EX-10.B: AGREEMENT BETWEEN AP SERVICES, LLC AND RAYTECH CORPORATION

Exhibit 10(b)

May 21, 2004

Stanley J. Levy, Esq.
Chairman of the Board – Raytech Corporation
c/o Levy Phillips and Konigsberg LLP
800 Third Avenue, 13^th Floor
New York, NY 10022

Re: Interim Management Services

Dear Mr. Levy:

This letter outlines the understanding (“Agreement”) between AP Services, LLC, a Michigan limited liability company, (“APS”) and Raytech Corporation (the “Company”), for the engagement of APS to provide certain temporary employees to the Company as described below.

All defined terms shall, unless the context otherwise requires, have the meanings ascribed to them in Schedule 1 (“Definitions and Interpretation”).

The engagement of APS, including any APS employees who serve in Executive Officer positions, shall be under the approval of the Board of Directors of the Company.

Objective and Tasks

APS will provide Larry W. Singleton to serve as the Company’s Interim Chief Executive Officer, reporting to the Company’s Board of Directors. Working collaboratively with the senior management team, the Board of Directors and other Company professionals, Larry Singleton will perform the duties and responsibilities of a Chief Executive Officer as described by the Company’s Board of Directors, and shall, without limitation:

Stanley J. Levy, Esq.
May 21, 2004
Page 2

Staffing

APS will provide the individual set forth on Exhibit A, herein referred to as the temporary employee (“Temporary Staff”), subject to the terms and conditions of this Agreement, with the titles, pay rates, and other descriptions set forth therein.

The Temporary Staff may be assisted by other professionals at various levels, as the tasks require, who would also become Temporary Staff. We will keep you informed as to our staffing and will not add additional Temporary Staff to the assignment without first consulting with you to obtain your concurrence that such additional resources are required and do not duplicate the activities of other employees or professionals.

Stanley J. Levy, Esq.
May 21, 2004
Page 3

Fees and Retainer

APS shall be compensated for its Services under this Agreement at the rates set forth on Schedule 2.

We will commence this engagement immediately upon receipt of a signed engagement letter and retainer. We will require a retainer of $25,000 to be applied against the time charges and expenses specific to the engagement and in accordance with Section 2 of the attached General Terms and Conditions. This retainer, along with the retainer provided to AlixPartners, LLC, pursuant to the engagement letter dated December 15, 2003, represents a total retainer held of $100,000.

* * *

The terms and conditions set out in the attached Schedules and the General Terms and Conditions form part of and are incorporated by reference herein to this Agreement.

If these terms meet with your approval, please sign and return the enclosed copy of this Agreement and wire transfer the amount to establish the retainer.

We look forward to working with you.

Sincerely yours,

AP Services, LLC

Robert J. Rock
Principal

Acknowledged and Agreed to:

RAYTECH CORPORATION

AP Services, LLC
Employment by Raytech Corporation

Exhibit A

Temporary Employees
Individuals With Executive Officer Positions

Note: To the extent that actual hours worked in a calendar month, multiplied by Mr. Singleton’s discounted hourly rate of $440, is less than $85,000 per month, such lesser amount will be charged for such calendar month.

Schedule 1

Definitions and Interpretation

Schedule 2

Fees and Expenses

Schedule 3

Disclosures

AP Services, LLC
General Terms and Conditions

These General Terms and Conditions (“Terms”) shall govern the services provided by AP Services, LLC (“APS”) as set forth in the letter agreement executed by the Company and APS to which these Terms are attached.

Section 1. Company Responsibilities

Company will undertake responsibilities as set forth below:

1.  Provide reliable and accurate detailed information, materials, documentation, and

APS’ delivery of the services and the fees charged are dependent on (i) Company’s timely and effective completion of its responsibilities; and (ii) timely decisions and approvals made by the Company’s management. Company shall be responsible for any delays, additional costs, or other deficiencies caused by not completing its responsibilities.

Section 2. Timing, Fees, and Expenses.

The engagement will commence immediately upon receipt of a signed engagement letter and a retainer.

Hourly Fees. For purposes of semi-monthly billings, our fees will be based on the hours charged at our hourly rates as set forth in the letter agreement. We review and revise our hourly billing rates effective January l of each year.

Contingent Success Fees. As described in the attached agreement.

Out-of-Pocket Expenses. In addition to hourly fees as defined in the letter agreement, the Company shall pay directly or reimburse APS upon receipt of periodic billings for all reasonable out-of-pocket expenses incurred in connection with this assignment.

Retainer. We require a retainer to be applied against the time charges and expenses specific to the engagement. We will submit semi-monthly invoices for services rendered and expenses incurred as described above, and will offset such invoices against the retainer. Payment will be due upon receipt of the invoices to replenish the retainer to the agreed-upon amount. Any unearned portion of the retainer will be returned to you at the termination of the engagement.

Section 3. Relationship of the Parties.

The parties intend that an independent contractor relationship will be created by this Agreement. As an independent contractor, APS will have complete and exclusive charge of the management and operation of its business, including hiring and paying the wages and other compensation of all its employees and agents, and paying all bills, expenses and other charges incurred or payable with respect to the operation of its business. Of course, as an independent contractor, neither the Temporary Staff nor APS will be entitled to receive from the Company any vacation pay, sick leave, retirement, pension, or social security benefits, workers’ compensation, disability, unemployment insurance benefits, or any other employee benefits. APS will be responsible for all employment, withholding, income and other taxes incurred in connection with the operation and conduct of its business. Temporary Staff will not be considered employees of the Company except for purposes of this agreement.

The Company agrees to promptly notify APS if it extends (or solicits the possible interest in receiving) an offer of employment to an employee of APS and agrees that it will pay APS a cash fee, upon hiring, equal to 150% of the aggregate first year’s annualized compensation, including any other compensation, to be paid to any person working for the Company on behalf of APS that the Company or any of its subsidiaries or affiliates hires at any time up to two years subsequent to the date of the final invoice rendered by APS with respect to this engagement. This agreement does not prohibit the Company from making general solicitations for employment or from soliciting for employment any individuals who have ceased to be employees or agents of APS prior to such solicitation.

Section 4. Confidentiality.

APS agrees to keep confidential all Information obtained from the Company, and neither APS nor the Temporary Staff will disclose to any other person or entity, or use for any purpose other than specified herein, any information pertaining to the Company or any affiliate thereof, which is either non-public, confidential, or proprietary in nature (“Information”) that it obtains or is given access to during the performance of the services provided hereunder. The foregoing is not intended to nor shall be construed as prohibiting APS or the Temporary Staff from disclosure pursuant to a valid subpoena or court order, but neither APS nor such Temporary Staff shall encourage, suggest, invite or request, or assist in securing, any such subpoena or court order, and the Temporary Staff shall immediately give notice of any such subpoena or court order by fax transmission to the Company. Furthermore, APS and the Temporary Staff may make reasonable disclosures of Information to third parties in connection with their performance of their obligations and assignments hereunder. In addition, APS will have the right to disclose to others in the normal course of business its involvement with the Company.

Information includes data, plans, reports, schedules, drawings, accounts, records, calculations, specifications, flow sheets, computer programs, source or object codes, results, models, or any work product relating to the business of the Company, its subsidiaries, distributors, affiliates, vendors, customers, employees, contractors and consultants.

Section 5. Intellectual Property.

Except for those methodologies, processes techniques, ideas, concepts and know-how developed independently by APS or supplied in connection with this agreement and prior to this agreement (collectively known as “APS’ Work Product”), Company shall retain all right, title, and interest in and to: (i) the work product, including but not limited to, all patent, copyright, trademark, and other intellectual property rights therein; and (ii) all methodologies, processes, techniques, ideas, concepts, and know-how embodied in the work product, (together “the Work Product”). APS hereby transfers and assigns to Company all right, title, and interest that APS may have in the Work Product and all intellectual property rights therein. Company may, solely for its internal business purposes, use, copy, distribute internally, and modify the Work Product described under the letter agreement. Unless required to do so by law or regulation, the Company shall not, without APS’ prior written consent (which shall not be unreasonably withheld), disclose to a third party, publicly quote, or make reference to the Work Product. Subject to the confidentiality restrictions contained in Section 4, APS may use the Work Product for any purpose.

AP Services, LLC
General Terms and Conditions

Section 6. Framework of the Engagement.

The Company acknowledges that it is hiring the Temporary Staff purely to assist the Company and its Board of Directors in the management of the Company. This engagement shall not constitute an audit, review or compilation, or any other type of financial statement reporting or consulting engagement that is subject to the rules of the AICPA, the SSCS, or other such state and national professional bodies.

Section 7. Indemnification

In bankruptcy engagements, neither APS nor its employees not serving as officers of the Company will be entitled to indemnification provided by the Company. However, APS employees serving as officers of the Company will be entitled to the benefit of the most favorable indemnities provided by the Company to its officers and directors, whether under the Company’s by-laws, certificates of incorporation, by contract or otherwise. The Company agrees that it will use its best efforts to specifically include and cover APS employees serving as officers of the Company under the Company’s policy for directors’ and officers’ (“D&O”) insurance.

In non-bankruptcy engagements, it is our practice to receive indemnification. Accordingly, in consideration of our agreement to act on your behalf in connection with this engagement, you agree to indemnify, hold harmless, and defend us (including our principals, employees, Temporary Staff and agents) from and against all claims, liabilities, losses, damages and reasonable expenses as they are incurred, including reasonable legal fees and disbursements of counsel, and the costs of our professional time (our professional time will be reimbursed at our rates in effect when such future time is required), relating to or arising out of the engagement, including any legal proceeding in which we may be required or agree to participate but in which we are not a party. We, our principals, employees, Temporary Staff and agents may, but are not required to, engage a single firm of separate counsel of our choice in connection with any of the matters to which this indemnification agreement relates. This indemnification agreement does not apply to actions taken or omitted to be taken by us, our principals, employees, Temporary staff or agents in bad faith or due to our willful misconduct.

In addition to the above indemnification, APS employees serving as officers of the Company will be entitled to the benefit of the most favorable indemnities provided by the Company to its officers and directors, whether under the Company’s by-laws, certificates of incorporation, by contract or otherwise. In the event that other APS employees become officers of the Company, such individuals will be entitled to the same benefit.

The Company agrees that it will use its best efforts to specifically include and cover APS employees serving as officers of the Company under the Company’s policy for directors’ and officers’ (“D&O”) insurance. In the event that the Company is unable to include APS appointees under the Company’s policy or does not have first dollar coverage as outlined in the preceding paragraph in effect for at least $10 million, (e.g., such policy is not reserved based on actions that have been or are expected to be filed against officers and directors alleging prior acts that may give rise to a claim), it is agreed that APS will attempt to purchase a separate D&O policy that will cover its employees and agents only and that the cost of same shall be invoiced to the Company as an out of pocket cash expense. If APS is unable to purchase such D&O insurance, then we reserve the right to terminate this agreement. In the event that other Temporary Staff become officers of the Company, such individuals will be entitled to the same benefit. The obligations of the parties as reflected herein shall survive the termination of the engagement.

Section 8. Disclosures.

We know of no fact or situation, other than those disclosed in Schedule 3, which would represent a conflict of interest for us with regard to the Company.

While we are not aware of any relationships, other than those disclosed in Schedule 3, that connect us to any party in interest, because APS is a consulting firm that serves clients on a national basis in numerous cases, it is possible that APS may have rendered services to or have business associations with other entities which had or have relationships with the Company. APS has not and will not represent the interests of any of these aforementioned entities in this case, involving the Company.

Section 9. Governing Law

This letter agreement is governed by and construed in accordance with the laws of the State of Delaware with respect to contracts made and to be performed entirely therein and without regard to choice of law or principles thereof.

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration. Each party shall appoint one non-neutral arbitrator. The two party arbitrators shall select a third arbitrator. However, if within thirty days after their appointment the two party arbitrators do not select a third arbitrator, the third arbitrator shall be selected by the American Arbitration Association (AAA). The arbitration shall be conducted under the AAA’s Commercial Arbitration Rules, and the arbitrators shall issue a reasoned award. The arbitrators may award costs and attorneys’ fees to the prevailing party. Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

Section 10. Termination and Survival.

This Agreement to provide Temporary Staff hereunder may be terminated at any time by written notice by one party to the other; provided, however, that notwithstanding such termination APS will be entitled to any fees and expenses due under the provisions of the agreement, including Contingent Success Fee in accordance with Schedule 2.

Additionally, unless APS is terminated by the Company for Cause (as defined below) or due to circumstances described in the Contingent Success Fee provision in the Agreement, APS shall remain entitled to the Contingent Success Fee(s) that otherwise would be payable for the greater of 12 months from the date of termination or the period of time that that has elapsed from the date of this letter to the date of termination. Cause shall mean:

(a) an APS representative acting on behalf of the Company is convicted of a felony, or

(b) it is determined in good faith by the Board of Directors of the Company, and after thirty (30) days notice and opportunity to cure, either (i) an APS representative engages in misconduct injurious to the Company, or (ii) an APS representative breaches any of his or its material obligations under this Agreement; or (iii) an APS representative willfully disobeys a lawful direction of the Board of Directors or senior management of the Company.

AP Services, LLC
General Terms and Conditions

Sections 2, 4, 5, 7, 9, 10, and 11 shall survive the expiration or termination of the Agreement.

Section 11. General.

Severability. If any portion of the letter agreement shall be determined to be invalid or unenforceable, we each agree that the remainder shall be valid and enforceable to the maximum extent possible.

Entire Agreement. The Terms and the attached letter agreement contain the entire understanding of the parties relating to the services to be rendered by APS and may not be amended or modified in any respect except in writing signed by the parties. APS will not be responsible for performing any services not specifically described in this letter or in a subsequent writing signed by the parties. If there is a conflict between these Terms and the letter agreement, these Terms shall govern.

Notices. All notices required or permitted to be delivered under this letter agreement shall be sent, if to APS, to the address set forth in the letter agreement, to the attention of Mr. Melvin R. Christiansen, and if to Company, to the address set forth in the letter agreement, to the attention of your General Counsel, or to such other name or address as may be given in writing to the other party. All notices under the letter agreement shall be sufficient if delivered by facsimile or overnight mail. Any notice shall be deemed to be given only upon actual receipt.