Employment Agreement - Raytheon Co. and Keith J. Peden


Keith J. Peden                    Raytheon Company
Vice President and Deputy         Executive Offices
Director Human Resources          141 Spring Street
781 860 2380                      Lexington, Massachusetts
781 860 2912 fax                  02421  USA

                                                        March 13, 2000

Mr. Shay D. Assad
7 School Street
Hopkinton, MA  01748

           Re: Retention Bonus

Dear Shay:

         Raytheon Company is exploring various alternatives with respect to
Raytheon Engineers and Constructors, Inc. (hereinafter 'RE&C'), including its
sale to a third party. This letter sets forth the special incentive arrangement
and conditions for which you will be eligible in connection with your continued
employment and cooperation in the potential sale of RE&C.

        Raytheon will decide in its sole discretion if and when it will proceed
with the sale of RE&C, or any portion of the assets of RE&C and the terms and
conditions upon which any sale or sales shall be effected. Nothing contained
herein shall obligate the sale of RE&C, any portion thereof or assets of RE&C at
this or any other time.

         1. You agree to assist and fully cooperate with RE&C in all matters
related to its efforts to sell, and to do and perform all tasks reasonably
requested of you to support and bring about such sale. Furthermore, in
recognition of RE&C's desire that you make yourself available for employment
with the eventual buyer should the buyer desire to retain your services, you
agree to review and consider in good faith employment offers, if any, made by
the Buyer.

         2. Change In Control. The Company agrees that the successful change in
control of RE&C shall constitute a qualifying event for purposes of your
Raytheon Company Change in Control Severance Agreement ('CIC Agreement') dated
November 22, 1995, as amended. Consequently, you shall be entitled to the
Severance Benefit provided in Section 1.9 and the Excise Tax Payments, if
applicable, as set forth in Section 5. The amount due under the CIC Agreement
shall be paid to you within twenty (20) days of the Closing Date.

         3. 1999  Results  Based  Incentive  ('RBI')  Bonus.  You shall be
eligible for an RBI Bonus consistent with the terms of the performance measures
of the 1999 RBI Bonus Plan.

                                       2

         4. Retention  Bonus.  If you  continue  as an employee  until the
Closing  Date of the sale of RE&C, you will be eligible to participate in the
following Retention Bonus arrangement.

         (A) The Retention Bonus shall be two times the annual base salary
             rate you are paid as of the Closing Date and two times your
             targeted 1999 RBI Bonus. The Retention Bonus is divided into
             three parts and is subject to the terms and conditions set
             forth below.

             (i)   Part 1: Part 1 of the Retention Bonus is twenty-five
                   percent (25%) of one year's base salary and bonus.
                   You will be paid Part 1 if you continue to be an
                   active employee as of the Closing Date. Part 1 will
                   be paid within twenty (20) days of the Closing Date.

             (ii)  Part 2: Part 2 of the Retention Bonus is seventy-five
                   percent (75%) of one year's base salary and bonus.
                   You will be entitled to Part 2 if you are employed by
                   the Buyer on the first anniversary of the Closing
                   Date. Part 2 will be paid within twenty (20) days of
                   this date.

             (iii) Part 3: Part 3 of the Retention Bonus is one year's
                   base salary and bonus. You shall receive Part 3 if
                   you are employed by the Buyer on the second
                   anniversary of the Closing Date. Part 3 will be paid
                   within twenty (20) days of this date.

         (B) You shall be  entitled  to the full  Retention  Bonus  (Parts 1, 2
             and 3) as of the Closing Date if:

             (i)  You are not offered a position with the Buyer, nor are
                  you offered continued employment with Raytheon Company,
                  an affiliate or subsidiary, or

             (ii) You are offered a position with the Buyer, but the
                  position does not include a base salary essentially
                  equivalent to your base salary with RE&C at the time
                  of the Closing.

         (C) You shall be entitled to any unpaid part of the Retention
             Bonus if you accept a position with the Buyer and, during the
             first twenty-four (24) months of such employment, you are:

             (i)  Involuntarily separated from employment without cause, as
                  defined below; or

             (ii) Subjected to a substantial reduction in the base
                  salary paid by the Buyer at the inception of your
                  employment with the Buyer.

                                       3

         (D) For purposes of this Retention Bonus arrangement, 'cause' shall be
             defined as:

             (i)   Failure to perform any of the material duties of the
                   position with the Buyer, including special projects
                   and assignments, after notice and a reasonable
                   opportunity to correct performance; or

             (ii)  Breach of any material provision of the Buyer's Standards
                   of Business Behavior and Ethics; or

             (iii) Conviction of, or plea of nolo contendere to, any
                   felony or misdemeanor which has a material impact on
                   your ability to perform the duties of your position.

         (E) If you are entitled to Part 2 or 3 of the Retention Bonus due
             to the occurrence of the conditions set forth in paragraphs
             4(B)-(C), you shall receive this payment within twenty (20)
             days of written demand from you establishing to Raytheon's
             satisfaction the occurrence of such condition(s).

         5.  Termination Prior to Closing.  Raytheon retains the right to
terminate your employment prior to the Closing for the reasons set forth below.
In the event of a termination for cause, you shall not be entitled to the
Retention Bonus. Reasons for termination which shall constitute grounds for a
denial of the Retention Bonus are:

         (A) Failure to perform any of the material duties of your
             position, including special projects and assignments, after
             notice and a reasonable opportunity to correct performance; or

         (B) Breach of any material provision of the Raytheon's Standards of
             Business Behavior and Ethics; or

         (C) Breach of any material provision of Raytheon Company Rules and
             Regulations.

         If you are terminated prior to Closing for a reason other than those
specified in subparagraphs (A), (B) and (C) above, you will be eligible for
Portion 1 of the Retention Bonus set forth in paragraph 4.

         6.  Benefit  Assurance.  The company intends to seek agreement with the
Buyer to provide employee benefits reasonably comparable in the aggregate to the
current company benefits. If the company is unable to reach such agreement, you
will receive a one-time lump sum payment as a one-year benefit differential.

                                       4

         7.  Stock.

             (a) Vested Stock Options at Closing Date: For those stock
                 options which are vested as of the Closing Date, you
                 shall have three (3) years from the last day worked
                 for Raytheon to exercise these options. The procedure
                 for the exercise of the options will vary depending
                 upon whether you exercise the options during or after
                 the first anniversary of your separation from
                 Raytheon.

                 (i)  First Year Exercise: Exercise of these
                      options during the first year following your
                      last day worked for Raytheon shall be
                      pursuant to the procedure set forth in 'A
                      Guide to Your Raytheon Company Stock Option
                      Plan' (see page 8 of attached copy).

                 (ii) Exercise Years 2 and 3: The following terms
                      and procedures shall govern the exercise of
                      your options after the first anniversary and
                      ending on the third anniversary of your last
                      day worked for Raytheon:

                      (A)  Basis for Separation from Employment:

                           (1) Involuntarily Without Cause:  If you are
                               involuntarily terminated without cause, as
                               defined in paragraph 3(D), you may exercise
                               these options through the third anniversary of
                               the Closing Date.

                           (2) Involuntarily  With Cause:  If you are
                               terminated  for cause, as defined in paragraph
                               3(D), by the Buyer, you will immediately lose
                               the right to exercise these options as of the
                               date terminated by the Buyer.

                           (3) Voluntary Termination: If you voluntarily
                               terminate your employment during this period,
                               you shall have thirty (30) calendar days
                               following your last day actually worked to
                               exercise these options.

                                       5

                      (B) Procedure:

                          (i)    On any business day you may elect to obtain the
                                 value of all or a portion of these options by
                                 contacting the Stock Administration Group,
                                 Corporate Human Resources, Lexington, MA at
                                 781-860-2903 and making a verbal request
                                 identifying the number of shares you want to
                                 'exercise.' This request should be confirmed
                                 by facsimile letter to the Stock Administrator,
                                 Fax No. 781-860-3688 as soon as possible after
                                 the verbal request.

                          (ii)   Raytheon will then calculate the amount due to
                                 you by multiplying the number of shares you
                                 want to exercise by the difference between the
                                 option price and the highest reported trading
                                 price on the date of your request following the
                                 time of your request to the Stock
                                 Administrator.

                          (iii)  Payment of the amount calculated pursuant to
                                 subsection (b) above, subject to applicable
                                 statutory withholdings,  will be sent to you by
                                 check, within seven (7) days of your 'exercise'
                                 request.

             (b)  Non-Vested Stock Options at Closing Date. With respect to
                  your options which have not vested as of the Closing Date, the
                  company intends to reach an agreement with the Buyer whereby
                  the unvested options are converted to an equivalent value of
                  Buyer's common stock. Under the intended agreement, structured
                  to comply with the applicable provisions of the Internal
                  Revenue Code (ss. 422 and 424), your current unvested options
                  in Raytheon stock would be adjusted to constitute a Buyer
                  option to acquire the number of shares of Buyer's stock equal
                  to the number of shares of Raytheon stock subject to option
                  times a fraction, the numerator of which is the average of the
                  daily average of the high and low trading prices of Raytheon
                  stock for the three business days prior to the Closing Date,
                  and the denominator of which is the average of the daily
                  average of the high and low trading prices of each share of
                  Buyer common stock for the three business days prior to the
                  Closing Date.

             (c)  Restricted Stock. The restrictions on your restricted stock
                  award will be waived as of the Closing Date, and you will
                  receive the cash value of these shares at the highest traded
                  price on that day, payable within twenty (20) days, subject to
                  normal applicable tax withholdings.

                                       6

         8. Long Term Achievement Program ('LTAP'). You shall continue as an
active participant in the LTAP transition plans for 1999 and 2000; and, the
1999-2001 plan in accordance with LTAP terms. The payout, if any, for the
performance cycles shall be made after the performance cycles in accordance with
each plan's performance measures.

         9. Pension.  As of the Closing Date, you will be vested in the accrued
benefit as provided pursuant to the terms of the Raytheon Company Pension Plan
for Salaried Employees.

        10.  Financial and Estate Planning  Program.  The financial and estate
planning services provided in accordance with the Raytheon Executive Perquisite
Program shall continue through June 30, 2000.

        11. Prior to any public announcement concerning the sale of RE&C, you
agree that without the prior consent of Raytheon you will not have any contact
with nor disclose to any person or entity (other than those individuals
identified to you in writing as being active participants in the sale process),
either the fact that discussions or negotiations are taking place or have taken
place regarding the possible sale of RE&C or any of the terms, conditions or
other facts relating to the possible sale, including the status thereof. During
the course of the negotiation of the possible sale of RE&C, you recognize your
continuing duty of loyalty and obligation to act in the best interests of the
Company.

        12. Confidentiality.  You agree to keep confidential this agreement and
not to disclose either the fact of the agreement or the terms thereof, except
where necessary to members of your immediate family, tax or legal advisors, and
as required in response to a valid subpoena or court order.

         13. Arbitration of Claims. The parties agree that any disputes arising
during the term of your employment with Raytheon and/or RE&C, including but not
limited to any claims arising under the terms of this agreement, shall be
subject to final and binding arbitration as the sole and exclusive forum for
dispute resolution. Arbitration under this section shall be conducted pursuant
to the rules of the American Arbitration Association applicable to employment
disputes.

         Please acknowledge your acceptance of the terms and conditions of this
Retention Bonus agreement by signing below.

                                       Very truly yours,

                                       Raytheon Company

                                       By

                                       Keith J. Peden
                                       Vice President and Deputy Director
                                              Human Resources

AGREED AND ACCEPTED:

Date:

cc:      D. M. Donovan
         G. F. Gasperini