Exhibit 10.4

 

RAYTHEON COMPANY

NONQUALIFIED STOCK OPTION AGREEMENT

 

This Agreement made as of «grant_date» between Raytheon Company (the “Company”)
and

 

«optionee»   «ssn2»

 

(the “Optionee”). In consideration of the agreements set forth below, the
Company and the Optionee agree as follows:

 

1. Grant. A Nonqualified Stock Option (the “Option”) is hereby granted by the
Options Subcommittee of the Management Development and Compensation Committee to
the Optionee, to purchase that number of shares of Raytheon Common Stock, $0.01
par value per share (the “Common Shares”) set forth below, subject to the
following terms and conditions and to the provisions of the Raytheon Company
2001 Stock Option Plan (the “Plan”), as amended from time to time, the terms of
which are incorporated by reference herein.

 

Number of Common

Shares Subject to Option

--------------------------------------------------------------------------------

   Price Per Share

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   Exercise Period
Commencement Date

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Exercise Period

Expiration Date

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«NQ1»

   $«price»    «exercise_date_1»    «expire_date»

«NQ2»

   $«price»    «exercise_date_2»    «expire_date»

«NQ3»

   $«price»    «exercise_date_3»    «expire_date»

 

2. Exercise. An Option may be exercised through Smith Barney, in the manner set
forth in Section 7, specifying the number of shares as to which the Option is
being exercised, accompanied (except as otherwise provided in Section 3 below)
by full payment for such shares in the form of check or bank draft payable to
the order of Smith Barney or other shares of the Stock with a current Fair
Market Value equal to the Option Price of the shares to be purchased. Receipt by
Smith Barney of such notice and payment shall constitute the exercise of the
Option or a part thereof. Within 20 days thereafter, Smith Barney shall deliver
or cause to be delivered to the Optionee a certificate or certificates (or other
evidence of ownership) for the number of shares then being purchased. Such
shares shall be fully paid and nonassessable. If such shares are not at that
time effectively registered under the Securities Act of 1933, as amended, the
Optionee shall include with such notice a letter, in form and substance
satisfactory to the Company, confirming that such shares are being purchased for
the Optionee’s own account for investment and not with a view to distribution.

 

3. Cashless Exercise. In lieu of payment by check, bank draft or other Common
Shares, an Optionee may, unless prohibited by applicable law or Company policy,
elect to effect payment by delivering sale instructions to Smith Barney a number
of the shares subject to the Option being exercised sufficient, after brokerage
commissions, to cover the aggregate exercise price of such Option and, if the
Optionee further elects, the Optionee’s withholding obligations with respect to
such exercise referred to in Section 15.8 of the Plan, together with irrevocable
instructions to Smith Barney to sell such shares and to remit directly to the
Company such aggregate exercise price and, if the Optionee has so elected, the
amount of such withholding obligation. The Company shall not be required to
deliver to Smith Barney any stock certificate (or other evidence of ownership)
for such shares until it has received from Smith Barney such exercise price and,
if the Optionee has so elected, such withholding obligation amount.

 

4. Cessation of Active Service. If an Optionee ceases to be an active employee,
consultant or non-employee Director of the Company or any Affiliate other than
by reason of death or retirement, absent in any case a determination by the
Committee to the contrary, any Options which were exercisable by the Optionee on
the date of cessation of active employment may be exercised no later than the
earlier of (a) the expiration date of the Option or (b) the respective periods
listed below.

 

Reason for Cessation of Active Employment

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Period Following Last Day of Active Employment

Within Which Option May Be Exercised

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Medical Leave of Absence

   During such leave

Discharge for Cause or other severance of employment determined by Committee to
warrant termination of option

   None

Layoff or other involuntary termination without Cause

   Three Years

Voluntary termination (non-retirement)

   Three Months

 

5. Death of Optionee. If an Optionee’s employment terminates because of death,
the Options shall be fully vested automatically without regard to whether any
applicable vesting requirements in the Grant Agreement have been fulfilled, and
the Options may be exercised at any time before the expiration date, but only by
the Optionee’s estate or by the person(s) who acquired the right to exercise
such Option by bequest or inheritance or by reason of the death of the Optionee.

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6. Retirement of Optionee. If an Optionee’s employment terminates because of
Retirement, any Options which were granted at least one year prior to the date
of termination of employment will vest in accordance with the Vesting Period
specified in the Grant Agreement and may be exercised any time before their
expiration date, provided such Options are exercisable on the exercise date.

 

7. Procedure for Exercise. The Option may be exercised by the Optionee (or in
the event of the Optionee’s death the persons specified in Section 5) by calling
a Smith Barney customer service representative or by accessing the Smith Barney
online benefit website. The Optionee must remit to Smith Barney notice and
payment pursuant to the procedure specified in Section 2 above (except as
otherwise provided in Section 3 above) to complete the Option exercise. The date
of exercise shall be the date such notice is received by Smith Barney (provided
full payment, required by Section 2, or evidence required by Section 3, is
tendered therewith) unless a later date is specified in the notice.

 

8. Withholding Taxes. The Company or Smith Barney shall have the right to
require the Optionee to remit to the Company, or to withhold from other amounts
payable to the Optionee as compensation or otherwise, an amount sufficient to
satisfy all federal, state and local tax withholding requirements.

 

9. Disposition of the Option. The Option may be exercised only by the Optionee
during his or her lifetime, by legatees of such Optionee under the Optionee’s
will or by his or her executors, personal representatives or distributees and
may not be transferred other than by will or the applicable laws of descent and
distribution. The Option shall not otherwise be transferred, assigned, pledged
or hypothecated for any purpose whatsoever and shall not be subject, in whole or
in part, to execution, attachment or similar process. Any attempted assignment,
transfer, pledge or hypothecation or other disposition of the Option, other than
in accordance with the terms set forth herein, shall be void and of no effect.

 

10. Rights as Stockholder. Neither the Optionee nor any other person entitled to
exercise the Option under the terms hereof shall be considered a stockholder or
have any of the rights or privileges of a stockholder of the Company in respect
of any of the Common Shares issuable upon exercise of the Option unless and
until certificates for Common Shares are issued to him or her upon payment in
full of the option exercise price in the manner specified herein and in the
Plan.

 

11. Rights as Employee. The grant of the Option confers upon the Optionee no
right to continued employment by the Company or its subsidiaries.

 

12. Additional Restrictions. The Option shall be exercised in accordance with
such terms and conditions as the Management Development and Compensation
Committee (or the Options Subcommittee thereof) of the Company’s Board of
Directors shall from time to time adopt to the extent not inconsistent with the
Delaware General Corporation Law, the Plan and Section 422 of the Internal
Revenue Code.

 

13. Government Regulations. Notwithstanding anything contained herein to the
contrary, the Company’s obligations to issue or deliver certificates evidencing
the Common Shares shall be subject to all applicable laws, rules and regulations
and to such approvals by any governmental agencies or national securities
exchanges as may be required.

 

14. Capitalized Terms. All capitalized terms used but not otherwise defined
herein shall have the meanings given to such terms in the Plan.

 

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.

 

Raytheon Company

By:

 

 

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William H. Swanson

   

President

 

The undersigned Optionee hereby accepts the foregoing Option and the terms and
conditions hereof.

 

 

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Optionee

 

QUESTIONS CONCERNING THIS AGREEMENT OR THE OPTION GRANT SHOULD BE DIRECTED TO A
SMITH

BARNEY CUSTOMER REPRESENTATIVE AT (800) 803-5086 IF IN THE U.S. OR (212)
615-7046 IF OUTSIDE THE U.S.