Document:

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                                                                   EXHIBIT 10(o)
              CLAIMS PROCESSING AND MANAGED CARE SERVICES CONTRACT

         This Claims Processing and Managed Care Services Contract (the
"Agreement") is made this 1st day of June, 2001 by and between Fitzgeralds
Gaming Corporation on behalf of itself and each of its operating subsidiaries:
Fitzgeralds Mississippi, Inc., Fitzgeralds Reno, Inc., Fitzgeralds Las Vegas,
Inc., and 101 Main Street, LLC. (hereinafter, collectively, "Fitzgeralds" or
"Client"), and Meritage Employer Services, LLC (hereinafter "Company").

                                    RECITALS

         WHEREAS the Client has adopted the Self-Funded Employer Benefit Plan
(as attached hereto as Exhibit 2) (hereinafter "Benefit Plan") for the purpose
of providing benefits under its ERISA plan for certain of its employees and
their dependents; and

         WHEREAS benefits payable under the provisions of the Benefit Plan
constitute liabilities of the Client; and

         WHEREAS the Client wants the Company to furnish services necessary in
the administration of certain aspects of the Benefit Plan; and

         WHEREAS the Company is willing to provide such services in accordance
with the terms of this Agreement.

         NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is agreed as follows:

                                    AGREEMENT

I. EFFECTIVE DATE AND TERM OF AGREEMENT

         The term of this Agreement shall commence on the 1st day of June, and,
subject to the good faith negotiations set forth in Section V below, will remain
in effect until resolution of all claims asserted in the Fitzgeralds bankruptcy
cases currently pending or against any Fitzgeralds liquidating trust or similar
entity formed to effectuate the liquidation of Fitzgeralds, unless this
Agreement is terminated by either party pursuant to the termination provision
contained herein.

II. COVERAGE AND BENEFITS ADMINISTRATION

         The benefits to be administered are set forth in the Employee Benefit
Plan (the "Benefit Plan"), a copy of which is attached hereto as Exhibit 2. Such
services are for the Client's eligible employees and their family members
(hereinafter referred to as "Plan Participants") enrolled in the Benefit Plan.

SPECIAL SERVICES TO BE PROVIDED BY THE COMPANY

         Company shall provide special administrative services to the Client for
Plan Participants enrolled in the Benefit Plan. The special administrative
services to be provided for Client by Company and the fees for such services are
specified in Exhibit 3.

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III. COMPENSATION INVOICING AND DEPOSIT

         The basis for compensation of the Company, per NRS 683A.0883, is the
number of insured members, which has been agreed upon by the Company and the
Client. This compensation is not based on:

         (a)  The claim experience of the policies handled; or

         (b)  The savings realized by Company by adjusting, settling or paying
              the losses covered by an insurer.

         Upon execution of this Agreement and prior to the effective date of
services being rendered, the Client shall pay a deposit in advance, in the
amount of $26,000. Client shall pay Meritage annualized contracted fees prorated
monthly and payable in advance on the first day of the month for services to be
rendered that month as set forth in Exhibit 1 ("Contracted Fees").

         Exhibit 1 provides the monthly fees per covered employee (fees are not
charged for family members, because they are based on employee units for
services rendered). See Exhibit 1 for details of aggregate annual costs for all
properties, based on specified conditions of approval. Should termination of
this Agreement occur prior to twelve (12) full months of service, there shall
not be any refund of fees. Should the Agreement continue for more than twelve
(12) months, and the aggregate of all property contracted standard service fees
for all subsidiaries is exceeded, then the Client shall remit additional fees at
the rates listed in Exhibit 1.

         If the aggregate contracted fee level for all categories is not
expended based on number of employees covered and services performed, at the end
of twelve (12) months, Meritage will remit any overpayment back to the Client.
The Client may also have any overpayment offset against fees for ongoing
services. Client shall have general rights of offset and recoupment with respect
to all amounts payable under this Agreement and the other Risk Management
Contracts (hereinafter defined).

FEE DUE DATE AND PAYMENTS

         A. If such payment is not made in full by Client on or prior to the fee
         due date, a thirty (30) day grace period shall be granted to Client for
         payment without interest charged. Fees outstanding subsequent to the
         end of the grace period shall be subject to a late penalty charge of
         one and one-half percent (1.5%) of the total fee amount due calculated
         for each thirty (30) day period or portion thereof the amount due
         remains outstanding.

         B. If the Agreement is terminated for any reason, Client shall continue
         to be held liable for all fee payments due and unpaid prior to the date
         of termination.

IV. FEE ADJUSTMENTS

         In the event that an employee enrolls in the Benefit Plan after the
first day of a month, no fee shall be due to Company for that month. However, if
an Employee dis-enrolls from the Benefit Plan after the first day of a month, a
full months fee shall be due to Company for that month.

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V. FEE SCHEDULE CHANGES

         The fee schedule (as shown in Exhibit 1) is subject to three percent
(3%) annual increase on each anniversary of this Agreement, Further, the parties
hereby agree to engage in good faith negotiations to make reasonable adjustments
to the fees payable hereunder during the sixty (60) day period prior to each
sale of an operating subsidiary (or substantially all its assets) and during the
sixty (60) days prior to the consummation of any plan that would assign this
Agreement to any reorganized Fitzgeralds or any liquidating trust or similar
entity formed in Fitzgeralds' currently pending bankruptcy cases.

VI. ELIGIBILITY

         Eligible employees and all eligible family members shall be those
persons who meet the criteria set forth in the Benefit Plan (see Exhibit 2).

VII. MEMBER EFFECTIVE DATES

         Subject to Client's payment of applicable monthly fees, and other
provisions of the Agreement, the special services to be provided under the
Agreement shall become effective for Plan Participant(s) as set forth in the
Benefit Plan.

VIII. INELIGIBLE MEMBERS

         If, upon a Plan Participant becoming ineligible, Client fails to notify
the Company of such Plan Participant's ineligibility and Client has made or
continues to make the fee payments specified herein for such Plan Participant,
such fee payment(s) will be credited by the Company to the Client, provided the
Client gives the Company notice of the ineligibility no later than sixty (60)
days after the date eligibility ceased and the Company has not paid claims for
services for the Plan Participant after the member's eligibility ceased and
before the Company received timely notice of ineligibility. In no event will
fees be refunded or credited to Client for any period prior to sixty (60) days
from the date the Company is notified that a Plan Participant was ineligible.

IX. SCOPE OF RELATIONSHIP

         A. The Company shall be entitled to rely, to the extent reasonable,
         upon any written or oral communication of the Client, and the agents
         and employees thereof, which are believed by the Company to be genuine
         and to have been presented by a person having the apparent authority to
         do so.

         B. The Agreement is between the Company and Client and does not create
         any rights or legal relationships between the Company and any of the
         Plan Participants or beneficiaries under the Benefit Plan.

X. RESPONSIBILITIES OF THE CLIENT

         A. Furnish to the Company on a monthly basis, on Company approved
         forms, by electronic transmission, or via the internet, such
         information as might reasonably be required by the Company for the
         administration of the program and coverage provided hereunder,
         including any change in a Plan Participant's eligibility status. In
         addition, the Company may, at reasonable times, examine Client's
         records or Benefit Plan's pertinent records to verify eligibility
         listings and fee payments hereunder.

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         B. Distribute to Plan Participants and Providers at Client's expense,
         if agreed upon in advance and included in administration cost, such
         notices, identification cards, and any other materials as may be
         reasonably requested by Company.

         C. Furnish all membership change notifications to the Company on forms
         approved by the Company, or via Internet access to MemberLink, if
         applicable.

         D. Fund covered medical, dental, pharmacy or vision claims for
         terminated Plan Participants with dates of service within the period
         where administrator has not been notified of the employee's termination
         with the Company.

         E. Be the final arbiter as to the interpretation of the Benefit Plan
         (Exhibit 2), and as to the payment of benefits thereunder. Company
         shall advise and consult with the Client when an extraordinary benefit
         matter arises under the Benefit Plan.

         F. Client agrees to indemnify and hold harmless the Company from any
         lawsuit brought to recover a benefit alleged to be payable under the
         Plan, where Client directed the Company in writing not to pay the claim
         for such benefit, contrary to the written recommendation of the Company
         that such claim was covered under both the terms of the Plan and the
         Client's stop-loss coverage. Company agrees to indemnify, defend and
         hold Client harmless from all claims, demands, costs, fees (including
         reasonable attorneys' fees), judgments and liability asserted against
         Client by a third party, which arises out of the negligence, gross
         negligence or willful misconduct of the Company in the performance or
         non-performance of this Agreement.

         G. If the Client chooses to have drugs paid through the Prescription
         Drug Program, Client agrees to pay any and all covered prescription
         charges for valid covered members of the plan for prescriptions
         dispensed in connection with the operation of the Prescription Drug
         Program within fifteen (15) days after receipt of Prescription Drug
         invoice.

         H. Bill negotiation service is included service provided to the Client.
         Client agrees to use Company as its exclusive negotiator of savings
         discounts with each Non-Network Provider on a per case basis for health
         care services and benefits to which Plan Participants are entitled
         under the terms of the applicable Employee Benefits Plan.

                  i.    On each business work day Company is to provide
                        information listing each Non-Network Provider Case for
                        which Company is to negotiate a savings discount.

                  ii.   Client agrees to pay claims, in accordance with the
                        terms negotiated by the Company, and agreed to in
                        advance with each Non-Network Provider.

         I. To implement the Plan, Client will establish a special account at a
         financial institution to be selected at the sole discretion of the
         Client. Benefits under the Plan will be paid by checks drawn by the
         Company against that special account. Client funds in the special
         account shall, to the fullest extent permitted by law, be and remain
         assets of the Client and not the Plan.

         J. Client will make deposits into the special bank account of such
         amounts and at such intervals as required to discharge the Client's
         liabilities under the Benefit Plan.

         K. The identification of the special bank account, the nature and
         frequency of reports on the activity of the account, details regarding
         the mechanics of processing individual checks drawn against the account
         and information to appear on such checks, and the retention of

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         accepted checks, will be implemented by agreement between Client, the
         Company, and the financial institutions selected.

         L. During the term of this Agreement, Client will provide the Company
         with the statistical information reasonably necessary for the
         administration of the Plan in accordance with the provisions of this
         Agreement. This information will be provided in such form and at such
         intervals as are acceptable to the Client and the Company.

         M. The Client shall establish and maintain a procedure by which the
         Plan Participant has an opportunity to appeal a denied claim to the
         Employee Benefit Plan. The procedure shall include the following
         provisions:

                           1.    The Plan Participant will have sixty (60) days
                                 after receipt of written notification of denial
                                 of a claim to request review of the decision.

                           2.    A decision will be made upon sixty (60) days
                                 from receipt by the Employee Benefit Plan for a
                                 request for review, unless special
                                 circumstances require an extension of time for
                                 processing, in which case a decision shall be
                                 rendered as soon as possible, but not later
                                 than one hundred twenty (120) days after
                                 receipt of a request for review.

                           3.    The decision on review shall be in writing and
                                 shall include specific reasons for the
                                 decision, including specific references to the
                                 pertinent Plan provisions on which the decision
                                 is based.

                           4.    Requests for appeal which do not comply with
                                 this procedure and time limitations will not be
                                 considered, except in cases of extraordinary
                                 circumstances.

XI. DUTIES OF THE COMPANY

         A.       Administrative Services

                  a.    Prepare and furnish the following reports summarizing
                        the financial experience of the Plan:

                           1.    Bi-weekly or weekly summary of checks drawn,
                                 dependent on the Client's selection of interval
                                 for check printing.

                           2.    Monthly listing of checks drawn, amount of
                                 checks voided, refunds and checks paid.

                           3.    Monthly and annual summaries of checks not
                                 presented for payment, including checks that
                                 were canceled.

                           4.    Annual claim totals by line of coverage.

                  b.    Assist in the preparation of Schedule A of IRS Form 5500
                        requirements.

                  c.    Assist in establishing banking arrangements to provide
                        for the payment of benefits under the Plan. Client is
                        required to furnish their own account for payment of
                        benefits. Should this not be accomplished, and a
                        fiduciary account be necessary per NRS 683A.0877,
                        withdrawals be will handled per the following:

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                           1.    All insurance charges and premiums collected by
                                 the Company on behalf of an insurer and return
                                 premiums received from an insurer are held by
                                 the administrator in a fiduciary capacity.

                           2.    Money must be remitted within fifteen (15) days
                                 to the person or persons entitled to it, or be
                                 deposited within fifteen (15) days in one or
                                 more fiduciary accounts established and
                                 maintained by the administrator in a bank,
                                 credit union or other financial institution in
                                 Nevada. The fiduciary accounts must be separate
                                 from the personal or business accounts of the
                                 administrator.

                           3.    If charges or premiums deposited in an account
                                 have been collected for or on behalf of more
                                 than one insurer, the Company shall cause the
                                 bank, credit union or other financial
                                 institution where the fiduciary account is
                                 maintained to record clearly the deposits and
                                 withdrawals from the account on behalf of each
                                 insurer.

                           4.    The Company shall promptly obtain and keep
                                 copies of the records of each fiduciary account
                                 and shall furnish any insurer with copies of
                                 the records which pertain to him upon demand of
                                 the insurer.

                           5.    The Company shall not pay any claim by
                                 withdrawing money from his fiduciary account in
                                 which premiums or charges are deposited.

                           6.    Withdrawals must be made as provided in the
                                 agreement between the insurer and the Company
                                 for:

                                    (a)  Remittance to the insurer.

                                    (b)  Deposit in an account maintained in the
                                         name of the insurer.

                                    (c)  Transfer to and deposit in an account
                                         for the payment of claims.

                                    (d)  Payment to a group policyholder for
                                         remittance to the insurer entitled to
                                         the money.

                                    (e)  Payment to the Company of his
                                         commission fees or charges.

                                    (f)  Remittance of return premiums to
                                         persons entitled to them.

                           7.    The Company shall maintain copies of all
                                 records relating to deposits or withdrawals
                                 and, upon the request of an insurer, provide
                                 the insurer with copies of those records.

                  d.    Prepare and maintain standard administrative manuals for
                        benefits enrollment and administration.

                  e.    At the Client's expense, subject to the Client's review
                        and prior approval, arrange for and provide the printing
                        of special forms utilized in connection with the
                        administration of the Plan. In addition, at the Client's
                        request provide for

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                        Internet access and customization of Internet site for
                        Client's Plan Participants, providers, and for
                        enrollment and membership changes.

                  f.    The Company agrees to generate and analyze appropriate
                        utilization reports, (refer to Managed Care Special
                        Services Agreement); otherwise information from another
                        utilization review organization can either be entered
                        into our system or transmitted electronically, which
                        will be maintained in the ordinary course of business,
                        on a quarterly or monthly basis as requested for the
                        benefit of Client, or if so directed, a broker or Client
                        involved with the Benefit Plan.

                  g.    Establish and maintain a record-keeping system
                        concerning the services to be performed hereunder as per
                        NRS 683A.0873, which requires:

                           1.       The Company shall maintain at its principal
                                    office adequate books and records of all
                                    transactions between the Company, the
                                    insurer and the insured. The books and
                                    records must be maintained in accordance
                                    with prudent standards of record keeping for
                                    insurance and with regulations of the
                                    commissioner for a period of five (5) years
                                    after the transaction to which they
                                    respectively relate. After the five (5) year
                                    period, the Company may remove the books and
                                    records from the state, store their contents
                                    on microfilm or return them to the
                                    appropriate insurer.

                           2.       The commissioner may examine, audit and
                                    inspect books and records maintained by the
                                    Company under the provisions of this section
                                    to carry out the provisions of NRS 679B.230
                                    to 679B.300, inclusive.

                           3.       The names and addresses of insured persons
                                    and any other material, which is in the
                                    books and records of the Company are
                                    confidential except when used in proceedings
                                    against the Company.

                           4.       The insurer may inspect and examine all
                                    books and records to the extent necessary to
                                    fulfill all contractual obligations to
                                    insured persons, subject to restrictions in
                                    the written agreement between the insurer
                                    and Company.

                           All such records shall be available for inspection by
                  Client at any time during normal business hours at the offices
                  of the Company in Reno, Nevada, upon at least five (5) working
                  days notice to the Company. Copies can be made available of
                  any information that is permissible under HIPPA, which
                  outlines the patient privacy and medical record
                  confidentiality protection.

                  h.    An administrator may advertise the insurance, which he
                        administers, only after he receives the approval of the
                        insurer who underwrites the business involved. (See NRS
                        683A.087)

                  i.    Upon request by Client, the Company will participate in
                        educational presentations to Employees and COBRA
                        participants and provide a representative (bi-lingual)
                        to assist with the presentation.

                  j.    Provide certificate of coverage to Plan Participants who
                        lose coverage under the Plan during the term of this
                        Agreement in compliance with COBRA and the

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                        Health Insurance Portability and Accountability Act of
                        1996, as it amended ERISA.

                        Accept certificate of prior credible coverage from Plan
                        Participants and credit prior creditable coverage
                        against the pre-existing limitation period in the
                        Company's Plan, if any, in accordance with HIPAA, as it
                        amended ERISA. The Company will make its best efforts to
                        determine the validity of prior coverage, but will not
                        be liable to the Client, or to any person or entity, for
                        action taken, or coverage credited, based upon a
                        certificate which is later determined to be false,
                        fraudulent, or erroneous.

         B.       Technical Services

                  a.    Furnish an estimate of the open and unreported claim
                        liability at the close of each twelve (12) month period.

                  b.    Furnish annually an estimate for budget purposes of
                        claim costs and fees for the following twelve (12) month
                        Period.

         C.       Claim Services

                  a.    Furnish assistance in the development of procedures to
                        be followed for verification of employee and dependent
                        coverage and for submission of claims.

                  b.    Provide standard forms necessary for submission and
                        processing of claims. At the request of Client and at
                        Client's cost, prepare and furnish specially designed
                        claim forms.

                  c.    Evaluate claims submitted, including professional
                        evaluation by the Company's Medical Adjudication
                        Department when required.

                  d.    Compute the amounts of benefits, and prepare and furnish
                        to each Employee a statement of explanation of benefits
                        (EOB).

                  e.    Issue checks in payment of approved claims within a
                        timely manner in compliance with any statutory
                        requirements, to include both state and federal
                        regulations.

                  f.    Maintain and update statistical data that will enable
                        the Client to direct the Company to administer the
                        Plan's "eligible medical expenses" fee basis for benefit
                        payment.

                  g.    Make an examination of charges for medical services that
                        appear excessive and when appropriate, discuss disputed
                        charges for medical services that appear excessive with
                        providers of those services.

                  h.    Provide utilization review for appropriate authorization
                        in connection with the payment of benefits for medical
                        services, if the Plan requires, as a condition of
                        payment.

                  i.    When applicable, determine the amount of Plan benefits
                        payable, if any, when a claimant is eligible for
                        Medicare benefits.

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                  j.    Each claim paid by the administrator from money
                        collected for or on behalf of an insurer must be paid by
                        a check or draft upon and as authorized by the insurer.
                        (See NRS 683A.088)

                  k.    Generate 1099 reports to the Internal Revenue Service
                        and send separate statements to providers of medical
                        services furnishing information as required by the
                        Internal Revenue Code and Regulations thereunder
                        regarding amounts paid to these providers of medical
                        services.

                  l.    Maintain levels of claim processing performance in
                        conformance within the following standards:

                                    1.      Turnaround time on ninety percent
                                            (90%) of all claims not to exceed
                                            state law;

                                    2.      Financial accuracy of ninety-eight
                                            percent (98%) (dollars paid);

                                    3.      Procedural payment accuracy of
                                            ninety-five (95%); which includes
                                            compliance with the Plan Document,
                                            Managed Care Program, and Medical
                                            Adjudication at an accuracy level of
                                            ninety-seven (97%). Should these
                                            levels not be met, the Company has
                                            thirty (30) days to bring
                                            performance back to these levels,
                                            during this thirty (30) day period,
                                            the Client will receive a five
                                            percent (5%) discount on fees.

                  m.    Make payment of claims per NRS 683A.0879 for claims
                        relating to health insurance coverage, which provides:

                           1.       Except as otherwise provided in subsection
                                    2, the Company shall approve or deny a claim
                                    relating to health insurance coverage within
                                    thirty (30) days after the Company receives
                                    the claim. f the claim is approved, the
                                    Company shall pay the claim within thirty
                                    (30) days after it is approved. If the
                                    approved claim is not paid within that
                                    period, the Company shall pay interest on
                                    the claim at the rate of interest
                                    established pursuant to NRS 99.040 unless a
                                    different rate of interest is established
                                    pursuant to an express written contract
                                    between the Company and the provider of
                                    health care. The interest must be calculated
                                    from thirty (30) days after the date on
                                    which the claim is approved until the claim
                                    is paid.

                           2.       If the Company requires additional
                                    information to determine whether to approve
                                    or deny the claim, the Company shall notify
                                    the claimant of the request for the
                                    additional information within twenty (20)
                                    days after he receives the claim.

                           3.       The Company shall notify the provider of
                                    health care of all the specific reasons for
                                    the delay in approving or denying the claim.
                                    The Company shall approve or deny the claim
                                    within thirty (30) days after receiving the
                                    additional information.

                           4.       If the claim is approved, the Company shall
                                    pay the claim within thirty (30) days after
                                    it receives the additional information. If
                                    the approved claim is not paid within that
                                    period, the Company shall pay interest on
                                    the claim in the manner prescribed in
                                    subsection 1.

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                           5.       The Company shall not request a claimant to
                                    resubmit information that the claimant has
                                    already provided to the Company, unless the
                                    Company provides a legitimate reason for the
                                    request and the purpose of the request is
                                    not to delay the payment of the claim,
                                    harass the claimant or discourage the filing
                                    of claims.

                           6.       The Company shall not pay only part of a
                                    claim that has been approved and is fully
                                    payable.

                           7.       A court shall award costs and reasonable
                                    attorney's fees to the prevailing party in
                                    an action brought pursuant to this section.

                  n.    Notify claimants of declined claims and the reason of
                        the declination using the following guidelines:

                        If claim is wholly or partially denied, the Company
                        shall furnish notice of the decision to the Plan
                        Participant within thirty (30) days after receipt of the
                        claim. Company will provide to every Plan Participant
                        who is denied a claim for benefits written notice
                        setting forth in a manner calculated to be understood by
                        the Plan Participant the following:

                           1)       The specific reason or reasons for denial;

                           2)       Specific reference to pertinent Plan
                                    provisions on which the denial is based;

                           3)       A description of any additional material or
                                    information necessary for the Plan
                                    Participant to perfect the claim and an
                                    explanation of why such material or
                                    information is necessary; and

                           4)       Appropriate information as to the steps to
                                    be taken if the Plan Participant wishes to
                                    submit his or her claim for review.

                  o.    Administer the coordination of benefits provisions
                        pursuant to the Coordination of Benefits provisions of
                        the Benefit Plan.

                  p.    To the extent permitted by law and when the claimant has
                        furnished an appropriate authorization if required by
                        law, furnish to the Client copies of explanation of
                        benefits for claims paid and prepared for claimants, or
                        provide access to the website thru the Company to
                        provide a copy of any worksheets as requested. Also, the
                        Client may access "StatusLink" for verification of any
                        claims paid. Reprints can be obtained through the
                        Internet.

                  q.    At the request of the Client and at Client's expense,
                        provide special claim reports, which require
                        programming, otherwise reports will be provided at no
                        additional expense.

                  r.    At the request of the Client and at Client's expense,
                        participate in plan adjustments due to mergers,
                        spin-offs, and extensions.

                  s.    Perform claims submission to excess loss or stoploss
                        carrier as outlined in the agreement between the Client
                        and the excess risk or stoploss carrier.

                                 Page 10 of 20
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                  t.       If any injury or illness is caused by any third party
                           and the Plan Participant has a right to recover
                           damages from that third party, the following
                           procedures will be followed by the Company:

                           1.       Company will send the Plan Participant a
                                    letter to be signed by the Plan Participant
                                    notifying them of their obligation to
                                    reimburse the Plan if he/she receives
                                    payment for medical services and supplies
                                    from a third party suit or settlement. The
                                    Company may recommend the Client implement
                                    additional language to change the method of
                                    handling third party claims, which puts the
                                    Plan as a secondary payor after the third
                                    party has either paid or denied liability.

                           2.       The Company, acting on behalf of the Client,
                                    will actively seek recovery from the Plan
                                    Participant or third party until all
                                    recourses except legal action have been
                                    exhausted. The Company may be requested by
                                    the Client to initiate court proceedings to
                                    collect any such funds.

                           3.       Once reimbursement is obtained, the Company
                                    will provide it to the Client for deposit in
                                    the Plan's fund.

                  u.    Recoveries of overpayments to plan participants,
                        providers, etc., will be attempted only for claim
                        payments of $10 or above. Company shall have no
                        responsibility for such overpayments.

                  v.    Meritage will be solely responsible for complying with
                        all ERISA provisions applicable to the Company in
                        connection with this Agreement (such provisions include,
                        but are not necessarily limited to as timely and
                        accurate payment of claims, disclosure of any
                        information required by ERISA and any limitations under
                        ERISA relating to the Company's receipt of
                        compensation).

                  w.    If the Client disputes a claim payment, it will have the
                        right to review at any time during regular business
                        hours the data that supports the Company's claim
                        payment.

                  x.    The Company agrees to indemnify the Client and hold the
                        Client harmless from and against any and all damages,
                        claims, lawsuits, settlements, judgments, costs,
                        penalties, and expenses, of any kind or nature,
                        including reasonable attorneys' fees, arising out of (i)
                        any failure by the Company to comply with any applicable
                        law or regulation or provision of this Agreement, (ii)
                        any negligence on the Company's part, or (iii) any claim
                        that the Client is liable for the negligence of a health
                        care provider with whom the Company has, or is alleged
                        to have, a contractual relationship.

                  y.    The Client agrees to indemnify, defend and hold the
                        Company harmless from all claims, demands, costs, fees
                        (including reasonable attorneys' fees), judgments and
                        liability asserted against Client by a third party,
                        which arise out of negligence, gross negligence or
                        willful misconduct of the company in the performance or
                        non-performance of this Agreement. Client must provide
                        written notification of the claim for indemnity that has
                        been asserted for Company to evaluate allegations an
                        validity of the claim arising solely as a result of
                        Company's actions.

                  z.    The Client and the Plan will not be liable for any
                        claims or damages that result from the Company's failure
                        to comply with any laws or regulations, including but
                        not limited to Medicare secondary payor laws or
                        regulations. The Company

                                 Page 11 of 20
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                        agrees to hold the Client harmless for any charges or
                        losses (including attorney's fees) that may be assessed
                        against the Client or incurred by the Client at any time
                        due to the Company's failure to comply with any laws or
                        regulations, including but not limited to the Medicare
                        secondary payor provisions, if this information is
                        disclosed to the Company.

                  aa.   Notwithstanding any provisions in this Agreement to the
                        contrary, the Company shall at all times perform its
                        services under this Agreement in accordance with the
                        same standard of care that a prudent person acting in a
                        like capacity and familiar with such matters would use
                        in the conduct of an enterprise of like character and
                        with like aims, and the Company shall be liable for any
                        loss or damages arising out of its failure to perform in
                        accordance with such standard of care.

                  bb.   The Client shall have the right, from time to time, to
                        audit the Company's performance under this Agreement.
                        Such audit shall be performed by either the Client or
                        its agent and such audit may utilize samples or
                        statistical models or audit techniques selected by the
                        Client or its agent. The Company shall fully cooperate
                        in all such audits and shall provide any information
                        requested by the Client or its agents in connection with
                        such audit.

                  cc.   In the event of any claim or payment under the Plan for
                        which there may be a right of reimbursement or a right
                        of subrogation, the Company shall promptly notify the
                        Client of any such claim or payment, and the Company
                        will fully cooperate with the Client in enforcing such
                        right of reimbursement or subrogation. The Company shall
                        not be entitled to any compensation in connection with
                        such subrogation or reimbursement without the Client's
                        prior written agreement to a specific amount of such
                        compensation for a specific subrogation or reimbursement
                        recovery.

                  dd.   In the event this Agreement terminates for any reason,
                        the Company shall fully cooperate with the Client in
                        transferring the claims processing function to a
                        successor claims processor of the Client's selection and
                        the Company will provide such successor claims processor
                        with any information necessary to achieve a smooth and
                        efficient transfer to the successor claims processor.

                  ee.   ERISA shall exclusively govern and control all matters
                        relating to the Plan (including, but not limited to,
                        this Agreement) and ERISA shall supersede and preempt
                        any and all state laws (including but not limited to,
                        those of Nevada) relating to the Plan and this
                        Agreement.

                  ff.   Any financial reconciliation of charges owed to the
                        Company under this Agreement shall be performed by the
                        Company no later than ninety (90) days after the term of
                        this Agreement in which such charges were incurred. The
                        Client and the Plan will not be liable for any charges
                        due under this Agreement not included in that
                        reconciliation.

                  gg.   Any actuarial, claim, underwriting, and/or
                        provider-related calculations or determinations by the
                        Company in connection with this Agreement (including,
                        but not limited to, the calculation of provider
                        discounts, incurred claims and trend factors) will be
                        reasonable, in good faith, and in accordance with
                        generally accepted underwriting and actuarial
                        principles. A detailed written explanation of all such
                        settlements, calculations and determinations will be
                        provided to the Client upon the Client's written
                        request.

                  hh.   Coordinate activities set forth in Exhibit 3 with Client
                        and correspond with the

                                 Page 12 of 20
<PAGE>

                        Plan Participants and providers of services if
                        additional information is deemed necessary.

                  ii.   Provide notice to Plan Participants as to the reason(s)
                        for denial and provide for the review of denied
                        authorizations as recommended by the Company, provided,
                        however, that such review shall be advisory to Client in
                        accordance with the Agreement and shall not be deemed to
                        be an exercise of discretion by the Company in
                        accordance with the Agreement;

                  jj.   Generate and analyze appropriate utilization reports on
                        a monthly or periodic basis for the benefit of Client,
                        or if so directed, a broker or Client involved with
                        Employee Benefit Plan.

                  kk.   The Company shall provide Client with a Monthly
                        Negotiated Savings Discount Report containing an
                        itemization of each negotiated cases within ten (10)
                        working days following the end of the month.

XII. TERMINATION

         A. The Client may terminate the Agreement for any reason by giving
         ninety (90) days written notice to the Company. In such event, benefits
         hereunder shall terminate for all Plan Participants as of the effective
         date of termination.

         B. The Agreement may be terminated by the Company upon written notice,
         if default by Client is not cured thirty (30) days after notice of
         default;

         C. The Agreement may be terminated by the Client:

                  1.    Upon written notice, in the event of revocation of the
                        Company's Certificate of Authority in Nevada; or

                  2.    In any event of the Company's material breach of any
                        other terms and provisions of the Agreement, upon prior
                        written notice to the Company. If the breach can be
                        cured within thirty (30) days and is not cured within
                        the thirty (30) day period, the Client shall be
                        permitted to terminate the Agreement upon ninety (90)
                        days prior written notice. If the breach cannot be cured
                        within thirty (30) days, but the Company begins to cure
                        such breach within the thirty (30) period and diligently
                        prosecutes such cure, the Company will not be in
                        default. If the breach cannot be cured within the thirty
                        (30) days and the Company either does not begin to cure
                        within the thirty (30) day period, or begins to cure but
                        does not diligently prosecute such cure, the Client can
                        terminate upon ninety (90) days prior written notice.

         D. In the event of termination, Company agrees to perform contracted
         services for a reasonable period to include run-out claims, only
         through the time period for which it receives payments.

         E. In the event of termination, the Company shall have the right to
         charge the Client or designee reasonable transitional fees for reports
         and claims history information required by the Client or designated
         third party administrator. The amount of such fees are set forth in
         Exhibit 1. Such fees are subject to adjustment based upon any increases
         in cost associated with producing such reports.

                                 Page 13 of 20
<PAGE>

XIII. GENERAL PROVISIONS

         A. This Agreement shall be governed by, and shall be construed in
         accordance with the laws of the State of Nevada, except as such law is
         superseded by any provision of ERISA.

         B. In the event the Company overpays any person entitled to benefits
         under the Plan or pays benefits to any person who is not entitled to
         such benefits, the Company will make a reasonable effort on the
         Client's behalf to recover the overpayment, but will not be required to
         initiate court proceedings, unless directed by the Client. Such
         recovered amount would then be payable to the Client.

            Notwithstanding the foregoing the Company will not be liable for any
         overpayment or for any loss incurred by Client unless it is the direct
         result of negligent, dishonest, fraudulent or criminal acts on the part
         of the Company or any of its directors, officers, or employees or any
         person directly engaged or retained by the Company to discharge its
         obligations under this Agreement. In the event the Company and Client
         cannot agree as to the nature of the conduct involving the matter under
         consideration, the question regarding the nature of such conduct shall
         be settled by arbitration in accordance with the Rules of the American
         Arbitration Association. In the event the Company reimburses Client for
         an overpayment, the Company shall be subrogated to all rights of Client
         with respect to recovery of the overpayment from any person so overpaid
         and Client will provide reasonable cooperation to the Company in
         connection with the recovery of the overpayment.

            The Company's services, obligations and responsibilities under this
         Agreement are extended only to Client. The Company assumes no
         obligations or responsibilities and extends no covenants, direct or
         indirect, express or implied, to any participants in the Plan or to any
         other person except for any obligations it may have under ERISA.

         C. The Company shall not be liable for any loss resulting from the
         performance of its duties hereunder, except for losses resulting
         directly from:

                  1.    Negligent or willful misconduct of the Company including
                        the failure of the Company to follow the written
                        directions of Client; or

                  2.    Negligent, fraudulent or criminal acts of the agents or
                        employees of the Company whether acting alone or in
                        concert with others.

         D. The Company shall maintain with a Best Rated A+ carrier adequate
         Error and Omissions coverage, and shall provide at the request of the
         Client evidence of the coverage.

XIV. ENTIRE AGREEMENT

         This Agreement together with its Exhibits, and the individual
applications to the extent as required by the Plan, of the Employees and Covered
Family Members, to the extent required and covered under the Plan, if any,
together with the Claims Processing and Managed Care Services Contract, the
Liability Claims Investigation, Adjustment and Management Agreement, the Workers
Compensation Service Agreement, and the Consulting Contract (this Agreement and
such agreements, collectively, the "Risk Management Contracts"), constitute the
entire agreement between the parties regarding the special services described.

XV. AMENDMENTS AND WAIVERS

         Any amendments to the Agreement shall be in writing and must be
approved and executed by the President or a Vice-President or Officer of the
Client and the Company. No agent of the Client or

                                 Page 14 of 20
<PAGE>

Company has the authority to change the Agreement, waive any of its
provisions or restrictions or extend the time for making payment.

XVI. CLERICAL ERROR

         Clerical error, whether of the Client or the Company in keeping any
record pertaining to the services under the Agreement, will not invalidate the
Agreement.

XVII. NOTICE

         (i) Any notice hereunder to be given to Client shall be addressed to:

         President                     Copy to  General Counsel
         Fitzgeralds Gaming Corporation         Fitzgeralds Gaming Corporation
         301 Fremont Street                     301 Fremont Street
         Las Vegas, Nevada 89101                Las Vegas, Nevada 89101

         General Manager                        General Manager
         Fitzgeralds Reno, Inc                  Fitzgeralds Las Vegas, Inc
         P.O. Box 40130                         301 Fremont Street
         Reno, Nevada 89504                     Las Vegas, Nevada 89101

         General Manager                        General Manager
         101 Main Street LLC                    Fitzgeralds Mississippi, Inc.
         120 Gregory Street                     711 Lucky Lane
         P.O. Box P                             Robinsonville, Mississippi 38664
         Black Hawk, Colorado 50422

         (ii) Any notice hereunder to be given to the Company shall be addressed
         to:

         PRESIDENT
         Meritage Employers Services, LLC
         300 East Second Street, 15th Floor
         Reno, Nevada 89501

XVIII. BANKRUPTCY COURT APPROVAL

         Company acknowledges and understands that the Client and each of the
operating subsidiaries commenced cases under Chapter 11 of the United States
Bankruptcy Code on December 5, 2000 and that such proceedings are still pending.
Company further acknowledges and understands that this Agreement shall not be
effective unless and until approved by the Bankruptcy Court.

                                 Page 15 of 20
<PAGE>

         The Company agrees that this Agreement may be assigned by the Client to
any liquidating trust or similar entity formed to effect the liquidation of
Fitzgeralds, and hereby consents and agrees not to object to any assumption and
assignment of this Agreement to such an entity.

XIX. DISPUTES

         If a dispute or grievance between the parties arises with respect to
the obligations of the parties under this Agreement or as a result of this
Agreement, and such dispute or grievance cannot be resolved in an informal
fashion, the parties hereby agree that all disputes arising our of or related to
this Agreement shall be subject to the exclusive jurisdiction of the United
States Bankruptcy Court for the District of Nevada, and each hereby waives trial
by jury and any assertion that such dispute is a non-core matter.

XX.  REGULATORY REQUIREMENTS

         Company acknowledges and agrees that Client is subject to the licensing
and regulatory control of the Nevada Gaming Control Board and various other
state, county and city gaming regulatory enforcement agencies (collectively the
"Gaming Authorities"). Said Gaming Authorities may request or require the Client
to obtain and report certain information regarding Company and its principals.
To the extent so required, Company agrees to fully and promptly cooperate and
comply with such requests for information, as authorized by the Client.

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

FITZGERALDS GAMING CORPORATION              MERITAGE EMPLOYER
                                            SERVICES, LLC

/s/ PHILIP D. GRIFFITH                      /s/ KATHLEEN BRYANT
-------------------------                   ----------------------------
Philip D. Griffith                          Kathleen Bryant
President and CEO                           President

FITZGERALDS RENO, INC.                      FITZGERALDS LAS VEGAS, INC.

/s/ MAX L. PAGE                             /s/ WILLIAM NOONAN
-------------------------                   ----------------------------
Max L. Page                                 William Noonan
Exec. Vice President and                    Vice President
General Manager                             and General Manager

FITZGERALDS MISSISSIPPI, INC.               101 MAIN STREET, LLC

/s/ DOMENIC MEZZETTA                        /s/ JOE COLLINS
-------------------------                   ----------------------------

                                 Page 16 of 20
<PAGE>

Domenic Mezzetta                            Joe Collins
Vice President and General Manager          Vice President and General Manager

                                 Page 17 of 20
<PAGE>

                                    EXHIBIT 1

Monthly Fee per Eligible Employee $12.00

<TABLE>
<CAPTION>
                                   2001             2002              2002           SERVICES ACCESSED
                                  ------           ------            ------         -------------------
<S>                               <C>              <C>               <C>               <C>

Medical Claims                                                    WITH MULTIPLE
Administration                    $12.00           $12.60             YEAR                    X
                                                                    CONTRACT
                                                                     $12.00

---------------------------- ----------------- ---------------- ------------------ ----------------------

Dental Claims                     $2.00             $2.10             $2.00                   X
Administration
---------------------------- ----------------- ---------------- ------------------ ----------------------
Flex Claims per enrolled          $5.00             $5.00             $5.00                   X
participant
---------------------------- ----------------- ---------------- ------------------ ----------------------
Pharmacy and                       Inc                X                 X                     X
Vision Claims
Administration
---------------------------- ----------------- ---------------- ------------------ ----------------------
Managed Care Claims               $2.00             $2.10             $2.00                   X
Administration
---------------------------- ----------------- ---------------- ------------------ ----------------------
COBRA Notification                 Inc.               X                 X                     X
---------------------------- ----------------- ---------------- ------------------ ----------------------
HIPAA Notification                 Inc.               X                 X                     X
---------------------------- ----------------- ---------------- ------------------ ----------------------
</TABLE>

                                CONTRACTED RATES
<TABLE>
<CAPTION>

------------------------------------------------------------------------------
                                   HEALTH BENEFITS
------------------------------------------------------------------------------

------------------------------------------------------------------------------
Properties                 Covered Lives              Monthly          Annual
------------------------------------------------------------------------------
<S>                        <C>                       <C>             <C>
Black Hawk                      240                     3,699          44,387
------------------------------------------------------------------------------
Las Vegas                       391                     6,026          72,313
------------------------------------------------------------------------------
Reno                            430                     6,627          79,526
------------------------------------------------------------------------------
Tunica                          610                     9,401         112,816
------------------------------------------------------------------------------
Corporate                        16                       247           2,959
------------------------------------------------------------------------------

------------------------------------------------------------------------------
Totals                          1687                 $ 26,000        $312,001
------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
  CONTRACTED RATES     BLACK HAWK      LAS VEGAS        RENO           TUNICA      CORPORATE     TOTALS        TOTALS
  ANNUALIZED WITH
  ABOVE NUMBER OF
   COVERED LIVES                                                                                 ANNUAL        MONTHLY
---------------------------------------------------------------------------------------------------------------------------
<S>                    <C>             <C>              <C>            <C>         <C>           <C>           <C>
Employee Benefits      44,387          72,313           79,526         112,816     2,959         312,001       $26,000
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

Set-up Fee: Defer $5,000 set up fee on the following basis;

*Internet Access, laser checks and EOB costs will be discussed with client
examples of services supplied with proposal.

                                 Page 18 of 20
<PAGE>

Run-Out Claims. In the event of termination of this contract, the following
guidelines for processing of run-out claims apply. Run-out means any claim for a
date of service which occurred while the Agreement was in effect but not
processed until after the Agreement has been terminated. Run-out services begin
on _______________ .

The fee for processing run-out claims is $5.00 per claim. Such charge to apply
separately to any duplicate claims processed. Company will bill the Client for
the processing of run-out claims on a monthly basis. Payment for such processing
will be due in fifteen (15) days after the date the bill is received.

Transitional Fees. In the event of termination, there will be a charge of
mutually negotiated for any reports required.

Conversion of Data from another Administrator. The cost of conversion will be
the direct cost from RIMS to convert the data, or should your previous TPA be
able to provide the data in the format required by RIMS the cost of the data
restoration will be billed directly to the Client.

EXAMPLE 1

The Agreement with the Client continues for 12 months based on the contractual
agreed Rates and number of employees covered results in the following incurred
by Meritage on behalf of the Client:

<TABLE>
<CAPTION>
Property                     Number of EES              Annual Charges
<S>                          <C>                        <C>
Black Hawk                        200                        38,400
Las Vegas                         300                        57,600
Reno                              450                        86,400
Tunica                            600                       115,200
Corporate                          10                         1,920
                             --------------             --------------
TOTALS                           1560                     $ 299,520
                                 ====                     =========
</TABLE>

Meritage remits ($12,481) to Client. Client may choose to have next period fees
offset by the amount due from Meritage.

EXAMPLE 2

The Agreement with the Client continues for 8 months and is terminated upon the
sale of the assets of the Client with the following incurred by Meritage on
behalf of the Client:

<TABLE>
<CAPTION>
Property                            # ees            Eight Months
<S>                                 <C>              <C>
Black Hawk                              200              25,600
Las Vegas                               200              25,600
Reno                                    300              38,400
Tunica                                  330              42,240
Corporate                                10               1,280

                                       ----           ---------
TOTALS                                 1040           $ 199,680
                                       ====           =========
</TABLE>

THE CONTRACT BILLING FOR $26,000 WOULD INCLUDE PAYMENT FOR 8 MONTHS FEES PAID,
THERE WOULD BE A $8,320 OVERPAYMENT BY THE CLIENT.

There would be no adjustment to the monthly fee paid since the agreement was
terminated by the Client prior to 12 months.

                                 Page 19 of 20
<PAGE>

                                    EXHIBIT 2

                           SPECIAL SERVICES AGREEMENT

                                    ATTACHED
                       EMPLOYEE BENEFIT PLAN DESCRIPTIONS

                                 Page 20 of 20
<PAGE>

                                    EXHIBIT 3

SPECIAL ADMINISTRATIVE SERVICES FOR EMPLOYEE BENEFIT PLAN

<TABLE>
<CAPTION>
<S>                 <C>                                                <C>
A.   SERVICES                                                                   Services Accessed
         a.   Prior authorization                                      $2.00    PER COVERED EMPLOYEE/MONTH
                                                                       -----------------------------------

                    i.     Prior authorization of Inpatient Surgery
                    ii.    Prior authorization of Outpatient Surgery

                    iii.   Prior authorization of Major diagnostic & therapeutic services
                    iv.    Determination of Medical Necessity for all of the above
                    v.     Assign Initial Length of Stay
                    vi.    Second Opinion Program
                    vii.   Mental Health Services Review
                    viii.  Reporting Analysis and Consultation
         b.   Concurrent Inpatient Review                     INC IN ABOVE $2.00/ EMPLOYEE/MONTH
                                                                           ---------------------
                    i.     Determination of Medical Necessity During Inpatient Stay
                    ii.    Assign & Monitor Length of Stay
                    iii.   Discharge Planning
                    iv.    Large Case Management/Home Health/Durable
                    v.     Medical equipment management
                    vi.    Second Opinion Program
                    vii.   Medical record review of Large cases or questionable claims
                    viii.  Bill Negotiation Services
         c.   Review of Prescription Drugs and prescribing patterns
                    i.     Cost analysis
                    ii.    Alternative medication recommendations
B.   ADDITIONAL SERVICES
         a.   Claims Management
         b.   Employee Health Program
         c.   Medical Peer Review
         d.   Benefit Design
         e.   Consulting Services

</TABLE>
C.   CLAIMS RE-PRICING

Claims repricing is included in claims fees. Any claim to be priced is to be
delivered or sent to:

Meritage Employer Services, LLC             Attention: Health Claims
300 East Second Street, 15th Floor
Reno, Nevada 89501

D.  SPECIAL ADMINISTRATIVE SERVICES FOR EMPLOYEE BENEFIT PLAN

      A.  Bill Negotiation Services/ Minimum Case Contracts

Company shall undertake the negotiation of Plan Participant case (discounts for
Covered Services rendered by Non-network Providers as follows:

a. Services rendered by each Non-Network Provider that exceed FIVE hundred
dollars {$500) or when Plan Participant receives prior authorization for
outpatient courses of treatment (i.e.-. angioplasty, chemotherapy, radiation
therapy, rehabilitation, home health, renal dialysis, radiation therapy, etc,)

b. Facility (i.e.. Hospital, ambulatory surgery center, extended care facility,
mental health and/or substance abuse facility, etc.) charges that exceed one
thousand five hundred dollars ($1,500.00) or when a Plan Participant receives
prior authorization for admittance to a facility for a length of stay greater
than two (2) days.

Payment Client agrees to reimburse Company at the rate of the billed amount
less the actual discount negotiated off of the Non-Network Providers billed
charges. The Company will not accept any reimbursement for any negotiated
discounts, without the prior written approval of the Client.

                                 Page 21 of 20<PAGE>

                                                                   Exhibit 10.1

                              EMPLOYMENT AGREEMENT
                              --------------------

                  THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of the 10th day of January, 2002, by and between A. SCHULMAN,
INC., a Delaware corporation (the "Employer"), and BARRY A. RHODES (the
"Employee").

                  WHEREAS, the Employer and the Board of Directors of the
Company desire to provide for the continued employment of the Employee as a
member of the Employer's management, in the best interest of the Company and its
stockholders. The Employee is willing to commit himself continue to serve the
Employer, on the terms and conditions herein provided;

                  NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, the parties hereto agree as follows:

                  1. DEFINED TERMS

                  The definitions of capitalized terms used in this Agreement
(unless stated where first used) are provided in the last Section hereof.

                  2. EMPLOYMENT

                  The Employer hereby continues to employ the Employee as Vice
President - North American Sales for the Employer, and the Employee hereby
accepts such continued employment upon the terms and conditions herein
contained.

                  3. DUTIES AND CONDITIONS OF EMPLOYMENT

                  3.1 DUTIES. The Employee shall devote his entire business
time, attention and energies to the Employer and shall not engage in any conduct
which shall reflect adversely upon the Employer. The Employee shall perform such
duties for the Employer as may be assigned to one in his executive status and
capacity by the Chief Executive Officer of the Company or the Board of the
Company. The Employee shall serve diligently and to the best of his ability.

                  During his employment by the Employer, the Employee shall not,
without the Company's prior written consent, be engaged in any other business
activity, whether or not such business activity is pursued for gain, profit or
other pecuniary advantage, except that notwithstanding the foregoing, he may
invest his personal funds for his own account; provided that such investment
shall be passive and not controlling in any such investment and subject to the
provisions of Section 13.2 hereof and provided further that he will not be
required to provide any substantial services on behalf of such enterprise.
Notwithstanding the foregoing, the Employee may serve on the Boards of Directors
of other corporations during the Term as long as such service does not interfere
with the performance of his duties hereunder.

                  3.2 CONDITIONS. The Employee shall be provided with suitable
office space, furnishings, secretarial and administrative assistance. Without
the Employee's consent, the Employee shall not be required to report principally
to an office located more than five hundred

                                       21
<PAGE>

(500) miles from his principal office at the date of this Agreement, except to
the extent the Employee may be required to report to the Company's principal
office.

                  4. TERM OF AGREEMENT; TERMINATION OF EMPLOYMENT; ESCROW DURING
DISPUTE

                  4.1 TERM OF AGREEMENT. The Employer hereby employs the
Employee for a Term commencing as of the date hereof and ending January 10,
2005. At the end of February 2002 and at the end of each calendar month
thereafter up to and including the end of the calendar month in which Employee's
62nd birthday occurs, this Agreement shall automatically be extended for one (1)
month unless either party shall give notice to the other of non-extension prior
to the end of such calendar month; provided, however, if a Change in Control
shall have occurred during the Term of this Agreement, Sections 7 and 8 and 10
through 20 of this Agreement shall continue in effect until at least the end of
the Change-in-Control Protective Period (whether or not the Term of the
Agreement shall have expired for other purposes).

                  4.2 TERMINATION OF EMPLOYMENT PRIOR TO A CHANGE IN CONTROL.
Prior to any Change in Control, the Company may terminate the employment of the
Employee for Cause pursuant to this Agreement. Prior to any Change in Control,
the Employee may terminate his employment pursuant to this Agreement if the
Employer fails to make full and timely payments of all sums provided for in
Sections 5 and 6 hereof (subject to Section 7.2 hereof), or otherwise shall
breach its covenants hereunder in any material respect.

                  4.3 ESCROW DURING A TERMINATION DISPUTE. Prior to any Change
in Control, if the Employee shall be terminated for Cause, and, within 30 days
of such termination, shall notify the Employer of his intention to adjudicate
such termination as improper, the Employer agrees that it will deposit with
KeyBank National Association, Cleveland, Ohio, as Escrow Agent the installments
of the Employee's Base Salary (as provided in Section 5 below) as the same would
have become payable but for such termination. In the event of a final
adjudication by a tribunal of competent jurisdiction that such termination was
not for Cause, then the amounts so deposited in escrow, plus any interest earned
by the Escrow Agent thereon, shall be delivered promptly to the Employee. If
such adjudication shall be in favor of the Employer, the Escrow Agent shall
return the sums so deposited, plus such interest, to the Employer.

                  The escrowed salary shall not be deemed to be liquidated
damages but the Employer shall be entitled to a credit against any such award to
the extent of the sums so delivered to the Employee.

                  5. COMPENSATION

                  The Employer agrees to pay to the Employee as compensation for
his services hereunder a Base Salary initially equal to the fixed annual salary
currently being paid to the Employee as shown on the Employer's employment
records, payable in substantially equal weekly, biweekly, bimonthly or monthly
installments, as the case may be, in the manner currently being paid to the
Employee. The Base Salary may be discretionarily increased by the Board from
time to time as the Board deems appropriate in its reasonable business judgment.

                                       22
<PAGE>

The Base Salary in effect from time to time shall not be decreased during the
Term (except as provided in Section 7.2).

                  It is understood and agreed that the Employee's compensation
may not be limited to his Base Salary and that the Employee may receive an
annual bonus in the amount, if any, determined annually by the Employer.

                  The Employee shall also participate in employee compensation
and benefit plans available generally to executives of the Employer (including,
without limitation, any tax-qualified profit sharing plan, nonqualified profit
sharing plan, life insurance plan and health insurance plan) on a level
appropriate to his position and shall receive the employee fringe benefits
available generally to executives of the Employer (including, without
limitation, the use of a company car).

                  6. EXPENSES

                  The Employee is authorized to incur reasonable expenses for
promoting the business of the Employer, including expenses for entertainment,
travel and similar items. The Employer shall reimburse the Employee for all such
expenses upon the presentation by the Employee, from time to time, of an
itemized account of such expenditures.

                  7. PRE-TERMINATION COMPENSATION; DISABILITY

                  7.1 NORMAL PRE-TERMINATION COMPENSATION. If the Employee's
employment shall be terminated for any reason during the Term (or, if later,
prior to the end of the Change-in-Control Protective Period), the Employer shall
pay the Employee's Base Salary to the Employee through the Date of Termination
at the rate in effect at the time the Notice of Termination is given (subject to
Section 7.2 hereof), together with all compensation and benefits payable to the
Employee through the Date of Termination under the terms of any compensation or
benefit plan, program or arrangement maintained by the Employer during such
period. Subject to Sections 8, 9, 10 and 11 hereof, after completing the expense
reimbursements required by Section 6 hereof and making the payments and
providing the benefits required by this Section 7, the Employer shall have no
further obligations to the Employee under this Agreement.

                  7.2 DISABILITY ADJUSTMENT TO BASE SALARY PAYMENTS. During the
Term (or, if later, at any time prior to the end of the Change-in-Control
Protective Period), during any period that the Employee fails to perform the
Employee's full-time duties with the Employer as a result of incapacity due to
physical or mental illness (but in no event for more than twenty-four (24)
months), the Employer shall pay only sixty percent (60%) of the Employee's Base
Salary to the Employee at the rate in effect at the commencement of any such
period (less amounts, if any, payable to the Employee at or prior to the time of
any such Base Salary payment under disability benefit plans of the Employer or
under the Social Security disability insurance program). After six (6) months of
Disability, the Employer shall have the right to terminate the Employee's
employment pursuant to this Agreement and all Base Salary payments (except the
sixty percent (60%) payments pursuant to the foregoing sentence) shall cease.
Except to the extent provided in this Section 7.2, all Base Salary payments to
the Employee shall be abated during the period of Disability. Subject to
Sections 8, 9, 10 and 11 hereof, after completing the expense

                                       23
<PAGE>

reimbursements required by Section 6 hereof and making the payments and
providing the benefits required by this Section 7, the Employer shall have no
further obligations to the Employee under this Agreement.

                  8. NORMAL POST-TERMINATION PAYMENTS; CONTINUATION PAY;
TERMINATION PAY; PROMPT PAYMENT

                  8.1 NORMAL POST-TERMINATION PAYMENTS. If the Employee's
employment shall be terminated for any reason during the Term of this Agreement
(or, if later, prior to the end of the Change-in-Control Protective Period), the
Employer shall pay the Employee's normal post-termination compensation and
benefits to the Employee as such payments become due. Subject to Section 10
hereof, such post-termination compensation and benefits shall be determined
under, and paid in accordance with, the Employer's retirement, insurance and
other compensation or benefit plans, programs and arrangements (other than this
Agreement).

                  8.2 CONTINUATION PAY; TERMINATION PAY. Notwithstanding
anything to the contrary in Section 7.2, 9.1 or 10.1(A) hereof, if the laws
governing this Agreement shall require that the Employer continue to pay or
otherwise compensate the Employee for any period of time following termination
of the Employee's employment ("Continuation Pay") or if such laws require
certain amounts of severance pay, termination compensation or the like
(collectively, "Termination Pay"), then to the fullest extent permitted by law
any payments to the Employee pursuant to Section 7.2, 9.1 or 10.1(A) hereof
shall be included in the calculation of Continuation Pay and Termination Pay and
such payments shall be deducted from the amount of Continuation Pay or
Termination Pay due the Employee.

                  8.3 PROMPT PAYMENT. Any payments due under Section 5, 6, 7 or
9 hereof or this Section 8 shall be made promptly after the event giving rise to
the obligation and shall be made to the Employee or in accordance with Section
14.2 hereof, as the case may be.

                  9. POST-TERMINATION PAYMENTS UPON TERMINATION (PRIOR TO A
CHANGE IN CONTROL) BY DEATH OR BY THE EMPLOYER WITHOUT CAUSE

                  9.1 DEATH BENEFIT. If the Employee's employment shall be
terminated by death during the Term (or, if later, prior to the end of the
Change-in-Control Protective Period), then, in addition to the compensation and
benefits provided by Sections 7.1 and 8 hereof, the Employer shall pay a lump
sum amount equal to sixty percent (60%) of the Base Salary for twenty-four (24)
months in accordance with Section 14.2.

                  9.2 TERMINATION BY THE EMPLOYER WITHOUT CAUSE. If the Employer
shall terminate the Employee's employment during the Term and prior to a Change
in Control, without Cause (and not for Disability or in connection with the
Employee's death), the Employer shall pay the Employee his Base Salary
throughout the remaining Term and annual bonuses during the remaining Term, each
of which bonuses shall be equal to one-half (1/2) times the average annual bonus
paid to the Employee during the most recent five (5) calendar years of the
Employee's employment by any of the Companies (prorated for any partial years in
the remaining Term).

                                       24
<PAGE>

                  10. SEVERANCE PAYMENTS; DEDUCTIBILITY.

                  10.1 SEVERANCE PAYMENTS.

                  Subject to Section 10.2 hereof, the Employer shall pay the
Employee the payments described in this Section 10.1 (the "Severance Payments")
upon the termination of the Employee's employment following a Change in Control
and prior to the end of the Change-in-Control Protective Period, in addition to
any payments and benefits to which the Employee is entitled under Sections 5, 6,
7 and 8.1 hereof, unless such termination is (i) by the Employer for Cause, (ii)
by reason of death or Disability, or (iii) by the Employee without Good Reason.
For purposes of this Agreement, the Employee's employment shall be deemed to
have been terminated by the Employer without Cause following a Change in Control
or by the Employee with Good Reason following a Change in Control, as the case
may be, if (i) the Employee's employment is terminated without Cause prior to a
Change in Control and such termination was at the request or direction of a
Person who has entered into an agreement with the Employer the consummation of
which would constitute a Change in Control, (ii) the Employee terminates his
employment with Good Reason prior to a Change in Control and the circumstance or
event which constitutes Good Reason occurs at the request or direction of such
Person, or (iii) the Employee's employment is terminated by the Employer without
Cause prior to a Change in Control (but following a Potential Change in Control)
and such termination is otherwise in connection with or in anticipation of a
Change in Control which actually occurs. For purposes of any determination
regarding the applicability of the immediately preceding sentence, any position
taken by the Employee shall be presumed to be correct unless the Employer
establishes to the Committee by clear and convincing evidence that such position
is not correct.

                                    (A) In lieu of any further salary payments
                  to the Employee for periods subsequent to the Date of
                  Termination and in lieu of any severance benefit otherwise
                  payable to the Employee, the Employer shall pay to the
                  Employee a lump sum severance payment, in cash, equal to three
                  (3) times the sum of (i) the higher of the Employee's Base
                  Salary in effect immediately prior to the occurrence of the
                  event or circumstance upon which the Notice of Termination is
                  based or the Employee's Base Salary in effect immediately
                  prior to the Change in Control, and (ii) the higher of the
                  annual bonus earned by the Employee in respect of the
                  Employer's fiscal year immediately preceding that in which the
                  Date of Termination occurs or the average annual bonus so
                  earned in respect of the three fiscal years immediately
                  preceding that in which the Change in Control occurs.

                                    (B) Notwithstanding any provision of any
                  annual incentive plan to the contrary, the Employer shall pay
                  to the Employee a lump sum amount, in cash, equal to the sum
                  of (i) any annual incentive compensation which has been
                  allocated or awarded to the Employee for a completed fiscal
                  year preceding the Date of Termination and which, as of the
                  Date of Termination, is contingent only upon the continued
                  employment of the Employee to a subsequent date, and (ii) a
                  pro rata portion to the Date of Termination of a deemed annual
                  bonus for the Employer's fiscal year in which the Date of
                  Termination occurs, calculated by multiplying (i) the higher
                  of the annual bonus earned by the Employee with respect to the
                  immediately preceding fiscal year or the average annual bonus
                  earned by the Employee with respect to the immediately
                  preceding

                                       25
<PAGE>
                  three fiscal years of the Employer by (ii) the fraction
                  obtained by dividing the number of days in the fiscal year of
                  the Employer in which termination occurs up to and including
                  the Date of Termination by 365.

                                    (C) For the thirty-six (36) month period
                  immediately following the Date of Termination, the Employer
                  shall arrange to provide the Employee with life, disability,
                  accident and health insurance benefits substantially similar
                  to those which the Employee is receiving immediately prior to
                  the Notice of Termination (without giving effect to any
                  amendment to such benefits made subsequent to a Change in
                  Control, which amendment adversely affects in any manner the
                  Employee's entitlement to or the amount of such benefits);
                  PROVIDED, HOWEVER, that, unless the Employee consents to a
                  different method (after taking into account the effect of such
                  method on the calculation of "parachute payments" pursuant to
                  Section 10.2 hereof), such health insurance benefits shall be
                  provided through a third-party insurer. Benefits otherwise
                  receivable by the Employee pursuant to this Section 10.1(C)
                  shall be reduced to the extent comparable benefits are
                  actually received by or made available to the Employee without
                  cost during the thirty-six (36) month period following the
                  Employee's termination of employment (and any such benefits
                  actually received by or made available to the Employee shall
                  be reported to the Employer by the Employee). If the Severance
                  Payments shall be decreased pursuant to Section 10.2 hereof,
                  and the Section 10.1(C) benefits which remain payable after
                  the application of Section 10.2 hereof are thereafter reduced
                  pursuant to the immediately preceding sentence because of the
                  receipt or availability of comparable benefits, the Employer
                  shall, at the time of such reduction, pay to the Employee the
                  least of (a) the amount of the decrease made in the Severance
                  Payments pursuant to Section 10.2 hereof, (b) the amount of
                  the subsequent reduction in these Section 10.1(C) benefits, or
                  (C) the maximum amount which can be paid to the Employee
                  without being, or causing any other payment to be,
                  nondeductible by reason of section 280G of the Code.

                  10.2 DEDUCTIBILITY.

                  (A) Notwithstanding any other provisions of this Agreement, in
the event that any payment or benefit received or to be received by the Employee
in connection with a Change in Control or the termination of the Employee's
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Employer, any Person whose actions result in a
Change in Control or any Person affiliated with the Employer or such Person)
(all such payments and benefits, including the Severance Payments, being
hereinafter called "Total Payments") would not be deductible (in whole or part),
by the Employer, an affiliate or Person making such payment or providing such
benefit as a result of section 280G of the Code, then, to the extent necessary
to make such portion of the Total Payments deductible (and after taking into
account any reduction in the Total Payments provided by reason of section 280G
of the Code in such other plan, arrangement or agreement), the cash Severance
Payments shall first be reduced (if necessary, to zero), and the noncash
Severance Payments shall thereafter be reduced (if necessary, to zero);
PROVIDED, HOWEVER, that the Employee may elect (at any time prior to the
delivery of a Notice of Termination hereunder) to have the non-cash Severance
Payments reduced (or eliminated) prior to any reduction of the cash Severance
Payments.

                                       26
<PAGE>

                  (B) For purposes of this limitation, (i) no portion of the
Total Payments the receipt or enjoyment of which the Employee shall have
effectively waived in writing prior to the delivery of a Notice of Termination
shall be taken into account, (ii) no portion of the Total Payments shall be
taken into account which in the opinion of tax counsel (the "Tax Counsel")
reasonably acceptable to the Employee and selected by the accounting firm which
was, immediately prior to the Change in Control, the Employer's independent
auditor (the "Auditor") does not constitute a "parachute payment" within the
meaning of section 280G(b)(2) of the Code, including by reason of section
280G(b)(4)(A) of the Code, (iii) the Severance Payments shall be reduced only to
the extent necessary so that the Total Payments (other than those referred to in
clauses (i) or (ii)) in their entirety constitute reasonable compensation for
services actually rendered within the meaning of section 280G(b)(4)(B) of the
Code or are otherwise not subject to disallowance as deductions by reason of
section 280G of the Code, in the opinion of the Tax Counsel, and (iv) the value
of any noncash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Auditor in accordance with the principles of
sections 280G(d)(3) and (4) of the Code.

                  (C) If it is established pursuant to a final determination of
a court or an Internal Revenue Service proceeding that, notwithstanding the good
faith of the Employee and the Employer in applying the terms of this Section
10.2, the aggregate "parachute payments" paid to or for the Employee's benefit
are in an amount that would result in any portion of such "parachute payments"
not being deductible by reason of section 280G of the Code, then the Employee
shall have an obligation to pay the Employer upon demand an amount equal to the
sum of (i) the excess of the aggregate "parachute payments" paid to or for the
Employee's benefit over the aggregate "parachute payments" that could have been
paid to or for the Employee's benefit without any portion of such "parachute
payments" not being deductible by reason of section 280G of the Code; and (ii)
interest on the amount set forth in clause (i) of this sentence at one hundred
twenty percent (120%) of the rate provided in section 1274(b)(2)(B) of the Code
from the date of the Employee's receipt of such excess until the date of such
payment.

                  10.3 The payments provided in Sections 10.1(A) and (B) hereof
shall be made not later than the fifth day following the Date of Termination;
PROVIDED, HOWEVER, that if the amounts of such payments, and the limitation on
such payments set forth in Section 10.2 hereof, cannot be finally determined on
or before such day, the Employer shall pay to the Employee on such day an
estimate, as determined in good faith by the Employer, in accordance with
Section 10.2 hereof, of the minimum amount of such payments to which the
Employee is clearly entitled and shall pay the remainder of such payments
(together with interest at one hundred twenty percent (120%) of the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can
be determined but in no event later than the thirtieth (30th) day after the Date
of Termination. In the event that the amount of the estimated payments exceeds
the amount subsequently determined to have been due, such excess shall
constitute a loan by the Employer to the Employee, payable on the fifth (5th)
business day after demand by the Employer (together with interest at one hundred
twenty percent (120%) of the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section, the Employer shall
provide the Employee with a written statement setting forth the manner in which
such payments were calculated and the basis for such calculations including,
without limitation, any opinions or other advice the Employer has received from
outside counsel, auditors or consultants (and any such opinions or advice which
are in writing shall be attached to the statement). In the event the

                                       27
<PAGE>

Employer should fail to pay when due the amounts described in Sections 10.1(A),
(B) and (C) hereof or in Section 10.2 hereof, the Employee shall also be
entitled to receive from the Employer an amount representing interest on any
such unpaid amounts from the due date, as determined under this Section 10.3
(without regard to any extension of the Date of Termination pursuant to Section
11.3 hereof), to the date of payment at one hundred twenty percent (120%) of the
rate provided in section 1274(b)(2)(B) of the Code.

                  10.4 The Employer also shall pay to the Employee all legal
fees and expenses incurred by the Employee (i) in disputing in good faith any
issue relating to the termination of the Employee's employment following a
Change in Control and prior to the end of the Change-in-Control Protective
Period, (ii) in seeking in good faith to obtain or enforce any benefit or right
provided by this Agreement, or (iii) in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code to any payment or benefit provided hereunder. Such payments shall be made
within five (5) business days after delivery of the Employee's written requests
for payment accompanied with such evidence of fees and expenses incurred as the
Employer reasonably may require.

                  11. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.

                  11.1 NOTICE OF TERMINATION. During the Term (and, if longer,
until the end of the Change-in-Control Protective Period), any purported
termination of the Employee's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 15 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employee's employment under the provision so
indicated. Further, with respect to any purported termination of the Employee's
employment after a Change in Control and prior to the end of the
Change-in-Control Protective Period, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the affirmative vote
of not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering
such termination (after reasonable notice to the Employee and an opportunity for
the Employee, together with the Employee's counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Employee was
guilty of conduct set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.

                  11.2 DATE OF TERMINATION. "Date of Termination," with respect
to any purported termination of the Employee's employment during the Term (and,
if longer, prior to the end of the Change-in-Control Protective Period), shall
mean (i) if the Employee's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Employee shall not
have returned to the full-time performance of the Employee's duties during such
thirty (30) day period), and (ii) if the Employee's employment is terminated for
any other reason, the date specified in the Notice of Termination (which, in the
case of a termination by the Employer, shall not be less than thirty (30) days
(except in the case of a termination for Cause) and, in the case of a
termination by the Employee, shall not be less

                                       28
<PAGE>

than fifteen (15) days nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given).

                  11.3 DISPUTE CONCERNING TERMINATION. With respect to any
purported termination of the Employee's employment after a Change in Control and
prior to the end of the Change-in-Control Protective Period, if within fifteen
(15) days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 11.3), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be
extended until the date on which the dispute is finally resolved, either by
mutual written agreement of the parties or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been
perfected); PROVIDED, HOWEVER, that the Date of Termination shall be extended by
a notice of dispute given by the Employee only if such notice is given in good
faith and the Employee pursues the resolution of such dispute with reasonable
diligence.

                  11.4 COMPENSATION DURING DISPUTE. If a purported termination
occurs following a Change in Control and prior to the end of the
Change-in-Control Protective Period and the Date of Termination is extended in
accordance with Section 11.3 hereof, the Employer shall continue to pay the
Employee the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and continue the
Employee as a participant in all compensation, benefit and insurance plans in
which the Employee was participating when the notice giving rise to the dispute
was given, until the Date of Termination, as determined in accordance with
Section 11.3 hereof. Amounts paid under this Section 11.4 are in addition to all
other amounts due under this Agreement (other than those due under Section 7.1
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.

                  12. NO MITIGATION

                  The Employer agrees that, if the Employee's employment with
the Employer terminates following a Change in Control and prior to the end of
the Change-in-Control Protective Period, the Employee is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Employee by the Employer pursuant to Section 10 hereof or Section 11.4 hereof.
Further, the amount of any payment or benefit provided for in this Agreement
(other than Section 10.1(C) hereof) shall not be reduced by any compensation
earned by the Employee as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Employee to the Employer, or otherwise.

                  13. CONFIDENTIALITY; NON-COMPETITION AND NON-SOLICITATION

                  13.1 CONFIDENTIALITY. The Companies' methods, plans for doing
business, processes, pricing, compounds, customers and supplies are vital to the
Companies and, to the extent not made public by the Companies, constitute
confidential information subject to the Companies' proprietary rights therein.
The Employee covenants and agrees that during the Term and at all times
thereafter, the Employee will not, directly or indirectly, make known, divulge,

                                       29
<PAGE>

furnish, make available or use, otherwise than in the regular course of the
Employee's employment by the Employer, any invention, product, process,
apparatus or design of any of the Companies, or any knowledge or information
in respect thereof (including, but not limited to, business methods and
techniques), or any other confidential or so-called "insider" information of
any of the Companies. This covenant shall apply without regard to the time or
circumstances of any termination of the Employee's employment.

                  13.2 NON-COMPETITION AND NON-SOLICITATION. The Employee
covenants and agrees that during the period of one (1) year following any
termination of the Employee's employment which occurs prior to a Change in
Control, the Employee will not, directly or indirectly, either as an individual
for the Employee's own account or as an investor, or other participant in, or as
an employee, agent, or representative of, any other business enterprise:

                  (i)      solicit, employ, entice, take away or interfere with,
                           or attempt to solicit, employ, entice, take away or
                           interfere with, any employee of the Employer or the
                           Companies; or

                  (ii)     engage or participate in or finance, aid or be
                           connected with any enterprise which competes with the
                           business of the Companies, or any of them.

The geographical limitations of the foregoing shall include any country in which
the Companies or any of them shall be doing business as of such date of such
termination. This covenant shall apply without regard to the circumstances of
any termination of the Employee's employment which occurs prior to a Change in
Control.

                  13.3 The Employee acknowledges that the covenants contained in
this Section 13 are of the essence of this Agreement and said covenants shall be
construed as independent of any other provisions of this Agreement. Recognizing
the irreparable nature of the injury that could result from the Employee's
violation of any of the covenants and agreement to be performed and/or observed
by the Employee pursuant to the provisions of this Section 13, and that damages
would be inadequate compensation, it is agreed that any violations by the
Employee of the provisions of this Section 13, shall be the proper subject for
immediate injunctive and other equitable relief to the Employer.

                  14. SUCCESSORS; BINDING AGREEMENT

                  14.1 In addition to any obligations imposed by law upon any
successor to the Employer, the Employer will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Employer to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Employer would be required to perform it if no such succession
had taken place. Failure of the Employer to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Employee to compensation from the Employer in
the same amount and on the same terms as the Employee would be entitled to
hereunder if the Employee were to terminate the Employee's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be

                                       30
<PAGE>

deemed the Date of Termination. Except as provided in this Section 14.1, this
Agreement shall not be assignable by either party without the written consent of
the other party hereto.

                  14.2 This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee shall die while any amount would still be payable to the Employee
hereunder (other than amounts which, by their terms, terminate upon the death of
the Employee) if the Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Employee's estate.

                  15. NOTICES

                  For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Employee, to the address shown for the Employee in the personnel records of the
Employer and, if to the Employer, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:

                     To the Employer:

                          Robert A. Stefanko
                          Chief Financial Officer and Executive Vice President-
                             Finance and Administration
                          A. Schulman, Inc.
                          P.O. Box 1710
                          Akron, Ohio  44309-1710

                      With a copy to:

                          James H. Berick, Esq.
                          Berick, Pearlman & Mills Co., L.P.A.
                          1350 Eaton Center
                          1111 Superior Avenue
                          Cleveland, Ohio  44114-2569

                  16. MISCELLANEOUS

                  No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by the Employee and such officer as may be specifically designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement supersedes the Employment Agreement between the
Employer and the Employee dated as of December 28, 1990 and any other agreements
or representations, oral or otherwise,

                                       31
<PAGE>

express or implied, with respect to the subject matter hereof which have been
made by either party, except as expressly set forth in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Ohio. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections. Any payments provided for hereunder shall be paid
net of any applicable withholding required under federal, state or local law and
any additional withholding to which the Employee has agreed. The obligations of
the Employer and the Employee under this Agreement which by their nature may
require (partial or total) performance after the expiration of the Term or the
Change-in-Control Protective Period (including, without limitation, those under
Sections 5 through 11 and Section 13 hereof) shall survive such expiration.

                  17. VALIDITY

                  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

                  18. COUNTERPARTS

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

                  19. SETTLEMENT OF DISPUTES AFTER CHANGE IN CONTROL;
ARBITRATION

                  After a Change in Control and prior to the end of the
Change-in-Control Protective Period, all claims by the Employee for benefits
under this Agreement shall be directed to and determined by the Committee and
shall be in writing. Any denial by the Committee of a claim for benefits under
this Agreement shall be delivered to the Employee in writing and shall set forth
the specific reasons for the denial and the specific provisions of this
Agreement relied upon. The Committee shall afford a reasonable opportunity to
the Employee for a review of the decision denying a claim and shall further
allow the Employee to appeal to the Committee a decision of the Committee within
sixty (60) days after notification by the Committee that the Employee's claim
has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Akron, Ohio, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. Notwithstanding any provision of this Agreement
to the contrary, the Employee shall be entitled to seek specific performance of
the Employee's right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.

                                       32
<PAGE>

                  20. DEFINITIONS

                  For purposes of this Agreement, the following terms shall have
the meanings indicated below:

                  (A) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act.

                  (B) "Board" shall mean the Board of Directors of the Employer.

                  (C) "Cause" for termination by the Employer of the Employee's
employment shall mean the following:

                                    (I) with respect to a termination as to
                  which the Notice of Termination is duly given prior to a
                  Change in Control, the Employee's breach of his covenants
                  herein contained, the Employee's gross neglect of his duties
                  hereunder, the Employee's knowingly committing misfeasance or
                  knowingly permitting nonfeasance of his duties in any material
                  respect, or the Employee's committing a felony; and

                                    (II) with respect to a termination as to
                  which the Notice of Termination is duly given following a
                  Change in Control, (i) the willful and continued failure by
                  the Employee to substantially perform the Employee's duties
                  with the Employer (other than any such failure resulting from
                  the Employee's incapacity due to physical or mental illness or
                  any such actual or anticipated failure after the issuance of a
                  Notice of Termination for Good Reason by the Employee pursuant
                  to Section 11.1 hereof) after a written demand for substantial
                  performance is delivered to the Employee by the Board, which
                  demand specifically identifies the manner in which the Board
                  believes that the Employee has not substantially performed the
                  Employee's duties, or (ii) the willful engaging by the
                  Employee in conduct which is demonstrably and materially
                  injurious to the Employer or its subsidiaries, monetarily or
                  otherwise. For purposes of clauses (i) and (ii) of this
                  definition, (x) no act, or failure to act, on the Employee's
                  part shall be deemed "willful" unless done, or omitted to be
                  done, by the Employee not in good faith and without reasonable
                  belief that the Employee's act, or failure to act, was in the
                  best interest of the Employer and (y) in the event of a
                  dispute concerning the application of this provision, no claim
                  by the Employer that Cause exists shall be given effect unless
                  the Employer establishes to the Committee by clear and
                  convincing evidence that Cause exists.

                  (D) A "Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:

                                    (I) any Person is or becomes the Beneficial
                  Owner, directly or indirectly, of securities of the Employer
                  (not including in the securities beneficially owned by such
                  Person any securities acquired directly from the Employer or
                  its affiliates other than in connection with the acquisition
                  by the

                                       33
<PAGE>

                  Employer or its affiliates of a business) representing 25% or
                  more of either the then outstanding shares of common stock of
                  the Employer or the combined voting power of the Employer's
                  then outstanding securities; or

                                    (II) the following individuals cease for any
                  reason to constitute a majority of the number of directors
                  then serving: individuals who, on the date hereof, constitute
                  the Board and any new director (other than a director whose
                  initial assumption of office is in connection with an actual
                  or threatened election contest, including but not limited to a
                  consent solicitation, relating to the election of directors of
                  the Employer) whose appointment or election by the Board or
                  nomination for election by the Employer's stockholders was
                  approved by a vote of at least two-thirds (2/3) of the
                  directors then still in office who either were directors on
                  the date hereof or whose appointment, election or nomination
                  for election was previously so approved; or

                                    (III) the stockholders of the Employer
                  approve a merger or consolidation of the Employer with any
                  other corporation or approve the issuance of voting securities
                  of the Employer in connection with a merger or consolidation
                  of the Employer (or any direct or indirect subsidiary of the
                  Employer) pursuant to applicable stock exchange requirements,
                  other than (i) a merger or consolidation which would result in
                  the voting securities of the Employer outstanding immediately
                  prior to such merger or consolidation continuing to represent
                  (either by remaining outstanding or by being converted into
                  voting securities of the surviving entity or any parent
                  thereof), in combination with the ownership of any trustee or
                  other fiduciary holding securities under an employee benefit
                  plan of the Employer or any subsidiary of the Employer, at
                  least 75% of the combined voting power of the voting
                  securities of the Employer or such surviving entity or any
                  parent thereof outstanding immediately after such merger or
                  consolidation, or (ii) a merger or consolidation effected to
                  implement a recapitalization of the Employer (or similar
                  transaction) in which no Person is or becomes the Beneficial
                  Owner, directly or indirectly, of securities of the Employer
                  (not including in the securities Beneficially Owned by such
                  Person any securities acquired directly from the Employer or
                  its subsidiaries other than in connection with the acquisition
                  by the Employer or its subsidiaries of a business)
                  representing 25% or more of either the then outstanding shares
                  of common stock of the Employer or the combined voting power
                  of the Employer's then outstanding securities; or

                                    (IV) the stockholders of the Employer
                  approve a plan of complete liquidation or dissolution of the
                  Employer or an agreement for the sale or disposition by the
                  Employer of all or substantially all of the Employer's assets,
                  other than a sale or disposition by the Employer of all or
                  substantially all of the Employer's assets to an entity, at
                  least 75% of the combined voting power of the voting
                  securities of which are owned by stockholders in substantially
                  the same proportions as their ownership of the Employer
                  immediately prior to such sale.

                  Notwithstanding the foregoing, no "Change in Control" shall be
deemed to have occurred if there is consummated any transaction or series of
integrated transactions immediately

                                       34
<PAGE>
following which the record holders of the common stock of the Employer
immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity which owns
all or substantially all of the assets of the Employer immediately following
such transaction or series of transactions.

                  Further, notwithstanding the foregoing, any event or
transaction which would otherwise constitute a Change in Control (a
"Transaction") shall not constitute a Change in Control for purposes of this
Agreement if, in connection with the Transaction, the Employee participates as
an equity investor in the acquiring entity or any of its affiliates (the
"Acquiror"). For purposes of the preceding sentence, the Employee shall not be
deemed to have participated as an equity investor in the Acquiror by virtue of
(i) obtaining beneficial ownership of any equity interest in the Acquiror as a
result of the grant to the Employee of an incentive compensation award under one
or more incentive plans of the Acquiror (including, but not limited to, the
conversion in connection with the Transaction of incentive compensation awards
of the Employer into incentive compensation awards of the Acquiror), on terms
and conditions substantially equivalent to those applicable to other executives
of the Employer immediately prior to the Transaction, after taking into account
normal differences attributable to job responsibilities, title and similar
matters, (ii) obtaining beneficial ownership of any equity interest in the
Acquiror on terms and conditions substantially equivalent to those obtained in
the Transaction by all other stockholders of the Employer, or (iii) passive
ownership of less than three percent (3%) of the stock of the Acquiror.

                  (E) "Change-in-Control Protective Period" shall mean the
period from the occurrence of a Change in Control until the later of the second
anniversary of such Change in Control or, if such Change in Control shall be
caused by the stockholder approval of a merger or consolidation described in
Section 20(E)(III) hereof, the second anniversary of the consummation of such
merger or consolidation.
                  (F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.

                  (G) "Committee" shall mean (i) the individuals (not fewer than
three in number) who, immediately prior to a Potential Change in Control,
constitute the Compensation Committee of the Board, plus (ii) in the event that
fewer than three individuals are available from the group specified in clause
(i) above for any reason, such individuals as may be appointed by the individual
or individuals so available (including for this purpose any individual or
individuals previously so appointed under this clause (ii)); provided, however,
that the maximum number of individuals constituting the Committee shall not
exceed five.

                  (H) "Companies" shall mean, collectively, the Employer and
each corporation which is now and hereafter shall become a subsidiary of, or a
parent of, the Employer, together with their respective successors and
assigns.(I) "Continuation Pay" shall mean those payments so described in Section
8.2 hereof.

                  (J) "Date of Termination" shall have the meaning stated in
Section 11.2 hereof.

                                       35
<PAGE>

                  (K) "Disability" shall be deemed the reason for the
termination by the Employer of the Employee's employment, if, as a result of the
Employee's incapacity due to physical or mental illness, the Employee shall have
been absent from the full-time performance of the Employee's duties with the
Employer for a period of six (6) consecutive months, the Employer shall have
given the Employee a Notice of Termination for Disability, and, within thirty
(30) days after such Notice of Termination is given, the Employee shall not have
returned to the full-time performance of the Employee's duties.

                  (L) "Employee" shall mean the individual named in the first
paragraph of this Agreement.

                  (M) "Employer" shall mean A. Schulman, Inc. and, except in
determining under Section 20(E) hereof whether or not any Change in Control of
the Employer has occurred, any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law, or otherwise.

                  (N) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.

                  (O) "Good Reason" for termination by the Employee of the
Employee's employment shall mean the occurrence (without the Employee's express
prior written consent) after any Change in Control, or after any Potential
Change in Control under the circumstances described in the second sentence of
Section 10.1 hereof (treating all references in paragraphs (I) through (VII)
below to a "Change in Control" as references to a "Potential Change in
Control"), of any one of the following acts by the Employer, or failures by the
Employer to act, unless, in the case of any act or failure to act described in
paragraph (I), (V), (VI) or (VII) below, such act or failure to act is corrected
prior to the Date of Termination specified in the Notice of Termination given in
respect thereof:

                                    (I) the assignment to the Employee of any
                  duties inconsistent with the Employee's status as an executive
                  officer of the Employer or a substantial adverse alteration in
                  the nature or status of the Employee's responsibilities from
                  those in effect immediately prior to the Change in Control
                  (other than any such alteration primarily attributable to the
                  fact that the Employer may no longer be a public company);

                                    (II) a reduction by the Employer in the
                  Employee's annual base salary as in effect on the date hereof
                  or as the same may be increased from time to time except for
                  across-the-board salary reductions similarly affecting all
                  executives of the Employer and all executives of any Person in
                  control of the Employer;

                                    (III) the relocation of the Employer's
                  principal executive offices to a location more than fifty (50)
                  miles from the location of such offices immediately prior to
                  the Change in Control or the Employer's requiring the Employee
                  to be based anywhere other than the Employer's principal
                  executive

                                       36
<PAGE>

                  offices except for required travel on the Employer's business
                  to an extent substantially consistent with the Employee's
                  present business travel obligations;

                                    (IV) the failure by the Employer, without
                  the Employee's consent, to pay to the Employee any portion of
                  the Employee's current compensation, or to pay to the Employee
                  any portion of an installment of deferred compensation under
                  any deferred compensation program of the Employer, within
                  seven (7) days of the date such compensation is due;

                                    (V) the failure by the Employer to continue
                  in effect any compensation plan in which the Employee
                  participates immediately prior to the Change in Control which
                  is material to the Employee's total compensation, including
                  but not limited to the Employer's 1991 Stock Incentive Plan
                  and Nonqualified Profit Sharing Plan or any substitute plans
                  adopted prior to the Change in Control, unless an equitable
                  arrangement (embodied in an ongoing substitute or alternative
                  plan) has been made with respect to such plan, or the failure
                  by the Employer to continue the Employee's participation
                  therein (or in such substitute or alternative plan) on a basis
                  not materially less favorable, both in terms of the amount of
                  benefits provided and the level of the Employee's
                  participation relative to other participants, as existed at
                  the time of the Change in Control;

                                    (VI) the failure by the Employer to continue
                  to provide the Employee with benefits substantially similar to
                  those enjoyed by the Employee under any of the Employer's
                  pension, life insurance, medical, health and accident, or
                  disability plans in which the Employee was participating at
                  the time of the Change in Control, the taking of any action by
                  the Employer which would directly or indirectly materially
                  reduce any of such benefits or deprive the Employee of any
                  material fringe benefit enjoyed by the Employee at the time of
                  the Change in Control, or the failure by the Employer to
                  provide the Employee with the number of paid vacation days to
                  which the Employee is entitled on the basis of years of
                  service with the Employer in accordance with the Employer's
                  normal vacation policy in effect at the time of the Change in
                  Control; or

                                    (VII) any purported termination of the
                  Employee's employment which is not effected pursuant to a
                  Notice of Termination satisfying the requirements of Section
                  11.1 hereof; for purposes of this Agreement, no such purported
                  termination shall be effective.

                  The Employee's right to terminate the Employee's employment
for Good Reason shall not be affected by the Employee's incapacity due to
physical or mental illness. The Employee's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any act or failure
to act constituting Good Reason hereunder.

                  For purposes of any determination regarding the existence of
Good Reason, any claim by the Employee that Good Reason exists shall be presumed
to be correct unless the

                                       37
<PAGE>

Employer establishes to the Committee by clear and convincing evidence that
Good Reason does not exist.

                  (P) "Notice of Termination" shall have the meaning stated in
Section 11.1 hereof.

                  (Q) "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Employer or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Employer or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Employer in substantially the same proportions as their
ownership of stock of the Employer.

                  (R) "Potential Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following paragraphs shall
have occurred:

                                    (1) the Employer enters into an agreement,
                  the consummation of which would result in the occurrence of a
                  Change in Control;

                                    (2) the Employer or any Person publicly
                  announces an intention to take or to consider taking actions
                  which, if consummated, would constitute a Change in Control;

                                    (3) any Person becomes the Beneficial Owner,
                  directly or indirectly, of securities of the Employer
                  representing 15% or more of either the then outstanding shares
                  of common stock of the Employer or the combined voting power
                  of the Employer's then outstanding securities; or

                                    (4) the Board adopts a resolution to the
                  effect that, for purposes of this Agreement, a Potential
                  Change in Control has occurred.

                  (S) "Severance Payments" shall mean those payments described
in Section 10.1 hereof.

                  (T) "Term" shall mean the period of time described in Section
4.1 hereof (including any extension or continuation described therein).

                  (U) "Termination Pay" shall mean those payments so described
in Section 8.2 hereof.

                  (V) "Total Payments" shall mean those payments described in
Section 10.2 hereof.

                                       38
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed (the corporate signatory by the respective officer
duly authorized) as of the day and year first above written.

                                     /s/ BARRY A. RHODES
                                 -----------------------------------------------
                                 BARRY A. RHODES ("Employee")

                                 A. Schulman, Inc. ("Company")

                                 By     /s/ TERRY L. HAINES
                                    --------------------------------------------
                                    Terry L. Haines, President

                                 By       /s/ ROBERT A. STEFANKO
                                    --------------------------------------------
                                    Robert A. Stefanko, Executive Vice President

                                       39

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