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                                                                    Exhibit 4(c)

                                 LOAN AGREEMENT

Wachovia Bank, National Association
300 Main Street
Stamford, Connecticut 06901
(Hereinafter referred to as the "Bank")

Raytech Powertrain, Inc.
4 Corporate Drive
Shelton, Connecticut 06484

Allomatic Products Company
609 E. Chaney Street
Sullivan, Indiana 47882

Raytech Systems, Inc.
312 S. St. Clair Street
Sullivan, Indiana 47882
(Individually and collectively "Borrower")

This Loan Agreement ("Agreement") is entered into as of October 23, 2003, by and
between Bank and Borrower.

This Agreement applies to the loan or loans (individually and collectively, the
"Loan") evidenced by one or more promissory notes of even date herewith or other
notes subject hereto, as modified from time to time (whether one or more, the
"Note") and all Loan Documents. The terms "Loan Documents" and "Obligations," as
used in this Agreement, are defined in the Note.

Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:

REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s) thereof,
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized as may be required and, if
necessary, by making appropriate filings with any governmental agency or unit
and are the legal, binding, valid and enforceable obligations of Borrower and
any guarantors; and do not (i) contravene, or constitute (with or without the
giving of notice or lapse of time or both)

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a violation of any provision of applicable law, a violation of the
organizational documents of Borrower or any guarantor, or a default under any
agreement, judgment, injunction, order, decree or other instrument binding upon
or affecting Borrower or any guarantor, (ii) result in the creation or
imposition of any lien (other than the lien(s) created by the Loan Documents) on
any of Borrower's or any guarantor's assets, or (iii) give cause for the
acceleration of any obligations of Borrower or any guarantor to any other
creditor. ASSET OWNERSHIP. Borrower has good and marketable title to all of the
properties and assets reflected on the balance sheets and financial statements
supplied Bank by Borrower, and all such properties and assets are free and clear
of mortgages, security deeds, pledges, liens, charges, and all other
encumbrances, except as otherwise disclosed to Bank by Borrower in writing and
approved by Bank ("Permitted Liens"). To Borrower's knowledge, no default has
occurred under any Permitted Liens and no claims or interests adverse to
Borrower's present rights in its properties and assets have arisen. DISCHARGE OF
LIENS AND TAXES. Borrower has duly filed, paid and/or discharged all taxes or
other claims that may become a lien on any of its property or assets, except to
the extent that such items are being appropriately contested in good faith and
an adequate reserve for the payment thereof is being maintained. SUFFICIENCY OF
CAPITAL. Borrower is not, and after consummation of this Agreement and after
giving effect to all indebtedness incurred and liens created by Borrower in
connection with the Note and any other Loan Documents, will not be, insolvent
within the meaning of 11 U.S.C. Section 101(32). COMPLIANCE WITH LAWS. Borrower
is in compliance in all respects with all federal, state and local laws, rules
and regulations applicable to its properties, operations, business, and
finances, including, without limitation, any federal or state laws relating to
liquor (including 18 U.S.C. Section 3617, et seq.) or narcotics (including 21
U.S.C. Section 801, et seq.) and/or any commercial crimes; all applicable
federal, state and local laws and regulations intended to protect the
environment; and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), if applicable. ORGANIZATION AND AUTHORITY. Each corporation,
partnership or limited liability company, Borrower and/or guarantor, as
applicable, is duly created, validly existing and in good standing under the
laws of the state of its organization, and has all powers, governmental
licenses, authorizations, consents and approvals required to operate its
business as now conducted. Each corporation, partnership or limited liability
company, Borrower and/or guarantor, as applicable, is duly qualified, licensed
and in good standing in each jurisdiction where qualification or licensing is
required by the nature of its business or the character and location of its
property, business or customers, and in which the failure to so qualify or be
licensed, as the case may be, in the aggregate, could have a material adverse
effect on the business, financial position, results of operations, properties or
prospects of Borrower or any such guarantor. NO LITIGATION. There are no pending
or threatened suits, claims or demands against Borrower or any guarantor that
have not been disclosed to Bank by Borrower in writing, and approved by Bank.

AFFIRMATIVE COVENANTS. Borrower agrees that from the date hereof and until final
payment in full of the Obligations, unless Bank shall otherwise consent in
writing, Borrower will: ACCESS TO BOOKS AND RECORDS. Allow Bank, or its agents,
during normal business hours, access to the books, records and such other
documents of Borrower as Bank shall reasonably require, and allow Bank, at
Borrower's expense, to inspect, audit and examine the same and to make extracts
therefrom and to make copies thereof. ACCOUNTS PAYABLE AGING. Deliver to Bank,
from time to time hereafter but not less than quarterly within 45 days of the
end of each such period, a detailed payables report including aging of payables
by total, vendor names and

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addresses, a reconciliation statement, and the original date of each invoice.
ACCOUNTS RECEIVABLE AGING. Deliver to Bank, from time to time hereafter but not
less than quarterly within 45 days of the end of each such period, a detailed
receivables report including totals, customer names and addresses, a
reconciliation statement, and the original date of each invoice. BUSINESS
CONTINUITY. Conduct its business in substantially the same manner and locations
as such business is now and has previously been conducted. COMPLIANCE WITH OTHER
AGREEMENTS. Comply with all terms and conditions contained in this Agreement,
and any other Loan Documents, and swap agreements, if applicable, as defined in
the 11 U.S.C. Section 101. ESTOPPEL CERTIFICATE. Furnish, within 15 days after
request by Bank, a written statement duly acknowledged of the amount due under
the Loan and whether offsets or defenses exist against the Obligations.
INSURANCE. Maintain adequate insurance coverage with respect to its properties
and business against loss or damage of the kinds and in the amounts customarily
insured against by companies of established reputation engaged in the same or
similar businesses including, without limitation, commercial general liability
insurance, workers compensation insurance, and business interruption insurance;
all acquired in such amounts and from such companies as Bank may reasonably
require. INVENTORY REPORTS. Deliver to Bank, from time to time hereafter but not
less than quarterly within 45 days of the end of each such period, an inventory
report showing individual values for raw materials, work-in-progress, finished
products and any inventory obsolescence. MAINTAIN PROPERTIES. Maintain, preserve
and keep its property in good repair, working order and condition, making all
needed replacements, additions and improvements thereto, to the extent allowed
by this Agreement. NOTICE OF DEFAULT AND OTHER NOTICES. (a) NOTICE OF DEFAULT.
Furnish to Bank immediately upon becoming aware of the existence of any
condition or event which constitutes a Default (as defined herein or in any
other Loan Documents) or any event which, upon the giving of notice or lapse of
time or both, may become a Default, written notice specifying the nature and
period of existence thereof and the action which Borrower is taking or proposes
to take with respect thereto. (b) OTHER NOTICES. Promptly notify Bank in writing
of (i) any material adverse change in its financial condition or its business;
(ii) any default under any material agreement, contract or other instrument to
which it is a party or by which any of its properties are bound, or any
acceleration of the maturity of any indebtedness owing by Borrower; (iii) any
material adverse claim against or affecting Borrower or any part of its
properties; (iv) the commencement of, and any material determination in, any
litigation with any third party or any proceeding before any governmental agency
or unit affecting Borrower; and (v) at least 30 days prior thereto, any change
in Borrower's name or address as shown above, and/or any change in Borrower's
structure. OTHER FINANCIAL INFORMATION. Deliver promptly such other information
regarding the operation, business affairs, and financial condition of Borrower
which Bank may reasonably request. PAYMENT OF DEBTS. Pay and discharge when due,
and before subject to penalty or further charge, and otherwise satisfy before
maturity or delinquency, all obligations, debts, taxes, and liabilities of
whatever nature or amount, except those which Borrower in good faith disputes.
REPORTS AND PROXIES. Deliver to Bank, promptly, a copy of all financial
statements, reports, notices, and proxy statements, sent by Borrower to
stockholders, and all regular or periodic reports required to be filed by
Borrower with any governmental agency or authority.

NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: CHANGE IN FISCAL YEAR. Change its fiscal
year. CHANGE OF CONTROL. Make

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or suffer a change of ownership that effectively changes control of Borrower
from current ownership. ENCUMBRANCES. Create, assume, or permit to exist any
mortgage, security deed, deed of trust, pledge, lien, charge or other
encumbrance on any of its assets, whether now owned or hereafter acquired, other
than: (i) security interests required by the Loan Documents; (ii) liens for
taxes contested in good faith; (iii) liens accruing by law for employee
benefits; or (iv) Permitted Liens. GUARANTEES. Guarantee or otherwise become
responsible for obligations of any other person or persons, other than the
ordinary endorsement of checks and drafts for collection in the ordinary course
of business. DEFAULT ON OTHER CONTRACTS OR OBLIGATIONS. Default on any material
contract with or obligation when due to a third party or default in the
performance of any obligation to a third party incurred for money borrowed.
GOVERNMENT INTERVENTION. Permit the assertion or making of any seizure, vesting
or intervention by or under authority of any governmental entity, as a result of
which the management of Borrower or any guarantor is displaced of its authority
in the conduct of its respective business or such business is curtailed or
materially impaired. JUDGMENT ENTERED. Permit the entry of any monetary judgment
or the assessment against, the filing of any tax lien against, or the issuance
of any writ of garnishment or attachment against any property of or debts due.
RETIRE OR REPURCHASE CAPITAL STOCK. Retire or otherwise acquire any of its
capital stock.

ANNUAL FINANCIAL STATEMENTS. Borrower shall cause its parent company, Raytech
Corporation ("Parent Company"), to deliver to Bank, within 90 days after the
close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules; all on a consolidated and consolidating basis with respect to Parent
Company and Borrower, and in reasonable detail, prepared in conformity with
generally accepted accounting principles, applied on a basis consistent with
that of the preceding year. All such statements shall be examined by an
independent certified public accountant acceptable to Bank. The opinion of such
independent certified public accountant shall not be acceptable to Bank if
qualified due to any limitations in scope imposed by Parent Company or any other
person or entity. Any other qualification of the opinion by the accountant shall
render the acceptability of the financial statements subject to Bank's approval.

PERIODIC FINANCIAL STATEMENTS. Borrower shall cause Parent Company to deliver to
Bank, within 45 days after the end of each fiscal quarter, unaudited
management-prepared quarterly financial statements including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules; all on a consolidated and consolidating basis
with respect to Parent Company and Borrower all in reasonable detail and
prepared in conformity with generally accepted accounting principles, applied on
a basis consistent with that of the preceding year. Such statements shall be
certified as to their correctness by a principal financial officer of Parent
Company.

TAX RETURNS. Borrower shall deliver to Bank, within 30 days of filing, complete
copies of federal and state tax returns, as applicable, together with all
schedules thereto, each of which shall be signed and certified by Borrower to be
true and complete copies of such returns. In the event an extension is filed,
Borrower shall deliver a copy of the extension within 30 days of filing.

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FINANCIAL COVENANTS. Borrower agrees to the following provisions from the date
hereof until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing, using the financial information for Borrower, its
subsidiaries, affiliates and its holding or parent company, as applicable:
CURRENT RATIO. Borrower, on an aggregate basis, shall, at all times, maintain a
Current Ratio of not less than 2.00 to 1.00. "Current Ratio" shall mean the
ratio of Current Assets to Current Liabilities. "Current Assets" shall mean all
assets which are so classified in accordance with generally accepted accounting
principles. "Current Liabilities" shall mean all liabilities which are so
classified in accordance with generally accepted accounting principles. DEBT
SERVICE COVERAGE RATIO. Borrower, on an aggregate basis, shall maintain a Debt
Service Coverage Ratio of not less than 1.50 to 1.00, to be calculated
quarterly, as of the final day of each fiscal quarter, on a rolling four
quarters basis. "Debt Service Coverage Ratio" is defined as earnings before
interest, taxes, depreciation and amortization, less unfinanced capital
expenditures, less distribution to Borrower's parent company, Raytech
Corporation, plus (or minus) changes in advances to affiliates, divided by the
sum of current maturities of long term debt plus current maturities of capital
lease obligations plus interest expense paid during the previous four quarters.

DEFAULT. If any of the following occurs, a default ("Default") under this Loan
Agreement shall exist: NONPAYMENT; NONPERFORMANCE. The failure of timely payment
or performance of the Obligations or Default under the Note or any other Loan
Documents. FALSE WARRANTY. A warranty or representation made in the Loan
Documents or furnished Bank in connection with the loan evidenced by the Note
proves materially false, or if of a continuing nature, becomes materially false.
CROSS DEFAULT. At Bank's option, any default in payment or performance of any
obligation under any other loans, contracts or agreements of Borrower, Parent
Company, any Subsidiary or Affiliate of Borrower, any general partner of or the
holder(s) of the majority ownership interests of Borrower with Bank or its
affiliates ("Affiliate" shall have the meaning as defined in 11 U.S.C. Section
101, except that the term "Borrower" shall be substituted for the term "Debtor"
therein; "Subsidiary" shall mean any business in which Borrower holds, directly
or indirectly, a controlling interest). CESSATION; BANKRUPTCY. The death of,
appointment of a guardian for, dissolution of, termination of existence of, loss
of good standing status by, appointment of a receiver for, assignment for the
benefit of creditors of, or commencement of any bankruptcy or insolvency
proceeding by or against Borrower, Parent Company, its Subsidiaries or
Affiliates, if any, or any general partner of or the holder(s) of the majority
ownership interests of Borrower, or any party to the Loan Documents. MATERIAL
BUSINESS ALTERATION. Without prior written consent of Bank, a material
alteration in the kind or type of Borrower's business. MATERIAL CAPITAL
STRUCTURE OR BUSINESS ALTERATION. Without prior written consent of Bank, (i) a
material alteration in the kind or type of Borrower's business or that of
Borrower's Parent Company, Subsidiaries or Affiliates, if any; (ii) the sale of
substantially all of the business or assets of Borrower, Parent Company, any of
Borrower's Subsidiaries or Affiliates or any guarantor, or a material portion
(10% or more) of such business or assets if such a sale is outside the ordinary
course of business of Borrower, Parent Company or any of Borrower's Subsidiaries
or Affiliates or any guarantor, or more than 50% of the outstanding stock or
voting power of or in any such entity in a single transaction or a series of
transactions; (iii) the acquisition of substantially all of the business or
assets or more than 50% of the outstanding stock or voting power of any other
entity; or (iv) should any Borrower, Parent Company or any of Borrower's
Subsidiaries or Affiliates or any guarantor enter into any merger

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or consolidation. MATERIAL ADVERSE CHANGE. Bank determines in good faith, in its
sole discretion, that the prospects for payment or performance of the
Obligations are impaired or there has occurred a material adverse change in the
business or prospects of Borrower, financial or otherwise.

CONDITIONS PRECEDENT. The obligations of Bank to make the loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
ADDITIONAL DOCUMENTS. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request. OPINION OF COUNSEL. On or prior to
the date of any extension of credit hereunder, Bank shall have received a
written opinion of the counsel of Borrower acceptable to Bank that includes
confirmation of the following: (a) The accuracy of the representations set forth
in this Agreement in the Representations Subparagraphs entitled "Authorization;
Non-Contravention"; and "Organization and Authority". (b) This Agreement and
other Loan Documents have been duly executed and delivered by Borrower and
constitute the legal, valid and binding obligations of Borrower, enforceable in
accordance with their terms. (c) No registration with, consent of, approval of,
or other action by, any federal, state or other governmental authority or
regulatory body is required by law in connection with the execution and delivery
of this Agreement and the other Loan Documents, or the extension of credit under
this Agreement or the other Loan Documents, or, if so required, such
registration has been made, and such consent or approval given or such other
appropriate action taken. (d) The Loan Documents create the priority of lien on
or security interest in the Collateral (as defined in the Loan Documents) that
is contemplated by the Loan Documents.

CONNECTICUT PREJUDGMENT REMEDY WAIVER. EACH BORROWER ACKNOWLEDGES THAT THE
TRANSACTIONS REPRESENTED BY THIS AGREEMENT ARE COMMERCIAL TRANSACTIONS AND
HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHTS TO NOTICE OF AND HEARING ON
PREJUDGMENT REMEDIES UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES OR
OTHER STATUTES AFFECTING PREJUDGMENT REMEDIES, AND AUTHORIZES THE BANK'S
ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.

                            (signature page follows)

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IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.

                                  Raytech Powertrain, Inc.
                                  By: ____________________________________
                                  Name: John B. Devlin, Title: Treasurer

                                  Allomatic Products Company
                                  By: ____________________________________
                                  Name: John B. Devlin, Title: Vice President

                                  Raytech Systems, Inc.
                                  By: ____________________________________
                                  Name: John B. Devlin, Title: Treasurer

                                  Wachovia Bank, National Association
                                  By: __________________________________________
                                      Richard J. DeMayo, Senior Vice President

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                               SECURITY AGREEMENT

                                                                October 23, 2003

Raytech Powertrain, Inc.
4 Corporate Drive
Shelton, Connecticut 06484

Allomatic Products Company
609 E. Chaney Street
Sullivan, Indiana 47882

Raytech Systems, Inc.
312 S. St. Clair Street
Sullivan, Indiana 47882
(Individually and collectively "Debtor" or "Debtors")

Wachovia Bank, National Association
300 Main Street
Stamford, Connecticut 06901
(Hereinafter referred to as "Bank" or "Wachovia")

For value received and to secure payment and performance of any and all
obligations of Debtor (also referred to collectively herein as "Borrower") to
Bank however created, arising or evidenced, whether direct or indirect, absolute
or contingent, now existing or hereafter arising or acquired, and whether or not
evidenced by a Loan Document, including swap agreements (as defined in 11 U.S.C.
Section 101), future advances, and all costs and expenses incurred by Bank to
obtain, preserve, perfect and enforce the security interest granted herein and
to maintain, preserve and collect the property subject to the security interest
(collectively, "Obligations"), Debtor hereby grants to Bank a continuing
security interest in and lien upon the following described property, whether now
owned or hereafter acquired, and any additions, replacements, accessions, or
substitutions thereof and all cash and non-cash proceeds and products thereof
(collectively, "Collateral"):

All of the personal property and fixtures of Debtor of every kind and nature
including, without limitation, all accounts, equipment, accessions, fixtures,
inventory, chattel paper, instruments, investment property, documents,
letter-of-credit rights, deposit accounts and general intangibles, wherever
located. The foregoing fixture Collateral is located at or affixed to real
properties known as 609 East Chaney Street, Sullivan, Indiana 47882, as recorded
in the real property records of the Town of Sullivan, of the State of Indiana,
in Book No. 266 Page No. 425, wherein the record owner is Allomatic Products
Company and 312 South St. Clair Street, Sullivan, Indiana 47882, as recorded in
the real property records of the Town of Sullivan, of the State of Indiana, in
Book No. 275 Page No. 480, wherein the record owner is Raybestos Powertrain,
LLC, a wholly-owned subsidiary of Raytech Systems, Inc..

Debtor hereby represents and agrees that:

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OWNERSHIP. Debtor owns the Collateral or Debtor will purchase and acquire rights
in the Collateral within ten days of the date advances are made under the Loan
Documents. If Collateral is being acquired with the proceeds of an advance under
the Loan Documents, Debtor authorizes Bank to disburse proceeds directly to the
seller of the Collateral. The Collateral is free and clear of all liens,
security interests, and claims except those previously reported in writing to
and approved by Bank, and Debtor will keep the Collateral free and clear from
all liens, security interests and claims, other than those granted to or
approved by Bank.

NAME AND OFFICES; JURISDICTION OF ORGANIZATION. The name and address of each
Debtor appearing at the beginning of this Agreement are such Debtor's exact
legal name and the address of its chief executive office. There has been no
change in the name of each Debtor, or the name under which such Debtor conducts
business, within the five years preceding the date hereof except as previously
reported in writing to Bank. None of Debtors has moved its chief executive
office within the five years preceding the date hereof except as previously
reported in writing to Bank. Each Debtor is organized under the laws of the
State of Delaware and has not changed the jurisdiction of its organization
within the five years preceding the date hereof except as previously reported in
writing to Bank.

TITLE/TAXES. Debtor has good and marketable title to Collateral and will warrant
and defend same against all claims. Debtor will not transfer, sell, or lease
Collateral (except as permitted herein). Debtor agrees to pay promptly all taxes
and assessments upon or for the use of Collateral and on this Security
Agreement. At its option, Bank may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on Collateral. Debtor agrees to
reimburse Bank, on demand, for any such payment made by Bank. Any amounts so
paid shall be added to the Obligations.

WAIVERS. Debtor agrees not to assert against Bank as a defense (legal or
equitable), as a set-off, as a counterclaim, or otherwise, any claims Debtor may
have against any seller or lessor that provided personal property or services
relating to any part of the Collateral or against any other party liable to Bank
for all or any part of the Obligations. Debtor waives all exemptions and
homestead rights with regard to the Collateral. Debtor waives any and all rights
to any bond or security which might be required by applicable law prior to the
exercise of any of Bank's remedies against any Collateral. All rights of Bank
and security interests hereunder, and all obligations of Debtor hereunder, shall
be absolute and unconditional, not discharged or impaired irrespective of (and
regardless of whether Debtor receives any notice of): (i) any lack of validity
or enforceability of any Loan Document; (ii) any change in the time, manner or
place of payment or performance, or in any term, of all or any of the
Obligations or the Loan Documents or any other amendment or waiver of or any
consent to any departure from any Loan Document; or (iii) any exchange,
insufficiency, unenforceability, enforcement, release, impairment or
non-perfection of any collateral, or any release of or modifications to or
insufficiency, unenforceability or enforcement of the obligations of any
guarantor or other obligor. To the extent permitted by law, Debtor hereby waives
any rights under any valuation, stay, appraisement, extension or redemption laws
now existing or which may hereafter exist and which, but for this provision,
might be applicable to any sale or disposition of the Collateral by Bank; and
any other circumstance which might otherwise constitute a defense available to,
or a discharge of any party with respect to the Obligations.

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NOTIFICATIONS; LOCATION OF COLLATERAL. Debtor will notify Bank in writing at
least 30 days prior to any change in: (i) Debtor's chief place of business
and/or residence; (ii) Debtor's name or identity; (iii) Debtor's
corporate/organizational structure; or (iv) the jurisdiction in which Debtor is
organized. In addition, Debtor shall promptly notify Bank of any claims or
alleged claims of any other person or entity to the Collateral or the
institution of any litigation, arbitration, governmental investigation or
administrative proceedings against or affecting the Collateral. Debtor will keep
Collateral at the location(s) previously provided to Bank until such time as
Bank provides written advance consent to a change of location. Debtor will bear
the cost of preparing and filing any documents necessary to protect Bank's
liens.

COLLATERAL CONDITION AND LAWFUL USE. Debtor represents that the Collateral is in
good repair and condition and that Debtor shall use reasonable care to prevent
Collateral from being damaged or depreciating, normal wear and tear excepted.
Debtor shall immediately notify Bank of any material loss or damage to
Collateral. Debtor shall not permit any item of Collateral to become an
accession to other property unless such property is also Collateral hereunder.
Debtor represents it is in compliance in all respects with all laws, rules and
regulations applicable to the Collateral and its properties, operations,
business, and finances.

RISK OF LOSS AND INSURANCE. Debtor shall bear all risk of loss with respect to
the Collateral. The injury to or loss of Collateral, either partial or total,
shall not release Debtor from payment or other performance hereof. Debtor agrees
to obtain and keep in force property insurance on the Collateral with a Lender's
Loss Payable Endorsement in favor of Bank and commercial general liability
insurance naming Bank as Additional Insured and such other insurance as Bank may
require from time to time. Such insurance is to be in form and amounts
satisfactory to Bank and issued by reputable insurance carriers satisfactory to
Bank with a Best Insurance Report Key Rating of at least "A-". All such policies
shall provide to Bank a minimum of 30 days written notice of cancellation.
Debtor shall furnish to Bank such policies, or other evidence of such policies
satisfactory to Bank. If Debtor fails to obtain or maintain in force such
insurance or fails to furnish such evidence, Bank is authorized, but not
obligated, to purchase any or all insurance or "Single Interest Insurance"
protecting such interest as Bank deems appropriate against such risks and for
such coverage and for such amounts, including either the loan amount or value of
the Collateral, all at its discretion, and at Debtor's expense. In such event,
Debtor agrees to reimburse Bank for the cost of such insurance and Bank may add
such cost to the Obligations. Debtor shall bear the risk of loss to the extent
of any deficiency in the effective insurance coverage with respect to loss or
damage to any of the Collateral. Debtor hereby assigns to Bank the proceeds of
all property insurance covering the Collateral up to the amount of the
Obligations and directs any insurer to make payments directly to Bank. Debtor
hereby appoints Bank its attorney-in-fact, which appointment shall be
irrevocable and coupled with an interest for so long as Obligations are unpaid,
to file proof of loss and/or any other forms required to collect from any
insurer any amount due from any damage or destruction of Collateral, to agree to
and bind Debtor as to the amount of said recovery, to designate payee(s) of such
recovery, to grant releases to insurer, to grant subrogation rights to any
insurer, and to endorse any settlement check or draft. Debtor agrees not to
exercise any of the foregoing powers granted to Bank without Bank's prior
written consent.

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FINANCING STATEMENTS, CERTIFICATES OF TITLE, POWER OF ATTORNEY. No financing
statement (other than any filed or approved by Bank) covering any Collateral is
on file in any public filing office. Debtor authorizes the filing of one or more
financing statements covering the Collateral in form satisfactory to Bank, and
without Debtor's signature where authorized by law, agrees to deliver
certificates of title on which Bank's lien has been indicated covering any
Collateral subject to a certificate of title statue, and will pay all costs and
expenses of filing or applying for the same or of filing this Security Agreement
in all public filing offices, where filing is deemed by Bank to be desirable.
Debtor hereby constitutes and appoints Bank the true and lawful attorney of
Debtor with full power of substitution to take any and all appropriate action
and to execute any and all documents, instruments or applications that may be
necessary or desirable to accomplish the purpose and carry out the terms of this
Security Agreement, including, without limitation, to complete, execute, and
deliver any Control Agreement(s) by Bank, Debtor and Third Party(ies) that may
be or become required in connection herewith (individually and collectively the
"Control Agreement"), and any instructions to Third Party(ies) regarding, among
other things, control and disposition of any Collateral which is the subject of
such Control Agreement(s). The foregoing power of attorney is coupled with an
interest and shall be irrevocable until all of the Obligations have been paid in
full. Neither Bank nor anyone acting on its behalf shall be liable for acts,
omissions, errors in judgment, or mistakes in fact in such capacity as
attorney-in-fact. Debtor ratifies all acts of Bank as attorney-in-fact. Debtor
agrees to take such other actions, at Debtor's expense, as might be requested
for the perfection, continuation and assignment, in whole or in part, of the
security interests granted herein and to assure and preserve Bank's intended
priority position. If certificates, passbooks, or other documentation or
evidence is/are issued or outstanding as to any of the Collateral, Debtor will
cause the security interests of Bank to be properly protected, including
perfection by notation thereon or delivery thereof to Bank.

LANDLORD/MORTGAGEE WAIVERS. Debtor shall cause each mortgagee of real property
owned by Debtor and each landlord of real property leased by Debtor to execute
and deliver instruments satisfactory in form and substance to Bank by which such
mortgagee or landlord subordinates its rights, if any, in the Collateral.

CONTROL. Debtor will cooperate with Bank in obtaining control with respect to
Collateral consisting of electronic chattel paper. Debtor authorizes and directs
Third Party to comply with the terms of this Security Agreement, to enter into a
Control Agreement, to mark its records to show the security interest of and/or
the transfer to Bank of the property pledged hereunder.

CHATTEL PAPER, ACCOUNTS, GENERAL INTANGIBLES. Debtor warrants that Collateral
consisting of chattel paper, accounts, or general intangibles is (i) genuine and
enforceable in accordance with its terms; (ii) not subject to any defense,
set-off, claim or counterclaim of a material nature against Debtor except as to
which Debtor has notified Bank in writing; and (iii) not subject to any other
circumstances that would impair the validity, enforceability, value, or amount
of such Collateral except as to which Debtor has notified Bank in writing.
Debtor shall not amend, modify or supplement any lease, contract or agreement
contained in Collateral or waive any provision therein, without prior written
consent of Bank. Debtor will not create any tangible chattel paper without
placing a legend on the chattel paper acceptable to Bank indicating that Bank
has a security interest in the chattel paper. Debtor will

                                    Page 11
<PAGE>

not create any electronic chattel paper without taking all steps deemed
necessary by Bank to confer control of the electronic chattel paper upon Bank in
accordance with the UCC.

ACCOUNT INFORMATION. From time to time, at Bank's request, Debtor shall provide
Bank with schedules describing all accounts, including customers' addresses,
created or acquired by Debtor and at Bank's request shall execute and deliver
written assignments of contracts and other documents evidencing such accounts to
Bank. Together with each schedule, Debtor shall, if requested by Bank, furnish
Bank with copies of Debtor's sales journals, invoices, customer purchase orders
or the equivalent, and original shipping or delivery receipts for all goods
sold, and Debtor warrants the genuineness thereof.

ACCOUNT DEBTORS. If a Default should occur, Bank shall have the right to notify
the account debtors obligated on any or all of the Collateral to make payment
thereof directly to Bank and Bank may take control of all proceeds of any such
Collateral, which rights Bank may exercise at any time. The cost of such
collection and enforcement, including attorneys' fees and expenses, shall be
borne solely by Debtor whether the same is incurred by Bank or Debtor. If a
Default should occur or upon demand of Bank, Debtor will, upon receipt of all
checks, drafts, cash and other remittances in payment on Collateral, deposit the
same in a special bank account maintained with Bank, over which Bank also has
the power of withdrawal.

If a Default should occur, no discount, credit, or allowance shall be granted by
Debtor to any account debtor and no return of merchandise shall be accepted by
Debtor without Bank's consent. Bank may, after Default, settle or adjust
disputes and claims directly with account debtors for amounts and upon terms
that Bank considers advisable, and in such cases Bank will credit the
Obligations with the net amounts received by Bank, after deducting all of the
expenses incurred by Bank. Debtor agrees to indemnify and defend Bank and hold
it harmless with respect to any claim or proceeding arising out of any matter
related to collection of Collateral.

GOVERNMENT CONTRACTS. If any Collateral covered hereby arises from obligations
due to Debtor from any governmental unit or organization, Debtor shall
immediately notify Bank in writing and execute all documents and take all
actions deemed necessary by Bank to ensure recognition by such governmental unit
or organization of the rights of Bank in the Collateral.

INVENTORY. So long as no Default has occurred, Debtor shall have the right in
the regular course of business, to process and sell Debtor's inventory. If a
Default should occur or upon demand of Bank, Debtor will, upon receipt of all
checks, drafts, cash and other remittances, in payment of Collateral sold,
deposit the same in a special bank account maintained with Bank, over which Bank
also has the power of withdrawal. Debtor agrees to notify Bank immediately in
the event that any inventory purchased by or delivered to Debtor is evidenced by
a bill of lading, dock warrant, dock receipt, warehouse receipt or other
document of title and to deliver such document to Bank upon request.

INSTRUMENTS, CHATTEL PAPER, DOCUMENTS. Any Collateral that is, or is evidenced
by, instruments, chattel paper or negotiable documents will be properly assigned
to and the originals of any such Collateral in tangible form deposited with and
held by Bank, unless Bank shall hereafter otherwise direct or consent in
writing. Bank may, without notice, before or

                                    Page 12
<PAGE>

after maturity of the Obligations, exercise any or all rights of collection,
conversion, or exchange and other similar rights, privileges and options
pertaining to such Collateral, but shall have no duty to do so.

COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral pledged except as set forth herein; and by way of
explanation and not by way of limitation, Bank shall incur no liability for any
of the following: (i) loss or depreciation of Collateral (unless caused by its
willful misconduct or gross negligence), (ii) failure to present any paper for
payment or protest, to protest or give notice of nonpayment, or any other notice
with respect to any paper or Collateral.

TRANSFER OF COLLATERAL. Bank may assign its rights in Collateral or any part
thereof to any assignee who shall thereupon become vested with all the powers
and rights herein given to Bank with respect to the property so transferred and
delivered, and Bank shall thereafter be forever relieved and fully discharged
from any liability with respect to such property so transferred, but with
respect to any property not so transferred, Bank shall retain all rights and
powers hereby given.

INSPECTION, BOOKS AND RECORDS. Debtor will at all times keep accurate and
complete records covering each item of Collateral, including the proceeds
therefrom. Bank, or any of its agents, shall have the right, at intervals to be
determined by Bank and without hindrance or delay, at Debtor's expense, to
inspect, audit, and examine the Collateral and to make copies of and extracts
from the books, records, journals, orders, receipts, correspondence and other
data relating to Collateral, Debtor's business or any other transaction between
the parties hereto. Debtor will at its expense furnish Bank copies thereof upon
request. For the further security of Bank, it is agreed that Bank has and is
hereby granted a security interest in all books and records of Debtor pertaining
to the Collateral.

COMPLIANCE WITH LAW. Debtor will comply with all federal, state and local laws
and regulations, applicable to it, including without limitation, environmental
and labor laws and regulations, in the creation, use, operation, manufacture and
storage of the Collateral and the conduct of its business.

REGULATION U. None of the proceeds of the credit secured hereby shall be used
directly or indirectly for the purpose of purchasing or carrying any margin
stock in violation of any of the provisions of Regulation U of the Board of
Governors of the Federal Reserve System ("Regulation U"), or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry margin stock or for any other purchase which might render the Loan a
"Purpose Credit" within the meaning of Regulation U.

CROSS COLLATERALIZATION LIMITATION. As to any other existing or future consumer
purpose loan made by Bank to Debtor, within the meaning of the Federal Consumer
Credit Protection Act, Bank expressly waives any security interest granted
herein in Collateral that Debtor uses as a principal dwelling and household
goods.

                                    Page 13
<PAGE>

ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Debtor shall pay all of Bank's
reasonable expenses incurred in enforcing this Security Agreement and in
preserving and liquidating Collateral, including but not limited to, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred with or without the commencement of a suit, trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.

DEFAULT. If any of the following occurs, a default ("Default") under this
Security Agreement shall exist: LOAN DOCUMENT DEFAULT. A default under any Loan
Document, including the failure of timely payment of any of the Obligations or
any breach of any representation or agreement contained or referred to in this
Security Agreement or other Loan Document. COLLATERAL LOSS OR DESTRUCTION. Any
loss, theft, substantial damage, or destruction of Collateral not fully covered
by insurance, or as to which insurance proceeds are not remitted to Bank within
30 days of the loss. COLLATERAL SALE, LEASE OR ENCUMBRANCE. Any sale, lease, or
encumbrance of any Collateral not specifically permitted herein without prior
written consent of Bank. LEVY, SEIZURE OR ATTACHMENT. The making of any levy,
seizure, or attachment on or of Collateral which is not removed within 10 days.
UNAUTHORIZED COLLECTION OF COLLATERAL. Any attempt to collect, cash in or
otherwise recover deposits that are Collateral. THIRD PARTY BREACH. Any default
or breach by a Third Party of any provision contained in any Control Agreement
executed in connection with any of the Collateral. UNAUTHORIZED TERMINATION. Any
attempt to terminate, revoke, rescind, modify, or violate the terms of this
Security Agreement or any Control Agreement without the prior written consent of
Bank.

REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code. Without limitation thereto, Bank shall have the following rights and
remedies: (i) to take immediate possession of Collateral, without notice or
resort to legal process, and for such purpose, to enter upon any premises on
which Collateral or any part thereof may be situated and to remove the same
therefrom, or, at its option, to render Collateral unusable or dispose of said
Collateral on Debtor's premises; (ii) to require Debtor to assemble the
Collateral and make it available to Bank at a place to be designated by Bank;
(iii) to exercise its right of set-off or bank lien as to any monies of Debtor
deposited in accounts of any nature maintained by Debtor with Bank or affiliates
of Bank, without advance notice, regardless of whether such accounts are general
or special; (iv) to dispose of Collateral, as a unit or in parcels, separately
or with any real property interests also securing the Obligations, in any county
or place to be selected by Bank, at either private or public sale (at which
public sale Bank may be the purchaser) with or without having the Collateral
physically present at said sale.

Any notice of sale, disposition or other action by Bank required by law and sent
to Debtor at Debtor's address shown above, or at such other address of Debtor as
may from time to time be shown on the records of Bank, at least 5 days prior to
such action, shall constitute reasonable notice to Debtor. Notice shall be
deemed given or sent when mailed postage prepaid to Debtor's address as provided
herein. Bank shall be entitled to apply the proceeds of any sale or other
disposition of the Collateral, and the payments received by Bank with respect to
any of the Collateral, to Obligations in such order and manner as Bank may
determine. Collateral that is subject to rapid declines in value and is
customarily sold in recognized markets may be disposed of by Bank in a
recognized market for such collateral without providing notice of sale. Debtor

                                    Page 14
<PAGE>

waives any and all requirements that the Bank sell or dispose of all or any part
of the Collateral at any particular time, regardless of whether Debtor has
requested such sale or disposition.

REMEDIES ARE CUMULATIVE. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Bank or any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law, in equity, or
in other Loan Documents.

INDEMNIFICATION. Debtor shall protect, indemnify and save harmless Bank from and
against all losses, liabilities, obligations, claims, damages, penalties, causes
of action, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, "Damages") imposed upon, incurred
by or asserted against Bank on account of (i) the Loan Documents or any failure
or alleged failure of Debtor to comply with any of the terms or representations
of this Agreement; (ii) any claim of loss or damage to the Collateral or any
injury or claim of injury to, or death of, any person or property that may be
occasioned by any cause whatsoever pertaining to the Collateral or the use,
occupancy or operation thereof, (iii) any failure or alleged failure of Debtor
to comply with any law, rule or regulation applicable to the Collateral or the
use, occupancy or operation of the Collateral (including, without limitation,
the failure to pay any taxes, fees or other charges), (iv) any Damages
whatsoever by reason of any alleged action, obligation or undertaking of Bank
relating in any way to or any matter contemplated by the Loan Documents, or (v)
any claim for brokerage fees or such other commissions relating to the
Collateral or any other Obligations; provided that such indemnity shall be
effective only to the extent of any Damages that may be sustained by Bank in
excess of any net proceeds received by it from any insurance of Debtor (other
than self-insurance) with respect to such Damages. Nothing contained herein
shall require Debtor to indemnify Bank for any Damages resulting from Bank's
gross negligence or its willful misconduct. The indemnity provided for herein
shall survive payment of the Obligations and shall extend to the officers,
directors, employees and duly authorized agents of Bank. In the event Bank
incurs any Damages arising out of or in any way relating to the transaction
contemplated by the Loan Documents (including any of the matters referred to in
this section), the amounts of such Damages shall be added to the Obligations,
shall bear interest, to the extent permitted by law, at the interest rate borne
by the Obligations from the date incurred until paid and shall be payable on
demand.

MISCELLANEOUS. (i) AMENDMENTS AND WAIVERS. No waiver, amendment or modification
of any provision of this Security Agreement shall be valid unless in writing and
signed by Debtor and an officer of Bank. No waiver by Bank of any Default shall
operate as a waiver of any other Default or of the same Default on a future
occasion. (ii) ASSIGNMENT. All rights of Bank hereunder are freely assignable,
in whole or in part, and shall inure to the benefit of and be enforceable by
Bank, its successors, assigns and affiliates. Debtor shall not assign its rights
and interest hereunder without the prior written consent of Bank, and any
attempt by Debtor to assign without Bank's prior written consent is null and
void. Any assignment shall not release Debtor from the Obligations. This
Security Agreement shall be binding upon Debtor, and the heirs, personal
representatives, successors, and assigns of Debtor. (iii) APPLICABLE LAW;
CONFLICT BETWEEN DOCUMENTS. This Security Agreement shall be governed by and
construed under the

                                    Page 15
<PAGE>

law of the jurisdiction named in the address of the Bank shown on the first page
hereof (the "Jurisdiction") without regard to that Jurisdiction's conflict of
laws principles, except to the extent that the UCC requires the application of
the law of a different jurisdiction. If any terms of this Security Agreement
conflict with the terms of any commitment letter or loan proposal, the terms of
this Security Agreement shall control. (iv) JURISDICTION. Debtor irrevocably
agrees to non-exclusive personal jurisdiction in the state identified as the
Jurisdiction above. (v) SEVERABILITY. If any provision of this Security
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective but only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Security Agreement. (vi) NOTICES. Any notices to Debtor shall be
sufficiently given, if in writing and mailed or delivered to the address of
Debtor shown above or such other address as provided hereunder; and to Bank, if
in writing and mailed or delivered to Wachovia Bank, National Association, Mail
Code CT2018, 300 Main Street, Stamford, Connecticut 06901 or such other address
as Bank may specify in writing from time to time. Notices to Bank must include
the mail code. In the event that Debtor changes Debtor's mailing address at any
time prior to the date the Obligations are paid in full, Debtor agrees to
promptly give written notice of said change of address by registered or
certified mail, return receipt requested, all charges prepaid. (vii) CAPTIONS.
The captions contained herein are inserted for convenience only and shall not
affect the meaning or interpretation of this Security Agreement or any provision
hereof. The use of the plural shall also mean the singular, and vice versa.
(viii) JOINT AND SEVERAL LIABILITY. If more than one party has signed this
Security Agreement, such parties are jointly and severally obligated hereunder.
(ix) BINDING CONTRACT. Debtor by execution and Bank by acceptance of this
Security Agreement, agree that each party is bound by all terms and provisions
of this Security Agreement.

DEFINITIONS. LOAN DOCUMENTS. The term "Loan Documents" refers to all documents,
including this Agreement, whether now or hereafter existing, executed in
connection with or related to the Obligations, and may include, without
limitation and whether executed by Debtor or others, commitment letters that
survive closing, loan agreements, promissory notes, guaranty agreements, deposit
or other similar agreements, other security agreements, letters of credit and
applications for letters of credit, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. Section 101). THIRD PARTY. The term "Third Party" means any Broker,
Collateral Agent, Securities Intermediary and/or bank which from time to time
maintains a securities account, and is acting in such capacity, for Debtor or
maintains a deposit account for Debtor with respect to any part of the
Collateral. UCC. "UCC" means the Uniform Commercial Code as presently and
hereafter enacted in the Jurisdiction. TERMS DEFINED IN THE UCC. Any term used
in this Agreement and in any financing statement filed in connection herewith
which is defined in the UCC and not otherwise defined in this Agreement or any
other Loan Document has the meaning given to the term in the UCC.

CONNECTICUT PREJUDGMENT REMEDY WAIVER. EACH DEBTOR ACKNOWLEDGES THAT THE
TRANSACTIONS REPRESENTED BY THIS AGREEMENT ARE COMMERCIAL TRANSACTIONS AND
HEREBY VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHTS TO NOTICE OF AND HEARING ON
PREJUDGMENT REMEDIES UNDER CHAPTER 903a OF THE CONNECTICUT

                                    Page 16
<PAGE>

GENERAL STATUTES OR OTHER STATUTES AFFECTING PREJUDGMENT REMEDIES, AND
AUTHORIZES THE BANK'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT
COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.

IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused
this Security Agreement to be executed under seal.

                                    Raytech Powertrain, Inc.
                                    Taxpayer Identification Number: 06-1242230

                                    By: ________________________________________
                                    Name: John B. Devlin, Title: Treasurer

                                    Allomatic Products Company
                                    Taxpayer Identification Number: 06-1255345

                                    By: ________________________________________
                                    Name: John B. Devlin, Title: Vice President

                                    Raytech Systems, Inc.
                                    Taxpayer Identification Number: 06-1545873

                                    By: ________________________________________
                                    Name: John B. Devlin, Title: Treasurer

                                    Page 17
<PAGE>

                                SCHEDULE A TO UCC

Schedule A to UCC from Raytech Powertrain, Inc., Allomatic Products Company, and
Raytech Systems, Inc. ("Debtor") and for the benefit of Wachovia Bank, National
Association ("Secured Party").

The following described property whether now owned or hereafter acquired, and
any additions, replacements, accessions, or substitutions thereof and all cash
and non-cash proceeds and products thereof.

Description of Collateral:

All of the personal property and fixtures of Debtor of every kind and nature
including, without limitation, all accounts, equipment, accessions, fixtures,
inventory, chattel paper, instruments, investment property, documents,
letter-of-credit rights, deposit accounts and general intangibles, wherever
located. The foregoing fixture Collateral is located at or affixed to real
properties known as 609 East Cheney Street, Sullivan, Indiana 47882, as recorded
in the real property records of the Town of Sullivan, of the State of Indiana,
in Book No. 266 Page No. 425, wherein the record owner is Allomatic Products
Company and 312 South St. Clair Street, Sullivan, Indiana 47882, as recorded in
the real property records of the Town of Sullivan, of the State of Indiana, in
Book No. 275 Page No. 480, wherein the record owner is Raybestos Powertrain,
LLC, a wholly-owned subsidiary of Raytech Systems, Inc..

Any term which is defined in the Uniform Commercial Code (UCC) has the meaning
given to the term in the UCC.

                                     Page 1
<PAGE>

                           SUBSTITUTE PROMISSORY NOTE

$7,000,000.00

                                                                 January 5, 2004

Raytech Powertrain, Inc.
4 Corporate Drive
Shelton, Connecticut 06484

Allomatic Products Company
609 E. Chaney Street
Sullivan, Indiana 47882

Raytech Systems, Inc.
312 S. St. Clair Street
Sullivan, Indiana 47882
(Individually and collectively "Borrower")

Wachovia Bank, National Association
300 Main Street
Stamford, Connecticut 06901
(Hereinafter referred to as "Bank")

Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of Seven Million and No/100 Dollars ($7,000,000.00) or such sum
as may be advanced and outstanding from time to time, with interest on the
unpaid principal balance at the rate and on the terms provided in this
Substitute Promissory Note (including all renewals, extensions or modifications
hereof, this "Note").

REPLACEMENT OF THE ORIGINAL NOTE. This Note is issued in substitution for and
replacement of the promissory note in the principal amount of $7,000,000
executed by the Borrower in favor of the Bank on October 23, 2003 (the "Original
Note"), which Original Note has been misplaced or lost. This Note shall
substitute, replace and supersede the Original Note. Any amounts outstanding
pursuant to the Original Note shall be deemed to be outstanding pursuant to this
Note as of the date hereof. This Note is not an addition to the Original Note
and the obligations of Borrower with respect to the loan evidenced by the
Original Note shall now be evidenced solely by this Note.

LOAN AGREEMENT. This Note is subject to the provisions of that certain Loan
Agreement between Bank and Borrower of even date herewith, as modified from time
to time.

USE OF PROCEEDS. The proceeds of the loan(s) evidenced by this Note shall be
used for the financing of the Pension Plan maintained by Borrower's parent
company for the benefit of its subsidiaries located in Indiana and final payment
on environmental remediation for the premises occupied by Borrower's parent
company and its subsidiaries located in Indiana.

                                     Page 2
<PAGE>

SECURITY. Borrower has granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, personal
property collateral described in that certain Security Agreement of even date
herewith.

INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at the LIBOR Market Index Rate plus 1.65%, as that
rate may change from day to day in accordance with changes in the LIBOR Market
Index Rate ("Interest Rate"). "LIBOR Market Index Rate", for any day, means the
rate for 1 month U.S. dollar deposits as reported on Telerate page 3750 as of
11:00 a.m., London time, on such day, or if such day is not a London business
day, then the immediately preceding London business day (or if not so reported,
then as determined by Bank from another recognized source or interbank
quotation).

OPTIONAL HEDGE. Borrower shall have the option to hedge the loan's floating
interest expense by entering into an interest rate swap ("Swap") on mutually
agreeable terms with Bank or other financial institution acceptable to Bank,
pursuant to which Borrower shall receive the amount necessary to pay the
interest expense due under the loan (exclusive of default interest or other
adjustments provided for in the Loan Documents) and shall pay the amount that
would be equal to the interest that would accrue on the loan at a fixed rate.
The actual rate payable is subject to market conditions at the time the Swap is
consummated. The Swap shall be governed by an ISDA Master Agreement and shall be
secured by the collateral described in that certain Security Agreement of even
date herewith and guaranteed by the guarantor described in that certain
Unconditional Guaranty of even date herewith.

DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations, other than Obligations under any swap agreements (as
defined in 11 U.S.C. Section 101) between Borrower and Bank or its affiliates,
shall bear interest at the Interest Rate plus 3% ("Default Rate"). The Default
Rate shall also apply from acceleration until the Obligations or any judgment
thereon is paid in full.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective interest yield by taking the stated (nominal)
rate for a year's period and then dividing said rate by 360 to determine the
daily periodic rate to be applied for each day in the applicable period.
Application of the Actual/360 Computation produces an annualized effective rate
exceeding the nominal rate.

REPAYMENT TERMS. This Note shall be due and payable as follows: 59 monthly
payments of $83,333.33 principal plus interest, each such payment due on the
first business day of each month starting on December 1, 2003. A balloon payment
of $2,083,333,33 shall be due and payable on November 3, 2008.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a

                                     Page 3
<PAGE>

Default occurs, monies may be applied to the Obligations in any manner or order
deemed appropriate by Bank.

If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.

DEFINITIONS. LOAN DOCUMENTS. The term "Loan Documents", as used in this Note and
the other Loan Documents, refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any letters of credit
issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in
connection therewith or related thereto, and may include, without limitation, a
commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements, security agreements, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. Section 101). OBLIGATIONS. The term "Obligations", as used in this Note
and the other Loan Documents, refers to any and all indebtedness and other
obligations under this Note, all other obligations under any other Loan
Document(s), and all obligations under any swap agreements (as defined in 11
U.S.C. Section 101) between Borrower and Bank, or its affiliates, whenever
executed. CERTAIN OTHER TERMS. All terms that are used but not otherwise defined
in any of the Loan Documents shall have the definitions provided in the Uniform
Commercial Code.

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 10 or more days.

Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.

ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations
including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.

USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.

DEFAULT. If any of the following occurs, a default ("Default") under this Note
shall exist: NONPAYMENT; NONPERFORMANCE. The failure of timely payment or
performance of the

                                     Page 4
<PAGE>
 Obligations or Default under this Note or any other Loan Documents. FALSE
WARRANTY. A warranty or representation made in the Loan Documents or furnished
Bank in connection with the loan evidenced by this Note proves materially false,
or if of a continuing nature, becomes materially false. CROSS DEFAULT. At Bank's
option, any default in payment or performance of any obligation under any other
loans, contracts or agreements of Borrower, any Subsidiary or Affiliate of
Borrower, any general partner of or the holder(s) of the majority ownership
interests of Borrower with Bank or its affiliates ("Affiliate" shall have the
meaning as defined in 11 U.S.C. Section 101, except that the term "Borrower"
shall be substituted for the term "Debtor" therein; "Subsidiary" shall mean any
business in which Borrower holds, directly or indirectly, a controlling
interest). CESSATION; BANKRUPTCY. The death of, appointment of a guardian for,
dissolution of, termination of existence of, loss of good standing status by,
appointment of a receiver for, assignment for the benefit of creditors of, or
commencement of any bankruptcy or insolvency proceeding by or against Borrower,
its Subsidiaries or Affiliates, if any, or any general partner of or the
holder(s) of the majority ownership interests of Borrower, or any party to the
Loan Documents. MATERIAL BUSINESS ALTERATION. Without prior written consent of
Bank, a material alteration in the kind or type of Borrower's business. MATERIAL
CAPITAL STRUCTURE OR BUSINESS ALTERATION. Without prior written consent of Bank,
(i) a material alteration in the kind or type of Borrower's business or that of
Borrower's Subsidiaries or Affiliates, if any; (ii) the sale of substantially
all of the business or assets of Borrower, any of Borrower's Subsidiaries or
Affiliates or any guarantor, or a material portion (10% or more) of such
business or assets if such a sale is outside the ordinary course of business of
Borrower, or any of Borrower's Subsidiaries or Affiliates or any guarantor, or
more than 50% of the outstanding stock or voting power of or in any such entity
in a single transaction or a series of transactions; (iii) the acquisition of
substantially all of the business or assets or more than 50% of the outstanding
stock or voting power of any other entity; or (iv) should any Borrower or any of
Borrower's Subsidiaries or Affiliates or any guarantor enter into any merger or
consolidation. MATERIAL ADVERSE CHANGE. Bank determines in good faith, in its
sole discretion, that the prospects for payment or performance of the
Obligations are impaired or there has occurred a material adverse change in the
business or prospects of Borrower, financial or otherwise.

REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: BANK
LIEN. Foreclose its security interest or lien against Borrower's accounts
without notice. ACCELERATION UPON DEFAULT. Accelerate the maturity of this Note
and, at Bank's option, any or all other Obligations, other than Obligations
under any swap agreements (as defined in 11 U.S.C. Section 101) between Borrower
and Bank, or its affiliates, which shall be governed by the default and
termination provisions of said swap agreements; whereupon this Note and the
accelerated Obligations shall be immediately due and payable; provided, however,
if the Default is based upon a bankruptcy or insolvency proceeding commenced by
or against Borrower or any guarantor or endorser of this Note, all Obligations
(other than Obligations under any swap agreement as referenced above) shall
automatically and immediately be due and payable. CUMULATIVE. Exercise any
rights and remedies as provided under the Note and other Loan Documents, or as
provided by law or equity.

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,

                                     Page 5
<PAGE>

consolidated financial statements and information pertaining to Borrower's
financial condition. Such information shall be true, complete, and accurate.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.

Each Borrower or any person liable under this Note waives presentment, protest,
notice of dishonor, demand for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of sale and all other
notices of any kind. Further, each agrees that Bank may extend, modify or renew
this Note or make a novation of the loan evidenced by this Note for any period,
and grant any releases, compromises or indulgences with respect to any
collateral securing this Note, or with respect to any other Borrower or any
other person liable under this Note or other Loan Documents, all without notice
to or consent of each Borrower or each person who may be liable under this Note
or any other Loan Document and without affecting the liability of Borrower or
any person who may be liable under this Note or any other Loan Document.

MISCELLANEOUS PROVISIONS. ASSIGNMENT. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Borrower
to assign without Bank's prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. APPLICABLE LAW; CONFLICT
BETWEEN DOCUMENTS. This Note and, unless otherwise provided in any other Loan
Document, the other Loan Documents shall be governed by and construed under the
laws of the state named in Bank's address on the first page hereof without
regard to that state's conflict of laws principles. If the terms of this Note
should conflict with the terms of any loan agreement or any commitment letter
that survives closing, the terms of this Note shall control. BORROWER'S
ACCOUNTS. Except as prohibited by law, Borrower grants Bank a security interest
in all of Borrower's accounts with Bank and any of its affiliates. JURISDICTION.
Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state
named in Bank's address on the first page hereof. SEVERABILITY. If any provision
of this Note or of the other Loan Documents shall be prohibited or invalid under
applicable law, such provision shall be ineffective but only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Note or other such document.
NOTICES. Any notices to Borrower shall be sufficiently given, if in writing and
mailed or delivered to the Borrower's address shown above or such other address
as provided hereunder, and to Bank, if in writing and mailed or delivered to
Wachovia Bank, National Association, Mail Code CT2018, 300 Main

                                     Page 6
<PAGE>

Street, Stamford, Connecticut 06901 or such other address as Bank may specify in
writing from time to time. Notices to Bank must include the mail code. In the
event that Borrower changes Borrower's address at any time prior to the date the
Obligations are paid in full, Borrower agrees to promptly give written notice of
said change of address by registered or certified mail, return receipt
requested, all charges prepaid. PLURAL; CAPTIONS. All references in the Loan
Documents to Borrower, guarantor, person, document or other nouns of reference
mean both the singular and plural form, as the case may be, and the term
"person" shall mean any individual, person or entity. The captions contained in
the Loan Documents are inserted for convenience only and shall not affect the
meaning or interpretation of the Loan Documents. ADVANCES. Bank may, in its sole
discretion, make other advances which shall be deemed to be advances under this
Note, even though the stated principal amount of this Note may be exceeded as a
result thereof. POSTING OF PAYMENTS. All payments received during normal banking
hours after 2:00 p.m. local time at the office of Bank first shown above shall
be deemed received at the opening of the next banking day. JOINT AND SEVERAL
OBLIGATIONS. Each person who signs this Note as a Borrower (as defined herein)
is jointly and severally obligated. FEES AND TAXES. Borrower shall promptly pay
all documentary, intangible recordation and/or similar taxes on this transaction
whether assessed at closing or arising from time to time. LIMITATION ON
LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING
BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION
PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT
OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED
HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE
LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2)
PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE
IN THE FUTURE IN CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY,
WHETHER THE SAME IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE.
PATRIOT ACT NOTICE. To help fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account. For
purposes of this section, account shall be understood to include loan accounts.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS NOTE, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED
IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE.
EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY
PRIOR AGREEMENT

                                     Page 7
<PAGE>

RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN
DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION
WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS
NOTE.

CONNECTICUT PREJUDGMENT REMEDY WAIVER. EACH BORROWER ACKNOWLEDGES THAT THE
TRANSACTIONS REPRESENTED BY THIS NOTE ARE COMMERCIAL TRANSACTIONS AND HEREBY
VOLUNTARILY AND KNOWINGLY WAIVES ANY RIGHTS TO NOTICE OF AND HEARING ON
PREJUDGMENT REMEDIES UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES OR
OTHER STATUTES AFFECTING PREJUDGMENT REMEDIES, AND AUTHORIZES THE BANK'S
ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.

                            (signature page follows)

                                     Page 8
<PAGE>

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.

PLACE OF EXECUTION AND DELIVERY. Borrower hereby certifies that this Note and
the Loan Documents were executed in the State of Connecticut and delivered to
Bank in the State of Connecticut.

                                  Raytech Powertrain, Inc.
                                  Taxpayer Identification Number: 06-1242230

                                  By: ________________________________________
                                  Name: John B. Devlin, Title: Treasurer

                                  Allomatic Products Company
                                  Taxpayer Identification Number:  06-1255345

                                  By: ________________________________________
                                  Name: John B. Devlin, Title: Vice President

                                  Raytech Systems, Inc.
                                  Taxpayer Identification Number:  06-1545873

                                  By: ________________________________________
                                  Name: John B. Devlin, Title: Treasurer

                                    Page 9