<PAGE>

                                                                     EXHIBIT 4.2

                                 NOTICE OF GRANT

              RAYTECH CORPORATION 2002 INCENTIVE COMPENSATION PLAN

Name:______________________________    Address:__________________________

You have been granted an Option to purchase Shares of the Company, subject to
the terms and conditions of the Stock Option Agreement attached hereto (the
"Stock Option Agreement") and the Raytech Corporation 2002 Incentive
Compensation Plan (the "Plan"), as summarized below. Defined terms used in this
Notice of Grant have the meanings ascribed to such terms in the Plan:

     Date of Grant:                 _________________________________

     Option Price per Share:        $________________________________

     Number of Shares Purchasable:  _________________________________

     Total Option Price:            $________________________________

     Type of Option:                Incentive Stock Option Nonqualified Stock
                                    Option

     Expiration Date:               _________________________________

Vesting Schedule:

This Option shall become vested and exercisable, in whole or in part, as
follows: 25% of the Option shall be vested and exercisable on each of the first,
second, third and fourth anniversaries of the Date of Grant, subject to your
continued employment with the Company or an Affiliate through the applicable
vesting date; provided, that, in the event of a Change in Control as defined in
Section 2.7 of the Plan, the Option shall become 100% vested and fully
exercisable immediately prior to the Change in Control.

Period/Termination:

This Option (to the extent vested) may be exercised at any time prior to the
Expiration Date, unless the Option is sooner terminated pursuant to the Stock
Option Agreement.

<PAGE>

                               RAYTECH CORPORATION
                        2002 INCENTIVE COMPENSATION PLAN

                             STOCK OPTION AGREEMENT

         This Stock Option Agreement (this "Agreement") is made as of the ___
day of____________, 200_, between Raytech Corporation, a Delaware corporation
(the "Company"), and ______________________________ (the "Participant", which
term as used herein shall be deemed to include any successor to the Participant
by will or by the laws of descent and distribution, unless the context shall
otherwise require).

         Pursuant to the Company's 2002 Incentive Compensation Plan (the
"Plan"), the Company, acting through the Board, approved the grant to the
Participant, effective as of the date set forth above, of an Option to purchase
the number of Shares Purchasable at the Option Price, each as set forth in the
Notice of Grant attached hereto (the "Notice of Grant"), upon the terms and
conditions hereinafter set forth. Capitalized terms not defined herein shall
have the meanings ascribed to such terms in the Plan.

         NOW, THEREFORE, in consideration of the mutual premises and
undertakings hereinafter set forth, the parties hereto agree as follows:

         1.       OPTION; OPTION PRICE. The Company hereby grants to the
Participant an option (the "Option") to purchase any or all of the number of
Shares Purchasable, as set forth in the Notice of Grant, at an exercise price
per share equal to the Option Price set forth in the Notice of Grant, subject to
the terms and conditions of this Agreement and the Plan (which is incorporated
by reference herein). In all cases (except with regard to Section 18 of this
Agreement) the terms, definitions and provisions of the Plan shall control in
the event of any conflict with the terms, definitions and provisions of this
Agreement. If designated in the Notice of Grant as an "Incentive Stock Option",
the Option is intended to qualify for Federal income tax purposes as an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). If designated in the Notice of Grant as a
"Nonqualified Stock Option," the Option is not intended to qualify as an
Incentive Stock Option. A copy of the Plan as in effect on the date hereof has
been supplied to the Participant, and the Participant hereby acknowledges
receipt thereof.

         2.       TERM. The term during which the Option may be exercised,
subject to vesting, (the "Option Term"), shall commence on the Date of Grant and
shall expire on the Expiration Date set forth in the Notice of Grant, unless
such Option shall theretofore have been terminated in accordance with the terms
hereof or of the Plan.

         3.       TIME OF EXERCISE.

                  (a)      The Option shall become vested and exercisable as set
forth in the Notice of Grant. Each installment of the Option that becomes vested
and exercisable shall be cumulative and shall remain exercisable during the
remaining period of the Option Term, unless sooner exercised or terminated as
provided in this Agreement or in the Plan.

                                        1

<PAGE>

                  (b)      Anything contained in this Agreement to the contrary
notwithstanding, to the extent that this Option is intended to be an Incentive
Stock Option, as set forth in the Notice of Grant, the Option shall not be
exercisable as an Incentive Stock Option, and shall be treated as a Nonqualified
Stock Option, to the extent that the aggregate Fair Market Value (as determined
in accordance with Section 6.9 of the Plan as of the dates of grant of such
options) of all stock with respect to which incentive stock options are
exercisable for the first time by the Participant during any calendar year
(under the Plan and all other plans of the Company and its Subsidiaries, if any)
exceeds $100,000.

         4.       TERMINATION OF OPTION.

                  (a)      The unexercised portion of the Option shall
automatically terminate and shall become null and void and be of no further
force or effect upon the first to occur of the following:

                           (i)      the expiration of the Option Term;

                           (ii)     the expiration of one year from the date of
the Participant's termination of employment with the Company and its Affiliates
(a "Termination of Service"), if such Termination of Service is a result of the
Participant's death or retirement upon or after reaching age 55;

                           (iii)    the expiration of six months from the date
of the Participant's Termination of Service, if such Termination of Service is a
result of the Participant's total disability (as defined under the Raytech
Long-Term Disability Plan);

                           (iv)     immediately upon the Participant's
Termination of Service if such Termination of Service is by the Company or an
Affiliate for Cause (as defined below);

                           (v)      the expiration of three months from the date
of the Participant's Termination of Service for any reason other than a reason
described in clause (ii), (iii) or (iv) above; provided, however, that if the
Participant shall die during such three-month period, the time of termination of
the unexercised portion of the Option shall be one year from the date of the
Participant's death; and

                           (vi)     except to the extent permitted by Section
11, the date on which the Option or any part thereof or right or privilege
relating thereto is transferred (otherwise than by will or by the laws of
descent and distribution), assigned, pledged, hypothecated, attached or
otherwise disposed of by the Participant.

                  (b)      Notwithstanding clauses (ii) through (v) of paragraph
(a) above, in the event of the Participant's Termination of Service by the
Company for any reason other than Cause during the 12-month period immediately
following a Change in Control, the Option may thereafter be exercised by the
Participant, to the extent it was exercisable at the time of termination and is
not settled in accordance with Section 8(b)(ii), until the earlier of (i) one
year from the date of such Termination of Service and (ii) the Expiration Date.

                                       2

<PAGE>

                  (c)      To the extent the Option is an Incentive Stock
Option, it shall only qualify as such for the applicable period following
Termination of Service specified in Section 422 of the Code and the Treasury
Regulations relating thereto, and the Option shall be a Nonqualified Stock
Option to the extent the Option remains exercisable after such period.

                  (d)      Anything contained herein to the contrary
notwithstanding, the Option shall not be affected by any change of duties or
position of the Participant (including a transfer to or from the Company or any
of its Affiliates), so long as the Participant continues to be an Employee.

                  (e)      As used in this Agreement, the term "Cause" means (i)
"Cause" as defined in any individual agreement between the Company or an
Affiliate and the Participant or (ii) if there is no such agreement or if such
agreement does not define Cause: (A) the repeated refusal or neglect of such
Participant to perform in a material respect his or her employment or
service-related duties, following written notice from the Committee describing
such refusal or neglect and an opportunity for 30 days to cure the condition to
the satisfaction of the Committee, (B) such Participant's willful misconduct or
breach of fiduciary duty, (C) such Participant's conviction of or entering a
plea of guilty or nolo contendere to a crime constituting a felony or (D) the
breach by such Participant of any covenant, agreement or obligation not to
disclose any material confidential information pertaining to the Company or such
Affiliate or not to compete or interfere with the Company or such Affiliate

         5.       PROCEDURE FOR EXERCISE.

                  (a)      The Option may be exercised, from time to time, in
whole or in part (but for the purchase of whole shares only), by delivery of a
written notice substantially in the form attached as Exhibit A hereto (the
"Exercise Notice") from the Participant to the Company, which Notice shall:

                           (i)      state that the Participant elects to
exercise the Option;

                           (ii)     state the number of Shares with respect to
which the Option is being exercised (the "Optioned Shares");

                           (iii)    state the method of payment for the Optioned
Shares pursuant to Section 5(b);

                           (iv)     state the date upon which the Participant
desires to consummate the purchase of the Optioned Shares (which date must be
prior to the termination of such Option and no sooner that 5 business days from
the delivery of such Notice and no later than 30 calendar days from the delivery
of such Notice, as may be appropriately adjusted by the Committee in the event
of a Change in Control);

                           (v)      include any representations of the
Participant required under Section 9(b);

                                       3

<PAGE>

                           (vi)     if the Option shall be exercised by any
person other than the Participant, include evidence to the satisfaction of the
Committee of the right of such person to exercise the Option pursuant to Section
11; and

                           (vii)    include such further provisions consistent
with the Plan (including, without limitation, the execution of a restricted
stock agreement) as the Committee may from time to time require.

                  (b)      Payment of the Option Price for the Optioned Shares
shall be made (i) in cash or by bank cashier's or certified check payable to the
Company, (ii) by delivery of stock certificates (in negotiable form)
representing Shares that have been owned of record by the Participant for more
than six months on the date of exercise and that have a Fair Market Value on the
effective date of exercise (determined in the manner set forth in Section 6.9 of
the Plan) equal to the aggregate Option Price of the Optioned Shares, (iii) in
compliance with any cashless exercise program authorized by the Committee in its
sole discretion; or (iv) a combination of the methods set forth in the foregoing
clauses (i), (ii) and (iii).

                  (c)      The Company shall issue (or cause to be issued) a
stock certificate in the name of the Participant (or such other person
exercising the Option in accordance with the provisions of Section 11) for the
Optioned Shares as soon as reasonably practicable after receipt of the Notice
and payment of the aggregate Option Price for such shares. Such stock
certificate shall contain any legend required under Section 5 of the Exercise
Notice.

         6.       WITHHOLDING. The Committee shall be entitled to require as a
condition of delivery of the Optioned Shares in connection with the exercise of
an Option that the Participant remit or, in appropriate cases, agree to remit
when due, an amount sufficient to satisfy all current or estimated future
federal, state and local withholding tax and employment tax requirements
relating thereto. The Committee may in its discretion permit the minimum
statutorily required withholding obligations to be satisfied by having the
Company withhold a portion of the Optioned Shares that would otherwise be issued
to the Participant upon exercise of the Option.

         7.       NO RIGHTS AS A STOCKHOLDER. The Participant shall not have any
privileges of a stockholder of the Company with respect to any Optioned Shares
until the date of issuance of a stock certificate pursuant to Section 5(c).

         8.       ADJUSTMENTS.

                  (a)      Changes in Capital Structure. Subject to Section
8(b), the number and kind of securities that are subject to the Option and the
Option Price are subject to adjustment as provided in Section 4.2 of the Plan.
Anything contained in the Plan or in this Agreement to the contrary
notwithstanding, in the case of Incentive Stock Options, no adjustment under
this Section 8(a) shall be made if such adjustment (i) would constitute a
modification, extension or renewal of such ISOs within the meaning of Sections
422 and 424 of the Code, and the regulations promulgated by the Treasury
Department thereunder or (ii) would, under Section 422 of the Code and the
regulations promulgated by the Treasury Department thereunder, be considered the
adoption of a new plan requiring stockholder approval.

                                       4

<PAGE>

                  (b)      Change in Control. Notwithstanding any provision of
the Plan to the contrary, in the event of a Change in Control, as defined in
Section 2.7 of the Plan:

                           (i)      The Option shall vest to the extent set
forth in the Notice of Grant; and

                           (ii)     The Committee may make such adjustments
and/or settlements of the unexercised portion of the Option as it deems
appropriate and consistent with the Plan's purposes, including, without
limitation, settling the Option for cash or Shares if the price paid for a Share
in connection with the Change in Control exceeds the Option Price or canceling
the Option if the Option Price exceeds the price paid for a Share in connection
with the Change in Control; provided, however, that in the event of the
assumption of the Option by, or the substitution for such Option of a new option
covering the stock of, the surviving, successor or purchasing corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the number,
kind and option price of shares subject to such option, the Committee shall, in
the case of ISOs, to the extent not inconsistent with the best interests of the
Company or its Affiliates (such best interests to be determined in good faith by
the Committee in its sole discretion), use its best efforts to ensure that any
such assumption or substitution will not constitute a modification, extension or
renewal of the ISOs within the meaning of Section 424(h) of the Code and the
regulations promulgated by the Treasury Department thereunder.

                  (c)      Any adjustments referred to in Section 8(a) or (b)
shall be made by the Committee in its sole discretion and shall be conclusive
and binding on the Participant.

         9.       ADDITIONAL PROVISIONS RELATED TO EXERCISE.

                  (a)      The Option shall be exercisable only on such date or
dates and during such period and for such number of Shares Purchasable as are
set forth in this Agreement.

                  (b)      To exercise the Option, the Participant shall follow
the procedures set forth in Section 5 hereof. Upon the exercise of the Option at
a time when there is not in effect a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the issuance of
Shares upon exercise of the Option and/or the sale thereof, the Committee in its
discretion may, as a condition to the exercise of the Option, require the
Participant (i) to make the representations set forth in Exhibit B hereto and
(ii) to make such other representations and warranties as are deemed appropriate
by counsel to the Company. In any event, no Shares shall be issued and delivered
upon the exercise of the Option unless and until the Company and/or the
Participant shall have complied with all applicable Federal or state
registration, listing and/or qualification requirements and all other
requirements of law or of any regulatory agencies having jurisdiction.

         10.      NO EVIDENCE OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Nothing
contained in the Plan or in this Agreement shall confer upon the Participant any
right with respect to the continuation of his or her employment by the Company
or any Affiliate or interfere in any way with the right of the Company or any
Affiliate (subject to the terms of any separate agreement to the contrary), at
any time to terminate such employment relationship or to increase or decrease
the compensation of the Participant from the rate in existence at the time of
the grant of the

                                       5

<PAGE>

Option. For the avoidance of doubt, this Option shall not guarantee employment
for the length of any vesting schedule set forth in the Notice of Grant.

         11.      RESTRICTION ON TRANSFER. The Option may not be transferred,
pledged, assigned, hypothecated or otherwise disposed of in any way by the
Participant, except by will or by the laws of descent and distribution or, if
the Option is a Nonqualified Stock Option, to a spouse or former spouse pursuant
to a domestic relations order (within the meaning of Rule 16a-12 promulgated
under the Exchange Act). The Option may be exercised during the lifetime of the
Participant only by the Participant or the Participant's guardian or legal
representative; provided, however, if the Option is a Nonqualified Stock Option
and is transferred to a spouse or a former spouse pursuant to a domestic
relations order, the Option may be exercised by such spouse or former spouse. In
addition, if the option is a Nonqualified Stock Option, the Committee, in its
sole discretion, may provide that this Option may be otherwise transferable and
exercisable by a transferee. Following transfer, for purposes of this Agreement,
a transferee of an Option shall be deemed to be the Optionee; provided that the
Option shall be exercisable by the transferee only to the extent and for such
periods that the Option would have been exercisable if held by the Optionee. If
the Participant dies, the Option shall thereafter be exercisable, during the
period specified in Section 4(a)(ii), by the Participant's executors or
administrators to the full extent to which the Option was exercisable by the
Participant at the time of the Participant's death. The Option shall not be
subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Option contrary to
the provisions hereof, and the levy of any execution, attachment or similar
process upon the Option, shall be null and void and without effect.

         12.      DISQUALIFYING DISPOSITIONS. If Optioned Shares acquired by
exercise of an Incentive Stock Option are disposed of within two years following
the date of this Agreement or one year following the issuance thereof to the
Participant (a "Disqualifying Disposition"), the Participant shall, immediately
prior to such Disqualifying Disposition, notify the Company in writing of the
date and terms of such Disqualifying Disposition and provide such other
information regarding the Disqualifying Disposition as the Company may
reasonably require.

         13.      NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if (i)
personally delivered, (ii) sent by nationally-recognized overnight courier or
(iii) sent by registered or certified mail, postage prepaid, addressed as
follows:

         if to the Participant, to the address set forth on the Notice of Grant;
and

         if to the Company, to:

         Raytech Corporation
         Four Corporate Lane, Suite 295
         Shelton, CT 06484
         Attention: Secretary

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have

                                       6

<PAGE>

been given (x) when delivered, if personally delivered, (y) on the first
Business Day (as hereinafter defined) after dispatch, if sent by
nationally-recognized overnight courier and (z) on the third Business Day
following the date on which the piece of mail containing such communication is
posted, if sent by mail. As used herein, "Business Day" means a day that is not
a Saturday, Sunday or a day on which banking institutions in the city to which
the notice or communication is to be sent are not required to be open.

         14.      NO WAIVER. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.

         15.      PARTICIPANT UNDERTAKING. The Participant hereby agrees to take
whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Participant pursuant to the express provisions of this Agreement or the
Plan.

         16.      SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
Participant and the Company and their respective successors, assigns, heirs,
representatives and estates, as the case may be.

         17.      MODIFICATION OF RIGHTS. The rights of the Participant are
subject to modification and termination in certain events as provided in this
Agreement and the Plan.

         18.      GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts made and to be wholly performed therein. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable. Each of the parties submits to the jurisdiction of any state or
federal court sitting in the State of Connecticut, in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other party with respect
thereto. Either party may make service on the other party by sending or
delivering a copy of the process to the party to be served at the address and in
the manner provided herein for the giving of notices.

         19.      LEGAL FEES AND COSTS. If any court action is filed regarding
this Agreement, the losing party shall pay the prevailing party's reasonable
attorneys' fees, costs and expenses within thirty (30) days after the losing
party's receipt of an invoice from the prevailing party.

         20.      COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

         21.      ENTIRE AGREEMENT. This Agreement (including the Notice of
Grant), the Plan and, upon execution, the Exercise Notice and the Investment
Representation Statement, constitute the entire agreement between the parties
with respect to the subject matter hereof, and supersede all previously written
or oral negotiations, commitments, representations and agreements with respect
thereto.

                                       7

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                     RAYTECH CORPORATION

                                     By: _____________________________________
                                         Name:
                                         Title:

                                     PARTICIPANT

                                     _________________________________________
                                         Name:

<PAGE>

                                    EXHIBIT A

              RAYTECH CORPORATION 2002 INCENTIVE COMPENSATION PLAN
                                 EXERCISE NOTICE

Raytech Corporation
Four Corporate Drive, Suite 295
Shelton, CT 06484
Attention: Secretary

Date of Notice:_____________________

         1.       EXERCISE OF OPTION. Effective as of _______________________,
___, [PLEASE INSERT DATE THAT IS AT LEAST 5 DAYS FROM THE DATE OF NOTICE AND NO
LATER THAN 30 DAYS FROM THE DATE OF NOTICE] the undersigned (the "Participant")
hereby elects to exercise the Participant's option to purchase ________________
Shares (the "Optioned Shares") of Raytech Corporation (the "Company") under and
pursuant to the 2002 Incentive Compensation Plan (the "Plan") and the Stock
Option Agreement, dated ___________________, 200_ (the "Stock Option
Agreement"). The Participant shall pay the aggregate Option Price for the
Optioned Shares on or before the effective date of exercise specified above, as
follows:

                  -        in cash or by bank cashier's or certified check
                           payable to the Company in the amount of
                           $_____________;

                  -        by delivery of stock certificates (in negotiable
                           form) representing Shares that have been owned of
                           record by the Participant for more than six months on
                           the effective date of exercise and having a Fair
                           Market Value (as determined pursuant to Section 6.9
                           of the Plan) equal to $____________; and/or

                  -        pursuant to the cashless exercise program previously
                           authorized by the Committee in the amount of
                           $____________.

         2.       REPRESENTATIONS OF THE PARTICIPANT. The Participant
acknowledges that the Participant has received, read and understood the Plan and
the Stock Option Agreement and the Investment Representation Statement (if
applicable) and agrees to abide by and be bound by their terms and conditions.

         3.       RIGHTS AS STOCKHOLDER. Until the stock certificate evidencing
the Optioned Shares is issued (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Optioned Shares, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
as soon as practicable after the Option is exercised.

         4.       TAX CONSULTATION. The Participant understands that the
Participant may suffer adverse tax consequences as a result of the Participant's
purchase or disposition of the Optioned Shares. The Participant represents that
the Participant has consulted with any tax advisors the

                                      A-1

<PAGE>

Participant deems appropriate in connection with the purchase or disposition of
the Shares and that the Participant is not relying on the Company for any tax
advice.

         5.       RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.

                  (a)      Legends. The Participant understands and agrees that
the Company may cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of
the Shares together with any other legends that may be required by state or
federal securities laws or otherwise required by counsel to the Company at the
time of the issuance of the Shares:

         THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
         HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
         (THE "ACT"), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER
         JURISDICTION. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
         NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE DISTRIBUTION THEREOF.
         THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, OR TRANSFERRED
         UNLESS (I) A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
         THESE SECURITIES AND SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN
         COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER
         JURISDICTION OR (II) THERE IS AN OPINION OF COUNSEL OR OTHER EVIDENCE,
         IN EITHER CASE SATISFACTORY TO THE CORPORATION, THAT AN EXEMPTION
         THEREFROM IS AVAILABLE AND THAT SUCH OFFER, SALE, PLEDGE, OR TRANSFER
         IS IN COMPLIANCE WITH APPLICABLE SECURITIES LAW OF ANY STATE OR OTHER
         JURISDICTION.

                  (b)      Stop-Transfer Notices. The Participant agrees that,
in order to ensure compliance with any restrictions referred to herein, the
Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.

                  (c)      Refusal to Transfer. The Company shall not be
required (i) to transfer on its books any Optioned Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement or
(ii) to treat as owner of such Optioned Shares or to accord the right to vote or
pay dividends to any purchaser or other transferee to whom such Optioned Shares
shall have been so transferred.

         6.       SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
the Participant and his or her heirs, executors, administrators, successors and
assigns.

         7.       INTERPRETATION. Any dispute regarding the interpretations of
this Agreement shall be submitted by the Participant or by the Company forthwith
to the Committee, which shall

                                      A-2

<PAGE>

review such dispute at its next regular meeting. The resolution of such a
dispute by the Committee shall be final and binding on the Company and on the
Participant.

         8.       GOVERNING LAWS; SEVERABILITY. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts made and to be wholly performed therein. Should any
provision of this Agreement be determined by a court of law to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable. Each of the parties submits to the jurisdiction of any
state or federal court sitting in the State of Delaware, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other party with respect
thereto. Either party may make service on the other party by sending or
delivering a copy of the process to the party to be served at the address and in
the manner provided herein for the giving of notices.

         9.       NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given if given in the manner
specified in the Stock Option Agreement.

         10.      FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.

         11.      DEFINITIONS. Capitalized terms not defined herein shall have
the meaning set forth in the Plan.

                     [REST OF PAGE INTENTIONALLY LEFT BLANK]

                                      A-3

<PAGE>

         12.      ENTIRE AGREEMENT. The Plan, the Notice of Grant, the Stock
Option Agreement and the Investment Representation Statement (if applicable) are
incorporated herein by reference. This Agreement, the Plan, the Notice of Grant,
the Stock Option Agreement and the Investment Representation Statement (if
applicable) constitute the entire agreement of the parties and supersede in
their entirety all prior undertakings and agreements of the Company and the
Participant with respect to the subject matter hereof.

                                  Submitted by:

                                  PARTICIPANT

                                  ____________________________________________
                                        (Signature)

                                  Address:

                                  ____________________________________________

                                  ____________________________________________

Accepted by:

Raytech Corporation

By: ______________________________
    Name:
    Title:

                                      A-4

<PAGE>

                                    EXHIBIT B

                       INVESTMENT REPRESENTATION STATEMENT

         PARTICIPANT:

         COMPANY   : Raytech Corporation

         SECURITY  : Common Stock

         AMOUNT    :

         DATE      :

         In connection with the purchase of the above-listed Securities, the
undersigned Participant represents to the Company the following:

                  (a)      The Participant is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities. The Participant is acquiring these Securities for investment for the
Participant's own account only and not with a view to, or for resale in
connection with, a "distribution" thereof within the meaning of the Securities
Act of 1933, as amended (the "Securities Act").

                  (b)      The Participant acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and have
not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of the Participant's investment intent as expressed herein. In this
connection, the Participant understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if the Participant's representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future. The Participant further understands that
the Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
The Participant further acknowledges and understands that the Company is under
no obligation to register the Securities. The Participant understands that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company and other legends required under the applicable state or federal
securities laws.

                  (c)      The Participant is familiar with the provisions of
Rule 144, promulgated under the Securities Act, which, in substance, permits
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions, including the following: (1) the resale
being made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Exchange Act); and, in the case of an affiliate,

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<PAGE>

(2) the availability of certain public information about the Company, (3) the
amount of Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a Form 144,
if applicable.

                  (d)      The Participant further understands that in the event
all of the applicable requirements of Rule 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A under the Securities Act,
or some other registration exemption will be required; and that, notwithstanding
the fact that Rule 144 is not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that a person proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk. The Participant understand that no
assurances can be given that any such other registration exemption will be
available in such event.

                            Signature of Participant:

                            __________________________________________________

                            Date:______________________,  ____________________

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