<PAGE>

                                                                   Exhibit 10.49

                               SECURITY AGREEMENT

         SECURITY AGREEMENT dated as of December 1, 1997 between Rotary Power
International, Inc., a Delaware corporation having its principal place of
business at 22 Passaic Street, Wood-Ridge, New Jersey 07075 (the "Debtor"), and
Sentinel Trust Company ("Trustee"), as trustee for the holders of $ 10,000,000
aggregate maturing principal amount of 10.403% Bonds due December 15, 2007
("Bonds") issued by Debtor pursuant to an Indenture of Trust dated as of
December 1, 1997 between the Debtor and the Trustee (the "Indenture").

         WHEREAS, the Debtor has issued the Bonds to provide funds to, among
other things, optionally redeem outstanding New Jersey Economic Development
Authority Federally Taxable Revenue Bonds, Series 1992 (Rotary Power
International, Inc. Project); and

         WHEREAS, the Debtor has agreed to pledge certain of the tangible assets
now owned or hereafter acquired by it to the Trustee as security for the payment
of the Principal or Redemption Price of the Bonds and any other amounts that may
become due and payable under the Indenture.

         NOW, THEREFORE, the parties hereto agree as follows:

         1. GRANT OF SECURITY INTEREST. (a) For value received, the Debtor
hereby grants to the Trustee for the benefit of the Trustee and the holders from
time to time of the Bonds ("Bondholders") (the Trustee and the Bondholders being
referred to collectively as the "Secured Parties") in order to secure the
payment when due, whether by acceleration or otherwise, of the Secured
Obligations (as that term is defined below) a security interest in and
assignment of, and agrees that the Trustee has and shall continue to have a lien
on and security interest in and assignment of, any and all of the following
property of Debtor, whenever acquired and wherever located (collectively
referred to as the "Collateral"):

         (i) Any and all of Debtor's Tangibles (as that term is defined below);
and

         (ii) The products, proceeds and accessions of Debtor's Tangibles.

         (b) The Debtor agrees that the Trustee has and shall continue to have a
continuing fully perfected first priority lien on and security interest in all
of the Collateral, except any portion of the Collateral which is encumbered by
an existing lien and security interest as of the date hereof, as to which the
Trustee


<PAGE>

shall have a subordinate lien and security interest.

         2. DEFINITIONS. (a) The term "Secured Obligations" as used herein shall
mean the following:

         (i) Any and all obligations of the Debtor to the Trustee or the
Bondholders pursuant to the Bonds or the Indenture, including, without
limitation, the Debtor's obligations in respect of the payment of the Principal
or Redemption Price of the Bonds and obligations owing to the Trustee under the
Indenture; and

         (ii) Any and all other obligations to the Trustee hereunder.

         (b) The term "Tangibles" as used herein shall be deemed to mean
"inventory" and "equipment" as defined in the Uniform Commercial Code as in
effect in the State of New Jersey, including, without limitation, all of
Debtor's right, title and interest in and to the equipment, machinery, fixtures,
tools, work in process, inventory, furniture and other articles of personal
property and all goods and tangible property now owned or hereafter acquired by
the Debtor and all replacement or substitutions therefore; provided, however,
that for all purposes of this Security Agreement, "Tangibles" shall not include
(i) the Company's interest in any intellectual property or other intangibles and
(ii) the assets listed in Schedule A attached hereto.

         (c) Terms used herein which are not expressly defined herein shall have
the meanings ascribed to them in the Indenture, except that such terms which are
defined in the Uniform Commercial Code as in effect in the State of New Jersey
have the same meanings herein as in said Code.

         (d) As used in this Security Agreement and when required by the
context, each number (singular and plural) shall include all numbers, and each
gender shall include all genders; and unless the context otherwise requires, the
word "person" shall include "corporation, firm or association."

         3. RELEASE OF SECURITY INTEREST. (a) Upon the payment in full of the
Secured Obligations, the Trustee's security interest in, and assignment of, the
Collateral shall immediately terminate.

         (b) Upon the sale of inventory and finished products by the Company in
the ordinary course of business, the lien on and security interest granted to
the Trustee in such Collateral shall terminate.

         (c) In addition to the sales of Collateral contemplated by Section 3(b)
hereof, upon the written consent of the Holders of


<PAGE>

at least a majority in Principal of the outstanding Bonds, the Company shall be
permitted to sell all or a portion of the Collateral and use the proceeds from
such sale to mandatorily redeem the Bonds in whole or in part pursuant to the
provisions of the Bonds and the Indenture. Upon any such sale, the lien on and
security interest granted to the Trustee in such Collateral shall immediately
terminate.

         4. WARRANTIES, COVENANTS AND AGREEMENTS OF DEBTOR. Debtor warrants,
covenants and agrees that:

         (a) Except for the security interests in the Collateral existing on the
date hereof and the security interest granted hereby and except as permitted
hereby and by the agreements under which the Secured Obligations are being
incurred, Debtor is, and as to Collateral acquired after the date hereof Debtor
shall and will be at the time of acquisition, the owner and holder of the
Collateral free from any other adverse claim, security interest, encumbrance,
lien, charge, or other right, title or interest of any person other than the
Trustee and covenant that at all times the Collateral will be and remain free of
all such other adverse claims, security interests, or other liens or
encumbrances; Debtor has full power and lawful authority to sell, assign and
transfer the Collateral to the Trustee and to grant to the Trustee a security
interest therein as herein provided; the execution and delivery and the
performance hereof are not in contravention of any charter or by-law provision
or of any indenture, agreement or undertaking to which Debtor is a party or by
which any Debtor or its property is bound; and Debtor will defend the Collateral
against all claims and demands of all persons (other than those holding a
security interest in the Collateral existing as of the date hereof) at any time
claiming the same or any interest therein. Any officer, agent or representative
acting for or on behalf of Debtor in connection with this Security Agreement or
any aspect thereof, or entering into or executing this Security Agreement or any
financing statement on behalf of Debtor, has been duly authorized so to do, and
is fully empowered to act for and represent Debtor in connection with this
Security Agreement and all matters related thereto or in connection therewith.

         (b) (i) Except with respect to security interests in the Collateral
existing on the date hereof, Debtor has not heretofore signed any financing
statement or security agreement which covers any of the Collateral, and no such
financing statement or security agreement is now on file in any public office
(other than any such statements or agreements, if any, that are permitted
hereunder and under the agreements under which the Secured Obligations are


<PAGE>

being incurred)

         (ii) As long as any amount remains unpaid on any of the Secured
Obligations, and except as expressly permitted by any such agreements, Debtor
will not enter into or execute any security agreement or any financing statement
covering the Collateral, other than those security agreements and financing
statements existing on the date hereof or in favor of the Trustee hereunder.

         (iii) Debtor authorizes the Trustee to file, in jurisdictions where
this authorization will be given effect, a financing statement signed only by
the Trustee covering the Collateral, and hereby appoints the Trustee as Debtor's
attorney-in-fact to sign and file any such financing statements covering the
Collateral. Any such financing statements shall be prepared by the Debtor at its
sole cost and expense. Debtor will join the Trustee in executing such documents
as the Debtor or its counsel may from time to time determine to be necessary or
desirable to obtain or preserve the security interest of the Trustee in the
Collateral under provisions of any applicable Uniform Commercial Code in effect
where the Collateral is located or Debtor conducts business, and the Trustee
shall be entitled to conclusively rely on an opinion of counsel to the Debtor
provided pursuant to this section; without limiting the generality of the
foregoing, Debtor agrees to join the Trustee in executing one or more financing
or continuation statements necessary in order to obtain or preserve the
Trustee's security interest in the Collateral, and to pay the costs of filing or
recording the same, or of filing or recording this Security Agreement, in all
public offices at any time and from time to time, whenever filing or recording
of any such financing or continuation statement or of this Security Agreement is
deemed by the Debtor or its counsel to be necessary or desirable. In connection
with the foregoing, it is agreed and understood between the parties hereto (and
the Trustee is hereby authorized to carry out and implement this agreement and
understanding and Debtor hereby agrees to pay the costs thereof) that the
Trustee may, at any time or times, file as a financing statement any
counterpart, copy, or reproduction of this Security Agreement. Notwithstanding
any other provision of this Security Agreement, the Trustee may, but is not
obligated to, request that the Debtor execute and file any financing or
continuation statement necessary in order to obtain or preserve the Trustee's
security interest in the Collateral.

         (iv) On or prior to January 1 in any year in which any amount remains
unpaid on any of the Secured Obligations, the Debtor shall deliver to the
Trustee an Officer's Certificate stating whether any continuation statement is
required to be filed during


<PAGE>

such year in any jurisdiction in which any Collateral is located in order to
maintain the validity of the Trustee's security interest in such Collateral.

         (c) Except as otherwise required in the ordinary course of Debtor's
business, Debtor's Tangibles shall remain in Debtor's possession and control at
all times at Debtor's risk of loss, and are now kept and at all times shall be
kept at the Debtor's principal place of business.

         (d) Subject to the provision of Section 4(c) above, Debtor will
promptly notify the Trustee of any change in the locations of any Tangibles and
of any new addresses or location where Tangibles are or may be kept, and Debtor
will not remove the Tangibles, or any part thereof, from the addresses and
locations described and specified above without the prior written consent of the
Trustee. Debtor shall also promptly notify the Trustee of any change in Debtor's
principal place of business.

         (e) Debtor further covenants and agrees that if any certificates of
title or similar documents are at any time issued with respect to the
Collateral, Debtor will promptly advise the Trustee thereof, and Debtor will
promptly cause the interest of the Trustee to be properly noted thereon, and if
any certificates of title or similar documents are so issued or outstanding at
the time this Security Agreement is executed by or on behalf of Debtor, then
Debtor shall have caused the interest of the Trustee so to have been properly
noted at or before the time of such execution; and Debtor will further promptly
deliver to the Trustee any such certificate of title or similar document.

         (f) Except as provided in Section 3 above, Debtor will not sell or
offer to sell or otherwise transfer, encumber or dispose of the Collateral or
any interest therein without the prior written consent of the Trustee.

         (g) Notwithstanding anything to the contrary contained herein, it is
understood and agreed that if for any reason Tangibles are at any time kept or
located at addresses or locations other than those specified herein or which may
hereafter be consented to by the Trustee, the Trustee shall nevertheless have
and retain a security interest therein.

         5. SPECIAL PROVISIONS - TANGIBLES. (a) Except as the Trustee may
otherwise consent, any of Debtor's Tangibles in possession of persons other than
Debtor must be represented by documents issued by the person in possession
thereof, in form acceptable to the Trustee, which documents must, upon
reasonable request of the


<PAGE>

Trustee, be delivered to the Trustee and must be either negotiable documents
issued in the name of Debtor or non-negotiable documents issued in the name of
the Trustee or on which the security interest of the Trustee has been noted by
the issuer thereof. Debtor warrants that all such documents will be genuine,
valid and in all respects what they purport to be and that the Tangibles
described therein will be identified fungible portions of an identified mass,
and that said documents are and will be subject to no terms or conditions other
than is noted therein or thereon or as otherwise set forth in this agreement.

         (b) At any time after any of the Secured Obligations shall become due,
whether by acceleration or otherwise, and after the occurrence of an Event of
Default and so long as such Event of Default shall be continuing, all proceeds
of Debtor's Tangibles, whether cash proceeds or non-cash proceeds, shall be
received and held by Debtor in trust for the Trustee, shall not be commingled
with any other funds, accounts, monies or property of Debtor, and shall be
promptly accounted for, paid over and delivered to the Trustee in the form as
received by Debtor upon receipt thereof by Debtor.

         (c) Debtor will promptly report to the Trustee any occurrence or
condition known to or which becomes known to the Debtor having any material
adverse effect upon the value or condition of Debtor's Tangibles taken as a
whole.

         6. FURTHER AGREEMENTS BETWEEN THE DEBTOR AND THE TRUSTEE.

         (a) Subject to the provisions of the Indenture, the Trustee shall never
be under any obligation to collect, attempt to collect, protect or enforce the
Collateral or any security therefor, which Debtor agrees, and undertakes to do
at Debtor's expense, but the Trustee may do so in its discretion at any time
after any of the Secured Obligations shall become due, whether by acceleration
or otherwise, and after the occurrence of an Event of Default and so long as
such Event of Default shall be continuing, and at such time the Trustee shall
have the right to take any steps by judicial process or otherwise as it may deem
proper to effect the collection of all or any portion of the Collateral or to
protect or to enforce the Collateral or any security therefor. All expenses
(including, without limitation, attorneys' fees and expenses) incurred or paid
by the Trustee in connection with or incident to any such collection or attempt
to collect the Collateral or actions to protect or enforce the Collateral or any
security therefor shall be borne by Debtor or reimbursed by Debtor and any
proceeds received by the Trustee as a result of any such actions in collecting,
enforcing or


<PAGE>

protecting the Collateral shall be held by the Trustee without liability for
interest thereon and may be applied by the Trustee as the Trustee may deem
appropriate toward payment of any of the Secured Obligations secured hereby in
such order or manner as the Trustee may elect.

         (b) In the event the Trustee shall pay any such taxes, assessments,
interests, costs, penalties or expenses incident to or in connection with the
collection of the Collateral or protection or enforcement of the rights of the
Trustee hereunder, Debtor shall pay to the Trustee the full amount thereof with
interest at the highest rate permitted by law; and so long as the Trustee shall
be entitled to any such payment, this Security Agreement shall operate as
security therefor as fully and to the same extent as it operates as security for
payment of other Secured Obligation secured hereunder, and for the enforcement
of such repayment the Trustee shall have every right and remedy provided for
enforcement of payment of the Secured Obligations.

         (c) In the event that the Collateral or any part thereof shall now or
hereafter become so related to particular real estate that an interest in it may
arise under the real estate laws of the state in which such real estate is
located, then Debtor shall immediately notify the Trustee of such fact and take
all steps and furnish all information, including an opinion of counsel to the
Debtor, as the Debtor or its counsel shall reasonably determine is necessary for
the purpose of creating or extending (as the case may be) a valid and
enforceable lien in such Collateral, including making such additional filings or
recordings, at Debtor's expense, as the Debtor or its counsel shall deem
necessary or appropriate. The Trustee shall be entitled to conclusively rely on
any opinion of counsel to the Debtor provided pursuant to this section.
Notwithstanding any other provision of this Security Agreement, the Trustee may,
but is not obligated to, request that the Debtor execute and file any financing
or continuation statement necessary for the purpose of creating or extending (as
the case may be) a valid and enforceable lien in such Collateral.

         7. REMEDIES. (a) After any of the Secured Obligations shall become due
and payable, whether by acceleration or otherwise, in addition to any other
remedies provided for in any of the agreements relating to any of the Secured
Obligations or available under applicable law, the Trustee shall have and may
exercise with reference to the Collateral and Secured Obligations any or all of
the rights and remedies of a secured party under the Uniform Commercial Code in
effect in the State of New Jersey (or in such other jurisdictions as any
Collateral shall then be


<PAGE>

located), and as otherwise granted herein or under any other applicable law or
under any other agreement executed by the Debtor, including, without limitation,
the right and power to sell, at public or private sale or sales, or otherwise
dispose of, lease or otherwise utilize the Collateral and any part or parts
thereof in any manner authorized or permitted under said Uniform Commercial Code
after default by a debtor, and to apply the proceeds thereof toward payment of
any costs and expenses and attorneys' fees and expenses thereby incurred by the
Trustee and toward payment of the Secured Obligations (as between the Trustee
and Debtor, in such order or manner as the Trustee may elect). Specifically, and
without limiting the foregoing, the Trustee, at a place to be designated by the
Trustee, shall have the right to take possession of all or any part of the
Collateral or any security therefor and of all books, records, papers and
documents of Debtor or in Debtor's possession or control relating to the
Collateral which are not already in the Trustee's possession, and for such
purpose may enter upon any premises upon which any of the Collateral or any
security therefor or any of said books, records, papers and documents are
situated and remove the same therefrom without any liability for trespass or
damages thereby occasioned. To the extent permitted by law, Debtor expressly
waives any notice of sale or other disposition of the Collateral and all other
rights or remedies of Debtor or formalities prescribed by law relative to sale
or disposition of the Collateral or exercise of any other right or remedy of the
Trustee existing after default hereunder; and to the extent any such notice is
required and cannot be waived, Debtor agrees that if such notice is given in the
manner provided in Section 9 hereof at least three (3) days before the time of
the sale or disposition, such notice shall be deemed reasonable and shall fully
satisfy any requirement for giving of said notice.

         (b) After any of the Secured Obligations shall become due, whether by
acceleration or otherwise, and at any time after the occurrence of an Event of
Default and so long as such Event of Default shall be continuing, the Trustee is
expressly granted the right, at its option, to transfer at any time to itself or
to its nominee, the Collateral, or any part thereof, and to receive the
payments, collections, monies, income, proceeds or benefits attributable or
accruing thereto and to hold the same as security for the Secured Obligations or
to apply it to the principal and interest or other amounts owing on any of the
Secured Obligations (as between Trustee and Debtor, in such order or manner as
Trustee may elect).

         (c) All rights to marshalling of assets of Debtor, including any such
right with respect to the Collateral, are hereby waived by


<PAGE>

Debtor to the extent permitted under applicable law.

         (d) All recitals in any instrument of assignment or any other
instrument executed by the Trustee incident to the sale, lease, transfer,
assignment or other disposition, lease or utilization of the Collateral or any
part thereof hereunder shall be full proof of the matters stated therein and no
other proof shall be requisite to establish full legal propriety of the sale or
other action taken by the Trustee or of any fact, condition or thing incident
thereto and all prerequisites of such sale or other action or of any fact,
condition or thing incident thereto shall be presumed conclusively to have been
performed or to have occurred.

         8. INDEMNIFICATION. The Debtor agrees to pay, and, to the extent
permitted by law, to indemnify and save the Trustee harmless against, any costs,
expenses, losses and liabilities which it may incur in the exercise and
performance of its powers and duties hereunder, including, without limitation,
any liability relating to any environmental contamination or hazardous
discharge, and which are not due to the Trustee's gross negligence or willful
misconduct, except to the extent they have already been paid to the Trustee or
provision for the payment thereof, satisfactory to the Trustee, has already been
made.

         9. GENERAL. (a) NO IMPAIRMENT, ETC. The execution and delivery of this
Security Agreement in no manner shall impair or affect any other security (by
endorsement or otherwise) for the payment or performance of the Secured
Obligations and no security taken hereafter as security for payment performance
of the Secured Obligations shall impair in any manner or affect this Security
Agreement, all such present and future additional security to be considered as
cumulative security. Any part of the Collateral may be released from this
Security Agreement without altering, varying or diminishing in any way the
force, effect, lien, security interest, or charge of this Security Agreement as
to the Collateral not expressly released, and this Security Agreement shall
continue as a lien, security interest and charge on all of the Collateral not
expressly released until all the Secured Obligations secured hereby have been
paid or performed in full. Any future assignment of the interest of Debtor in
and to any of the Collateral shall not deprive the Trustee of the right to sell
or otherwise dispose of or utilize all or any part of the Collateral as above
provided or necessitate the sale or disposition thereof in parcels or in
severalty.

         (b) LIABILITY FOR DEFICIENCY. This Security Agreement shall not be
construed as relieving Debtor from liability on the Secured


<PAGE>

Obligations and for any deficiency thereon.

         (c) POWERS OF THE TRUSTEE. In protecting, exercising or assuring its
interests, rights and remedies under this Security Agreement, the Trustee may,
but shall not be obligated to, receive, open and dispose of mail addressed to
Debtor and execute, sign and endorse negotiable and other instruments for the
payment of money, documents of title and other evidences of payment, shipment or
storage for any form of Collateral or proceeds on behalf of and in the name of
Debtor.

         (d) FINANCIAL LIABILITY OF THE TRUSTEE. None of the provisions
contained in this Security Agreement shall require the Trustee or any of its
officers or directors to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers.

         (e) SUBROGATION. The Debtor is hereby subrogated to all of Trustee's
interests, rights and remedies in respect to the Collateral and all security now
or hereafter existing with respect thereto and all guaranties and endorsements
thereof and with respect thereto.

         (f) INSURANCE. Without limiting Debtor's obligations under any of the
agreements entered into in connection with the Secured Obligations, if any part
of Debtor's Tangibles now or hereafter existing consists of or includes or
affects tangible goods of the type which are customarily insured by persons
situated similarly to Debtor against loss, casualty, fire damage, theft or other
destruction or loss, and if requested by the Trustee, Debtor agrees (at Debtor's
expense) to take out and maintain, or to cause same to be taken out and
maintained, such insurance with respect to such goods as may reasonably be
requested by the Trustee, with the Trustee named as an additional insured and
loss payee under such insurance. The Trustee may, but shall not be obligated to,
act and is hereby authorized to act, as attorney-in-fact for Debtor in
obtaining, adjusting, settling and cancelling such insurance and endorsing any
drafts by insurers of such goods, but the Trustee shall not be obligated by this
provision so to act; and if, at any time or times, Debtor shall fail to take out
or maintain insurance as required under this Security Agreement or under this
Section, the Trustee may (but shall not be obligated to), without waiving such
default by Debtor, take out or maintain such insurance, and all premiums and
other costs paid by the Trustee incident thereto shall be repayable upon demand
by the Trustee to the Debtor, with interest thereon from the date expended by
the Trustee until repaid at the


<PAGE>

rate equal to the highest rate of interest permitted by law, and shall be and
become a part of the Secured Obligations secured hereby.

(g) NOTICES. Any communications, notice or demand to be given hereunder shall be
duly given if in writing (including telecopy communications) and delivered,
mailed or telecopied:

                   if to Debtor, at:

                   Rotary Power International, Inc.
                   22 Passaic Street
                   Wood-Ridge, New Jersey 07075
                   Attention:  President
                   if to the Trustee, at:

                  Sentinel Trust Company
                  8122 Sawyer Brown Road, Suite 201

                   Nashville, TN 37221

                   Attention:       Corporate Trust Administration

or, as to any party, to such other address as shall be designated by such party
in a prior written notice to each other party similarly given.

         (h) NO DUTY TO PRESERVE COLLATERAL. The Trustee shall not be obligated
to take any steps necessary to preserve any rights in the Collateral or in any
security therefor against any other party, which obligation Debtor hereby
assumes.

         (i) NO WAIVER. No delay or omission on the part of the Trustee in
exercising any right hereunder shall operate as a waiver of any such right or
any other right. A waiver on any one or more occasions shall not be construed as
a bar to or waiver of any right or remedy on any future occasion. The remedies
of the Trustee hereunder are cumulative, and the exercise of any one or more of
the remedies provided for herein shall not be construed as an election or as a
waiver of any of the other remedies of the Trustee provided for herein or by law
or otherwise.

         (j) ASSIGNMENT. All rights of the Trustee hereunder shall inure to the
benefit of its successors and assigns; and all obligations of Debtor shall bind
its successors and assigns.


<PAGE>

         (k) GOVERNING LAW. This Security Agreement shall be governed by
construed in accordance with the laws of the State of New Jersey, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of any of the security interests hereunder, or remedies
hereunder, are governed by the laws of a jurisdiction other than the State of
New Jersey.

         (l) EXECUTION IN COUNTERPARTS. This Security Agreement may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.

         IN WITNESS WHEREOF, the Debtor and the Trustee have duly executed and
delivered this Security Agreement this 1st day of December, 1997.

                                       ROTARY POWER INTERNATIONAL, INC.

Attest:

                                       By: /s/ Ken Brody
--------------------------                ----------------
                                           Name:   Ken Brody
                                           Title:  President and CEO

                                       SENTINEL TRUST COMPANY

Attest:

                                       By: /s/ D.N. Bates
--------------------------                ----------------
                                           Name:   D.N. Bates
                                           Title:  President


<PAGE>



                                                                      SCHEDULE A

[2] Tombstone Fixtures for K&T "Orion"

Bacharach H.D. Fuel Pump Steel Stand

Trash Compactor

Kearney and Trecker "Orion 2300" 4-Axis CNC Horizontal 3-Pallet Changer
Machining Center, S/N: 9288033

Over 200 Pieces of #50 Taper Tooling

Parlec Parsetter 220 Tool Pre-Setter, S/N: 20060

42" Blanchard Model 22ACD-42 Rotary Surface Grinder, S/N: 15759, (1989)

Zeiss Model UPMC-850 3-Axis CNC Coordinate Measuring Machine, S/N: 78277

Bendix Model CORDAX 803 Coordinate Measuring Machine, S/N: 2-3204-0680

Hoglund Hydraulic Grinder

30" Rank Model 22-2600 Optical, S/N: T892407

14" Jones and Lamson Model FC-14 Optical Comparator, S/N: 25633

15-1/2" x 30" Monarch Geared Head Engine Lathe, S/N: 42632

25-Ton Dake Model 25T-EL-I- Elec-Draulic H-Frame Shop Press

25-Ton Stenhoj Manual-Operated Hydraulic H-Frame Press

Industrial Machine Washing System, S/N: 88-3761

50-HP Sullair Model 12BS-50H Rotary Screw Type Air Compressor, S/N: 003-73152

Yale Tug Motor

20-HP Powerex Model G1-20 Rotary Screw Type Air Compressor, S/N: 1520673JM

15-HP Powerex Model G1-15 Rotary Screw Type Air Compressor, S/N: 1S153552

                                       A-1
<PAGE>

Zeks Therm Air Dyer Unit

7-1/2 HP Piston-Type Tank Mounted Air Compressor

Miller 750-AMP Load Bank, S/N: JK632394

Airton Model K696D16133 Resistive Load Bank, S/N: 445

Miller 10-KW Auxillary Power Load Bank, S/N: KA763651

Avtron Load Banks, [1] Power Analyzer Unit

Horiba Emissions Analyzer Systems

Labconco Work Station and Hood

Puffer Hubbard Refrigeration Unit

Puffer Hubbard Model IUF-4013-A-A-E Freezer Unit

Tenney Jr. Bench-Type Environmental Chamber

Lab-Line Imperial IV Model 3470M Lab-Type Oven, S/N: 1287

4,000 Lbs. Capacity 36" x 64" Electric Scissor Lift Table

Delta Model 52-611 6" Belt and 12" Disc Combination Sander, S/N: 93G19386

6" Black & Decker Double End Grinder

6" Baldor Double End Carbide Grinder

Walker Turner Model 2RDA 2" Radial Arm Drill

#7 Greenard Ratchet-Type Arbor Press

#3-1/2 Famco Ratchet-Type Arbor Press

#3-1/2 Greenard Ratchet-Type Arbor Press

Kohler Model 70R7282 75 KVA "Fast Response II" Generator, S/N: 240472

Black and Decker Model N Super Service Valve Refacer, S/N: 1043812

Phoenix Models 300/PP-11 and 900/7 Dry Rod Electrode Stabilizing Ovens

                                       A-2

<PAGE>

Leco CM-24 Abrasive Cut-Off Saw, S/N: 111 7

Leco BG-200 4" Wide Belt Grinder, S/N: 1871 7

Dow Corning Model LFW-1 friction and Wear Testing Machine

Revolver Portable Hand-Crank Work Holding Units

Tenant Floor Sweeper

Minuteman Floor Scrubber

450-AMP Miller "Delta Weld 450" DC Welder, S/N: JG123671

200-HP General Electric MG Set

Datac Airflow Temperature Control Unit

Brown & Sharpe "Micro-Hite" Digital Height Gauge, S/N: 0766116

Wilson/Rockwell Series 500 Digital Hardness Tester, S/N: 81031511

Fisherscope Type 750C-N2 Coating Thickness Tester, S/N: 129-9554A

Torque Master Model TSD2050 Torque Tester Machine, S/N: 348

Stuhr 12" x 48" Bench Center

                          INCLUDED, BUT NOT LIMITED TO:

Granite Surface Plates up to 30" x 60" x 10" thick, Wiz gauge, pin gauge sets,
dividing ID micrometers, OD micrometers, gauges, cadillac height gauge, Torison
balancer, Torque wrenches, v-blocks, paralles, reference block calipers, digital
micrometers, thickness gauges, depth micrometers, indi-square, hundreds of
items.

                          INCLUDED, BUT NOT LIMITED TO:

Miscellaneous Heavy-Duty Adjustable Steel Pallet Racking, die lift trucks,
pedestal fans, engine hoist, chain falls, fire extinguishers, workbenches and
vises, flame-proof storage cabinets, drills, taps, reamers, shelving, roller
conveyor, hose reels, parts bins, material handling carts, hydraulic pallet
jacks, rolling stairs, welding curtains, electric chain hoists, milling vises,
maple-top workbenches, hand tapper, oil pumps, oil rag cans, Starrett Model 500
MM gauge, precision vises, angle


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plates, crane scales, overhead single beam cranes with chain falls, 360 degrees
rotary jib with 2-ton chain fall, plus much more.

Vidmar Stanley Cabinets

[17] Maple-Top Work Benches with Vidmar Cabinet

[2] 16-Drawer Storage Cabinets

9-Drawer Vidmar Storage Cabinets

[21] 11-Drawer Lista Storage Cabinets

[2] 5-Drawer Vidmar Storage Cabinets

Ford Econoline 350 Heavy Duty Van, Vin #: 1FTJE34H1CHA03809


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                       OFFICE FURNITURE AND RELATED ITEMS

                          INCLUDED, BUT NOT LIMITED TO:

4-Drawer and 5-Drawer file cabinets, panasonic phone system with centrey
processor, Xerox Model 1065 Copier, graphics plotter, HP Laser Jet Printers,
assorted typewriters, executive chairs and desks, catalog binder, refrigerator,
large quantity of office partitions, lateral files, formica tables, Epson
printer, VCR player, monitors, pull-down view screen, RCA TV, Lectum, conference
table and chairs, Xerox 5052 Copier, Executive Conference Table, hundreds of
chairs, book cases, assorted PC's, credenzas, card files, cafeteria tables,
drafting tables, oak tables, executive chairs and much, much more.





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