Document:

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                                                                   EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT (this "Agreement") is made by and between
KRUG INTERNATIONAL CORP., an Ohio corporation ("KRUG" or the "Company"), KRUG's
wholly owned subsidiary SUNLINK HEALTHCARE CORP., a Delaware corporation
("SunLink") and ROBERT M. THORNTON, JR., an individual resident of Georgia (the
"Executive"), as of the 1st day of January, 2001 (the "Effective Date").

         KRUG desires to employ the Executive as its Chairman, Chief Executive
Officer, and President and KRUG desires that Executive also serve as the
Chairman and Chief Executive Officer of SunLink. The Executive is willing to
serve KRUG and SunLink on the terms and conditions herein provided.

         In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree that on the Effective Date:

         1.       Employment. KRUG and SunLink shall employ the Executive, and
the Executive shall serve as Chairman, Chief Executive Officer, and President
of KRUG and Chairman and Chief Executive Officer of SunLink, upon the terms and
conditions set forth herein. Executive's principal office shall be located in
the Atlanta, Georgia metropolitan area. The Executive shall have such authority
and responsibilities consistent with his position and which may be set forth in
the bylaws of KRUG or SunLink, as the case may be, or assigned by their
respective Boards of Directors from time to time. Executive shall also be
nominated by KRUG for election as a member of the Board of Directors of KRUG
and KRUG shall vote its SunLink shares for election of Executive as a member of
the Board of Directors of SunLink. The Executive shall devote his full business
time, attention, skill and efforts to the performance of his duties hereunder,
except during periods of illness or periods of vacation and leaves of absence
consistent with KRUG company policy. The Executive may devote reasonable
periods of time to serve as a director or advisor to other organizations, to
perform charitable and other community activities, and to manage his personal
investments; provided, however, that such activities do not materially
interfere with the performance of his duties hereunder and are not in conflict
or competitive with, or adverse to, the interests of KRUG or SunLink.

         2.       Term. Unless earlier terminated as provided herein, the
Executive's employment under this Agreement shall be for a term (the "Fixed
Term") of three (3) years ending December 31, 2003. Unless at least 180 days
written notice of non-renewal shall have been given to Executive by the Company
or to the Company by Executive prior to the end of the Fixed Term or any
Extended Term that Executive's employment will not be continued beyond such
Fixed Term or any Extended Term, as the case may be, the term of this Agreement
shall be deemed automatically renewed for an additional period of eighteen
months (an "Extended Term") commencing upon the end of the Fixed Term or then
applicable Extended Term, as the case may be, and shall continue in force
during each such Extended Term or until such time as either party shall give
ninety (90) days written notice to the other party terminating this Agreement
pursuant to Section 5 below.

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         3.       Compensation and Benefits.

                  a.       KRUG shall pay the Executive a salary at a rate of
not less than $250,000 per annum in accordance with the salary payment practices
of the Company. KRUG's Board of Directors shall review the Executive's salary at
least annually and may increase the Executive's base salary if it determines in
its sole discretion that an increase is appropriate.

                  b.       The Executive shall participate in a management
incentive program and shall be eligible to receive bonus payments of up to
sixty percent (60%) of Executive's annual base salary based upon criteria that
the Executive Compensation Committee of KRUG in consultation with Executive
shall establish from time to time pursuant to that program.

                  c.       The compensation payable by KRUG to Executive
hereunder shall be inclusive of compensation for all services rendered by
Executive to KRUG, SunLink and their respective Subsidiaries and Executive
shall have no separate right of compensation from SunLink or any such
Subsidiary other than the right to be indemnified as an officer of SunLink or
such Subsidiary under the corporate bylaws thereof and/or insured under any
directors and officers liability policies maintained by SunLink, KRUG or such
Subsidiary.

         4.       Stock Options and Other Benefits.

                  a.       KRUG shall grant to Executive, five-year options to
purchase a total of 200,000 shares of common stock of KRUG. Such grant shall be
effective as of the date of grant as determined by the Board. The options shall
be granted pursuant and subject to a new stock option plan to be approved by
KRUG's shareholders at their next annual meeting and will be similar to the KRUG
International Corp. 1995 Incentive Stock Option Plan at an exercise price per
share equal to the closing sale price of KRUG's common stock on the American
Stock Exchange as of the date of grant. The options so granted shall vest 20% as
of the date of grant and an additional 20% annually at the first, second, third
and fourth anniversaries of the date of grant.

                  b.       In addition to participating in the new option plan
pursuant to Section 4(a) and KRUG's existing option plan, Executive shall
during the term of Executive's employment be eligible to participate in any
additional stock option plan or arrangement adopted by KRUG which includes
senior KRUG officers to receive additional grants of options under such plans
in such numbers and at such exercise prices as the Board shall determine in its
discretion.

                  c.       The Executive shall participate in all retirement,
welfare, deferred compensation, life and health insurance, and other benefit
plans or programs of KRUG now or hereafter applicable to the Executive or
applicable to a class of employees that includes senior executives of KRUG;
provided, however, that during any period during the Fixed Term or any Extended
Term that the Executive is subject to a Disability, and during the 180-day
period of physical or mental infirmity leading up to the Executive's Disability,
the amount of the Executive's compensation provided under this Section 4 shall
be reduced by the sum of the amounts, if any, paid to the Executive for the same
period under any disability benefit or pension plan of KRUG.

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                  d.       KRUG shall reimburse Executive up to $2,000.00 per
year for Executive paid premiums, deductibles, co-insurance and non-covered
charges under health, dental and disability plans of either company in which
Executive participates, including reimbursement for the cost of an executive
physical annually in an amount not to exceed $1,000.00 per year.

                  e.       KRUG shall provide supplemental term life insurance
coverage equal to three (3) times base salary.

                  f.       KRUG shall reimburse Executive up to $2,000.00 per
year for continuing education costs, including travel.

                  g.       KRUG shall reimburse Executive up to $3,000.00 per
year for club dues, fees and charges.

                  h.       KRUG shall reimburse Executive up to $3,000.00 per
year for legal and accounting fees paid by Executive for personal legal and
accounting services, which shall be in addition to costs relating to the
negotiation and advice relating to this agreement which shall be paid by KRUG.

                  i.       Reimbursement under Items 3(d), 3(f) and 3(g) above
may be claimed for out-of-pocket expenses Executive has incurred since April 1,
2000.

                  j.       The Executive shall receive twenty-five (25) days
paid vacation each year. Unused vacation may not be carried over to subsequent
years.

         5.       Termination.

                  a.       The Executive's employment under this Agreement and
his offices and positions with KRUG may be terminated prior to the end of the
Fixed Term or any Extended Term only as follows:

                           (i)      automatically upon the death of the
         Executive;

                           (ii)     by KRUG due to the Disability of the
         Executive upon ninety (90) days written notice and delivery of a Notice
         of Termination to the Executive;

                           (iii)    by KRUG for Cause upon delivery of a Notice
         of Termination to the Executive;

                           (iv)     by either party for any reason upon 90 days
         notice to the other party.

Any termination of Executive's employment by KRUG shall also constitute the
concurrent termination of such Executive's employment and offices with SunLink
and any other Subsidiary of KRUG.

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                  b.       If the Executive's employment with KRUG shall be
terminated during the Fixed Term or any Extended Term (i) by reason of the
Executive's death, or (ii) by KRUG for Disability or Cause, KRUG shall pay to
the Executive (or in the case of his death, the Executive's estate) within
fifteen days after the Termination Date a lump sum cash payment equal to the
Accrued Compensation.

                  c.       If the Executive's employment with KRUG shall be
terminated by the Company other than for (i) Disability, (ii) Cause or (iii)
pursuant to Section 5(d) below, Executive shall

                           (A)      in the case of any such termination by the
         Company during the Fixed Term, receive severance payments equal to the
         lesser of (x) eighteen (18) months salary or (y) the greater of the
         salary for the remaining number of months in the Fixed Term or twelve
         months, or

                           (B)      in the case of any such termination by the
         Company during any Extended Term, receive severance payments equal to
         the lesser of (x) twelve (12) months salary or (y) the salary for the
         remaining number of months in the Extended Term,

(minus, in each such case, applicable withholdings), paid in accordance with
the normal payroll schedule of the Company, a pro rata portion of any annual
bonus for which goals have been proportionately met, and continuation of the
benefits set forth in Sections 4(c), 4(d), 4(e), 4(f), 4(g), 4(h), and 4(j) for
ninety (90) days following termination. If any such payment is not delivered,
mailed by first class mail or sent by commercial courier service to Executive
at the most recent address provided by Executive within fifteen (15) business
days after being due, the entire balance shall, at the option of the Executive,
immediately be due and payable.

                  d.       If the Executive's employment is terminated by
Executive or by KRUG for any reason other than for Cause (exclusive of Cause
referred to in clause (iii) of Section 22(d)) within one (1) year after a
Change in Control, Executive shall, in lieu of any payment under Sections 5(b)
or 5(c), (i) receive severance payments equal to twenty-four (24) months base
salary (minus applicable withholdings), paid in accordance with the normal
payroll schedule of the company, (ii) receive Accrued Compensation, including
without limitation, a pro rata portion of any annual bonus for which goals have
been proportionately met, (iii) receive the balance of any other benefits set
forth in sections 4(c), 4(d), 4(e), 4(f), 4(g), 4(h) and 4(j) for twelve (12)
months following termination, and (iv) Executive's unvested stock options shall
vest, and shall be exercisable pursuant to the terms of the applicable stock
option plan and agreement. If any such payment is not delivered, mailed by
first class mail or sent by commercial courier service to Executive at the most
recent address provided by Executive within fifteen (15) business days after
being due, the entire balance shall, at the option of Executive, immediately be
due and payable.

                  e.       The severance pay and benefits provided for in this
Section 5 shall be in lieu of any other severance or termination pay to which
the Executive may otherwise be entitled under any Company severance or
termination plan, program, practice or arrangement, but shall not be in lieu of
any additional benefits to which Executive may be entitled under the
Consolidated

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Omnibus Budget Reconciliation Act ("COBRA"). The Executive's entitlement to any
other compensation or benefits shall be determined in accordance with KRUG's
employee benefit plans and other applicable programs, policies and practices
then in effect.

                  f.  Clause (ii) of Section 5(a) shall not be effective or
invoked by KRUG upon any Change in Control or within one (1) year thereafter.

                  g.  Any notice by the Company to Executive or by Executive to
the Company of non-renewal given as contemplated by Section 2 shall not be
deemed to be a termination of Executive's employment for the purposes of Section
5(b) or (c).

         6.  Indemnification. KRUG and SunLink agree to indemnify, save and hold
Executive harmless from all losses, expenses, damages, liabilities, obligations,
claims and costs of any kind (including reasonable attorneys' fees and other
legal costs and expenses) that Executive may at any time suffer or incur by
reason of any claims, actions or suits brought or threatened to be brought
against Executive by any person or entity, as a result of or in connection with
Executive's service as an officer, employee or director of KRUG or SunLink or as
an employee, officer or director of any of their Subsidiaries, or any entity
that in the future becomes a Subsidiary or affiliate of KRUG or SunLink, except
that no indemnification shall be made if it is proved by clear and convincing
evidence in a court of competent jurisdiction that Executive's action or failure
to act involved an act or omission undertaken with deliberate intent to cause
injury to KRUG or SunLink or was undertaken with reckless disregard for the best
interest of KRUG or SunLink. The provisions of this Section 6 shall survive
termination of this Agreement.

         7.  Trade Secrets. The Executive shall not, at any time, either during
the term of his employment or after the Termination Date, use or disclose any
Trade Secrets of KRUG or SunLink, as defined herein, except in fulfillment of
his duties as the Executive during his employment, for so long as the pertinent
information or data remain Trade Secrets, whether or not the Trade Secrets are
in written or tangible form.

         8.  Protection of Other Confidential Information. Executive recognizes
the interest of KRUG, SunLink or their subsidiaries in maintaining the
confidential nature of their proprietary and other business and commercial
information. In connection therewith, Executive covenants that during the term
of Executive's employment under this Agreement, and for a period of eighteen
(18) months thereafter, Executive will not, directly or indirectly, except as
necessary to perform Executive's duties for KRUG or SunLink, publish, disclose
or use any Confidential Information of KRUG or SunLink. "Confidential
Information" shall mean any internal, non-public information (other than Trade
Secrets already addressed above) concerning KRUG's or SunLink's financial
position and results of operations (including revenues, assets, net income,
etc.); pricing structure; annual and long-range business plans; product or
service plans; marketing plans and methods; training, educational and
administrative manuals; customer and supplier information and purchase
histories; and employee lists. The provisions of Sections 7 and 8 shall be
sufficient to protect Trade Secrets and Confidential Information of third
parties provided to KRUG or SunLink under an obligation of secrecy.

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         9.       Return of Materials.  Executive shall surrender to KRUG or
SunLink, promptly upon request and in any event upon termination of Executive's
employment with KRUG or SunLink, all media, documents, notebooks, computer
programs, handbooks, data files, models, samples, price lists, drawings,
customer lists, prospect data, or other material of any nature whatsoever (in
tangible or electronic form) in Executive's possession or control, including all
copies thereof, relating to KRUG and SunLink, their business, or their
customers. Upon the request of KRUG or SunLink, Executive shall certify in
writing compliance with the foregoing requirement.

         10.      Non-Solicitation of Customers.  During the term of this
Agreement and for a period of eighteen (18) months after termination of
Executive's employment with KRUG or SunLink for any reason, Executive shall not
directly or indirectly, through one or more intermediaries or otherwise, solicit
or attempt to solicit any Customers to induce or encourage them to acquire or
obtain from any individual or entity other than KRUG or SunLink, any product or
service competitive with or substitute for any Company Product. For purposes of
this Section, a "Customer" refers to any person or group of persons with whom
Executive had direct material contact with regard to the selling, delivery or
support of Company Products, including servicing such person's or group's
account, during the period of twelve (12) months preceding termination of
Executive's employment; and "Company Products" refers to the products and
services that KRUG or SunLink offered or sold within six (6) months of the date
of termination of Executive's employment.

         11.      Non-Solicitation of Executives.  During the term of this
Agreement and for a period of eighteen (18) months after termination of
employment with KRUG or SunLink for any reason, Executive shall not, alone or
in concert with others, solicit or induce any other KRUG or SunLink employee to
leave the employ of KRUG or SunLink or recruit or attempt to recruit such
person to accept employment with another business. Provided, however, that this
restriction shall only apply to employees with whom Executive had direct
material contact during the period of twelve (12) months preceding the
termination of Executive's employment.

         12.      No Denigration.  Executive will not at any time denigrate,
ridicule or intentionally criticize the Company or any of its Subsidiaries or
affiliates or any of their respective services, products, properties, employees,
officers or directors, including without limitation, by way of news interviews,
or the expression of personal views, opinions or judgments to the news media.

         13.      Successors; Binding Agreement.

                  a.       This Agreement shall be binding upon and shall inure
to the benefit of KRUG and SunLink, their Successors and Assigns and KRUG and
SunLink shall require any Successors and Assigns to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that KRUG
or SunLink would be required to perform it if no such succession or assignment
had taken place.

                  b.       Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.

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         14.      Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other; provided, however, that all notices to KRUG or SunLink shall be
directed to the attention of the Board with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been received
on the date of delivery thereof.

         15.      Modification and Waiver. No provisions of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and KRUG. No waiver by any
party hereto at any time of any breach by the other party hereto of, or failure
of 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.

         16.      Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
without giving effect to the conflict of laws principles thereof.

         17.      Arbitration. Any controversy or claim against either party
arising from, out of or relating to this Agreement, the breach thereof (other
than controversies or claims arising from, out of or relating to the provisions
in Sections 7, 8, 9, 10, 11 and 12 above, which may be litigated in a court of
competent jurisdiction), or the employment or termination thereof of Executive
by KRUG or SunLink which would give rise to a claim under federal, state or
local law (including but not limited to claims based in tort or contract,
claims for discrimination under state or federal law, and/or claims for
violation of any federal, state or local law, statute or regulation) ("Claims")
shall be submitted to an impartial mediator ("Mediator") selected jointly by the
parties. Both parties shall attend a mediation conference and attempt to
resolve any and all Claims. If they are not able to resolve all Claims, any
unresolved Claims, including any dispute as to whether a matter constitutes a
Claim which must be submitted to arbitration, shall be determined by final and
binding arbitration in Atlanta, Georgia in accordance with the Model Employment
Dispute Resolution Rules ("Rules") of the American Arbitration Association, by
an experienced employment arbitrator licensed to practice law in the State of
Georgia in accordance with the Rules. The arbitrator shall be selected by
alternate striking from a list of six arbitrators, half of which shall be
supplied by KRUG or SunLink and half by Executive. The party not initiating the
arbitration shall strike first. The process shall be repeated twice until an
arbitrator is selected. If an arbitrator is still not selected, the Mediator
shall provide a list of three names which will be alternately struck, with the
party initiating the arbitration striking first, until a selection is made.

         A demand for arbitration shall be made within a reasonable time after
the Claim has arisen. In no event shall the demand for arbitration be made
after the date when institution of legal and/or equitable proceedings based on
such Claim would be barred by the applicable statute of limitations. Each party
to the arbitration will be entitled to be represented by counsel and will have
the opportunity to take one deposition of an opposing party or witness before
the arbitration hearing. By mutual agreement of the parties, additional
depositions may be taken. The arbitrator shall have

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the authority to hear and grant a motion to dismiss and/or for summary
judgment, applying the standards governing such motions under the Federal
Rules of Civil Procedure. Each party shall have the right to subpoena witnesses
and documents for the arbitration hearing. A court reporter shall record all
arbitration proceedings.

         With respect to any Claim brought to arbitration hereunder, either
party may be entitled to recover whatever damages would otherwise be available
to that party in any legal proceeding based upon the federal and/or state law
applicable to the matter and as specified by Section 16. The decision of the
arbitrator may be entered and enforced in any court of competent jurisdiction by
either KRUG or SunLink or Executive. Each party shall pay the fees of their
respective attorneys, the expenses of their witnesses and any other expenses
connected with presenting their Claim or defense (except as otherwise awarded by
the arbitrator). Except as otherwise awarded by the arbitrator, other costs of
the arbitration, including the fees of the Mediator, the arbitrator, the cost of
any record or transcript of the arbitration, administrative fees, and other fees
and costs, shall be borne by KRUG or SunLink. Should Executive or KRUG or
SunLink pursue any dispute or matter covered by this Section by any method other
than said arbitration, the responding party shall be entitled to recover from
the other party all damages, costs, expenses, and attorneys' fees incurred as a
result of such action. The provisions contained in this Section 17 shall survive
the termination and/or expiration of this Agreement.

         The parties indicate their acceptance of the foregoing arbitration
requirement by initialing below:

    /s/ James J. Mulligan   /s/ Maria E. Robinson   /s/ Robert M. Thornton, JR.
    ---------------------   ---------------------   ---------------------------
    For KRUG                For SunLink             Executive

         18.      Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.

         19.      Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof. Except as modified herein,
any existing stock option agreement between Executive and KRUG shall remain in
full force and effect.

         20.      Headings. The headings of Sections herein are included solely
for convenience of reference shall not control the meaning or interpretation of
any of the provisions of this Agreement.

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

         22.      Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:

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                  a.       "Accrued Compensation" shall mean an amount which
shall include all amounts earned or accrued through the Termination Date but not
paid as of the Termination Date including (i) base salary, (ii) reimbursement
for reasonable and necessary expenses incurred by the Executive on behalf of
KRUG or SunLink during the period ending on the Termination Date, and (iii)
bonuses and incentive compensation.

                  b.       "Act" shall mean the Securities Act of 1933, as
amended.

                  c.       "Base Amount" shall mean the greater of the
Executive's annual base salary (i) at the rate in effect on the Termination
Date or (ii) at the highest rate in effect at any time during the twelve (12)
month period prior to the Change in Control, and shall include all amounts of
his base salary that are deferred under the qualified and non-qualified
employee benefit plans of KRUG or any other agreement or arrangement.

                  d.       The termination of the Executive's employment shall
be for "Cause" if it is a result of:

                           (i)      any act that (A) constitutes, on the part of
         the Executive, fraud, dishonesty, malfeasance of duty, or conduct
         inappropriate to the Executive's office, and (B) is demonstrably likely
         to lead to material injury to KRUG or SunLink or resulted or was
         intended to result in direct or indirect gain to or personal enrichment
         of the Executive; or

                           (ii)     the conviction of the Executive of a felony;
         or

                           (iii)    Executive's failure to perform his job
         duties to the satisfaction of the Board of Directors of KRUG, as
         determined by a two thirds majority vote;

provided, however, that in the case of clause (i) above, such conduct shall not
constitute Cause:

                  (x)      unless (A) there shall have been delivered to the
         Executive a written notice setting forth with specificity the reasons
         that the Board of Directors believes the Executive's conduct
         constitutes the criteria set forth in the clause (i), (B) the Executive
         shall have been provided the opportunity to be heard in person by the
         Board of Directors (with the assistance of the Executive's counsel if
         the Executive so desires); or

                  (y)      if such conduct (A) was believed by the Executive in
         good faith to have been in or not opposed to the interests of KRUG and
         SunLink, and (B) was not intended to and did not result in the direct
         or indirect gain to or personal enrichment of the Executive.

Provided further, in order for KRUG to terminate Executive's employment
pursuant to clause (iii) above, KRUG must first give Executive written notice
of such Cause and ninety (90) days to cure such Cause.

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                  e.       "Change in Control" shall mean the occurrence during
the Fixed Term or any Extended Term of any of the following events:

                 (iv)     An acquisition (other than directly from KRUG or
         SunLink) of any voting securities of that company (the "Voting
         Securities") by any "Person" (as the term person is used for purposes
         of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the
         "1934 Act")) immediately after which such Person has "Beneficial
         Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934
         Act) of 40% or more of the combined voting power of the Company's then
         outstanding Voting Securities; provided, however, that in determining
         whether a Change in Control has occurred, Voting Securities which are
         acquired in a "Non-Control Acquisition" (as hereinafter defined) shall
         not constitute an acquisition which would cause a Change in Control. A
         "Non-Control Acquisition" shall mean an acquisition by (1) an employee
         benefit plan (or a trust forming a part thereof) maintained by (x) the
         Company or (y) any corporation or other Person of which a majority of
         its voting power or its equity securities or equity interest is owned
         directly or indirectly by the Company (a "Subsidiary"), (2) the company
         or any Subsidiary, or (3) any Person in connection with a "Non-Control
         Transaction" (as hereinafter defined).

                           (v)      The individuals who, as of the date of this
         Agreement, are members of the Board of KRUG or SunLink (the "Incumbent
         Board") cease for any reason to constitute at least two-thirds of the
         Board; provided, however, that if the election, or nomination for
         election by that company's stockholders, of any new director was
         approved by a vote of at least two-thirds of the Incumbent Board, such
         new director shall, for purposes of this Agreement, be considered as a
         member of the Incumbent Board; provided, further, however, that no
         individual shall be considered a member of the Incumbent Board if such
         individual initially assumed office as a result of either an actual or
         threatened "Election Contest" (as described in Rule 14a-11 promulgated
         under the 1934 Act) or other actual or threatened solicitation of
         proxies or consents by or on behalf of a Person other than the Board (a
         "Proxy Contest") including by reason of any agreement intended to avoid
         or settle any Election Contest or Proxy Contest; or

                           (vi)     Approval by stockholders of KRUG or SunLink
                                    of:

                                    (A)      (1)      A merger, consolidation or
                                             reorganization involving the
                                             Company, unless

                                    (X)      the stockholders of the Company,
                                             immediately before such merger,
                                             consolidation or reorganization,
                                             own, directly or indirectly,
                                             immediately following such merger,
                                             consolidation or reorganization, at
                                             least two-thirds of the combined
                                             voting power of the outstanding
                                             voting securities of the
                                             corporation resulting from such
                                             merger or consolidation or
                                             reorganization (the "Surviving
                                             Corporation") in substantially the
                                             same proportion as their ownership

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                                             of the Voting Securities
                                             immediately before such merger,
                                             consolidation or reorganization,
                                             and

                                    (y)      the individuals who were members of
                                             the Incumbent Board immediately
                                             prior to the execution of the
                                             agreement providing for such
                                             merger, consolidation or
                                             reorganization constitute at least
                                             two-thirds of the members of the
                                             board of directors of the Surviving
                                             Corporation;

                                    (A transaction described in clauses (x) and
                                    (y) shall herein be referred to as a
                                    "Non-Control Transaction").

                           (vii)    Notwithstanding anything contained in this
         Agreement to the contrary, if the Executive's employment is terminated
         prior to a Change in Control and the Executive reasonably demonstrates
         that such termination (A) was at the request of a third party who has
         indicated an intention or taken steps reasonably calculated to effect a
         Change in Control and who effectuates a Change in Control (a "Third
         Party") or (B) otherwise occurred in connection with, or in
         anticipation of, a Change in Control which actually occurs, then for
         all purposes of this Agreement, the date of a Change in Control with
         respect to the Executive shall mean the date immediately prior to the
         date of such termination of the Executive's employment.

                  f.  "Disability" shall mean, subject to applicable state and
federal laws, a physical or mental infirmity which impairs the Executive's
ability to substantially perform his duties with KRUG for a period of four (4)
consecutive months, as determined by an independent physician selected with the
approval of both KRUG and the Executive.

                  g.  "Notice of Termination" shall mean a written notice of
termination from KRUG or the Executive which specifies an effective date of
termination, indicates the specific termination provision in this Agreement
relied upon, and sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated.

                  h.  "Successors and Assigns" shall mean a corporation or other
entity acquiring all or substantially all the assets and business of KRUG or
SunLink (including this Agreement), whether by operation of law or otherwise.

                  i.  "Termination Date" shall mean, in the case of the
Executive's death, his date of death, and in all other cases, the date specified
in the Notice of Termination.

                  j.  "Trade Secrets" shall mean any information, including but
not limited to technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, information on customers, or a
list of actual or potential customers or suppliers, which: (i) derives economic

                                       11

<PAGE>   12
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.

         IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals the 30th day of April, 2001 effective as of January 1, 2001.

                                        KRUG INTERNATIONAL CORP.

                                        By: /s/ JAMES J. MULLIGAN
                                           ------------------------------
                                             James J. Mulligan
                                             Secretary

                                        SUNLINK HEALTHCARE CORP.

                                        By: /s/ MARIA E. ROBINSON
                                           ------------------------------
                                             Maria E. Robinson
                                             Secretary

                                        ROBERT M. THORNTON, JR.

                                        /s/ ROBERT M. THORNTON, JR.
                                        ---------------------------------
                                        Executive

                                       12Exhibit (4)(b)

                          OPERATING EXPENSES AGREEMENT

     THIS OPERATING  EXPENSES AGREEMENT (the "Agreement") is effective as of the
1st day of April,  1999, by and between  RAINIER  INVESTMENT  MANAGEMENT  MUTUAL
FUNDS, a Delaware business trust (hereinafter called the "Trust"),  on behalf of
each  series of the Trust  listed in Appendix A hereto,  as may be amended  from
time to time (hereinafter  referred to individually as a "Fund" and collectively
as  the  "Funds"),  and  RAINIER  INVESTMENT  MANAGEMENT,  INC.,  a  corporation
organized and existing  under the laws of the State of  Washington  (hereinafter
called the "Advisor").

                                   WITNESSETH:

     WHEREAS,  the Advisor  renders advice and services to the Funds pursuant to
the terms and  provisions  of a Management  Agreement  between the Trust and the
Advisor dated May 6, 1994 (the "Management Agreement"); and

     WHEREAS,  the Funds are  responsible  for, and have assumed the  obligation
for,  payment  of  certain  expenses  pursuant  to  Section 4 of the  Management
Agreement that have not been assumed by the Advisor, and

     WHEREAS,  the  Advisor  desires  to limit the Funds'  respective  Operating
Expenses (as that term is defined in Paragraph 2 of this Agreement)  pursuant to
the terms and  provisions  of this  Agreement,  and the Trust (on  behalf of the
Funds) desires to allow the Advisor to implement those limits;

     NOW,  THEREFORE,  in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
<PAGE>
     1. LIMIT ON OPERATING  EXPENSES.  The Advisor  hereby  agrees to limit each
Fund's  Operating  Expenses to the  respective  annual  rate of total  Operating
Expenses specified for that Fund in APPENDIX A of this Agreement.

     2.  DEFINITION.  For  purposes  of  this  Agreement,  the  term  "Operating
Expenses" with respect to a Fund is defined to include all expenses necessary or
appropriate  for the operation of the Fund  including  the Advisor's  investment
advisory or management fee under Section 5(a) of the Management  Agreement,  and
other expenses described in Section 4 of the Management Agreement, including any
Rule 12b-1 fees, but not including any front-end or contingent  deferred  loads,
taxes, interest, brokerage commissions, expenses incurred in connection with any
merger or reorganization or extraordinary expenses such as litigation.

     3. REIMBURSEMENT OF FEES AND EXPENSES.  The Advisor,  under Section 5(b) of
the  Management  Agreement,  retains  its  right  to  receive  reimbursement  of
reductions of its investment  management  fee and Operating  Expenses paid by it
that are not its responsibility under Section 4 of the Management Agreement.

     4. TERM. This Agreement shall become effective on the date specified herein
and  shall  remain  in  effect  for a  period  of one (1)  year,  unless  sooner
terminated as provided in Paragraph 5 of this  Agreement.  This Agreement  shall
continue in effect thereafter for additional  periods not exceeding one (1) year
so long as such  continuation is approved for each Fund at least annually by the
Board of Trustees of the Trust (and separately by the disinterested  Trustees of
the Trust).

     5. TERMINATION.  This Agreement may be terminated by the Trust on behalf of
any one or more of the Funds at any time  without  payment of any  penalty or by
the Board of Trustees of the Trust,  upon sixty (60) days' written notice to the
Advisor.  The Advisor may decline to renew this  Agreement by written  notice to
the Trust at least thirty (30) days before its annual expiration date.

                                        2
<PAGE>
     6. ASSIGNMENT.  This Agreement and all rights and obligations hereunder may
not be assigned without the written consent of the other party.

     7.  SEVERABILITY.  If any provision of this Agreement shall be held or made
invalid by a court  decision,  statute or rule,  or shall be otherwise  rendered
invalid, the remainder of this Agreement shall not be affected thereby.

     8. CAPTIONS. The captions in this Agreement are included for convenience of
reference  only and in no way  define or limit any of the  provisions  hereof or
otherwise affect their construction of effect.

     9.  GOVERNING  LAW. This  Agreement  shall be governed by, and construed in
accordance  with,  the laws of the State of Washington  without giving effect to
the conflict of laws principles  thereof;  provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule,  including  the  Investment  Company  Act of  1940,  as  amended  and  the
Investment  Advisers  Act of 1940,  as  amended  and any rules  and  regulations
promulgated thereunder.

     IN WITNESS  WHEREOF,  the  parties  hereto have caused this went to be duly
executed and attested by their duly authorized officers, all on the day and year
first above written.

RAINIER INVESTMENT MANAGEMENT           RAINIER INVESTMENT MANAGEMENT, INC.
MUTUAL FUNDS

By: /s/ J. Glenn Haber                  By: /s/ J. Glenn Haber
    ------------------------------          ------------------------------
    Title: Chairman                         Title: Principal

                                        3
<PAGE>
                                   APPENDIX A

                                                  Operating
Fund                                            Expense Limit     Effective Date
----                                            -------------     --------------
Rainier Small/Mid Cap Equity Portfolio              1.48%          April 1, 1999
Rainier Core Equity Portfolio                       1.29%          April 1, 1999
Rainier Balanced Portfolio                          1.19%          April 1, 1999
Rainier Intermediate Fixed Income Portfolio         0.55%          April 1, 1999
Rainier Growth Equity Portfolio                     1.19%          June 15, 2000

RAINIER INVESTMENT MANAGEMENT           RAINIER INVESTMENT MANAGEMENT, INC.
MUTUAL FUNDS

By: /s/ J. Glenn Haber                  By: /s/ J. Glenn Haber
    ------------------------------          ------------------------------
    Title: Chairman                         Title: Principal

                                        4

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