class Period (the "Sales Proceeds") ; (iv) ascribe a $26 .78 per share holding

value for the number of shares of Raytheon Class A and $28.25 per share holding value for Class

B common stock purchased during the Class Period and still held at the end of the Class Period("Holding Value(s)"). The difference between (i) the Total Purchase Amount and the (ii) sum of

the Sales Proceeds and Holding Value(s), will be deemed a Claimant's gain or loss on his, her or

its overall transactions in Raytheon Class A and/or Class B common stock during the Class

Period.

17 This discount is intended to reflect both (a) that Class Members who sold their stock priorto a change in the available disclosures would face a greater difficulty showing that their losswas caused by such misrepresentation, and (b) the fact that the Court indicated that it woulddismiss the Class action claims against PwC for purchases after September 16, 1999 .

29

Class Members who do not submit acceptable Proofs of Claim will not share in the settlementproceeds but will nevertheless be bound by the settlement and the Order and Final Judgment ofthe Court dismissing this Action.

Putative Class Members who previously submitted requests for exclusion in connection with theoriginal Notice of Pendency will not be bound by any judgment to be entered herein .

Putative members of the Class with respect to the PwC Settlement who request exclusion fromthe Class with respect to the PwC Settlement will not be bound by the judgment with respect tothe PwC Settlement but, unless they previously excluded themselves from the Class inconnection with the prior Notice of Pendency, will nevertheless be bound by the Judgment withrespect to the Raytheon Defendants and should submit a Proof of Clam to share in the proceedsof the Raytheon Settlement .

Distributions will be made to Authorized Claimants after all claims have been processed andafter the Court has finally approved the settlement. If any funds remain in either Net SettlementFund by reason of un-cashed checks or otherwise, then, after the Claims Administrator has madereasonable and diligent efforts to have Class Members who are entitled to participate in thedistribution of the Net Settlement Fund cash their distributions, any balance remaining in the NetSettlement Fund one (1) year after the initial distribution of such funds shall be re-distributed toClass Members who have cashed their initial distributions and who would receive at least $10 .00from such re-distribution, after payment of any unpaid costs or fees incurred in administering theNet Settlement Fund for such re-distribution . If after six months after such re-distribution anyfunds shall remain in the Net Settlement Fund, then such balance shall be contributed to non-sectarian, not-for-profit, 501(c)(3) organization(s) designated by Plaintiff's Lead Counsel .

Lead Plaintiff, Defendants, their respective counsel, and all other Released Parties (exceptMilberg Weiss Bershad& Schulman LLP solely in its capacity as Escrow Agent as stated inparagraph 6 of the Stipulation) shall have no responsibility for or liability whatsoever for theinvestment or distribution of the Settlement Funds, the Net Settlement Funds, the Plan ofAllocation or the determination, administration, calculation, or payment of any Proof of Claim ornon-performance of the Claims Administrator, the payment or withholding of taxes owed by theSettlement Fund or any losses incurred in connection therewith .

SPECIAL NOTICE TO SECURITIES BROKERS AND OTHER NOMINEES

If you purchased Class A and/or Class B common stock of Raytheon Company during the periodfrom October 7, 1998 through October 12, 1999, inclusive, for the beneficial interest of a person

or organization other than yourself, the Court has directed that, WITHIN SEVEN (7) DAYS OFYOUR RECEIPT OF THIS SETTLEMENT NOTICE, you either (a) provide to the Claim s

Administrator the name and last known address of each person or organization for whom orwhich you purchased such stock during such time period, if you did not previously provide a listof your beneficial purchasers, or (b) request additional copies of this Settlement Notice and theProof of Claim form, which will be provided to you free of charge, and within seven (7) daysmail the Settlement Notice and Proof of Claim form directly to the beneficial owners of thesecurities referred to herein . If you choose to follow alternative procedure (b), the Court hasdirected that, upon such mailing, you send a statement to the Claims Administrator confirmin g

30

that the mailing was made as directed . You are entitled to reimbursement from the SettlementFund of your reasonable expenses actually incurred in connection with the foregoing, includingreimbursement of postage expense and the cost of ascertaining the names and addresses ofbeneficial owners . Those expenses will be paid upon request and submission of appropriatesupporting documentation. All communications concerning the foregoing should be addressed tothe Claims Administrator:

In re Raytheon Company Securities Litigationc/o Analytics Incorporated, Claims Administrator

Post Office Box 2003Chanhassen, MN. 55317-2003

(888) 300-231 9

Dated : Boston , Massachusetts2004

By Order of the Cou rtCLERK OF THE COURT

31

EXHIBIT 2


IN RE RAYTHEON COMPANY : Civil Action No .

SECURITIES LITIGATION : 99-12142-PBS


PROOF OF CLAIM AND RELEAS E

DEADLINE FOR SUBMISSION: , 200

IF YOU PURCHASED THE CLASS A AND/OR CLASS B COMMON STOCK OFRAYTHEON COMPANY ("RAYTHEON") DURING THE PERIOD FROMOCTOBER 7, 1998 THROUGH OCTOBER 12, 1999, INCLUSIVE ("CLASSPERIOD"), AND WERE ALLEGEDLY DAMAGED THEREBY, YOU ARE A"CLASS MEMBER" AND YOU MAY BE ENTITLED TO SHARE IN THESETTLEMENT PROCEEDS. (EXCLUDED FROM THE CLASS ARE THEDEFENDANTS, ALL OF THE OFFICERS, DIRECTORS, AND PARTNERSTHEREOF, MEMBERS OF THEIR IMMEDIATE FAMILIES, AND THEIR LEGALREPRESENTATIVES, HEIRS, SUCCESSORS OR ASSIGNS AND ANY ENTITY INWHICH ANY OF THE FOREGOING HAVE OR HAD A CONTROLLINGINTEREST. ALSO EXCLUDED FROM THE CLASS ARE THE PERSONS AND/ORENTITIES WHO PREVIOUSLY EXCLUDED THEMSELVES FROM THE CLASS INACCORDANCE WITH THE REQUIREMENTS SET FORTH IN THE NOTICE OFPENDENCY DATED SEPTEMBER 13, 2002 . )

IF YOU ARE A CLASS MEMBER, YOU MUST COMPLETE AND SUBMIT THISFORM IN ORDER TO BE ELIGIBLE FOR ANY SETTLEMENT BENEFITS.

YOU MUST COMPLETE AND SIGN THIS PROOF OF CLAIM AND MAIL IT BYFIRST CLASS MAIL, POSTMARKED NO LATER THAN , 200 TOTHE FOLLOWING ADDRESS :

In re Raytheon Company Securities Litigationc/o Analytics Incorporated, Claims Administrato r

Post Office Box 2003Chanhassen, MN. 55317-200 3

YOUR FAILURE TO SUBMIT YOUR CLA IM BY 1200 _ WILLSUBJECT YOUR CLAIM TO REJECTION AND PRECLUDE YOU FROMRECEIVING ANY PAYMENTS IN CONNECTION WITH THE SETTLEMENTS OF

THIS LITIGATION . DO NOT MAIL OR DELIVER YOUR CLAIM TO THE COURT

OR TO ANY OF THE PARTIES OR THEIR COUNSEL AS ANY SUCH CLAIMWILL BE DEEMED NOT TO HAVE BEEN SUBMITTED . SUBMIT YOUR CLAIM

ONLY TO THE CLAIMS ADMINISTRATOR.

1 . I purchased the Class A and/or Class B common stock of Raytheon Company

("Raytheon") during the period from October 7 , 1998 through October 12 , 1999, inclusive, and

was damaged thereby . (Do not submit this Proof of Claim if you did not purch ase Raytheon

Class A and/or Class B common stock during this period) .

2. By submitting this Proof of Claim, I state that I believe in good faith that I am a

Class Member as defined above and in the Notice of Proposed Settlement of Class Action,

Motion for Attorneys' Fees and Settlement Fairness Hearing (the "Settlement Notice"), or am

acting for such person; that I am not a Defendant in the Action or anyone excluded from the

Class; that I have read and understand the Settlement Notice; that I believe that I am entitled to

receive a share of the Net Settlement Fund; that I elect to participate in the proposed Settlement

described in the Settlement Notice; and that I have not submitted a request for exclusion. (If you

are acting in a representative capacity on behalf of a Class Member (e.g., as an executor,

administrator, trustee, or other representative), you must submit evidence of your current

authority to act on behalf of that Class Member. Such evidence would include, for example,

letters testamentary, letters of administration, or a copy of the trust documents.)

3 . I have set forth where requested below all relevant information with respect to

each purchase of Raytheon Class A and/or Class B common stock during the Class Period, and

each sale, if any, of such securities . I agree to furnish additional information (including

transactions in other Raytheon securities) to the Claims Administrator to support this claim if

requested to do so .

2

4. I have enclosed photocopies of the stockbroker's confirmation slips, stockbroker' s

statements, relevant portions of my tax returns or other documents evidencing each purchase ,

sale or retention of Raytheon Class A and/or Class B common stock listed below in support o f

my claim. (IF ANY SUCH DOCUMENTS ARE NOT IN YOUR POSSESSION, PLEASE

OBTAIN A COPY OR EQUIVALENT DOCUMENTS FROM YOUR BROKER OR TAX

ADVISOR BECAUSE THESE DOCUMENTS ARE NECESSARY TO PROVE AND

PROCESS YOUR CLAIM.)

5. I understand that the information contained in this Proof of Claim is subject t o

such verification as the Claims Administrator may request or as the Court may direct, and I agre e

to cooperate in any such verification . (The information requested herein is designed to provid e

the minimum amount of information necessary to process most simple claims . The Claims

Administrator may request additional information as required to efficiently and reliably calculate

your Recognized Claim . In some cases the Claims Administrator may condition acceptance o f

the claim based upon the production of additional information, including, where applicable ,

information concerning transactions in any derivatives of the subject securities such as options . )

6. Upon the occurrence of the Effective Date (as defined in the Settlement Notice )

my signature hereto will constitute a full and complete release, remise and discharge by me an d

my heirs, executors, administrators, predecessors, successors, and assigns (or, if I am submittin g

this Proof of Claim on behalf of a corporation, a partnership, estate or one or more other persons,

by it, him, her or them, and by its, his, her or their heirs, executors, administrators, predecessors ,

successors, and assigns ) of each of the "Released Parties" with respect to which the settlement

was approved, of all "Settled Claims," as defined in the Settlement Notice .

3

7 . NOTICE REGARDING ELECTRONIC FILES : Certain claimants with large

numbers of transactions may request, or may be requested, to submit information regarding thei r

transactions in electronic files. All Claimants MUST submit a manually signed paper Proof of

Claim form listing all their transactions whether or not they also submit electronic copies . If you

wish to file your claim electronically, you must contact the Claims Administrator at 1-(888) 300-

2319 or visit their website at www. raytheonsettlement. com to obtain the required file layout . No

electronic files will be considered to have been properly submitted unless the Claim s

Administrator issues to the Claimant a written acknowledgment of receipt and acceptance o f

electronically submitted data.

8. Statement of Claim

Name(s) of Beneficial Owner(s) :

Name

Joint Owner's Name (if any)

Address of Beneficial Owner(s) :

Street No.

City State Zip Code

( ) ( )Telephone No . (Day) Telephone No. (Night)

Taxpayer I .D. No. or Social Security No.

Check one :

4

IndividualJoint OwnersEstate

CorporationIRAOther (specify)

FOR RAYTHEON CLASS A COMMON STOCK :

9. At the close of business on October 6, 1998, I owned shares o f

Raytheon Class A common stock .

10. I made the following purchases of Raytheon Class A common stock during the

period from October 7, 1998 through October 12, 1999, inclusive. (Persons .who received

Raytheon Class A common stock during the Class Period other than by purchase are not eligibl e

to submit claims for those transactions .) :

Date(s) ofPurchase(List

Chronologically)(Month/Day/Year)

/ /

/ /

/ /

/ /

Number of Shares ofClass A CommonStock Purchased

Purchase Price PerShare of Class ACommon Stock

Aggregate Cost(includingcommissions , taxes,and fees)

11 . I made the following sales of Raytheon Class A common stock during the perio d

from October 7, 1998 through October 12, 1999, inclusive :

Date(s) of Sale

(ListChronologically)(Month/Day/Year)

/ /

/ /

Number of Shares of

Class A CommonStock Sold

Sale Price Per Share

of Class A CommonStock

Amount Received(net of commissions,taxes, and fees)

5

12. At the close of business on October 12, 1999, I still owned shares o f

Raytheon Class A common stock .

FOR RAYTHEON CLASS B COMMON STOCK:

13. At the close of business on October 6, 1998, I owned shares o f

Raytheon Class B common stock.

14. I made the following purchases of Raytheon Class B common stock during the

period from October 7, 1998 through October 12, 1999, inclusive. (Persons who received

Raytheon Class B common stock during the Class Period other than by purchase are not eligibl e

to submit claims for those transactions .) :

Date(s) ofPurchase(ListChronologically)(Month/Day/Year)

/ /

/ /

/ /

/ /

Number of Shares ofClass B CommonStock Purchased

Purchase Price PerShare of Class BCommon Stock

Aggregate Cost(includingcommissions, taxes,and fees)

15 . I made the following sales of Raytheon Class B common stock during the perio d

from October 7, 1998 through October 12, 1999, inclusive :

Date(s) of Sale Number of Shares of Sale Price Per Share(List Class B Common of Class B CommonChronologically) Stock Sold Stock

6

Amount Received(net of commissions,taxes, and fees)

(Month/Day/Year)

/ /

/ /

/ /

/ /

16. At the close of business on October 12, 1999, I still owned shares o f

Raytheon Class B common stock .

IF YOU NEED ADDITIONAL SPACE TO LIST YOUR TRANSACTIONS PHOTOCOPY THIS PAG E

17. Substitute Form W-9

Request for Taxpayer Identification Number :

Enter taxpayer identification number below for the Beneficial Owner(s). For most

individuals, this is your Social Security Number . The Internal Revenue Service ("I .R.S .")

requires such taxpayer identification number . If you fail to provide this information, your claim

may be rejected.

Social Security Number (for individuals) o r

Taxpayer Identification Number(for estates, trusts, corporations, etc . )

18. Certification

UNDER THE PENALTIES OF PERJURY, I (WE) CERTIFY THAT ALL OF THE

INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE .

I (We) certify that I am (we are) NOT subject to backup withholding under the provision s

of Section 3406 (a)(I)(c) of the Internal Revenue Code because: (a) I am (We are) exempt from

$ $

$ $

$ $

$ $

7

backup withholding, or (b) I (We) have not been notified by the I .R.S . that I am (we are) subjec t

to backup withholding as a result of a failure to report all interest or dividends, or (c) the I .R.S.

has notified me (us) that I am (we are) no longer subject to backup withholding .

NOTE: If you have been notified by the I.R.S. that you are subject to backup withholding, ple ase

strike out the language that you are not subject to backup withholding in the certification above .

Signature of Claimant (If this claim is beingmade on behalf of Joint Claimants, then eachmust sign)

(Signature)

(Signature)

(Capacity of person(s) signing, e.g. beneficialpurchaser(s), executor, administrator, trustee,etc.)

Date :

THIS PROOF OF CLAIM MUST BE SUBMITTED NO LATER THAN

2004, AND MUST BE MAILED TO :

In re Raytheon Company Securities Litigation

c/o Analytics Incorporated, Claims Administrato rPost Office Box 2003

Chanhassen, MN. 55317-2003

A Proof of Claim received by the Claims Administrator shall be deemed to have bee n

submitted when posted, if mailed by , 200_, and if a postmark is indicated o n

the envelope and it is mailed first class, and addressed in accordance with the above instructions .

In all other cases, a Proof of Claim shall be deemed to have been submitted when actuall y

received by the Claims Administrator .

You should be aware that it will take a significant amount of time to process fully all of

the Proofs of Claim and to administer the Settlement . This work will be completed as promptly

8

as time permits, given the need to investigate and tabulate each Proof of Claim . Please notify the

Claims Administrator of any change of address .

REMINDER CHECKLIST

1 . ❑ Please be sure to sign this Proof of Claim on page [_] . If this Proof of Claim issubmitted on behalf of joint claimants, then both claimants must sign .

2 . ❑ Please remember to attach supporting documents . Do NOT send any stoc k

certificates . Keep copies of everything you submit .

3 . ❑ Do NOT use highlighter on the Proofof Claim or an y supporting documents .

4. ❑ If you move after submitting this Proof of Claim please notify the claimsAdministrator of the change in your address .

NOTE RECEIPT ACKNOWLEDGMENT NEEDE D

The Claims Administrator will send a written confirmation of its receipt of your Proof of Claim.

Do not assume your claim is submitted until you receive written confirmation of its receipt .

Your claim is not deemed filed until the Claims Administrator sends you written confirmation o f

its receipt of your Proof of Claim . If you do not receive an acknowledgement postcard within

thirty (30) days of your mailing the Proof of Claim, then please call the Claims Administrato r

toll free at 1-888-300-2319

9

EXHIBIT 3


IN RE RAYTHEON COMPANY : Civil Action No .SECURITIES LITIGATION : 99-12142-PB S

SUMMARY NOTICE OF PROPOSED SETTLEMENTS OF CLASS ACTION,AND SETTLEMENT HEARING

TO: ALL PERSONS OR ENTITIES WHO PURCHASED CLASS A AND/OR CLASS BCOMMON STOCK OF RAYTHEON COMPANY DURING THE PERIOD FRO MOCTOBER 7, 1998 THROUGH OCTOBER 12, 1999, INCLUSIVE, AND WHOWERE ALLEGEDLY DAMAGED THEREBY (THE "CLASS") .

YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civil

Procedure and an Order of the Court, that settlements for a total of $460 million, including $26 0

million in cash, and $200 million in warrants, have been proposed in the above-captioned

certified class action . A hearing will be held before the Honorable Patti B . Saris in the John

Joseph Moakley United States Courthouse, 1 Courthouse Way, Boston, Massachusetts 02210, a t

_.m., on , 2004 to determine whether the proposed settlements

should be approved by the Court as fair, reasonable, and adequate, and to consider Plaintiff' s

Lead Counsel's motion for an award of attorneys' fees and for reimbursement of expenses .

IF YOU ARE A MEMBER OF THE CLASS DESCRIBED ABOVE, YOUR RIGHTS

WILL BE AFFECTED AND YOU MAY BE ENTITLED TO SHARE IN THE SETTLEMEN T

PROCEEDS. If you have not yet received the full printed Notice of Proposed Settlement o f

Class Action, Motion for Attorneys' Fees and Settlement Fairness Hearing and a Proof of Clai m

form, you may obtain copies of these documents by identifying yourself as a member of th e

Class and by contacting :

In re Raytheon Company Securities Litigationc/o Analytics Incorporated, Claims Administrato r

Post Office Box 2003

Chanhassen, MN . 55317-2003(888) 300-231 9

www.raytheonsettlement.com

Inquiries, other than requests for the forms of Settlement Notice and Proof of Claim, may b e

made to Plaintiffs' Lead Counsel :

Salvatore J. Graziano, Esq .MILBERG WEISS BERSHAD & SCHULMAN LLP

One Pennsylvania PlazaNew York, NY 10119-0165

(212) 594-5300

To participate in the Settlement proceeds, you must submit a Proof of Claim no later tha n

200_. If you are a Class Member and do not submit a proper Proof o f

Claim, you will not share in the Settlement proceeds but you nevertheless will be bound by th e

Order and Final Judgment of the Court. Any objections to the proposed settlement must be filed

with the Court and served upon counsel no later than 2004 .

Further information may be obtained by directing your inquiry in writing to the Claim s

Administrator .

DO NOT CONTACT THE COURT

By Order of The Court

2

EXHIBIT B

UNITED STATES DISTRICT COURTDISTRICT OF MASSACHUSETT S

IN RE RAYTHEON COMPANYSECURITIES LITIGATION


Civil Action No .99-12142-PB S

ORDER AND FINAL JUDGMENT

On the day of 2004, a hearing was held before this Court to

determine: (1) whether the terms and conditions of the Stipulation and Agreement of Settlement

dated August _, 2004 (the "Stipulation") are fair, reasonable and adequate for the settlement of

all claims asserted by Lead Plaintiff and the Class against the Raytheon Defendants and

PricewaterhouseCoopers LLP ("PwC") in the Complaint now pending in this Court under the

above caption, including the release of the Defendants and the Released Parties, and should be

approved ; (2) whether judgment should be entered dismissing the Complaint on the merits and

with prejudice in favor of the Defendants and as against all persons or entities who are members

of the Class herein who have not requested exclusion therefrom ; (3) whether to approve the Plan

of Allocation as a fair and reasonable method to allocate the settlement proceeds among the

members of the Class ; and (4) whether and in what amount to award Plaintiffs' Counsel fees and

reimbursement of expenses . The Court having considered all matters submitted to it at the

hearing and otherwise ; and it appearing that a notice of the hearing substantially in the form

approved by the Court was mailed to all persons or entities reasonably identifiable, wh o

purchased the Class A and/or Class B common stock of Raytheon Company ("Raytheon") durin g

the period from October 7, 1998 through October 12, 1999, inclusive (the "Class Period"), as

shown by the records of Raytheon's transfer agent and the records compiled by the Notic e

Administrator in connection with its previous mailing of the Notice of Pendency, at th e

respective addresses set forth in such records, except those persons or entities excluded from th e

definition of the Class or who previously excluded themselves from the Class, and that a

summary notice of the hearing substantially in the form approved by the Court was published i n

the national edition of The Wall Street Journal pursuant to the specifications of the Court ; and

the Court having considered and determined the fairness and reasonableness of the award o f

attorneys' fees and expenses requested ; and all capitalized terms used herein having the

meanings as set forth and defined in the Stipulation .

NOW, THEREFORE, IT IS HEREBY ORDERED THAT :

The Court has jurisdiction over the subject matter of the Action, the Lead

Plaintiff, all Class Members, and the Defendants .

2 . The Court finds that the prerequisites for a class action under Federal Rules o f

Civil Procedure 23 (a) and (b)(3) have been satisfied in that: (a) the number of Class Members i s

so numerous that joinder of all members thereof is impracticable ; (b) there are questions of law

and fact common to the Class ; (c) the claims of the Class Representatives are typical of th e

claims of the Class they seek to represent ; (d) the Class Representatives have and will fairly and

adequately represent the interests of the Class ; (e) the questions of law and fact common to the

members of the Class predominate over any questions affecting only individual members of th e

Class; and (f) a class action is superior to other available methods for the fair and efficien t

adjudication of the controversy .

Pursuant to Rule 23 of the Federal Rules of Civil Procedure and for the purpose s

of the Settlements this Court hereby finally certifies this action as a class action on behalf of al l

2

persons or entities who purchased Class A and/or Class B common stock of Raytheon Company

during the period from October 7, 1998 through October 12, 1999, inclusive, and who wer e

allegedly damaged thereby . Excluded from the Class are the Defendants, all of the officers ,

directors, and partners thereof, members of their immediate families, and their lega l


had a controlling interest. Also excluded from the Class are the persons and/or entities wh o

previously excluded themselves from the Class in accordance with the requirements set forth i n

the Notice of Pendency, as listed on Exhibit 1 annexed hereto . Also excluded from the Class

with respect to the PwC Settlement are the persons and/or entities who excluded themselves from

the Class with respect to the PwC Settlement in accordance with the requirements set forth in th e

Settlement Notice, as listed on Exhibit 2 annexed hereto .

4. Notice of the Proposed Settlements was given to all Class Members who could b e

identified with reasonable effort . The form and method of notifying the Class of the terms and

conditions of the proposed Se tt lements met the requirements of Rule 23 of the Federal Rules o f

Civil Procedure , Section 21D(a)(7) of the Securities Exchange Act of 1934, 15 U.S.C. 78u-

4(a)(7) as amended by the Private Securities Litigation Reform Act of 1995, due process, an d

any other applicable law, constituted the best notice practicable under the circumstances, and

constituted due and sufficient notice to all persons and entities entitled thereto .

The Settlements are approved as fair, reasonable and adequate to the Clas s

Members, and the Class Members and the parties are directed to consummate the Settlements i n

accordance with the terms and provisions of the Stipulation .

3

6. The Settlement Warrants are to be issued in exchange for bona fide outstandin g

claims; all parties to whom it is proposed to issue such securities have had the right to appear at

the hearing on the fairness of the Settlement; and the Settlement Warrants are therefore

unrestricted and freely tradable exempted securities pursuant to Section 3(a)(10) of the Securitie s

Act of 1933, 15 U.S .C. § 77c(a)(10) .

7. The Complaint, which the Court finds was filed on a good faith basis i n

accordance with the Private Securities Litigation Reform Act and Rule 11 of the Federal Rules o f

Civil Procedure based upon all publicly available information, is hereby dismissed wit h

prejudice and without costs .

Members of the Class and the successors and assigns of any of them, are hereby

permanently barred and enjoined from instituting, commencing or prosecuting, either directly or

in any other capacity, the Settled Claims against the Released Parties . "Settled Claims" mean s

any and all claims, debts, demands, rights or causes of action or liabilities whatsoever (including ,

but not limited to, any claims for damages, interest, attorneys' fees, expert or consulting fees, an d

any other costs, expenses , liability or relief whatsoever), whether based on federal, state, local ,

statutory or common law or any other law, rule or regulation, whether fixed or contingent ,

accrued or un-accrued, liquidated or un-liquidated, foreseen or not foreseen, raised or not raised ,

matured or un-matured, at law or in equity, whether direct, class or individual in nature ,

including both known claims and Unknown Claims, (i) that have been asserted in the Action b y

the Class Members or any of them against any of the Released Parties, or (ii) that could have

been asserted in any forum by the Class Members or any of them against any of the Release d

Parties which (a) arise out of, relate in any way to, or are based upon the allegations ,

transactions, facts, matters or occurrences, representations or omissions involved, set forth, o r

4

referred to in the Complaint or Action, and relate to the purchase, sale, or holding of shares of

Class A and/or Class B common stock of Raytheon Company during the Class Period, or (b) that

arise out of or relate in any way to the defense or settlement of the Action (except for claims to

enforce the Settlement) . "Released Parties" means the Released Raytheon Parties, the Released

Individual Defendant Parties and the Released PwC Parties . "Released Individual Defendant

Parties" means any and all of the Individual Defendants, and their past, present, or future

partners, agents, attorneys, employees, heirs, successors in interest or assigns, administrators,

executors and personal representatives, and shall include any insurer who contributes to or

reimburses Raytheon and/ or the Individual Defendants for a portion of its or their contribution

to the Raytheon Settlement and who receives a release from the Individual Defendants in

connection with the Settlement. Released Individual Defendant Parties does not mean or include

the Released Raytheon Parties or the Released PwC Parties . "Released Raytheon Parties" means

Raytheon and any and all of its past, present and future, direct and indirect subsidiaries, parents,

affiliates, successors and predecessors, and each of their respective officers, directors, agents,

employees, assigns, partners, principals, divisions, representatives, affiliates, attorneys, advisors,

investment advisors, accountants and any person, firm, trust, corporation, officer, director or

other individual or entity in which Raytheon has a controlling interest or which is related to or

affiliated with Raytheon, and shall include any insurer who contributes to or reimburses

Raytheon for a portion of its contribution to the Raytheon Settlement and who receives a release

from Raytheon in connection with the Settlement . Released Raytheon Parties does not mean or

include the Released Individual Defendant Parties or the Released PwC Parties . "Released PwC

Parties" means PricewaterhouseCoopers LLP and all of its past, present and future parent

entities, direct and indirect subsidiaries, affiliates, predecessors (including, without limitation ,

5

Coopers & Lybrand, L.L.P. and Price Waterhouse LLP) and successors, and each of their

respective past, present and future directors, officers, partners, principals, employees, agents ,

representatives, affiliates, advisers, investment advisers, insurers, servants, accountants attorney s

and any person, firm, trust, corporation, officer, director or other individual or entity in whic h

PwC has or had a controlling interest or which is or was related to or affiliated with PwC, an d

their respective representatives, heirs, successors in interest and assigns. Released PwC Parties

does not mean or include the Released Individual Defendant Parties or the Released Raytheo n

Parties . The Settled Claims are hereby compromised, settled, released, discharged and dismissed

as against the Released Parties on the merits and with prejudice by virtue of the proceeding s

herein and this Order and Final Judgment .

9. The Defendants and the successors and assigns of any of them, are hereby

permanently barred and enjoined from instituting, commencing or prosecuting, either directly o r

in any other capacity, the "Settled Defendants' Claims" against Alan G. Hevesi, Comptroller o f

the State of New York, NYSCRF, the New York State and Local Retirement Systems, and the

past, present , or future officers and employees of any of the foregoing and their predecessors ,

successors and assigns, and the heirs, administrators, executors and personal representatives of

each (the "Released Lead Plaintiff Parties") or any of the Class Members or their attorneys .

"Settled Defendants' Claims" means the Settled Raytheon Defendants' Claims and the Settle d

PwC Defendants' Claims . "Settled Raytheon Defendants' Claims" means any and all claims,

rights or causes of action or liabilities whatsoever, whether based on federal, state, local ,

statutory or common law or any other law, rule or regulation, including both known claims an d

Unknown Claims, that have been or could have been asserted in the Action or any forum by th e

Released Raytheon Parties and the Released Individual Defendant Parties, or any of them ,

6

against any of the Released Lead Plaintiff Parties, any Class Members or their attorneys, whic h

arise out of or relate in any way to the institution, prosecution, or settlement of the Actio n

(except for claims to enforce the Settlement) . "Settled PwC Defendants' Claims" means any and

all claims, rights or causes of action or liabilities whatsoever, whether based on federal, state,

local, statutory or common law or any other law, rule or regulation, including both known claims

and Unknown Claims, that have been or could have been asserted in the Action or any forum b y

the Released PwC Parties or any of them against any of the Released Lead Plaintiff Parties, any

Class Members or their attorneys, which arise out of or relate in any way to the institution ,

prosecution, or settlement of the Action (except for claims to enforce the Settlement) . The

Settled Defendants' Claims of all the Released Parties are hereby compromised, settled, released ,

discharged and dismissed on the merits and with prejudice by virtue of the proceedings herein

and this Order and Final Judgment.

10. "Barred Claims" means any claim(s) for contribution, indemnity, equitabl e

indemnity, reimbursement, or any other claim, however denominated, by which the claiman t

seeks to recover losses based upon, arising out of, relating to, or in connection with, the Settle d

Claims of the Class or any Class Member, whether arising under state, federal or common law

(hereinafter, the `Barred Claims") . The Court hereby permanently bars and enjoins all Barre d

Claims (a) against the Released Parties ; (b) by the Released Parties against any person or entity

other than a person or entity (excluding Released Parties) whose liability has been extinguished

by Settlement, except that nothing in this Order shall affect any of the Released Parties' right s

with respect to their respective insurance carriers .

7

11 . Neither this Order and Final Judgment, the Stipulation, nor any of its terms and

provisions, nor any of the negotiations or proceedings connected with it, nor any of th e

documents or statements referred to therein shall be :

(a) offered or received in any legal proceeding against any of the Defendant s

as evidence of or construed as or deemed to be evidence of any presumption, concession, o r

admission by any of the Defendants with respect to the truth of any fact alleged by any of the

plaintiffs or the validity of any claim that has been or could have been asserted in the Action o r

in any litigation, or the deficiency of any defense that has been or could have been asserted in th e

Action or in any litigation , or of any liability, negligence , fault, or wrongdoing of any of the

Defendants ;

(b) offered or received in any legal proceeding against any of the Defendant s

as evidence of a presumption, concession or admission of any fault, misrepresentation o r

omission with respect to any statement or written document approved or made by any Defendant;

(c) offered or received in any legal proceeding against any of the Defendant s

as evidence of a presumption, concession or admission with respect to any liability, negligence ,

fault or wrongdoing, or in any way referred to for any other reason as against any of the

Defendants, in any other civil, criminal or administrative action or proceeding, other than such

proceedings as may be necessary to effectuate the provisions of this Stipulation ; provided,

however, that if this Stipulation is approved by the Court, Defendants may refer to it to effectuate

the liability protection granted them hereunder;

8

(d) construed in any legal proceeding against any of the Defendants as a n

admission or concession that the consideration to be given hereunder represents the amoun t

which could be or would have been recovered after trial ; or

(e) construed as or received in evidence in any legal proceeding as a n

admission, concession or presumption against any of the Released Lead Plaintiff Parties or an y

of the Class Members that any of their claims are without merit, or that any defenses asserted b y

the Defendants have any merit, or that damages recoverable under the Complaint would not hav e

exceeded the Gross Settlement Funds .

12. The Plan of Allocation is approved as fair and reasonable, and Plaintiff's Lead

Counsel and the Claims Administrator are directed to administer the Stipulation in accordance

with its terms and provisions .

13 . The Court finds that all parties and their counsel have complied with eac h

requirement of Rule 11 of the Federal Rules of Civil Procedure as to all proceedings herein .

14. Plaintiffs Lead Counsel are hereby awarded [ %] of the Gross Cash

Settlement Funds and the Settlement Warrants in fees, which sums the Court finds to be fair and

reasonable, and $ from the Gross Cash Settlement Funds in reimbursement o f

expenses, which expenses shall be paid to Plaintiff's Lead Counsel from the Gross Cas h

Settlement Funds with interest from the date such Settlement Fund was funded to the date o f

payment at the same net rate that the Gross Cash Settlement Funds earn . The award of attorneys '

fees shall be allocated among Plaintiffs' Counsel in a fashion which, in the opinion of Plaintiff' s

Lead Counsel, fairly compensates Plaintiffs' Counsel for their respective contributions in the

prosecution of the Action .

9

15. In making this award of attorneys' fees and reimbursement of expenses to be pai d

from the Gross Settlement Funds, the Court has considered and found that :

(a) the settlements have created funds of $260 million in cash that is already

on deposit, plus interest thereon, and $200 million in warrants, that thousands of Class Member s

who submit acceptable Proofs of Claim will benefit from the Settlement created by Plaintiff' s

Lead Counsel ;

(b) Over copies of the Settlement Notice were disseminated t o

putative Class Members indicating that Plaintiff's Lead Counsel were moving for attorneys' fees

in the amount of nine percent (9%) of each of the Gross Cash Settlement Funds and Gross

Settlement Warrants, and for reimbursement of expenses in an amount not to exceed

approximately $8,250,000 and [only _ ] [no] objections were filed against the terms of the

proposed Settlement or the fees and expenses requested by Plaintiffs' Counsel contained in th e

Settlement Notice ;

(c) Plaintiff's Lead Counsel have conducted the litigation and achieved the

Settlement with skill, perseverance and diligent advocacy ;

(d) The action involves complex factual and legal issues and was activel y

prosecuted and defended over five years and, in the absence of a settlement, would involv e

further lengthy proceedings with uncertain resolution of the complex factual and legal issues ;

(e) Had Plaintiff's Lead Counsel not achieved the Settlement there would

remain a significant risk that Lead Plaintiff and the Class may have recovered less or nothin g

from the Defendants ; and

10

(f) The amount of attorneys' fees awarded and expenses reimbursed from the

Settlement proceeds are fair and reasonable in comparison with awards in similar cases .

16. Lead Plaintiff is hereby awarded from the Gross Cash Settlement Funds the su m

of $ for reimbursement of its reasonable costs and expenses directly relating to

its representation of the Class, plus interest on such expenses (at the same net interest rate as is

earned on the Gross Cash Settlement Funds from the date the Gross Cash Settlement Funds ar e

deposited into escrow to the date of payment) .

17 . Exclusive jurisdiction is hereby retained over the parties and the Class Member s

for all matters relating to this Action, including the administration, interpretation, effectuation or

enforcement of the Stipulation and this Order and Final Judgment, and including any applicatio n

for fees and expenses incurred in connection with administering and distributing the settlement

proceeds to the members of the Class .

18. Without further order of the Court, the parties may agree to reasonable extensions

of time to carry out any of the provisions of the Stipulation .

19. There is no just reason for delay in the entry of this Order and Final Judgment and

immediate entry by the Clerk of the Court is expressly directed pursuant to Rule 54 (b) of the

Federal Rules of Civil Procedure .

Dated: Boston, Massachusetts.2004

Honorable Patti B . SarisUnited States District Judge

11

EXHIBIT C

WARRANT AGREEMENT

Dated as of

[ ], 2004

between

RAYTHEON COMPANY

and

AMERICAN STOCK TRANSFER & TRUST COMPANY ,

as Warrant Agen t

Warrants forCommon Stock of

Raytheon Company

[[NYLIT :2228868v6:4046W :09/19/03-07 :29 P11

TABLE OF CONTENTS

Page

ARTICLE I Definitions

SECTION 1 .01 . Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ISECTION 1.02 . Other Defini tions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3SECTION 1.03 . Rules of Construction . Unless the text otherwise

requires : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARTICLE II Warrant Certificates

SECTION 2.01 . Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4SECTION 2.02 . Execution and Countersignature . Two Officers shall

sign the Warrant Certificates for the Company bymanual or facsimile signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

SECTION 2.03 . Certificate Register . The Warrant Agent shall keep aregister (the "Certificate Register") of the Warrants(and Warrant Certificates, if applicable) and of thei rtransfer and exchange . The Certificate Register shallshow the names and addresses of the respective Holdersand the date and number of Warrants owned by suchHolders (as evidenced on the face of each of theWarrant Certificates, if applicable). The Company andthe Warrant Agent may deem and treat the Person inwhose name a Warrant is registered as the absoluteowner of such Warrant for all purposes whatsoever andneither the Company nor the Warrant Agent shall b eaffected by notice to the contrary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

SECTION 2.04 . Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6SECTION 2.05 . Certificated Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7SECTION 2.06. Replacement Certificates . If a mutilated Warrant

Certificate is surrendered to the Warrant Agent or if theHolder of a Warrant Certificate claims that the WarrantCertificate has been lost, destroyed or wrongfully taken ,the Company shall issue and the Warrant Agent shal lcountersign a replacement Warrant Certificate if thereasonable requirements of the Warrant Agent and ofSection 8-405 of the Uniform Commercial Code as i neffect in the State of New York are met. If required bythe Warrant Agent or the Company, such Holder shal lfurnish an indemnity bond sufficient in the judgment o fthe Company and the Warrant Agent to protect the

Company and the Warrant Agent from any loss whic heither of them may suffer if a Warrant Certificate isreplaced. The Company and the Warrant Agent may

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charge the Holder for their expenses in replacing a

Warrant Certificate . Every replacement WarrantCertificate evidences an additional obligation of th e

Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8SECTION 2 .07 . Outstanding Warrants . Warrants outstanding at any

time are all Warrants evidenced on all WarrantCertificates authenticated by the Warrant Agent exceptfor those canceled by it and those delivered to it forcancellation . A Warrant does not cease to beoutstanding because an Affiliate of the Company holdsthe Warrant. A Warrant ceases to be outstanding if theCompany holds the Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

SECTION 2.08 . Cancellation. (a) In the event the Company shal lpurchase or otherwise acquire Certificated Warrants,the same shall thereupon be delivered to the WarrantAgent for cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

SECTION 2.09 . CUSIP Numbers. The Company in issuing theWarrants may use "CUSIP" numbers (if then generallyin use) and, if so, the Warrant Agent may use "CUSIP"numbers in notices as a convenience to Holders ;provided, however, that any such notice may state thatno representation is made as to the correctness of suchnumbers either as printed on the Warrant Certificates oras contained in any notice and that reliance may beplaced only on the other identification numbers printe don the Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ARTICLE III Exercise Terms

SECTION 3 .01 . Exercise. Each Warrant shall initially entitle the Holderthereof, subject to adjustment pursuant to the terms ofthis Agreement, to purchase one share of CommonStock for each Warrant evidenced thereby, at anexercise price (the "Exercise Price") of $37 .50 pershare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

SECTION 3 .02 . Exercise Periods . (a) Subject to the terms andconditions set forth herein, the Warrants shall beexercisable at any time and from time to time on anyBusiness Day after the Common Shelf RegistrationStatement is declared effective by the SEC; provided,however, that holders of Warrants will be able toexercise their Warrants only if (i) the Common ShelfRegistration Statement relating to the Warrant Shares iseffective and (ii) the Warrant Shares are qualified forsale or exempt from qualification under the applicablesecurities laws of the states or other jurisdictions inwhich such holders reside . The Company covenants

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SECTION 3.03

SECTION 3 .04 .

SECTION 3 .05 .

that it will, in good faith and as expeditiously asreasonably possible, use its reasonable best efforts t osecure and maintain such registration and qualification . . . . . . . . . . . . . . . . . . . . . . . .9Expiration. A Warrant shall terminate and become voi das of the earlier of (i) the close of business on theExpiration Date or (ii) the date such Warrant i sexercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Manner of Exercise . Warrants may be exercised upon(i) surrender to the Warrant Agent at the office of theWarrant Agent of the related Warrant Certificate,together with the form of election attached thereto topurchase Common Stock on the reverse thereof dulyfilled in and signed by the Holder thereof, an d(ii) payment to the Warrant Agent, for the account ofthe Company, of the Exercise Price for each WarrantShare or other security issuable upon the exercise ofsuch Warrants then exercised . Such payments shall bemade by certified or official bank check payable to theorder of the Company or by wire transfer of funds to anaccount designated by the Company for such purpose .Subject to Section 3.02, the rights represented by theWarrants shall be exercisable at the election of theHolders thereof either in full at any time or from time totime in part and in the event that a Warrant Certificateis surrendered for exercise of less than all the Warrantsrepresented by such Warrant Certificate at any timeprior to the Expiration Date, a new Warrant Certificaterepresenting the remaining Warrants shall be issued .The Warrant Agent shall countersign and deliver therequired new Warrant Certificates, and the Company, atthe Warrant Agent's request, shall supply the WarrantAgent with Warrant Certificates duly signed on behalfof the Company for such purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Issuance of Warrant Shares . Subject to Section 2 .05,upon the surrender of Warrant Certificates and paymentof the per share Exercise Price, as set forth i nSection 3 .04, the Company shall issue and cause the

Warrant Agent or, if appointed, a transfer agent for the

Common Stock ("Stock Transfer Agent") tocountersign and deliver to or upon the written order of

the Holder and in such name or names as the Holdermay designate, a certificate or certificates for thenumber of full Warrant Shares so purchased upon the

exercise of such Warrants or other securities to which it

is entitled, registered or otherwise, to the Person or

Persons entitled to receive the same (including any

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[[NYLIT2228868v6 :4046W :09/19/03-07 :29 p]]

depositary institution so designated by a Holder),together with cash as provided in Section 3 .06 inrespect of any fractional Warrant Shares otherwiseissuable upon such exercise. Such certificate orcertificates shall be deemed to have been issued andany Person so designated to be named therein shall bedeemed to have become a holder of record of suchWarrant Shares as of the date of the surrender of suchWarrant Certificates and payment of the per shareExercise Price, as aforesaid ; provided, however, that if,at such date, the transfer books for the Warrant Sharesshall be closed, the certificates for the Warrant Sharesin respect of which such Warrants are then exercisedshall be issuable as of the date on which such booksshall next be opened and until such date the Companyshall be under no duty to deliver any certificates forsuch Warrant Shares ; provided further, however, thatsuch transfer books, unless otherwise required by law,shall not be closed at any one time for a period longe rthan 20 calendar days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

SECTION 3.06 . Fractional Warrant Shares . The Company shall not b erequired to issue fractional Warrant Shares on theexercise of Warrants . If more than one Warrant shallbe exercised in full at the same time by the sameHolder, the number of full Warrant Shares which shallbe issuable upon such exercise shall be computed onthe basis of the aggregate number of Warrant Shareswhich may be purchasable pursuant thereto . If anyfraction of a Warrant Share would, except for theprovisions of this Section 3 .06, be issuable upon theexercise of any Warrant (or specified portion thereof),the Company shall pay an amount in cash equal to theCurrent Market Value per Warrant Share, as determinedon the day immediately preceding the date the Warrantis presented for exercise, multiplied by such fraction ,computed to the nearest whole cent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

SECTION 3 .07 . Reservation of Warrant Shares . The Company shall atall times keep reserved out of its authorized shares ofCommon Stock a number of shares of Common Stocksufficient to provide for the exercise of all outstandingWarrants . The registrar for the Common Stock (the"Registrar") shall at all times until the Expiration Datereserve such number of authorized shares as shall berequired for such purpose . The Company will keep acopy of this Agreement on file with the Stock TransferAgent. The Company will supply such Stock Transfe r

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Agent with duly executed stock certificates for suchpurpose and will itself provide or otherwise make

available any cash which may be payable as provided in

Section 3 .06. The Company will furnish to such StockTransfer Agent a copy of all notices of adjustments

(and certificates related thereto) transmitted to eac hHolder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 1

ARTICLE IV Adjustment and Notice Provisions

SECTION 4.01 . Adjustment of Exercise Price . Subject to the provisionsof this Article IV, the Exercise Price in effect from tim eto time shall be subject to adjustment as follows : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I I

SECTION 4.02 . No Adjustment to Exercise Price. No adjustment in theExercise Price in accordance with the provisions ofparagraph (a) of Section 4 .01 hereof need be made i fsuch adjustment would amount to a change in suchExercise Price of less than ten cents ; provided,however , that the amount by which any adjustment i snot made by reason of the provision of this Section 4 .02shall be carried forward and taken into account at th etime of any subsequent adjustment in the Exercis ePrice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1

SECTION 4.03 . Adjustment to Number of Shares . Upon eachadjustment of the Exercise Price pursuant to Paragrap h(a) of Section 4 .01, each Warrant shall thereupo nevidence the right to purchase that number of shares o fCommon Stock (calculated to the nearest hundredth ofa share) obtained by multiplying the number of sharesof Common Stock purchasable immediately prior tosuch adjustment upon exercise of the Warrant by theExercise Price in effect immediately prior to suc hadjustment and dividing the product so obtained by the

Exercise Price in effect immediately after suchadjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2

SECTION 4.04 . Reorganizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2SECTION 4.05 . Exercise Price Not Less Than Par Value. In no event

shall the Exercise Price be adjusted below the par valueper share of the Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3

SECTION 4.06 . Notice of Certain Action . In the event the Companyshall : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3

SECTION 4 .07 . Notice of Adjustments . Whenever any adjustment is

made pursuant to this Article IV, the Company shallcause notice of such adjustment to be mailed to the

Warrant Agent within fifteen days thereafter, such

notice to include in reasonable detail (i) the events

precipitating the adjustment, (ii) the computation of any

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adjustments, and (iii) the Exercise Price, the number ofshares or the securities or other property purchasableupon exercise of each Warrant after giving effect tosuch adjustment . The Warrant Agent shall be entitledto rely on such notice and any adjustment thereincontained and shall not be deemed to have knowledgeof any such adjustment unless and until it shall havereceived such notice . The Warrant Agent shall withinfifteen days after receipt of such notice from theCompany (which notice must specifically direct theWarrant Agent to perform the mailing) cause a similarnotice to be mailed to each Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 4.08 . Adjustment to Warrant Certificate . The form ofWarrant Certificate need not be changed because of anyadjustment made pursuant to this Article IV, andWarrant Certificates issued after such adjustment maystate the same Exercise Price and the same number ofshares of Common Stock issuable upon exercise of theWarrants as are stated in the Warrant Certificatesinitially issued pursuant to this Agreement . TheCompany, however, may at any time in its solediscretion make any change in the form of WarrantCertificate that it may deem appropriate to give effectto such adjustments and that does not affect thesubstance of the Warrant Certificate, and any WarrantCertificate thereafter issued or countersigned, whetherin exchange or substitution for an outstanding WarrantCertificate or otherwise, may be in the form as s ochanged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ARTICLE V Registration Rights

SECTION 5 .01 . Effectiveness of Registration Statement . Subject toSection 5.02, no later than 5 Business Days from IssueDate, the Company shall use its reasonable best effortsto cause to be filed pursuant to Rule 415 (or anysuccessor provision) of the Securities Act, and shall useits reasonable best efforts to cause to be effective, ashelf registration statement covering the issuance ofWarrant Shares to the Holders upon exercise of theWarrants by the Holders thereof (the "Common ShelfRegistration Statement") . The Company shall use itsreasonable best efforts to cause the Common ShelfRegistration Statement to remain effective until theearlier of (i) such time as all Warrants have beenexercised and (ii) the Expiration Date . The Companyshall promptly inform the Warrant Agent of any change

. . .13

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in the status of the effectiveness or availability of th eCommon Shelf Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

SECTION 5.02 . Suspension. The Company shall be entitled to suspendthe availability of the Common Shelf RegistrationStatement from time to time during any consecutive365-day period for a total not to exceed 60 days duringsuch consecutive 365-day period if the Boarddetermines in the exercise of its reasonable judgmentthat such suspension is necessary in order to complywith applicable laws and provides notice that suchdetermination was made to the Holders of the Warrants ;provided, however , that (i) if the Company exercisessuch right in the 45 consecutive-day periodimmediately prior to the Expiration Date, the ExpirationDate shall be delayed by the number of days duringsuch 45-day period for which the availability of theCommon Shelf Registration Statement was suspendedand (ii) in no event shall the Company be required todisclose the business purpose for such suspension if theCompany determines in good faith that such businesspurpose must remain confidential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

SECTION 5.03 . Blue Sky. The Company shall use its best efforts toregister or qualify the Warrant Shares under allapplicable securities laws, blue sky laws or similar lawsof all jurisdictions in the United States in which anyholder of Warrants may or may be deemed to purchaseWarrant Shares upon the exercise of Warrants and shalluse its best efforts to maintain such registration orqualification for so long as it is required to cause theCommon Shelf Registration Statement to remaineffective under the Securities Act pursuant toSection 5.01 ; provided , however , that the Companyshall not be required to qualify generally to do businessin any jurisdiction where it would not otherwise berequired to qualify but for this Section 5 .03 or to takeany action which would subject it to general service ofprocess or to taxation in any such jurisdiction where i tis not then so subject . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

SECTION 5 .04 . Additional Acts . If the issuance or sale of any

Common Stock issuable upon the exercise of theWarrants requires registration or approval of anygovernmental authority (other than the registrationrequirements under the Securities Act), or the taking ofany other action under the laws of the United States orany political subdivision thereof before such securitiesmay be validly offered or sold in compliance with suc h

[[NYLIT :2228868v6 :4046W:09/19/03--07 :29 p]]

-vii-

laws, then the Company covenants that it will, in goodfaith and as expeditiously as reasonably possible, use itsreasonable best efforts to secure and maintain suchregistration or approval or to take such other action, asthe case may be. If applicable, the Company shallpromptly notify the Warrant Agent in writing when(i) the Company has obtained all such governmentalapprovals and authorizations and (ii) such approval sand authorizations thereafter cease to be in effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

SECTION 5 .05 . Expenses . All expenses incident to the Company' sperformance of or compliance with its obligationsunder this Article V relating to the issuance of theWarrant Shares will be borne by the Company,including without limitation : (i) all SEC, stockexchange or National Association of Securities Dealers,Inc. registration and filing fees, (ii) all reasonable feesand expenses incurred in connection with thecompliance with state securities or blue sky laws, (iii)all expenses of any Persons incurred by or on behalf ofthe Company in preparing or assisting in preparing,printing and distributing the Common ShelfRegistration Statement or any other registrationstatement, prospectus, any amendments or supplementsthereto and other documents relating to the performanceof and compliance with this Article V, (iv) the fees anddisbursements of counsel for the Company and theWarrant Agent as agreed and (v) the fees anddisbursements of the independent public accountants ofthe Company, including the expenses of any specialaudits or comfort letters required by or incident to suchperformance and compliance ; provided, however, thatthe costs associated with the physical mailing toAuthorized Claimants of a prospectus associated withthe Settlement Warrants and either a SettlementWarrant Certificate or a Notice indicating thatSettlement Warrants were issued in electronic or bookentry form (which prospectuses, certificates and noticesshall be provided without charge by Raytheon) shall bepaid from the Raytheon Defendants' Cash SettlementAmount (as defined in the Settlement Agreement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

ARTICLE VI Warrant Agent

SECTION 6.01 . Appointment of Warrant Agent . The Company herebyappoints the Warrant Agent to act as agent for theCompany in accordance with the provisions of this

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Agreement and the Warrant Agent hereby accepts suchappointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 6 .02 . Rights and Duties of Warrant Agent . (a) Agent for the

Company. In acting under this Warrant Agreement and

in connection with the Warrant Certificates, the

Warrant Agent is acting solely as agent of the Company

and does not assume any obligation or relationship or

agency or trust for or with any of the holders of

Warrant Certificates or beneficial owners of Warrants .

All fees and expenses due the Warrant Agent shall be

paid to the Warrant Agent by the Company . The

Warrant Agent shall have no duty to determine whichcosts, if any, under this Agreement shall be borne by

the Holders or by the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 6.03 . Individual Rights of Warrant Agent . The WarrantAgent and any stockholder, director, officer oremployee of the Warrant Agent may buy, sell or deal inany of the Warrants or other securities of the Companyor its Affiliates or become pecuniarily interested intransactions in which the Company or its Affiliates maybe interested, or contract with or lend money to theCompany or its Affiliates or otherwise act as fully andfreely as though it were not the Warrant Agent underthis Agreement . Nothing herein shall preclude theWarrant Agent from acting in any other capacity for theCompany or for any other legal entity. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 6.04 . Warrant Agent's Disclaimer . The Warrant Agent shallnot be responsible for and makes no representation as tothe validity or adequacy of this Agreement or theWarrant Certificates and it shall not be responsible forany statement in this Agreement or the WarrantCertificates other than its countersignature thereon . . . . . . . . .

SECTION 6.05 . Compensation and Indemnity. The Company agreesthat the Warrant Agent is entitled, from time to time,reasonable compensation for its services as agreed andto reimbursement for all reasonable out-of-pocketexpenses incurred by it, including the reasonablecompensation and expenses of the Warrant Agent'sagents and counsel as agreed . The Company shallindemnify the Warrant Agent, its officers, directors,agents and counsel against any loss, liability or expense(including reasonable agents' and attorneys' fees andexpenses) incurred by it without gross negligence orbad faith on its part arising out of or in connection withthe acceptance or performance of its duties under thisAgreement . The Warrant Agent shall notify the

[[NYLIT2228868v6 :4046W :09/19/03-07:29 P11

-1x-

. . . . . . . . . . . . . . . . . . . .1 6

1 6

. .1 7

17

Company promptly of any claim for which it may seekindemnity. The Company need not reimburse anyexpense or indemnify against any loss or liabilityincurred by the Warrant Agent through willfulmisconduct, gross negligence or bad faith. TheCompany's payment obligations pursuant to thisSection 6.05 shall survive the termination of thi sAgreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

SECTION 6.06. Successor Warrant Agent . (a) The Company T oProvide and Maintain Warrant Agent . The Companyagrees for the benefit of the Holders that there shall atall times be a competent and reputable Warrant Agenthereunder until all the Warrants have been exercised o rare no longer exercisable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 7

ARTICLE VII Miscellaneous

SECTION 7.01 . Persons Benefiting . Nothing in this Agreement isintended or shall be construed to confer upon anyPerson other than the Company, the Warrant Agent andthe Holders any right, remedy or claim under or byreason of this Agreement or any part hereof . . . . . . . . . . . . . . . . . .

SECTION 7.92 . Rights of Holders . Holders of unexercised Warrant sare not entitled to (i) receive dividends or otherdistributions, (ii) receive notice of or vote at anymeeting of the stockholders, (iii) consent to any actionof the stockholders, (iv) receive notice of any otherproceedings of the Company, (v) exercise anypreemptive right or (vi) exercise any other rightswhatsoever as stockholders of the Company . . . . . . . . . . . . . . . . . .

SECTION 7.03. Amendment. This Agreement may be amended by the

parties hereto without the consent of any Holder for the

purpose of curing any ambiguity, or of curing,correcting or supplementing any defective provision

contained herein or adding or changing any other

provisions with respect to matters or questions arisingunder this Agreement as the Company and the Warrant

Agent may deem necessary or desirable (includingwithout limitation any addition or modification to

provide for compliance with the transfer restrictions setforth herein) ; provided, however, that such action shall

not adversely affect the rights of any of the Holders .Any amendment or supplement to this Agreement thathas an adverse effect on the interests of the Holders

. . . . . . . . . . . . . . . . .1 9

. . . . . . . . . . . . . . . . . . . . .1 9

shall require the written consent of the Holders of amajority of the then outstanding Warrants. The consentof each Holder affected shall be required for any

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amendment pursuant to which the Exercise Price wouldbe increased or the number of Warrant Shares issuableupon exercise of Warrants would be decreased (otherthan pursuant to adjustments provided herein) . Indetermining whether the Holders of the requirednumber of Warrants have concurred in any direction,waiver or consent, Warrants owned by the Companyshall be disregarded and deemed not to be outstanding,except that, for the purpose of determining whether theWarrant Agent shall be protected in relying on any suchdirection, waiver or consent, only Warrants which theWarrant Agent knows are so owned shall be sodisregarded. Also, subject to the foregoing, onlyWarrants outstanding at the time shall be considered i nany such determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

SECTION 7.04 . Notices . Any notice or communication shall be i nwriting and delivered in Person or mailed by first-clas smail addressed as follows : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20

SECTION 7.05 . Governing Law . The laws of the Commonwealth o fMassachusetts shall govern this Agreement and th eWarrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1

SECTION 7.06 . Successors . All agreements of the Company in thisAgreement and the Warrant Certificates shall bind itssuccessors . All agreements of the Warrant Agent i nthis Agreement shall bind its successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 1

SECTION 7.07 . Multiple Originals . The parties may sign any numberof copies of this Agreement. Each signed copy shall b ean original, but all of them together represent the same

agreement. One signed copy is enough to prove thi sAgreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 1

SECTION 7 .08 . Table of Contents . The table of contents and headingsof the Articles and Sections of this Agreement havebeen inserted for convenience of reference only, are notintended to be considered a part hereof and shall notmodify or restrict any of the terms or provisions hereof . . . . . . . . . . . . . . . . . . . . . 2 1

SECTION 7.09 . Severability. The provisions of this Agreement ar eseverable, and if any clause or provision shall be hel dinvalid, illegal or unenforceable in whole or in part i nany jurisdiction, then such invalidity o runenforceability shall affect in that jurisdiction onl ysuch clause or provision, or part thereof, and shall no tin any manner affect such clause or provision in an yother jurisdiction or any other clause or provision o fthis Agreement in any jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 1

EXHIBIT A Form of Face of Warrant Certificate

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WARRANT AGREEMENT dated as of [ ], 2003 (this

"Agreement"), between RAYTHEON COMPANY, a Delaware

corporation (the "Company"), and American Stock Transfer &Trust Company, as Warrant Agent (the "Warrant Agent") .

The Company desires to issue the warrants (the "Warrants") describedherein. The Warrants will initially entitle the holders thereof (the "Holders") to purchasea certain numbers of shares of its common stock, par value $0 .01 per share (the"Common Stock") (the shares of Common Stock issuable on exercise of the Warrantsbeing referred to herein as the "Warrant Shares") . The Warrants are being issued inconnection with the settlement of certain litigation previously pending against theCompany and other defendants in the United States District Court for the District ofMassachusetts, in accordance with the Stipulation and Agreement of Settlement, dated [], 2004, between the Company and the participants in such settlement (the "SettlementAgreement") and pursuant to Section 3(a)(10) of the Securities Act .

The Company desires the Warrant Agent to act on behalf of the Companyin connection with the issuance of the Warrants as provided herein and the WarrantAgent is willing to so act .

Each party agrees as follows for the benefit of the other party and for theequal and ratable benefit of the Holders of Warrants :

ARTICLE I

Definition s

SECTION 1 .01 . Definitions .

"Affiliate" of any Person means (i) any other Person which, directly orindirectly, is in control of, is controlled by or is under common control with such Person,or (ii) any other Person who is a director or executive officer of such Person . Forpurposes hereof, (a) "control" of a Person means the power, direct or indirect, to direct orcause the direction of the management and policies of such Person whether by contract orotherwise and (b) beneficial ownership of securities representing 10% or more of thevoting power of all outstanding securities of a Person shall be deemed to representcontrol of such Person ; and the terms "controlling" and "controlled" have meaningscorrelative to the foregoing.

"Board" means the Board of Directors of the Company or any committee

thereof duly authorized to act on behalf of such Board of Directors .

` The number of Settlement Warrants having a value of $200 million shall be calculated as set forth

in paragraph 4(b) of the Settlement Agreement.

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2

"Business Day" means each day that is not a Saturday, a Sunday or a dayon which banking institutions are not required to be open in the State of New York .

"Certificated Warrants" means Warrants in fully registered definitiveform, whether held by Warrant Holders in certificated form or held in book entry positionon the records of the Warrant Agent .

"Common Stock" means the common stock, par value $0 .01 per share, of

the Company .

"Current Market Value" per share of Common Stock at any date meansthe average of the daily Closing Prices for each Business Day during the periodcommencing 20 Business Days before such date and ending on the date one BusinessDay prior to such date . The Closing Price for each day (the "Closing Price") shall be thelast reported sales price or, in case no such reported sale takes place on such date, theaverage of the'reported closing bid and asked prices, in either case on The New YorkStock Exchange (the "NYSE") or The Nasdaq National Market (the "NNM"), asapplicable, or, if the Common Stock is not listed or admitted to trading on the NYSE orthe NNM, the principal national securities exchange or quotation system on which theCommon Stock is quoted or listed or admitted to trading or, if not quoted or listed oradmitted to trading on any national securities exchange or quotation system, the closingsales price or, in case no reported sale takes place, the average of the closing bid andasked prices, as furnished by any two members of the National Association of SecuritiesDealers, Inc . selected from time to time by the Company for that purpose . If no suchprices are available, the Current Market Price per share shall be the fair value of a shareof Common Stock as reasonably determined in good faith by the Board (which shall beevidenced by an Officers' Certificate delivered to the Warrant Agent) .

"Depository" means The Depository Trust Company , its nominees and

their respective successors .

"Exchange Act" means the U.S . Securities Exchange Act of 1934, asamended .

"Exercise Date" means, for a given Warrant, the day on which suchWarrant is exercised pursuant to Section 3 .04 .

"Issue Date" means the date on which the Warrants are initially issued .

"Officer" means, with respect to any Person, the Chairman of the Board,the Chief Executive Officer, the President, the Chief Operating Officer, the ChiefFinancial Officer, any Vice President, the Treasurer, any Assistant Treasurer, theController, or the Secretary or an Assistant Secretary of such Person.

"Officers' Certificate" means a certificate signed by two Officers .

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3

"Opinion of Counsel" means a written opinion from legal counsel who isreasonably acceptable to the Warrant Agent . Such counsel may be an employee of orcounsel to the Company or the Warrant Agent .

"Person" means any individual, corporation, partnership, joint venture,limited liability company, association, joint-stock company, trust, unincorporatedorganization, government or any agency or political subdivision thereof or any otherentity.

"SEC" means the Securities and Exchange Commission.

"Securities Act" means the U.S. Securities Act of 1933, as amended.

"Warrant Certificates" mean the Global Warrants or the CertificatedWarrants issued by the Company under this Agreement representing the Warrants .

"Warrant Custodian" means the custodian with respect to a GlobalWarrant (as appointed by the Depository) or any successor Person thereto and shallinitially be the Warrant Agent.

SECTION 1 .02 . Other Definitions .

Defined i n

Term Section

"Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals

"Agent Members" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 .01(b)

"Certificate Register" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 .03

"Common Shelf Registration Statement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 .0 1

"Common Stock" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals

"Company" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals

"Exercise Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .01

"Expiration Date". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .02(b)

"Global Warrant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 .01(a)

"Holders" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals

"Indemnified Parties". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 .05(a)

"Stock Transfer Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 .05

"Reorganization" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04

"Warrant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals

"Warrant Shares" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals

"Warrant Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recitals

SECTION 1 .03 . Rules of Construction . Unless the text otherwiserequires :

(i) a defined term has the meaning assigned to it herein ;

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4

(ii) an accounting term not otherwise defined has the meaning assigned toit in accordance with generally accepted accounting principles as in effect from

time to time ;

(iii) "including" means including, without limitation ; and

(iv) words in the singular include the plural and words in the pluralinclude the singular .

ARTICLE I I

Warrant Certificate s

SECTION 2 . 01 . Form and Dating .

(a) Warrants . The Warrants shall be issued initially in definitive, fullyregistered form on the books of the Warrant Agent (each, a Certificated Warrant) and/orin the form of one or more permanent Global Warrants, in definitive, fully registeredform with the global securities legend set forth in Exhibit A hereto (each, a "GlobalWarrant"), which shall be deposited on behalf of the Holders with the Warrant Agent, ascustodian for the Depository (or with such other custodian as the Depository may direct),and registered in the name of the Depository or a nominee of the Depository, dulyexecuted by the Company and countersigned by the Warrant Agent as hereinafterprovided .

(b) Book-Entry Provisions . (i) This Section 2 .01(b) shall apply only to aGlobal Warrant deposited with or on behalf of the Depository .

The Company shall execute and the Warrant Agent shall, in accordancewith Section 2 .02, countersign and deliver initially one or more Global Warrants that(a) shall be registered in the name of the Depository for such Global Warrant or GlobalWarrants or the nominee of the Depository and (b) shall be delivered by the WarrantAgent to the Depository or pursuant to the Depository's instructions or held by theWarrant Agent as custodian for the Depository .

(ii) Members of, or participants in, the Depository ("Agent Members")shall have no rights under this Agreement with respect to any Global Warrant held ontheir behalf by the Depository or by the Warrant Agent as the custodian of the Depositoryor under such Global Warrant, and the Depository may be treated by the Company, theWarrant Agent and any agent of the Company or the Warrant Agent as the absoluteowner of such Global Warrant for all purposes whatsoever . Notwithstanding the fore-going, nothing herein shall prevent the Company, the Warrant Agent or any agent of theCompany or the Warrant Agent from giving effect to any written certification, proxy orother authorization furnished by the Depository or impair, as between the Depository andits Agent Members, the operation of customary practices of the Depository governing theexercise of the rights of a holder of a beneficial interest in any Global Warrant .

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5

(c) Certificated Securities . Except as provided in Section 2 .04 or 2 .05,owners of beneficial interests in Global Warrants will not be entitled to receive physicaldelivery of Certificated Warrants .

SECTION 2.02 . Execution and Countersignature . Two Officers shallsign the Warrant Certificates for the Company by manual or facsimile signature .

If an Officer whose signature is on a Warrant Certificate no longer holdsthat office at the time the Warrant Agent countersigns the Warrant Certificate, theWarrants evidenced by such Warrant Certificate shall be valid nevertheless .

The Warrant Agent shall initially countersign and deliver WarrantCertificates entitling the Holders thereof to purchase in the aggregate not more than [

] Warrant Shares upon a written order of the Company signed by two Officers ofthe Company.

The Warrant Agent may appoint an agent reasonably acceptable to theCompany to countersign the Warrant Certificates . Unless limited by the terms of suchappointment, such agent may countersign Warrant Certificates whenever the WarrantAgent may do so . Each reference in this Agreement to countersignature by the WarrantAgent includes countersignature by such agent . Such agent will have the same rights asthe Warrant Agent for service of notices and demands .

At any time and from time to time after the execution of this Agreement,the Warrant Agent or an agent reasonably acceptable to the Company shall upon receiptof a written order of the Company signed by two Officers of the Company register on theCertificate Register (as defined in Section 2 .03) or issue a Warrant Certificate evidencingthe number of Warrants specified in such order ; provided, however, that the WarrantAgent shall be entitled to receive an Officers' Certificate and an Opinion of Counsel ofthe Company that it may reasonably request in connection with such registration orcountersignature of Warrants . Such order shall specify the number of Warrants to beregistered on the Certificate Register or evidenced on the Warrant Certificate to becountersigned, the date on which such Warrant Certificate is to be registered or counter-signed and the number of Warrants then authorized .

The Warrants (whether or not evidenced by a Warrant Certificate) shallnot be valid until registered on the Certificate Register .

SECTION 2.03 . Cert ificate Register . The Warrant Agent shall keep aregister (the "Certificate Register") of the Warrants (and Warrant Certificates, ifapplicable) and of their transfer and exchange . The Certificate Register shall show thenames and addresses of the respective Holders and the date and number of Warrantsowned by such Holders (as evidenced on the face of each of the Warrant Certificates, ifapplicable) . The Company and the Warrant Agent may deem and treat the Person inwhose name a Warrant is registered as the absolute owner of such Warrant for allpurposes whatsoever and neither the Company nor the Warrant Agent shall be affectedby notice to the contrary.

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6

SECTION 2 . 04 . Transfer and Exchange .

(a) Transfer and Exchange of Warrants .

(i) The transfer and exchange of Global Warrants or beneficial intereststherein shall be effected through the Depository, in accordance with thisAgreement (including applicable restrictions on transfer set forth herein) and theprocedures of the Depository therefor .

(ii) Notwithstanding any other provisions of this Agreement (other than

the provisions set forth in Section 2 .05), a Global Warrant may not be transferred

as a whole except by the Depository to a nominee of the Depository or by a

nominee of the Depository to the Depository or another nominee of theDepository or by the Depository or any such nominee to a successor Depository

or a nominee of such successor Depository .

(iii) In the event that a Global Warrant is exchanged and transferred forWarrants in definitive registered form pursuant to Section 2 .05, such Warrantsmay be exchanged only in accordance with such procedures as are substantiallyconsistent with the provisions of this Section 2 .04 and such other procedures asmay from time to time be adopted by the Company .

(iv) The Warrant Agent shall register the transfer, from time to time, ofany Certificated Warrant upon the Certificate Register, upon surrender of suchWarrant for transfer, properly endorsed with signatures properly guaranteed andaccompanied by the appropriate instructions for transfer . Upon any such transfer,a new Certificated Warrant(s) representing an equal aggregate number ofCertificated Warrants shall be issued and the transferred certificate shall be

cancelled.

(b) Cancellation or Adjustment of Global Warrant . At such time as allbeneficial interests in a Global Warrant have been exchanged for Certificated Warrants,redeemed, repurchased or canceled, such Global Warrant shall be returned to th e

Depository for cancellation or retained and canceled by the Warrant Agent . At any time

prior to such cancellation, if any beneficial interest in a Global Warrant is exchanged forCertificated Warrants, redeemed, repurchased or canceled, the number of Warrant s

represented by such Global Warrant shall be reduced and an adjustment shall be made onthe books and records of the Warrant Agent (if it is then the Warrant Custodian for suchGlobal Warrant) with respect to such Global Warrant, by the Warrant Agent, to reflect

such reduction .

(c) Obligations with Respect to Transfers and Exchanges of Warrants .

(i) To permit registrations of transfers and exchanges, the Company shallexecute and the Warrant Agent shall register Certificated Warrants and Global Warrantsas required pursuant to the provisions of Section 2 .02 and this Section 2.04.

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(ii) Any service charge for any registration of transfer or exchange, or anytransfer tax, assessments, or similar governmental charge payable in connection there-with, shall be paid by the Holder.

(iii) Prior to the due presentation for registration of transfer of any Warrant,the Company and the Warrant Agent may deem and treat the Person in whose name aWarrant is registered as the absolute owner of such Warrant, and neither the Companynor the Warrant Agent shall be affected by notice to the contrary .

(iv) All Warrants issued upon any transfer or exchange pursuant to theterms of this Agreement shall be the valid obligations of the Company, entitled to thesame benefits under this Agreement as the Warrants surrendered upon such transfer orexchange.

(d) No Obligation of the Warrant Agent. (i) The Warrant Agent shallhave no responsibility or obligation to any beneficial owner of a Global Warrant, amember of, or a participant in the Depository or other Person with respect to the accuracyof the records of the Depository or its nominee or of any participant or member thereof,with respect to any ownership interest in the Warrants or with respect to the delivery toany participant, member, beneficial owner or other Person (other than the Depository) ofany notice or the payment of any amount, under or with respect to such Warrants . Allnotices and communications to be given to the Holders and all payments to be made toHolders under the Warrants shall be given or made only to or upon the order of theregistered Holders (which shall be the Depository or its nominee in the case of a GlobalWarrant). The rights of beneficial owners in any Global Warrant shall be exercised onlythrough the Depository subject to the applicable rules and procedures of the Depository.The Warrant Agent may rely and shall be fully protected in relying upon informationfurnished by the Depository with respect to its members, participants and any beneficia lowners .

(ii) The Warrant Agent shall have no obligation or duty to monitor,determine or inquire as to compliance with any restrictions on transfer imposed under thisAgreement or under applicable law with respect to any transfer of any interest in anyWarrant (including any transfers between or among the Depository participants, membersor beneficial owners in any Global Warrant) other than to require delivery of suchcertificates and other documentation or evidence as are expressly required by, and to doso if and when expressly required by, the terms of this Agreement, and to examine thesame to determine substantial compliance as to form with the express requirementshereof.

SECTION 2.05 . Certificated Warrants .

(a) A Global Warrant deposited with the Depository or with the WarrantAgent as custodian for the Depository pursuant to Section 2 .01 shall be transferred to thebeneficial owners thereof in the form of Certificated Warrants in a number equal to thenumber of Warrants represented by such Global Warrant, in exchange for such GlobalWarrant, only if such transfer complies with Section 2.04 and (i) the Depository notifie s

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the Company that it is unwilling or unable to continue as depositary for such GlobalWarrant or if at any time the Depository ceases to be a "clearing agency" registered underthe Exchange Act and, in each such case, a successor depositary is not appointed by theCompany within 90 days of such notice or (ii) the Company, in its sole discretion,notifies the Warrant Agent in writing that it elects to cause the issuance of CertificatedWarrants under this Agreement.

(b) Any Global Warrant that is transferable to the beneficial ownersthereof pursuant to this Section shall be surrendered by the Depository to the WarrantAgent, to be so transferred, in whole or from time to time in part, without charge, and theWarrant Agent shall countersign and deliver, upon such transfer of each portion of suchGlobal Warrant, an equal number of Certificated Warrants .

(c) Subject to the provisions of Section 2.05(b), the registered Holder of aGlobal Warrant may grant proxies and otherwise authorize any Person, including AgentMembers and Persons that may hold interests through Agent Members, to take any actionwhich a Holder is entitled to take under this Agreement or the Warrants .

(d) In the event of the occurrence of either of the events specified inSection 2 .05(a), the Company will promptly make available to the Warrant Agent areasonable supply of Certificated Warrants in definitive, fully registered form .

SECTION 2.06 . Replacement Certificates. If a mutilated WarrantCertificate is surrendered to the Warrant Agent or if the Holder of a Warrant Certificateclaims that the Warrant Certificate has been lost, destroyed or wrongfully taken, theCompany shall issue and the Warrant Agent shall countersign a replacement WarrantCertificate if the reasonable requirements of the Warrant Agent and of Section 8-405 ofthe Uniform Commercial Code as in effect in the State of New York are met . If requiredby the Warrant Agent or the Company, such Holder shall furnish an indemnity bondsufficient in the judgment of the Company and the Warrant Agent to protect theCompany and the Warrant Agent from any loss which either of them may suffer if aWarrant Certificate is replaced . The Company and the Warrant Agent may charge theHolder for their expenses in replacing a Warrant Certificate . Every replacement WarrantCertificate evidences an additional obligation of the Company.

SECTION 2.07 . Outstanding Warrants . Warrants outstanding at anytime are all Warrants evidenced on all Warrant Certificates authenticated by the WarrantAgent except for those canceled by it and those delivered to it for cancellation . AWarrant does not cease to be outstanding because an Affiliate of the Company holds theWarrant. A Warrant ceases to be outstanding if the Company holds the Warrant .

If a Warrant Certificate is replaced pursuant to Section 2 .06, the Warrantsevidenced thereby cease to be outstanding unless the Warrant Agent and the Companyreceive proof satisfactory to them that the replaced Warrant Certificate is held by a bonafide purchaser .

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SECTION 2.08 . Cancellation . (a) In the event the Comp any shallpurchase or otherwise acquire Ce rtificated Warrants, the same shall thereupon bedelivered to the Warrant Agent for cancellation.

(b) The Warrant Agent and no one else shall cancel all WarrantCertificates surrendered for transfer, exchange, replacement, exercise or cancellationunless the Company directs the Warrant Agent to deliver canceled Warrant Certificates tothe Company. The Company may not issue new Warrant Certificates to replace WarrantCertificates to the extent they evidence Warrants which have been exercised or Warrantswhich the Company has purchased or otherwise acquired.

SECTION 2 .09 . CUSIP Numbers . The Company in issuing the

Warrants may use "CUSIP" numbers (if then generally in use) and, if so, the WarrantAgent may use "CUSIP" numbers in notices as a convenience to Holders ; provided,

however, that any such notice may state that no representation is made as to the

correctness of such numbers either as printed on the Warrant Certificates or as containedin any notice and that reliance may be placed only on the other identification numbers

printed on the Warrant Certificates .

ARTICLE III

Exercise Terms

SECTION 3 .01 . Exercise . Each Warrant shall initially entitle the Holderthereof, subject to adjustment pursuant to the terms of this Agreement, to purchase oneshare of Common Stock for each Warrant evidenced thereby, at an exercise price (the"Exercise Price") of $37 .50 per share .

SECTION 3.02 . Exercise Periods . (a) Subject to the terms andconditions set forth herein, the Warrants shall be exercisable at any time and from time totime on any Business Day after the Common Shelf Registration Statement is declaredeffective by the SEC ; provided, however, that holders of Warrants will be able to exercisetheir Warrants only if (i) the Common Shelf Registration Statement relating to theWarrant Shares is effective and (ii) the Warrant Shares are qualified for sale or exemptfrom qualification under the applicable securities laws of the states or other jurisdictionsin which such holders reside. The Company covenants that it will, in good faith and asexpeditiously as reasonably possible, use its reasonable best efforts to secure andmaintain such registration and qualification .

(b) No Warrant shall be exercisable after the fifth anniversary of the IssueDate (the "Expiration Date") .

SECTION 3.03 . Expiration. A Warrant shall terminate and become voidas of the earlier of (i) the close of business on the Expiration Date or (ii) the date suchWarrant is exercised .

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SECTION 3.04 . Manner of Exercise . Warrants may be exercised upon(i) surrender to the Warrant Agent at the office of the Warrant Agent of the relatedWarrant Certificate, together with the form of election attached thereto to purchaseCommon Stock on the reverse thereof duly filled in and signed by the Holder thereof, and(ii) payment to the Warrant Agent, for the account of the Company, of the Exercise Pricefor each Warrant Share or other security issuable upon the exercise of such Warrants thenexercised. Such payments shall be made by certified or official bank check payable tothe order of the Company or by wire transfer of funds to an account designated by theCompany for such purpose . Subject to Section 3 .02, the rights represented by theWarrants shall be exercisable at the election of the Holders thereof either in full at anytime or from time to time in part and in the event that a Warrant Certificate is surrenderedfor exercise of less than all the Warrants represented by such Warrant Certificate at anytime prior to the Expiration Date, a new Warrant Certificate representing the remainingWarrants shall be issued . The Warrant Agent shall countersign and deliver the requirednew Warrant Certificates, and the Company, at the Warrant Agent's request, shall supplythe Warrant Agent with Warrant Certificates duly signed on behalf of the Company forsuch purpose .

SECTION 3.05 . Issuance of Warrant Shares . Subject to Section 2.05,upon the surrender of Warrant Certificates and payment of the per share Exercise Price,as set forth in Section 3 .04, the Company shall issue and cause the Warrant Agent or, ifappointed, a transfer agent for the Common Stock ("Stock Transfer Agent") t ocountersign and deliver to or upon the written order of the Holder and in such name ornames as the Holder may designate, a certificate or certificates for the number of fullWarrant Shares so purchased upon the exercise of such Warrants or other securities towhich it is entitled, registered or otherwise, to the Person or Persons entitled to receivethe same (including any depositary institution so designated by a Holder), together withcash as provided in Section 3.06 in respect of any fractional Warrant Shares otherwiseissuable upon such exercise . Such certificate or certificates shall be deemed to have beenissued and any Person so designated to be named therein shall be deemed to have becomea holder of record of such Warrant Shares as of the date of the surrender of such WarrantCertificates and payment of the per share Exercise Price, as aforesaid; provided, however,that if, at such date, the transfer books for the Warrant Shares shall be closed, thecertificates for the Warrant Shares in respect of which such Warrants are then exercisedshall be issuable as of the date on which such books shall next be opened and until suchdate the Company shall be under no duty to deliver any certificates for such WarrantShares ; provided further, however, that such transfer books, unless otherwise required bylaw, shall not be closed at any one time for a period longer than 20 calendar days .

SECTION 3.06 . Fractional Warrant Shares . The Company shall not berequired to issue fractional Warrant Shares on the exercise of Warrants . If more than oneWarrant shall be exercised in full at the same time by the same Holder, the number of fullWarrant Shares which shall be issuable upon such exercise shall be computed on thebasis of the aggregate number of Warrant Shares which may be purchasable pursuantthereto. If any fraction of a Warrant Share would, except for the provisions of thisSection 3 .06, be issuable upon the exercise of any Warrant (or specified portion thereof),the Company shall pay an amount in cash equal to the Current Market Value per Warran t

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Share, as determined on the day immediately preceding the date the Warrant is presentedfor exercise, multiplied by such fraction, computed to the nearest whole cent .

SECTION 3.07 . Reservation of Warrant Shares . The Company shall atall times keep reserved out of its authorized shares of Common Stock a number of sharesof Common Stock sufficient to provide for the exercise of all outstanding Warrants . Theregistrar for the Common Stock (the "Registrar") shall at all times until the ExpirationDate reserve such number of authorized shares as shall be required for such purpose . TheCompany will keep a copy of this Agreement on file with the Stock Transfer Agent . TheCompany will supply such Stock Transfer Agent with duly executed stock certificates forsuch purpose and will itself provide or otherwise make available any cash which may bepayable as provided in Section 3 .06. The Company will furnish to such Stock TransferAgent a copy of all notices of adjustments (and certificates related thereto) transmitted toeach Holder.

The Company covenants that all Warrant Shares which may be issuedupon exercise of Warrants shall, upon issue, be fully paid, nonassessable, free ofpreemptive rights, and free from all liens, taxes, charges and security interests withrespect to the issue thereof.

ARTICLE IV

Adjustment and Notice Provisions

SECTION 4 . 01 . Adjustment of Exercise P rice . Subject to the provisions

of this Article IV , the Exercise Price in effect from time to time shall be subject toadjustment as follows :

(a) In case the Company shall ( i) declare a dividend payable in Common

Stock or make some other distribution on the outstanding shares of its Common Stock in

shares of its Common Stock, (ii) subdivide or reclassify the outstanding shares of itsCommon Stock into a greater number of shares or (iii) combine or reclassify theoutstanding shares of its Common Stock into a smaller number of shares , the Exercise

Price, in effect immediately after the record date for such dividend or dist ribution or the

effective date of such division, reclassification or combination shall be propo rtionately

adjusted by multiplying the then Exercise Price by a fraction, the numerator of whichshall be the number of shares of Common Stock outstanding immediately p rior to such

event and the denominator of which shall be the number of shares of Common Stock

outstanding immediately after such event, and the product so obtained shall thereafter be

the Exercise Price then in effect. Such adjustment shall be made successively whenever

any event specified above shall occur .

(b) All calculations under this Section 4 . 01 shall be made to the nearest

thousandth of a cent .

SECTION 4.02 . No Adjustment to Exercise Price . No adjustment in the

Exercise Price in accordance with the provisions of paragraph (a) of Section 4 .01 hereof

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need be made if such adjustment would amount to a change in such Exercise Price of lessthan ten cents ; provided, however, that the amount by which any adjustment is not madeby reason of the provision of this Section 4 .02 shall be carried forward and taken intoaccount at the time of any subsequent adjustment in the Exercise Price .

SECTION 4.03 . Adjustment to Number of Shares . Upon eachadjustment of the Exercise P rice pursuant to Paragraph (a) of Section 4.01, each Warrantshall thereupon evidence the right to purchase that number of shares of Common Stock(calculated to the nearest hundredth of a share ) obtained by multiplying the number ofshares of Common Stock purchasable immediately p rior to such adjustment uponexercise of the Warrant by the Exercise Price in effect immediately p rior to suchadjustment and dividing the product so obtained by the Exercise P rice in effectimmediately after such adjustment .

SECTION 4 . 04 . Reorganizations .

(a) Except as provided in Section 4.04(b), in case of any capital

reorganization, consolidation or merger of the Company (other than in the cases referredto in Section 4 .01 hereof or the consolidation or merger of the Company with or into

another corporation in which the Company is the continuing corporation and which does

not result in any reclassification of the outstanding shares of Common Stock or the

conversion of such outstanding shares of Common Stock into shares of other stock orother securities or property)(a "Reorganization"), the Holders of Warrants which have not

been exercised (or otherwise expired or been terminated) shall have the right to receive,

upon exercise of the Warrants and payment of the Exercise Price, the kind and amount ofshares of stock and other securities and property receivable upon such Reorganization by

a Holder of the number of shares of Common Stock into which such Warrants so

exercised might have been exercised immediately prior to such Reorganization . Unless

paragraph (b) is applicable to a Reorganization, or unless the surviving or acquiring

Person in such Reorganization automatically assumes the Company's obligations

hereunder as a matter of law, the Company shall provide that the surviving or acquiring

Person in such Reorganization will enter into an agreement with the Warrant Agent

confirming the Holders' rights pursuant to this Section 4 .04(a) and providing for

adjustments, which shall be as nearly equivalent as may be practicable to the adjustmentsprovided for in the Article IV .

(b) In the event of a Reorganization where consideration to the holder ofCommon Stock in exchange for their shares is payable solely in cash, the Holders of the

Warrants shall be entitled to receive, upon surrender of their Warrant Certificates, anamount in cash equal to the number of Warrants tendered by such Holder multiplied by

the value of a Warrant as of the date of such Reorganization, such value to be determined

by a valuation expert mutually agreed to by the Company and Plaintiff's Lead Counsel

for the action entitled In re Raytheon Company Securities Litigation , Civil Action No .

99-12142-PBS, using the Black-Scholes valuation model and assumptions consistent withthose provided for determining the number of Warrants (defined as "Settlement

Warrants" in the Settlement Agreement) in paragraph 4(b) of the Settlement Agreement .

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(c) In the event of a Reorganization, the Company shall at its soleexpense mail by first class mail, postage prepaid, to each Holder, notice of the executionof any such agreement.

SECTION 4.05 . Exercise Price Not Less Than Par Value . In no eventshall the Exercise Price be adjusted below the par value per share of the Common Stock .

SECTION 4.06. Notice of Certain Action . In the event the Companyshall :

(a) declare any dividend payable in stock to the holders of its CommonStock or make any other distribution in property other than cash to the holders of itsCommon Stock ; or

(b) offer to the holders of its Common Stock as such rights to subscribefor or purchase any shares of any cl ass of stock or any other rights or opinions; or

(c) effect any reclassification of its Common Stock (other than a

reclassification involving merely the subdivision or combination of outstanding shares of

Common Stock), Reorganization or the liquidation, dissolution or winding up of the

Company ;

then, in each such case, the Company shall cause notice of such proposed action to begiven to the Warrant Agent. Such notice shall specify the date on which the books of the

Company shall close, or a record be taken, for determining holders of Common Stockentitled to receive such stock dividend or other distribution or such rights or options, or

the date on which such reclassification, reorganization, consolidation, merger, sale,

transfer, other disposition, liquidation, dissolution or winding up shall take place or

commence, as the case may be, and the date as of which it is expected that holders shall

be entitled to receive securities or other property deliverable upon such action, if any

such date has been fixed. The Company shall also cause the Warrant Agent to mail

copies of such notice to each Holder of a Warrant Certificate in the manner specified insection 7 .04 hereof unless such notice is otherwise available on the SEC's Electronic Data

Gathering, Analysis and Retrieval System or similar system . Such notice shall be mailed,

in the case of any action covered by Subsection 4 .06(a) or 4 .06(b) above, at least ten days

prior to the record date for determining holders of the Common Stock for purposes of

receiving such payment or offer, and in the case of any action covered by Subsection

4.06(c) above, at least ten days prior to the earlier of the date upon which such action is to

take place or any record date to determine holders of Common Stock entitled to receivesuch securities or other property.

SECTION 4.07 . Notice of Adjustments . Whenever any adjustment ismade pursuant to this Article IV, the Company shall cause notice of such adjustment tobe mailed to the Warrant Agent within fifteen days thereafter, such notice to include inreasonable detail (i) the events precipitating the adjustment, (ii) the computation of anyadjustments, and (iii) the Exercise Price, the number of shares or the securities or otherproperty purchasable upon exercise of each Warrant after giving effect to suc h

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adjustment. The Warrant Agent shall be entitled to rely on such notice and anyadjustment therein contained and shall not be deemed to have knowledge of any suchadjustment unless and until it shall have received such notice . The Warrant Agent shall

within fifteen days after receipt of such notice from the Company (which notice mustspecifically direct the Warrant Agent to perform the mailing) cause a similar notice to bemailed to each Holder .

SECTION 4.08 . Adjustment to Warrant Certificate . The form ofWarrant Certificate need not be changed because of any adjustment made pursuant to thisArticle IV, and Warrant Certificates issued after such adjustment may state the sameExercise Price and the same number of shares of Common Stock issuable upon exerciseof the Warrants as are stated in the Warrant Certificates initially issued pursuant to thisAgreement . The Company, however, may at any time in its sole discretion make anychange in the form of Warrant Certificate that it may deem appropriate to give effect tosuch adjustments and that does not affect the substance of the Warrant Certificate, andany Warrant Certificate thereafter issued or countersigned, whether in exchange orsubstitution for an outstanding Warrant Certificate or otherwise, may be in the form as sochanged .

ARTICLE V

Registration Rights

SECTION 5.01 . Effectiveness of Registration Statement . Subject to

Section 5 .02, no later than 5 Business Days from Issue Date, the Company shall use itsreasonable best efforts to cause to be filed pursuant to Rule 415 (or any successorprovision) of the Securities Act, and shall use its reasonable best efforts to cause to beeffective, a shelf registration statement covering the issuance of Warrant Shares to theHolders upon exercise of the Warrants by the Holders thereof (the "Common ShelfRegistration Statement") . The Company shall use its reasonable best efforts to cause theCommon Shelf Registration Statement to remain effective until the earlier of (i) suchtime as all Warrants have been exercised and (ii) the Expiration Date . The Companyshall promptly inform the Warrant Agent of any change in the status of the effectivenessor availability of the Common Shelf Registration Statement .

SECTION 5 .02 . Suspension . The Company shall be entitled to suspend

the availability of the Common Shelf Registration Statement from time to time during

any consecutive 365-day period for a total not to exceed 60 days during such consecutive

365-day period if the Board determines in the exercise of its reasonable judgment thatsuch suspension is necessary in order to comply with applicable laws and provides notice

that such determination was made to the Holders of the Warrants ; provided, however ,

that (i) if the Company exercises such right in the 45 consecutive-day period immediately

prior to the Expiration Date, the Expiration Date shall be delayed by the number of daysduring such 45-day period for which the availability of the Common Shelf Registration

Statement was suspended and (ii) in no event shall the Company be required to disclose

the business purpose for such suspension if the Company determines in good faith that

such business purpose must remain confidential .

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SECTION 5 .03 . Blue Sky . The Company shall use its best efforts toregister or qualify the Warrant Shares under all applicable securities laws, blue sky lawsor similar laws of all jurisdictions in the United States in which any holder of Warrantsmay or may be deemed to purchase Warrant Shares upon the exercise of Warrants andshall use its best efforts to maintain such registration or qualification for so long as it isrequired to cause the Common Shelf Registration Statement to remain effective under theSecurities Act pursuant to Section 5 .01 ; provided, however, that the Company shall notbe required to qualify generally to do business in any jurisdiction where it would nototherwise be required to qualify but for this Section 5 .03 or to take any action whichwould subject it to general service of process or to taxation in any such jurisdiction whereit is not then so subject.

SECTION 5 .04 . Additional Acts . If the issuance or sale of any CommonStock issuable upon the exercise of the Warrants requires registration or approval of anygovernmental authority (other than the registration requirements under the SecuritiesAct), or the taking of any other action under the laws of the United States or any politicalsubdivision thereof before such securities may be validly offered or sold in compliancewith such laws, then the Company covenants that it will, in good faith and asexpeditiously as reasonably possible, use its reasonable best efforts to secure andmaintain such registration or approval or to take such other action, as the case may be. Ifapplicable, the Company shall promptly notify the Warrant Agent in writing when (i) theCompany has obtained all such governmental approvals and authorizations and (ii) suchapprovals and authorizations thereafter cease to be in effect .

SECTION 5 .05 . Expenses . All expenses incident to the Company'sperformance of or compliance with its obligations under this Article V relating to theissuance of the Warrant Shares will be borne by the Company, including withoutlimitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc .registration and filing fees, (ii) all reasonable fees and expenses incurred in connectionwith the compliance with state securities or blue sky laws, (iii) all expenses of anyPersons incurred by or on behalf of the Company in preparing or assisting in preparing,printing and distributing the Common Shelf Registration Statement or any otherregistration statement, prospectus, any amendments or supplements thereto and otherdocuments relating to the performance of and compliance with this Article V, (iv) thefees and disbursements of counsel for the Company and the Warrant Agent as agreed and(v) the fees and disbursements of the independent public accountants of the Company,including the expenses of any special audits or comfort letters required by or incident tosuch performance and compliance; provided, however, that the costs associated with thephysical mailing to Authorized Claimants of a prospectus associated with the SettlementWarrants and either a Settlement Warrant Certificate or a Notice indicating thatSettlement Warrants were issued in electronic or book entry form (which prospectuses,certificates and notices shall be provided without charge by Raytheon) shall be paid fromthe Raytheon Defendants' Cash Settlement Amount (as defined in the SettlementAgreement) .

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ARTICLE VI

Warrant Agent

SECTION 6.01 . Appointment of Warrant Agent . The Company herebyappoints the Warrant Agent to act as agent for the Company in accordance with theprovisions of this Agreement and the Warrant Agent hereby accepts such appointment .

SECTION 6.02 . Rights and Duties of Warrant Agent_ (a) Agent for the

Company. In acting under this Warrant Agreement and in connection with the WarrantCertificates, the Warrant Agent is acting solely as agent of the Company and does notassume any obligation or relationship or agency or trust for or with any of the holders ofWarrant Certificates or beneficial owners of Warrants . All fees and expenses due theWarrant Agent shall be paid to the Warrant Agent by the Company. The Warrant Agentshall have no duty to determine which costs, if any, under this Agreement shall be borneby the Holders or by the Company.

(b) Counsel . The Warrant Agent may consult with counsel satisfactory toit (who may be counsel to the Company), and the advice of such counsel shall be full andcomplete authorization and protection in respect of any action taken, suffered or omittedby it hereunder in good faith and in accordance with the advice of such counsel .

(c) Documents. The Warrant Agent shall be protected and shall incur no

liability for or in respect of any action taken or thing suffered by it in reliance upon any

Warrant Certificate, notice, direction, consent, certificate, affidavit, statement or otherpaper or document reasonably believed by it to be genuine and to have been presented or

signed by the proper parties .

(d) No Implied Obligations . The Warrant Agent shall be obligated to

perform only such duties as are specifically set forth herein and in the Warrant

Certificates, and no implied duties or obligations of the Warrant Agent shall be read into

this Agreement or the Warrant Certificates against the Warrant Agent . The Warrant

Agent shall not be under any obligation to take any action hereunder which may tend to

involve it in any expense or liability for which it does not receive indemnity if such

indemnity is reasonably requested . The Warrant Agent shall not be accountable or under

any duty or responsibility for the use by the Company of any of the Warrant Certificatescountersigned by the Warrant Agent and delivered by it to the Holders or on behalf of the

Holders pursuant to this Agreement or for the application by the Company of the

proceeds of the Warrants . The Warrant Agent shall have no duty or responsibility in case

of any default by the Company in the performance of its covenants or agreements

contained herein or in the Warrant Certificates or in the case of the receipt of any writtendemand from a Holder with respect to such default, including any duty or responsibility

to initiate or attempt to initiate any proceedings at law or otherwise .

(e) Not Responsible for Adjustments or Validity of Stock . The WarrantAgent shall not at any time be under any duty or responsibility to any Holder todetermine whether any facts exist that may require an adjustment of the number of share s

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of Common Stock issuable upon exercise of each Warrant or the Exercise Price, or withrespect to the nature or extent of any adjustment when made, or with respect to themethod employed, or herein or in any supplemental agreement provided to be employed,in making the same . The Warrant Agent shall not be accountable with respect to thevalidity or value of any shares of Common Stock or of any securities or property whichmay at any time be issued or delivered upon the exercise of any Warrant or upon anyadjustment pursuant to Article IV, and it makes no representation with respect thereto .The Warrant Agent shall not be responsible for any failure of the Company to make anycash payment or to issue, transfer or deliver any shares of Common Stock or stockcertificates upon the surrender of any Warrant Certificate for the purpose of exercise orupon any adjustment pursuant to Article N, or to comply with any of the covenants ofthe Company contained in Article N .

SECTION 6 .03 . Individual Rights of Warrant Agent . The Warrant

Agent and any stockholder, director, officer or employee of the Warrant Agent may buy,

sell or deal in any of the Warrants or other securities of the Company or its Affiliates or

become pecuniarily interested in transactions in which the Company or its Affiliates maybe interested, or contract with or lend money to the Company or its Affiliates or

otherwise act as fully and freely as though it were not the Warrant Agent under thisAgreement. Nothing herein shall preclude the Warrant Agent from acting in any other

capacity for the Company or for any other legal entity .

SECTION 6.04 . Warrant Agent's Disclaimer. The Warrant Agent shallnot be responsible for and makes no representation as to the validity or adequacy of thisAgreement or the Warrant Certificates and it shall not be responsible for any statement inthis Agreement or the Warrant Certificates other than its countersignature thereon .

SECTION 6 .05 . Compensation and Indemnity. The Company agreesthat the Warrant Agent is entitled, from time to time, reasonable compensation for itsservices as agreed and to reimbursement for all reasonable out-of-pocket expensesincurred by it, including the reasonable compensation and expenses of the WarrantAgent's agents and counsel as agreed . The Company shall indemnify the Warrant Agent,its officers, directors, agents and counsel against any loss, liability or expense (includingreasonable agents' and attorneys' fees and expenses) incurred by it without grossnegligence or bad faith on its part arising out of or in connection with the acceptance orperformance of its duties under this Agreement . The Warrant Agent shall notify theCompany promptly of any claim for which it may seek indemnity . The Company neednot reimburse any expense or indemnify against any loss or liability incurred by theWarrant Agent through willful misconduct, gross negligence or bad faith . TheCompany's payment obligations pursuant to this Section 6 .05 shall survive thetermination of this Agreement .

SECTION 6.06. Successor Warrant Agent . (a) The Company ToProvide and Maintain Warrant Agent . The Company agrees for the benefit of theHolders that there shall at all times be a competent and reputable Warrant Agenthereunder until all the Warrants have been exercised or are no longer exercisable .

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1 8

(b) Resignation and Removal . The Warrant Agent may at any time resignby giving written notice to the Company of such intention on its part, specifying the dateon which its desired resignation shall become effective ; provided, however, that such dateshall not be less than 60 days after the date on which such notice is given unless th e

Company otherwise agrees . The Warrant Agent hereunder may be removed at any timeby the filing with it of an instrument in writing signed by or on behalf of the Companyand specifying such removal and the date when it shall become effective, which dateshall not be less than 60 days after such notice is given unless the Warrant Agentotherwise agrees . Any removal under this Section 6 .06 shall take effect upon theappointment by the Company as hereinafter provided of a successor Warrant Agent(which shall be a bank or trust company authorized under the laws of the jurisdiction ofits organization to exercise corporate trust powers) and the acceptance of suchappointment by such successor Warrant Agent .

(c) The Company To Appoint Successor. In the event that at any time theWarrant Agent shall resign, or shall be removed, or shall become incapable of acting, orshall be adjudged a bankrupt or insolvent, or shall commence a voluntary case under theFederal bankruptcy laws, as now or hereafter constituted, or under any other applicableU.S. Federal or state bankruptcy, insolvency or similar law or shall consent to theappointment of or taking possession by a receiver, custodian, liquidator, assignee, trustee,sequestrator (or other similar official) of the Warrant Agent or its property or affairs, orshall make an assignment for the benefit of creditors, or shall admit in writing its inabilityto pay its debts generally as they become due, or shall take corporate action infurtherance of any such action, or a decree or order for relief by a court havingjurisdiction in the premises shall have been entered in respect of the Warrant Agent in aninvoluntary case under the Federal bankruptcy laws, as now or hereafter constituted, orany other applicable Federal or state bankruptcy, insolvency or similar law, or a decree ororder by a court having jurisdiction in the premises shall have been entered for theappointment of a receiver, custodian, liquidator, assignee, trustee, sequestrator (or similarofficial) of the Warrant Agent or of its property or affairs, or any public officer shall takecharge or control of the Warrant Agent or of its property or affairs for the purpose ofrehabilitation, conservation, winding up or liquidation, a successor Warrant Agent,qualified as aforesaid, shall be appointed by the Company by an instrument in writing,filed with the successor Warrant Agent . Upon the appointment as aforesaid of asuccessor Warrant Agent and acceptance by the successor Warrant Agent of suchappointment, the Warrant Agent shall cease to be Warrant Agent hereunder ; provided,

however, that in the event of the resignation of the Warrant Agent under thi ssubsection (c), such resignation shall be effective on the earlier of (i) the date specified inthe Warrant Agent's notice of resignation and (ii) the appointment and acceptance of asuccessor Warrant Agent hereunder.

(d) Successor To Expressly Assume Duties . Any successor WarrantAgent appointed hereunder shall execute, acknowledge and deliver to its predecessor andto the Company an instrument accepting such appointment hereunder, and thereuponsuch successor Warrant Agent, without any further act, deed or conveyance, shall becomevested with all the rights and obligations of such predecessor with like effect as iforiginally named as Warrant Agent hereunder, and such predecessor, upon payment of it s

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1 9

charges and disbursements then unpaid, shall thereupon become obligated to transfer,deliver and pay over, and such successor Warrant Agent shall be entitled to receive, allmonies, securities and other property on deposit with or held by such predecessor, asWarrant Agent hereunder .

(e) Successor by Merger . Any corporation into which the Warrant Agenthereunder may be merged or consolidated, or any corporation resulting from any mergeror consolidation to which the Warrant Agent shall be a party, or any corporation to whichthe Warrant Agent shall sell or otherwise transfer all or substantially all of its assets andbusiness ; provided, however, that it shall be qualified as aforesaid, shall be the successorWarrant Agent under this Agreement without the execution or filing of any paper or anyfurther act on the part of any of the parties hereto .

ARTICLE VII

Miscellaneous

SECTION 7.01 . Persons Benefiting . Nothing in this Agreement isintended or shall be construed to confer upon any Person other than the Company, theWarrant Agent and the Holders any right, remedy or claim under or by reason of thisAgreement or any part hereof.

SECTION 7.02. Rights of Holders . Holders of unexercised Warrants arenot entitled to (i) receive dividends or other distributions , (ii) receive notice of or vote atany meeting of the stockholders , ( iii) consent to any action of the stockholders ,(iv) receive notice of any other proceedings of the Company, (v) exercise any preemptiveright or (vi) exercise any other rights whatsoever as stockholders of the Company .

SECTION 7.03 . Amendment. This Agreement may be amended by theparties hereto without the consent of any Holder for the purpose of curing any ambiguity,or of curing, correcting or supplementing any defective provision contained herein oradding or changing any other provisions with respect to matters or questions arisingunder this Agreement as the Company and the Warrant Agent may deem necessary ordesirable (including without limitation any addition or modification to provide forcompliance with the transfer restrictions set forth herein) ; provided, however, that suchaction shall not adversely affect the rights of any of the Holders . Any amendment orsupplement to this Agreement that has an adverse effect on the interests of the Holdersshall require the written consent of the Holders of a majority of the then outstandingWarrants. The consent of each Holder affected shall be required for any amendmentpursuant to which the Exercise Price would be increased or the number of Warrant Sharesissuable upon exercise of Warrants would be decreased (other than pursuant toadjustments provided herein) . In determining whether the Holders of the requirednumber of Warrants have concurred in any direction, waiver or consent, Warrants ownedby the Company shall be disregarded and deemed not to be outstanding, except that, forthe purpose of determining whether the Warrant Agent shall be protected in relying onany such direction, waiver or consent, only Warrants which the Warrant Agent knows are

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20

so owned shall be so disregarded . Also, subject to the foregoing, only Warrantsoutstanding at the time shall be considered in any such determination .

SECTION 7.04. Notices . Any notice or communication shall be in

writing and delivered in Person or mailed by first -class mail addressed as follows :

if to the Company :

Raytheon Company870 Winter StreetWaltham Woods,Waltham, MA 02451-1449Telephone : (781) 522-3000Facsimile: (781) 522-647 1

Attention: General CounselAndAttention : Corporate Secretary

With a copy to :

Wilmer Cutler Pickering Hale and Don LLP60 State StreetBoston , Massachusetts 02109Telephone : (617) 526-6000Facsimile : (617) 526-5000

Attention: John F. Batter III, Esq .

if to the Warrant Agent :

American Stock Transfer & Trust Company6201 15th AvenueBrooklyn, NY 11219Telephone: (718) 921-8380Facsimile: (718) 765-871 8

Attention: Barry S . Rosenthal

with a copy to :

American Stock Transfer & Trust Company6201 15th AvenueBrooklyn, NY 11219Telephone: (718) 921-8269Facsimile: (718) 765-871 8

Attention: General Counse l

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2 1

The Company or the Warrant Agent by notice to the other may designateadditional or different addresses for subsequent notices or communications .

Any notice or communication mailed to a Holder shall be mailed to theHolder at the Holder's address as it appears on the Certificate Register and shall besufficiently given if so mailed within the time prescribed .

Failure to mail a notice or communication to a Holder or any defect in itshall not affect its sufficiency with respect to other Holders . If a notice orcommunication is mailed in the manner provided above, it is duly given, whether or notthe addressee receives it .

SECTION 7.05 . Governing Law. The laws of the Commonwealth ofMassachusetts shall govern this Agreement and the Warrant Certificates .

SECTION 7.06 . Successors . All agreements of the Company in thisAgreement and the Warrant Certificates shall bind its successors . All agreements of theWarrant Agent in this Agreement shall bind its successors .

SECTION 7 . 07 . Multiple Originals . The parties may sign any number ofcopies of this Agreement . Each signed copy shall be an original, but all of them togetherrepresent the same agreement . One signed copy is enough to prove this Agreement .

SECTION 7 .08 . Table of Contents . The table of contents and headingsof the Articles and Sections of this Agreement have been inse rted for convenience ofreference only, are not intended to be considered a part hereof and shall not modify orrestrict any of the terms or provisions hereof.

SECTION 7 . 09 . Severability. The provisions of this Agreement areseverable, and if any clause or provision shall be held invalid, illegal or unenforceable inwhole or in part in any jurisdiction, then such invalidity or unenforceability shall affect inthat jurisdiction only such clause or provision , or part thereof, and shall not in anymanner affect such clause or provision in any other jurisdiction or any other clause orprovision of this Agreement in any jurisdiction .

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IN WITNESS WHEREOF, the parties have caused this WarrantAgreement to be duly executed as of the date first written above .

RAYTHEON COMPANY,

by

Name:Title :

AMERICAN STOCK TRANSFER &TRUST COMPANY, as Warrant Agent,

by

Name:Title :

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EXHIBIT A

[FORM OF FACE OF WARRANT CERTIFICATE ]

[Global Securities Legend]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVEOF [THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEWYORK, NEW YORK] , TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAMEOF CEDE & CO . OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZE DREPRESENTATIVE OF [DTC] (AND ANY PAYMENT IS MADE TO CEDE & CO ., OR TO SUCHOTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF [DTC]), ANYTRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANYPERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO ., HASAN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS INWHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCHSUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITYSHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SETFORTH IN THE WARRANT AGREEMENT REFERRED TO ON THE REVERSE HEREOF .

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No. [ ] Certificate for [ ] Warrants

WARRANTS TO PURCHASE COMMON STOCK OFRAYTHEON COMPANY

THIS CERTIFIES THAT [ ], or its registered assigns, is the registeredholder of the number of Warrants set forth above (the "Warrants") . Each Warrant entitles the holderthereof (the "Holder"), at its option and subject to the provisions contained herein and in the WarrantAgreement referred to below, to purchase from RAYTHEON COMPANY, a Delaware corporation ("theCompany"), [ ] shares of common stock, par value of $0 .01 per share, of the Company (the "CommonStock") at the per share exercise price of $37 .50 (the "Exercise Price") . This Warrant Certificate shallterminate and become void as of the close of business on [ ], 200[ ] (the "Expiration Date") or upon theexercise hereof as to all the shares of Common Stock subject hereto . The number of shares issuable uponexercise of the Warrants and the Exercise Price per share shall be subject to adjustment from time to timeas set forth in the Warrant Agreement.

This Warrant Certificate is issued under and in accordance with a Warrant Agreementdated as of [ ] (the "Warrant Agreement"), between the Company and American StockTransfer & Trust Company (the "Warrant Agent", which term includes any successor Warrant Agent underthe Warrant Agreement), and is subject to the terms and provisions contained in the Warrant Agreement, toall of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof.The Warrant Agreement is hereby incorporated herein by reference and made a part hereof. Reference ishereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights,duties and obligations of the Company, the Warrant Agent and the Holders of the Warrants . Capitalized

terms used but not defined herein shall have the meanings ascribed thereto in the Warrant Agreement . Acopy of the Warrant Agreement may be obtained for inspection by the Holder hereof upon written requestto the Warrant Agent [ ], Attention: Corporate Trust Department.

Subject to the terms of the Warrant Agreement, the Warrants may be exercised in wholeor in part by presentation of this Warrant Certificate with the Election to Purchase attached hereto dulyexecuted and with the simultaneous payment of the Exercise Price in cash (subject to adjustment) to theWarrant Agent for the account of the Company at the office of the Warrant Agent and payment by theHolder to the Warrant Agent of any exercise fee associated with the exercise of such Warrants . Payment of

the Exercise Price in cash shall be made by certified or official bank check payable to the order of theCompany or by wire transfer of funds to an account designated by the Company for such purpose .

As provided in the Warrant Agreement and subject to the terms and conditions therein setforth, the Warrants shall be exercisable at any time and from time to time on any Business Day after theIssue Date ; provide however, that Holders of Warrants will be able to exercise their Warrants only if theCommon Shelf Registration Statement relating to the Common Stock underlying the Warrants is effectiveand such securities are qualified for sale or exempt from qualification under the applicable securities lawsof the states or other jurisdictions in which such Holders reside ; provided further, however, that no Warrant

shall be exercisable after 200[ ] . The Company covenants that it will, in good faith and asexpeditiously as reasonably possible, use its reasonable best efforts to secure, and maintain until theExpiration Date, the effectiveness of such registration relating to the Common Stock underlying theWarrants, and to provide that such securities are qualified for sale or exempt from qualification under theapplicable securities laws of the states or other jurisdictions in which such Holders reside .

As provided in the Warrant Agreement, the number of shares of Common Stock issuableupon the exercise of the Warrants and the Exercise Price are subject to adjustment upon the happening ofcertain events .

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Upon any partial exercise of the Warrants, there shall be countersigned and issued to theHolder hereof a new Warrant Certificate representing those Warrants which were not exercised . This

Warrant Certificate may be exchanged at the office of the Warrant Agent by presenting this WarrantCertificate properly endorsed with a request to exchange this Warrant Certificate for other Warrant

Certificates evidencing an equal number of Warrants . No fractional Warrant Shares will be issued upon theexercise of the Warrants, but the Company shall pay an amount in cash equal to the Current Market Valueper Warrant Share on the day immediately preceding the date the Warrant is exercised, multiplied by thefraction of a Warrant Share that would be issuable on the exercise of an y Warrant.

All shares of Common Stock issuable by the Company upon the exercise of the Warrantsshall, upon such issue, be duly and validly issued and fully paid and non-assessable .

The holder in whose name the Warrant Certificate is registered may be deemed andtreated by the Company and the Warrant Agent as the absolute owner of the Warrant Certificate for allpurposes whatsoever and neither the Company nor the Warrant Agent shall be affected by notice to the

contrary .

Company.The Warrants do not entitle any Holder hereof to any of the rights of a stockholder of th e

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This Warrant Certificate shall not be valid or obligatory for any purpose until it shallhave been countersigned by the Warrant Agent .

RAYTHEON COMPANY,

by

Name :Title :

by

Name :Title :

DATED :

Countersigned:

AMERICAN STOCK TRANSFER & TRUSTCOMPANY ,as Warrant Agent,

by

Authorized Signatory

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FORM OF ELECTION TO PURCHASE WARRANT SHARES(to be executed only upon exercise of Warrants )

RAYTHEON COMPANY

The undersigned hereby irrevocably elects to exercise Warrants toacquire shares of Common Stock, par value $0 . 01 per share , of RAYTHEON COMPANY, at an exercise

price per share of Common Stock of $37 . 50 and otherwise on the terms and conditions specified in the

within Warrant Certificate and the Warrant Agreement therein referred to, surrenders this Warrant

Certificate and all right, title and interest therein to RAYTHEON COMPANY and directs that the shares ofCommon Stock deliverable upon the exercise of such Warrants be registered or placed in the name and at

the address specified below and de livered thereto .

Date :

(Signature of Owner)

(Street Address )

(City) (State) (Zip Code)

Medallion Guarantee by:

2 The signature must correspond with the name as written upon the face of the within WarrantCertificate in every particular, without alteration or enlargement or any change whatever, and must be

medallion guaranteed by an eligible guarantor institution .

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Securities and/or check to be issued to :

Please insert social security or identifying number :

Name :

Street Address :

City, State and Zip Code :

A new Warrant Certificate evidencing any unexercised Warrants evidenced by the within WarrantCertificate is to be issued to:

Please insert social security or identifying number :

Name :

Street Address :

City, State and Zip Code :

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FORM OF WARRANT TRANSFER

For value received, the undersigned hereby sells, assigns and transfers unt othe right to purchase ( )

Warrant Shares representing shares of common stock, par value $0 .01 per share, of Raytheon Company(the "Company") pursuant to the attached Warrant Certificate and does hereby irrevocably constitute andappoint attorney to transfer the Warrant, or such portion as is transferred hereby, on thebooks of the Company with full power of substitution in the premises . The undersigned requests saidattorney to issue to the transferee a Warrant Certificate evidencing such transfer and to issue to theundersigned a new Warrant Certificate evidencing the right to purchase Warrant Shares for the balance notso transferred, if any .

Date :

(Signature of Owner)

(Street Address )

(City) (State) (Zip Code)

Medallion Guarantee by:

Name in which new Warrant(s) should be registered:

(Name )

(Street Address)

(City) (State) (Zip Code )

(social security or identifying number )

3 The signature must correspond with the name as written upon the face of the within WarrantCertificate in every particular, without alteration or enlargement or any change whatever, and must be

medallion guaranteed by an eligible guarantor institution .

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SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY 4

The following increases or decreases in this Global Security have been made :

Date of Exchange

Decrease innumber of

Warrants in thisGlobal Warrant

Certificate

Number ofWarrants in thi s

Increase in number Global Warrantof Warrants in this Certificate Signature of

Global Warrant following such authorized officerCertificate change of Warrant Agent

4 To be included only if Warrants are in global form

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EXHIBIT D

EXHIBIT DThe number of Settlement Warrants having a value of $200 million as of the Warran t

Valuation Date shall be determined according to the Black-Scholes methodology as calculate d

using the criteria specified below.

Type of Option: Call

Exercise Type : American

Model Type : The Black-Scholes model available on the Bloomberg service pageRTN Equity OV (Model Type 2 Black-Scholes) for Raytheoncommon stock usin all of the criteria specified herein, rounded tothe nearest 100,0001 (i .e . $0.00001 per option) .

Share Price: The Bloomberg Volume Weighted Average Price ("VWAP")reported on the Bloomberg service page RTN Equity AQR forRaytheon common stock for the 20 contiguous trading daysimmediately preceding, and ending at 4 :00 p.m., New York, NewYork time on the day before the Warrant Valuation Date, roundedto the nearest 10,0001' (i .e . $0.0001 per share) .

Strike Price: $37.50

Time to Expiration : 5 years

Risk-free Rate : The yield reported on the Bloomberg service page GT5 Govt GITfor the active (on-the-run) 5-year U.S. Treasury note as at 3 :00p .m., New York , New York time on the day immediatelypreceding the Warrant Valuation Date . Enter the 3 :00 p . m. closingprice into the Bloomberg P rice-Yield Calculator to obtain theyield. Activate the calculator by entering Y <GO>, enter the p ricein Bloomberg format, and hit <GO> .

Dividend Yield : The greater of (i) $0 . 80 divided by the VWAP, or (ii) the sum ofthe last four declared quarterly dividends on Raytheon commonstock divided by the VWAP.

Volatili : The volume weighted average daily volatility reported on theBloomberg serv ice page RTN Equity HVG (pages 1 and 2) forRaytheon common stock for the five calendar years ending on the

day immediately preceding the Warrant Valuation Date but

excluding the 20 trading days beginning on and immediatelyfollowing September 11, 2001 from such average .

In order to accommodate the mechanical limitations of Bloomberg, the following calculationmethod shall be used :

DOCS\215982v5

Using assumption of 250-Trading Days per year, the total 1,230 Trading Day weightedaverage daily volatility is calculated by linking successive 400 day periods (and the lastperiod) to total 1,230 trading days (i .e . five 250-day years less 20 days). Respective periodvolatility must be squared (to obtain the variance), multiplied by the number of trading daysin the period, and the resulting sum of all periods shall be divided by the total number oftrading days to get the weighted average variance . The weighted average daily volatility isthe square root of this variance .

On the HVG service page, the Market field shall be V (VWAP), Period shall be D (Daily),Currency shall be USD (U.S. Dollars), Annualization Factor shall be 250 days .

Trade Date : The Warrant Valuation Date

Settle Date : The Warrant Valuation Date

DOCS\215982v5

4 Stipulation and Agreement of Settlement 08/17/2004

Documents

Transcript of 4 Stipulation and Agreement of Settlement 08/17/2004