Norman L. and Catherine J. Forste - Page 4

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          agreement dated May 30, 1982.3  The director agreement was Mr.              
          Forste’s employment contract, and it provided for a term of                 
          employment that “shall extend from May 30, 1982 until the                   
          retirement or death of Director or the termination of such                  
          employment, in each case pursuant to the provisions of Section              
          4”.  Under section 4, four types of retirement were available to            
          DHS’s directors:  (1) Mandatory retirement (age 62 with 15 years            
          of service); (2) regular retirement (age 60 with 15 years of                
          service); (3) early retirement (age 55 with 15 years of service);           
          and (4) disability retirement (any age if the disability                    
          interfered with job performance).  In addition, the agreement               
          provided that directors could retire and the policy committee of            
          DHS could require a director to retire at any time, and the                 
          director would receive retirement income in an amount and under             
          such conditions as might be established by the policy committee             
          in its discretion; and further, the policy committee could                  
          require a director to terminate employment, and the director                
          could elect to terminate employment, at any time, and the                   
          director would have no right to retirement income except in the             
          discretion of the policy committee.                                         
               DHS was aware of Mr. Forste’s fear of flying when it hired             
          him and insisted that it could work around this problem.  DHS               


               3This agreement was in effect during the relevant times in             
          this case; i.e., during 1985.                                               





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