Document:

Exhibit
10.1

 

BANK
OF HAWAII CORPORATION

 

CHANGE-IN-CONTROL
RETENTION PLAN

 

Amended
and Restated Effective December 17, 2009

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Article 1.

  	
  Establishment and Purpose

  	
  1

  
	
   

  	
   

  	
   

  
	
  Article 2.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  Article 3.

  	
  Participation

  	
  5

  
	
   

  	
   

  	
   

  
	
  Article 4.

  	
  Benefits

  	
  6

  
	
   

  	
   

  	
   

  
	
  Article 5.

  	
  Termination for Cause

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 6.

  	
  Other Benefits

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 7.

  	
  Benefits in the Event of Death

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 8.

  	
  Legal Fees

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 9.

  	
  Tax Withholding

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 10.

  	
  Restrictive Covenants

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 11.

  	
  Administration

  	
  9

  
	
   

  	
   

  	
   

  
	
  Article 12.

  	
  Claims Procedures

  	
  10

  
	
   

  	
   

  	
   

  
	
  Article 13.

  	
  Amendment or Termination

  	
  11

  
	
   

  	
   

  	
   

  
	
  Article 14.

  	
  Successors

  	
  11

  
	
   

  	
   

  	
   

  
	
  Article 15.

  	
  Third Party Beneficiaries

  	
  11

  
	
   

  	
   

  	
   

  
	
  Article 16.

  	
  Indemnification

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 17.

  	
  Incapacity

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 18.

  	
  Funding

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 19.

  	
  FDIC Limitations

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 20.

  	
  Nonassignment

  	
  13

  
	
   

  	
   

  	
   

  
	
  Article 21.

  	
  Enforceability and Controlling Law

  	
  13

  
	
   

  	
   

  	
   

  
	
  APPENDIX A

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX B

  	
   

  	
   

  

 

i

 

BANK OF
HAWAII CORPORATION

CHANGE-IN-CONTROL
RETENTION PLAN

 

Article 1.                                            Establishment,
Restatement and Purpose.

 

1.1                               Establishment
and Restatement of Plan.  Effective as of
the date of adoption by the Human Resources and Compensation Committee of its
Board of Directors, Bank of Hawaii Corporation, a Delaware corporation, (the “Company”)
hereby amends and restates this retention compensation plan known as the Bank
of Hawaii Corporation Change-in-Control Retention Plan (the “Plan”), as
originally adopted October 19, 2007. 
This Plan originally superseded and replaced the Bank of Hawaii
Corporation Key Executive Severance Plan, effective as of April 27, 1983,
(the “Prior Plan”).  Under the Prior
Plan, the Company entered into Key Executive Change-in-Control Severance
Agreements and Executive Change-in-Control Severance Agreements (collectively, “Prior
Agreements”) with certain executive officers of the Company and its
subsidiaries.  An executive covered by a
Prior Agreement shall have no rights under the Prior Plan and Prior Agreement
as of the date the executive agrees in writing to be covered by this Plan.

 

1.2                               Purpose
of Plan.  The purpose of the Plan is to
advance the interests of the Company and its shareholders by ensuring that the
Company will have the continued employment, dedication, and focused attention
of its executive officers notwithstanding the possibility, threat, or
occurrence of a Change in Control of the Company.  The Plan is intended to provide the Company’s
executives with a level of economic security in the event of a Change in
Control that protects the compensation and benefit expectations of the
executives and is competitive with other organizations.

 

Article 2.                                            Definitions

 

Whenever used in the Plan,
the following terms shall have the meanings set forth below unless a different
meaning is clearly required by the context.

 

2.1                               “Base
Salary” means the Participant’s annual gross base salary from the Company or a
Subsidiary for the applicable Fiscal Year before any deductions, exclusions,
deferrals, or contributions on a tax-qualified or non-tax-qualified basis under
any plan or program of the Company or a Subsidiary, and excluding bonuses,
incentive compensation, special fees or awards, commissions, allowances, any
form of premium pay, and amounts designated by the Company or a Subsidiary as
payment toward or reimbursement of expenses. 
If a Participant is employed for less than a complete Fiscal Year, Base
Salary for the Fiscal Year shall be the annualized gross base salary (subject
to the adjustments described in the preceding sentence) based on the
Participant’s highest base salary rate during such Fiscal Year.  Base Salary shall be determined under this Section 2.1
in accordance with the personnel records and established practices and
procedures of the Company.

 

2.2                               “Beneficial
Owner” or “Beneficial Ownership” has the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.

 

 

2.3                               “Board” means the
Board of Directors of the Company.

 

2.4                               “Cause” means the
occurrence of any one or more of the following:

 

(a)                                  The Participant’s
willful failure to perform his or her duties for the Company (other than any
such failure resulting from the Participant’s Disability), after written demand
for substantial performance has been delivered to the Participant by the
Committee that specifically identifies how the Participant has not
substantially performed his or her duties, and the Participant fails to remedy
the situation within fifteen (15) business days of such written demand from the
Committee;

 

(b)                                 Gross
negligence in the performance of the Participant’s duties;

 

(c)                                  The Participant’s
conviction of, or plea of nolo contendere, to any felony whatsoever or any
other crime involving the personal enrichment of the Participant at the expense
of the Company;

 

(d)                                 The Participant’s
willful engagement in conduct that is demonstrably and materially injurious to
the Company, monetarily or otherwise;

 

(e)                                  A material
violation of any federal or state banking law or regulation;

 

(f)                                    A material
violation of any provision of the Company’s Code of Business Conduct and Ethics
(including any successor thereto) or any other Company-established code of
conduct to which the Participant is subject; or

 

(g)                                 Willful
violation of any of the covenants contained in Article 10, as applicable.

 

2.5                               “Change
in Control” means the first to occur of the following events:

 

(a)                                  The acquisition
by any individual, entity, or group (other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company)
of Beneficial Ownership of twenty-five percent (25%) or more of the combined
voting power of the Company’s then outstanding securities entitled to vote for
the election of the directors of the Company;

 

(b)                                 The
consummation of a reorganization, merger, or consolidation of the Company or
sale or other disposition of all or substantially all of the assets of the
Company, excluding, however, a corporate transaction pursuant to which all or
substantially all of the individuals or entities who are the Beneficial Owners
of the Company immediately prior to the corporate transaction will beneficially
own, directly or indirectly, more than sixty percent (60%) of the outstanding
shares of common stock of the resulting entity and of the combined voting power
of the outstanding securities entitled to vote for the election of directors of
such entity; or

 

2

 

(c)                                  Individuals
who, as of April 30, 2004, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of such Board, provided
that any individual who becomes a director of the Company subsequent to April 30,
2004, whose election or nomination for election by the Company’s shareholders
was approved by the vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed a member of the Incumbent Board,
and provided further that any individual who was initially elected as a
director of the Company as a result of an actual or threatened election contest
or any other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall not be deemed a member of the
Incumbent Board.

 

2.6                               “Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor
thereto.

 

2.7                               “Committee” means the
Human Resources and Compensation Committee of the Board or any other committee
appointed by the Board to be responsible for the administration of the Plan.

 

2.8                               “Company” means Bank of
Hawaii Corporation, a Delaware corporation, or any successor thereto that is
subject to the Plan as provided in Article 14.

 

2.9                               “Confidential
Information” means any information with respect to the conduct
or details of the business of the Company and its Subsidiaries, including,
without limitation, information relating to its commercial and retail banking
services, mortgage banking services, commercial and consumer loans, merchant
credit card services, investments and capital market transactions and
strategies, methods of operation, customer and borrower lists, customer account
information, deposits, outstanding loans, products (existing and proposed),
prices, fees, costs, plans, technology, inventions, trade secrets, know-how,
software, marketing methods, policies, personnel, suppliers, competitors,
markets, or other specialized information or proprietary matters of the Company
and its Subsidiaries.

 

2.10                        “Date
of Termination” means the date of a Qualifying Termination.

 

2.11                        “Disability” or “Disabled” means the Participant (a) is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than
twelve (12) months, or (b) is, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than twelve (12)
months, receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering employees of
the Company. In addition to the foregoing, a Participant shall be deemed
Disabled as of the date the Social Security Administration determines the
Participant to be totally disabled.

 

2.12                        “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time,
or any successor act thereto.

 

3

 

2.13                        “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any successor act thereto.

 

2.14                        “Excise
Tax” means an excise tax imposed by Code section 4999 (or any successor
provision thereto) together with any similar tax imposed by state or local law,
including any interest or penalties.

 

2.15                        “Fiscal
Year” means the calendar year.

 

2.16                        “Good
Reason” means the occurrence of one or more of the following after a Change in
Control without the Participant’s express written consent:

 

(a)                                  A material
diminution in the Participant’s Base Salary;

 

(b)                                 A material
diminution in the Participant’s authority, duties, or responsibilities;

 

(c)                                  A material
diminution in the authority, duties, or responsibilities of the supervisor to
whom the Participant is required to report, including, to the extent
applicable, a requirement that the Participant report to a corporate officer or
employee instead of reporting directly to the Board;

 

(d)                                 A material
diminution in the budget over which the Participant retains authority;

 

(e)                                  A material
change in the geographic location at which the Participant must perform his or
her services (which for this purpose means the Participant is required to
relocate to a different Hawaiian Island or a place that is more than 50 miles
from where the Participant was based immediately prior to the Change in
Control);

 

(f)                                    Any other
action or inaction that constitutes a material breach by the Company of this
Plan or a written employment agreement with the Participant (or other agreement
as to the terms of employment between the Company and the Participant).

 

A Participant must give the
Company written notice that a “Good Reason” event has occurred within ninety
(90) days of its occurrence.  The notice
must provide a reasonably detailed description of the facts that constitute a “Good
Reason” event. The Company shall have thirty (30) business days to remedy the “Good
Reason” event.

 

2.17                        “Participant” means an
executive officer of the Company or a Subsidiary who has been approved as a
Participant by the Committee in accordance with Article 3.

 

2.18                        “Person” has the
meaning ascribed to such term in Section 3(a)(9) of the Exchange Act
and used in Sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) thereof.

 

4

 

2.19                        “Plan” means the Bank
of Hawaii Corporation Change-in-Control Retention Plan as set forth herein and
amended from time to time.

 

2.20                        “Qualifying
Termination” means within twenty-four (24) months following a
Change in Control, (a) the Participant’s employment is involuntarily
terminated by the Company and its Subsidiaries without Cause, or (b) the
Participant terminates employment from the Company and its Subsidiaries for
Good Reason.  The twenty-four month
period will be extended by one (1) additional month if the thirty-day cure
period in Section 2.16 is triggered in the twenty-third or twenty-fourth
month following a Change in Control.  It
is intended that any Qualifying Termination shall be an “involuntary Separation
from Service,” as defined in Treasury Regulation Section 1.409A-1(n).

 

2.21                        “Separation
from Service” or “Separates from Service”
has the meaning ascribed to such term in Treasury Regulation Section 1.409A-l(h) and
generally means termination of employment from the Company and its
Subsidiaries.

 

2.22                        “Specified
Employee” means an individual who, as of the date of his or
her Separation from Service, meets the requirements to be a “key employee” as
defined in Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied
in accordance with the regulations thereunder and without regard to Section 416(i)(5))
at any time during the 12-month period ending on the Specified Employee
Identification Date.  For purposes of
this determination, the Specified Employee Identification Date is each December 31
and the Specified Employee Effective Date is the April 1 following such
Identification Date.  If the individual
is a key employee as of a Specified Employee Identification Date, the
individual is treated as a “key employee” for purposes of this section for the
entire 12-month period beginning on the Specified Employee Effective Date.  The terms “Identification Date” and “Effective
Date” for purposes of this paragraph have the meanings specified in Treasury
Regulation 1.409A-1(i)(3) and (4).

 

2.23                        “Subsidiary” means any
corporation, partnership, joint venture, limited liability company, or other
entity (other than the Company) in an unbroken chain of entities beginning with
the Company if each of the entities other than the last entity in the unbroken
chain owns directly or indirectly at least 50% of the total combined voting
power of another corporation or other entity in such chain.

 

Article 3.                                            Participation

 

3.1                               Participation
Agreement.  An
executive officer of the Company or a Subsidiary shall become eligible to
participate in the Plan upon the Committee’s designation of the executive
officer as a Participant.  The
Participant’s “Effective Date of Participation” shall be the date the
Participant acknowledges in writing his or her participation in this amended
and restated Plan.

 

3.2                               End of
Participation.  Upon
Separation from Service prior to a Change in Control, a Participant shall cease
to be a Participant and shall no longer be eligible for benefits under this
Plan.  If a Participant enters into a
separation agreement or employment agreement with the Company that designates a
date prior to Separation from Service on which the 

 

5

 

Participant’s participation in this Plan shall cease, the separation
agreement or employment agreement shall control.  Subject to any applicable separation or
employment agreement, prior to a Participant’s Separation from Service, the
Committee may in good faith determine that a Participant has ceased to be in
the class of executives eligible for coverage under the Plan, in which case the
Committee may terminate the Participant’s participation in the Plan effective
upon written notification to the Participant of such determination.  However, notwithstanding the foregoing, a
Participant’s participation in the Plan may not be involuntarily terminated
(except by reason of a Separation from Service prior to a Change in Control or
because of a termination for Cause at any time) (a) after the Committee
has actual knowledge that a third party has taken steps reasonably calculated
to effect a Change in Control (including, but not limited to, the commencement
of a tender offer for the voting stock of the Company or the circulation of a
proxy to the Company’s shareholders) and until the Committee determines in good
faith that such third party has fully abandoned or terminated its efforts to
effect a Change in Control, or (b) within twenty-four (24) months after a
Change in Control.  With respect to (b),
the foregoing 24 month period shall be extended by one (1) additional
month if the thirty-day cure period in Section 2.16 is triggered in the
twenty-third or twenty-fourth month following a Change in Control.

 

Article 4.                                            Benefits

 

4.1                               Right
to Benefits.  Following a
Qualifying Termination, a Participant shall have the rights and be entitled to the
benefits described in Sections 4.2 through 4.5.

 

4.2                               Severance,
Welfare, and Outplacement Benefits and Noncompetition Payments.  A Participant serving in the position of
Executive Vice President or other executive position below the level of Vice
Chairman as of the Participant’s Effective Date of Participation shall be
entitled to the severance, welfare and outplacement benefits and noncompetition
payments described in Appendix A attached hereto and incorporated herein by
this reference.  A Participant serving in
the position of Vice Chairman or above as of the Participant’s Effective Date
of Participation shall be entitled to the severance, welfare, outplacement and
relocation benefits and noncompetition payments described in Appendix B
attached hereto and incorporated herein by this reference.

 

4.3                               EIP
Benefits.  Any
contingent award granted to a Participant prior to a Change in Control under
the Bank of Hawaii Corporation Executive Incentive Plan (the “EIP”), or any
successor or other incentive bonus plan, shall be governed by the provisions of
the EIP or other incentive bonus plan.

 

4.4                               Equity
Compensation.  Any awards
granted to a Participant prior to a Change in Control under the Bank of Hawaii
Corporation 2004 Stock and Incentive Compensation Plan (the “2004 Stock Plan”),
the Bancorp Hawaii, Inc. Stock Option Plan of 1994 (the “1994 Stock Option
Plan”) or any successor or other equity compensation plan, shall be governed by
the provisions of the 2004 Stock Plan, the 1994 Stock Option Plan or other equity
compensation plan, subject to reduction pursuant to Section 5.a of
Appendix A or Section 6.b of Appendix B, as applicable.

 

6

 

4.5          Other Incentive Compensation.  Any awards granted to a Participant prior to
a Change in Control under an incentive compensation plan of the Company or a
Subsidiary other than the EIP, the 2004 Stock Plan or the 1994 Stock Option
Plan shall be governed by the provisions of the applicable plan.

 

4.6          Company’s Covenant with Respect to Benefit Opportunities.  Following a Change in Control, the Company
agrees that it shall not materially reduce a Participant’s opportunities with
respect to incentive compensation, equity compensation, or employee benefits,
unless the reduction applies to executive officers of the Company generally.

 

Article 5.                                            Termination
for Cause

 

Nothing in this Plan shall
be construed to prevent the Company or its Subsidiaries from terminating a
Participant’s employment for any reason or for no reason.  However, if the Company or a Subsidiary
(including any successor to the Company or a Subsidiary) wishes to terminate a
Participant’s employment for Cause after a Change in Control, the Company (or
any successor to the Company) must give the Participant a written notice (“Notice
of Termination”) that identifies the specific clause in the definition of Cause
on which the termination is based and provides a reasonably detailed
description of the facts that permit termination under that clause.  If the Company (or any successor to the
Company) terminates a Participant’s employment without providing a Notice of
Termination, the termination shall be deemed to be a termination without
Cause.  If the Company or a Subsidiary
terminates a Participant for Cause, the Participant shall not be entitled to
the benefits described in Section 4.2. 
(The Participant’s rights to the benefits described in Sections 4.3,
4.4, and 4.5 depend on the terms of the applicable plans.)

 

Article 6.                                            Other
Benefits

 

Neither the provisions of
this Plan nor the benefits provided hereunder shall reduce any amounts
otherwise payable to the Participant under any other benefit, incentive,
retirement, or equity compensation plan, or any employment agreement, or other
plan or arrangement of the Company or its Subsidiaries.

 

Article 7.                                            Benefits
in the Event of Death

 

In the event of the death of
the Participant after becoming entitled to benefits under this Plan, any
benefits that would have been paid to the Participant shall be paid to the
Participant’s designated beneficiary(ies). 
The beneficiary(ies) of the Participant under the Bank of Hawaii
Retirement Savings Plan (or successor plan) shall be deemed to be the
Participant’s designated beneficiary(ies) under this Plan, unless a beneficiary
or beneficiaries are otherwise designated by the Participant in written form
delivered and acceptable to the Committee prior to the Participant’s
death.  A Participant may make or change
such designation at any time.  In the
event of the death of a Participant prior to becoming entitled to benefits
under this Plan, no benefits shall be paid to the Participant’s
beneficiary(ies), estate, or any other person on behalf of the Participant.

 

7

 

Article 8.                                            Legal
Fees

 

If a Participant takes
action to enforce the terms of the Plan against the Company and if such
enforcement action is successful with respect to one (1) or more material
points (whether by decision of a court or arbitrator or by settlement between
the Participant and the Company), the Company shall reimburse the Participant
for the reasonable legal fees and expenses incurred by the Participant in
connection with such action up to a maximum of $50,000.  The Company shall make the reimbursement as
soon as administratively practicable after the matter is finally resolved but
no later than the 15th day of the third month following the month in which the
matter is finally resolved (whether by non-appealable decision by a court or
arbitrator, by a legally binding settlement between the Participant and the
Company, or because the Company concedes that an amount is payable).  For purposes of this paragraph, a Participant
will be deemed to have succeeded with respect to a material point if the
Participant obtains a monetary award or settlement from the Company that is
more than de minimis.

 

Article 9.                                            Tax
Withholding

 

Notwithstanding anything
herein to the contrary, the payment of any amount under this Plan shall be
subject to such income tax, employment tax and other withholding as the Company
determines is required under applicable law.

 

Article 10.                                     Restrictive
Covenants

 

In consideration of the
benefits of participation in this Plan, the Participant agrees that, while the
Participant is employed by the Company or a Subsidiary and for twelve (12)
months following the Participant’s Date of Termination, the Participant shall
be bound by the following restrictions:

 

10.1        Nondisclosure.  Unless required or otherwise permitted by
law, the Participant shall not disclose to others or use for the benefit of any
person or entity other than the Company and its Subsidiaries any Confidential
Information or any summary or derivative of that information.

 

10.2        Noncompetition.  The Participant shall not, either directly or
indirectly, engage in or invest in, own, manage, operate, finance, control, be
employed by, work as a consultant or contractor for, or otherwise be associated
with any Financial Institution doing business in Hawaii; provided, however,
that the Participant may purchase or otherwise acquire up to one percent (1%)
of any class of securities of any such Financial Institution (but without
otherwise participating in the activities of such enterprise) if such securities
are listed on any national or regional securities exchange or have been
registered under Section 12(g) of the Exchange Act.  The term “Financial Institution” means any
commercial bank, savings institution, securities brokerage, mortgage company, insurance
broker or other company or organization that competes in Hawaii with the
Company or any of its Subsidiaries.

 

10.3        Nonsolicitation of Business.  The Participant shall not solicit business of
the same or similar type being carried on by the Company or its Subsidiaries
from any company, 

 

8

 

person, or entity known by the Participant to be a customer of the
Company or its Subsidiaries, whether or not the Participant had personal
contact with such company, person or entity by reason of the Participant’s
employment with the Company or a Subsidiary.

 

10.4        Nonsolicitation of Employees.  The Participant shall not, whether for the
Participant’s own account or the account of any other person, solicit (other
than general, non-targeted solicitation), employ, or otherwise engage as an
employee, independent contractor, or otherwise, any person who is an employee
of the Company or its Subsidiaries or in any manner induce or attempt to induce
any employee of the Company or its Subsidiaries to terminate his or her
employment.

 

10.5        Nondisparagement.  The Participant shall not publicly denigrate
or in any manner undertake to publicly discredit the Company or its
Subsidiaries or any person or operation associated with the Company or its
Subsidiaries.

 

Article 11.                                     Administration

 

11.1        Administrative Authority.  The Committee shall have the responsibility
and authority to administer the Plan. 
The Committee shall administer the Plan in accordance with the Committee’s
charter and the governance rules and procedures applicable to the
Committee.  The Committee shall have
plenary authority, in its complete and sole discretion, to: (a) construe
and interpret the Plan and its terms and resolve any ambiguities herein; (b) determine
the amount and recipient of any payment hereunder; (c) prescribe, amend,
and rescind rules and regulations with respect to Plan administration or
interpretation; (d) make all other determinations and do all other things
necessary or appropriate for the administration of the Plan; and (e) have
all other powers granted to it in other sections of this Plan or as otherwise
necessary or appropriate to carry out its responsibilities hereunder.  The finding, decision, determination or
action of the Committee with respect to any question arising out of or in
connection with the administration, interpretation and application of the Plan
and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon any and all persons having any interest in the
Plan, subject only to the Plan’s claims rules. 
No findings, decisions or determinations of any kind made by the
Committee shall be disturbed by a court of law or otherwise unless there is a
judicial finding that the Committee has acted in an arbitrary and capricious
manner.

 

11.2        Code section 409A Compliance.  The Company intends the Plan to meet the
requirements of Code section 409A, the regulations promulgated thereunder and
any additional regulatory guidance provided thereunder by the Treasury
Department, and the Committee shall interpret and construe the terms of this
Plan in a manner consistent with such intent. 
Notwithstanding anything in the Plan to the contrary, any Plan provision
that does not meet the requirements of Code section 409A or applicable
regulatory guidance thereunder shall be reformed so as to satisfy such
requirements if such reformation may be accomplished without substantially
adversely affecting a Participant’s benefits, and if in the good faith
determination of the Committee such result cannot be achieved, shall be treated
as void.  Moreover, for purposes of
applying the provisions of Code section 409A to this Plan, each separately
identified amount to which a Participant is entitled under this Plan shall be
treated as a separate payment.  In
addition, to the extent permissible under Code section 409A, any series of
installment payments 

 

9

 

under this Plan shall be treated as a right to a series of separate
payments.  Finally, and notwithstanding
anything in the Plan to the contrary, any Plan provision that does not meet the
requirements of any future federal or state statute or applicable regulatory
guidance thereunder shall be reformed so as to satisfy such requirements if
such reformation may be accomplished without substantially adversely affecting
a Participant’s benefits, and if in the good faith determination of the
Committee such result cannot be achieved, shall be treated as void.

 

Article 12.                                     Claims
Procedures

 

Any individual (a “Claimant”)
who has not received benefits under the Plan that he or she believes should be
paid may make a claim for such benefits as follows:

 

12.1        Written Claim.  The Claimant shall initiate a claim by
submitting to the Company a written claim for the benefits.

 

12.2        Timing of Company Response.  The Committee shall respond to the Claimant
within ninety (90) days after receiving the claim.  If the Committee determines that special
circumstances require additional time for processing the claim, the Committee
may extend the response period by an additional ninety (90) days by notifying
the Claimant in writing, prior to the end of the initial 90-day period, that an
additional period is required.  The notice
of extension must set forth the special circumstances and the date by which the
Committee expects to render its decision.

 

12.3        Notice of Decision.  If the Committee denies part or all of the
claim, the Committee shall notify the Claimant in writing of such denial.  The Committee shall write the notification in
a manner calculated to be understood by the Claimant.  The notification shall set forth: (a) the
specific reasons for the denial; (b) a reference to the specific
provisions of the Plan on which the denial is based; (c) a description of
any additional information or material necessary for the Claimant to perfect
the claim and an explanation of why it is needed; (d) an explanation of
the Plan’s review procedures and the time limits applicable to such procedures;
and (e) a statement of the Claimant’s right to bring a civil action under Section 502(a) of
ERISA following an adverse benefit determination on review.

 

12.4        Review Procedure.  If the Committee denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by
the Committee of the denial.  To initiate
the review, the Claimant, within sixty (60) days after receiving the Committee’s
notice of denial, must file with the Committee a written request for
review.  The Claimant shall then have the
opportunity to submit written comments, documents, records and other
information relating to the claim.  The
Committee shall also provide the Claimant, upon request and free of charge,
reasonable access to, and copies of, all documents, records, and other information
relevant (as defined in applicable ERISA regulations) to the Claimant’s claim
for benefits.  In considering the claim
on review, the Committee shall take into account all materials and information
the Claimant submits relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.

 

10

 

12.5        Committee Response.  The Committee shall respond in writing to the
Claimant within sixty (60) days after receiving the request for review.  If the Committee determines that special
circumstances require additional time for processing the claim, the Committee
may extend the response period by an additional sixty (60) days by notifying
the Claimant in writing, prior to the end of the initial 60-day period, that an
additional period is required.  The
notice of extension must set forth the special circumstances and the date by
which the Committee expects to render its decision.  The Committee shall notify the Claimant in
writing of its decision on review.  The
Committee shall write the notification in a manner calculated to be understood
by the Claimant. The notification shall set forth: (a) the specific
reasons for the denial; (b) a reference to the specific provisions of the
Plan on which the denial is based; (c) a statement that the Claimant is
entitled to receive, upon request and free of charge, reasonable access to and
copies of all documents, records, and other information relevant (as defined in
applicable ERISA regulations) to the Claimant’s claim for benefits; and (d) a
statement of the Claimant’s right to bring a civil action under Section 502(a) of
ERISA after exhausting all administrative claims and review procedures in this Article 12.

 

Article 13.                                     Amendment
or Termination

 

The Committee may amend or
terminate the Plan at any time and in any manner without the consent of any
Participant or other affected individual, provided that any amendment or
termination shall not adversely affect the benefits payable (or to be paid) to
a Participant whose Date of Termination occurred prior to the date of such
amendment or termination (except as otherwise provided in Section 11.2).  Notwithstanding the foregoing, for a period
of two (2) years following a Change in Control, the Plan may not be
terminated or amended in any manner adverse to a Participant without the
written consent of the Participant (except as otherwise provided in Section 11.2).  Furthermore, in the event the Committee has
knowledge that a third party has taken steps reasonably calculated to effect a
Change in Control including, but not limited to, the commencement of a tender
offer for the voting stock of the Company or the circulation of a proxy to the
Company’s shareholders, then this Plan shall remain irrevocably in effect until
the Committee, in good faith, determines that such third party has fully
abandoned or terminated its effort to effect a Change in Control.

 

Article 14.                                     Successors

 

The Company shall require
any successor (whether direct or indirect, by purchase, merger, consolidation,
or otherwise) of all or substantially all of the business or assets of the
Company or of any division or Subsidiary thereof to assume expressly and agree
to perform the Company’s obligations under this Plan in the same manner and to
the same extent that the Company would be required to perform them if no such
succession had taken place.

 

Article 15.                                     Third
Party Beneficiaries

 

This Plan shall inure to the
benefit of and be enforceable by the Participant’s personal or legal
representatives, executors, administrators, successors, heirs, and assigns.

 

11

 

Article 16.                                     Indemnification

 

In addition to such other
rights of indemnification as they may have as members of the Board, the Company
shall indemnify the members of the Board and the Committee against all
reasonable expenses, including attorneys’ fees, actually and reasonably
incurred in connection with the defense of any action, suit, or proceeding, or
in connection with any appeal therein, to which they or any of them may be a
party by reason of any action or failure to act under or in connection with the
Plan, and against all amounts reasonably paid by them in settlement thereof or
paid by them in satisfaction of a judgment in any such action, suit, or
proceeding, if such members acted in good faith and in a manner that they
believed to be in, and not opposed to, the best interests of the Company.

 

Article 17.                                     Incapacity

 

If the Committee finds that
any person to whom a benefit is payable under this Plan is legally, physically,
or mentally incapable of personally receiving and receipting for such payment,
the Committee may direct that such benefit be paid to any person, persons, or
institutions who have custody of such person, or are providing necessities of
life (including. without limitation, food, shelter, clothing, medical, or
custodial care) to such person, to the extent deemed appropriate by the
Committee.  Any such payment shall
constitute a full discharge of the liability of the Company to the extent
thereof.

 

Article 18.                                     Funding

 

The amounts payable under
this Plan shall be paid in cash from the general assets of the Company, and a
Participant shall have no right, title, or interest in or to investments, if any,
which the Company may make to aid it in meeting its obligations under this
Plan.  Title to and beneficial ownership
of any such investments shall at all times remain in the Company.  Nothing contained in this Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a
trust of any kind.  To the extent that
any person acquires a right to receive a payment under this Plan, such right
shall be no greater than the right of an unsecured creditor.

 

Article 19.                                     FDIC
Limitations

 

If any payment or benefit
under this Plan would otherwise be a golden parachute payment within the
meaning of Section 18(k) of the Federal Deposit Insurance Act (a “Golden
Parachute Payment”) that is prohibited by applicable law, then the payments and
benefits will be reduced to the greatest amount that can be paid to the
Participant without there being a prohibited Golden Parachute Payment.  To the extent reasonably practicable, the
Company shall seek the approval of the Federal Deposit Insurance Corporation
(the “FDIC”) and/or the State of Hawaii Division of Financial Institutions and
any other bank regulatory body, as necessary, to make any payment to the
Participant that would otherwise constitute a Golden Parachute Payment.

 

12

 

Article 20.                                     Nonassignment

 

The interests of a
Participant hereunder may not be sold, transferred, assigned, pledged, or
hypothecated.  No Participant may borrow
against his/her interest in the Plan.

 

Article 21.                                     Enforceability
and Controlling Law

 

If any provision of this
Plan is held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions shall continue in full force and
effect.  Except to the extent preempted
by ERISA, the provisions of this Plan shall be construed, administered, and
enforced according to the laws of the State of Hawaii without giving effect to
the conflict of laws principles.

 

13

 

APPENDIX A

 

BANK OF HAWAII CORPORATION

CHANGE-IN-CONTROL RETENTION PLAN

 

Benefits for Executive Vice Presidents

 

1.                                      Entitlement
to Benefits

 

A Participant covered by
this Appendix A shall be entitled to the benefits described in this Appendix A
if the Participant has a Qualifying Termination.  All payments hereunder shall be subject to
tax withholding as provided in Article 9 of the Plan and the FDIC
Limitations as provided under Article 19 of the Plan.

 

2.                                      Severance
Benefits

 

a.                                     Base
Salary and Bonus.  The Company
shall pay the Participant the following severance benefit:

 

i.                                        An amount equal
to one (1) times the Participant’s highest annual Base Salary earned at
any time during the two (2) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries; plus

 

ii.                                     An amount equal
to one (1) times (a) the Participant’s annual bonus target percentage
under the Bank of Hawaii Corporation Executive Incentive Plan (or any successor
or alternative plan or arrangement providing for an annual incentive bonus)
during the Fiscal Year in which the Participant’s Date of Termination occurs,
multiplied by (b) the Participant’s highest annual Base Salary earned at
any time during the two (2) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries.

 

b.                                     Cash in
Lieu of Continuing Health and Welfare Benefits.  In lieu of continuing health and welfare
benefits (other than COBRA coverage) under any of the Company’s or a Subsidiary’s
plans after the Participant’s Date of Termination, the Company shall pay the
Participant an amount equal to two (2) times the cost of annual COBRA
premiums for the medical, dental, and vision plan coverage that the Company and
its Subsidiaries provided to the Participant immediately prior to the
Participant’s Date of Termination.  If
the Participant was not covered by a medical, dental, or vision plan
immediately prior to the Participant’s Date of Termination, the cash payment
shall be based on the average annual COBRA premiums for the plan(s) then
offered by the Company to employees generally.

 

A-1

 

c.                                     Time
and Form of Payment.  The
Company shall pay the benefits described in this Section 2 to the
Participant in a lump sum in the month following the Participant’s Date of
Termination.  Notwithstanding the
foregoing to the contrary, if the Participant is a Specified Employee as of the
date of his Separation from Service, no amounts payable under this Appendix A
shall be made before the first day of the seventh month following the
Participant’s Separation from Service (or, if earlier, the date of the
Participant’s death) if and to the extent that such payment or benefit
constitutes deferred compensation (or may be nonqualified deferred
compensation) under Code section 409A and such payment delay is required to
comply with the requirements of Code Section 409A.  Any severance compensation payment delayed by
reason of the prior sentence shall be paid out or provided in a single lump sum
at the end of such required delay period in order to catch up to the original
payment schedule.

 

3.                                      Outplacement
Benefits

 

The Company shall reimburse
the Participant for the reasonable expenses incurred by the Participant for
outplacement services.  The maximum
amount of reimbursement shall not exceed $15,000, as adjusted for inflation
after 2007 in accordance with the consumer price index for the Honolulu
metropolitan area. If the Company provides the outplacement services in-kind
(by contracting with an outplacement services provider), the outplacement
services must be completed by the end of the second full calendar year
following the Participant’s Date of Termination.  If, with the Company’s permission, the
Participant contracts on his or her own for outplacement services, the
Participant must incur the expenses by the end of the second full calendar year
following the Participant’s Date of Termination, and the Company shall
reimburse the Participant as the expenses are incurred and substantiated, but
no later than December 31 of the third full calendar year following the
Participant’s Date of Termination.

 

4.                                      Payment
for Restrictive Covenants

 

a.                                     Amount.  If for the twelve (12) month period
immediately following the Participant’s Date of Termination the Participant
refrains from engaging in those activities prohibited under Article 10 of
the Plan (i.e., the Participant complies with the Plan’s non-competition,
non-solicitation, non-disclosure and non-disparagement provisions), the Company
shall pay the Participant the following amount:

 

i.                                        An amount equal
to one (1) times the Participant’s highest annual Base Salary earned at
any time during the two (2) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries; plus

 

ii.                                     An amount equal
to one (1) times (a) the Participant’s annual bonus target percentage
under the Bank of Hawaii Corporation Executive Incentive Plan (or any successor
or alternative plan or arrangement providing for an annual incentive bonus)
during the Fiscal Year in which the Participant’s Date of Termination occurs,
multiplied by (b) the Participant’s highest annual Base Salary earned at
any time during the two (2) complete Fiscal 

 

A-2

 

Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries.

 

b.                                     Time
and Form of Payment.  The
Company shall make the payment described in this Section 4 to the
Participant in a lump sum in the thirteenth month following the Participant’s
Date of Termination.

 

5.                                      Parachute
Payments

 

a.                                     Reduction
of Severance Benefits.  If
it is determined that any payment, award, benefit, or distribution by the
Company or its Subsidiaries (or by an entity which effectuates a Change in
Control or any of its affiliated entities) to or for the benefit of the
Participant pursuant to the terms of this Plan or otherwise, including, without
limitation, the lapse or termination of any restriction on or the vesting or
exercisability of any equity compensation award (collectively, the “Benefit
Payments”) would be subject to Excise Tax, then the Benefit Payments shall be
reduced as provided below to the extent that the value of the aggregate reduced
Benefit Payments that the Participant is entitled to receive shall be one
dollar ($1) less than the maximum amount the Participant may receive without
becoming subject to the Excise Tax. 
Reductions under this paragraph shall be taken first from the portion of
the Participant’s Benefit Payments, if any, that is attributable to equity
compensation under Section 4.4 of the Plan, the vesting and payment of
which would otherwise be accelerated on account of a Change in Control, and next
from Severance Benefits payable in cash under Section 2 of this Appendix
A.  If the reduced Benefit Payments would
be subject to Excise Tax even if the foregoing unvested equity compensation and
Severance Benefits are completely eliminated, then the unvested equity
compensation shall be completely forfeited and the Severance Benefits payable
in cash under Section 2 of this Appendix A shall be reduced to zero ($0).

 

b.                                     Determination.  All determinations required to be made under
this Section 5 shall be made by an outside “Big 4” or similar
accounting firm chosen and paid for by the Company (the “Accounting Firm”).  Within thirty (30) calendar days after the date
of the Change in Control, the Participant shall direct the Accounting Firm to
make its determination in accordance with Section 1.280G-l of the Treasury
Regulations, and within thirty (30) calendar days after the Accounting Firm
receives such direction, it shall submit its determination and detailed
supporting calculations (collectively, the “Determination”) to both the Company
and the Participant.  The Accounting Firm
shall furnish an opinion (addressed to both the Participant and the Company) as
to the effect of this Section 5 on the Participant’s Benefit
Payments.  If the Accounting Firm determines
that no Excise Tax is payable by the Participant, it shall furnish an opinion
(addressed to both the Participant and the Company) or other evidence
reasonably acceptable to the Participant and the Company that there is
substantial authority not to report any Excise Tax on the Participant’s federal
income tax return.  The Determination by
the Accounting Firm shall be binding upon the Company and the Participant
absent manifest error.

 

c.                                     Cooperation
with Accounting Firm.  The Company
and the Participant shall each provide the Accounting Firm access to and copies
of any books, records, and documents in their possession that are reasonably
requested by the Accounting Firm, and otherwise cooperate 

 

A-3

 

with the Accounting Firm, in connection with the preparation and
issuance of the Determination under this Section 5.

 

d.                                     Tax
Return Filing.  The
Participant shall file the Participant’s federal, state, and local income tax
returns on a consistent basis with the Determination of the Accounting
Firm.  The Participant shall make proper
payment of the amount of any Excise Tax, and at the request of the Company,
provide to the Company evidence of such payment.

 

e.                                     Internal
Revenue Service Claims.  The
Participant shall notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would
subject the Participant to an Excise Tax with respect to amounts paid by the
Company.  Such notification shall be
given as promptly as practicable but no later than fifteen (15) business days
after the Participant actually receives notice of such claim.  The Participant shall further apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the
Participant).  The Participant shall not
pay such claim prior to the earlier of (a) the expiration of the
30-calendar-day period following the date on which the Participant gives notice
to the Company, or (b) the date that any payment of an amount with respect
to such claim is due.  If the Company
notifies the Participant in writing prior to the expiration of such period that
it desires to contest such claim, the Participant shall (i) provide the
Company with any written records or documents in the Participant’s possession
relating to such claim reasonably requested by the Company, (ii) take such
action in connection with contesting such claim as the Company will reasonably
request in writing from time to time, including without limitation, accepting
legal representation with respect to such claim by an attorney selected by the
Company who is competent in the subject matter, (iii) cooperate with the
Company in good faith in order effectively to contest such claim, and (iv) permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company will bear and pay directly all costs and expenses
(including interest and penalties) incurred in connection with such contest.  The Company’s control of any contested claim
will be limited to issues with respect to which an Excise Tax would apply on
amounts paid to the Participant by the Company, and the Participant shall be
solely responsible to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.

 

A-4

 

APPENDIX B

 

BANK OF HAWAII CORPORATION

CHANGE-IN-CONTROL RETENTION PLAN

Benefits
for Vice Chairmen and Above

 

1.                                      Entitlement
to Benefits

 

A Participant covered by
this Appendix B shall be entitled to the benefits described in this Appendix B
if the Participant has a Qualifying Termination.  All payments hereunder shall be subject to
tax withholding as provided in Article 9 of the Plan and the FDIC
Limitations as provided under Article 19 of the Plan.

 

2.                                      Severance
Benefits

 

a.                                     Base
Salary and Bonus.  The Company
shall pay the Participant the following severance benefit:

 

i.                                        An amount equal
to two (2) times the Participant’s highest annual Base Salary earned at
any time during the three (3) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries; plus

 

ii.                                     An amount equal
to two (2) times (a) the Participant’s annual bonus target percentage
under the Bank of Hawaii Corporation Executive Incentive Plan (or any successor
or alternative plan or arrangement providing for an annual incentive bonus)
during the Fiscal Year in which the Participant’s Date of Termination occurs,
multiplied by (b) the Participant’s highest annual Base Salary earned at
any time during the three (3) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries.

 

b.                             Cash in
Lieu of Continuing Health and Welfare Benefits.  In lieu of continuing health and welfare
benefits (other than COBRA coverage) under any of the Company’s or a Subsidiary’s
plans after the Participant’s Date of Termination, the Company shall pay the
Participant an amount equal to three (3) times the cost of annual COBRA
premiums for the medical, dental, and vision plan coverage that the Company and
its Subsidiaries provided to the Participant immediately prior to the
Participant’s Date of Termination.  If
the Participant was not covered by a medical, dental, or vision plan
immediately prior to the Participant’s Date of Termination, the cash payment
shall be based on the average annual COBRA premiums for the planes) then
offered by the Company to employees generally.

 

c.                                     Time
and Form of Payment.  The
Company shall pay the benefits described in this Section 2 to the
Participant in a lump sum in the month following the Participant’s Date of 

 

B-1

 

Termination.  Notwithstanding the
foregoing to the contrary, if the Participant is a Specified Employee as of the
date of his Separation from Service, no amounts payable under this Appendix B
shall be made before the first day of the seventh (7th) month following the Participant’s Separation from
Service (or, if earlier, the date of the Participant’s death) if and to the
extent that such payment or benefit constitutes deferred compensation (or may
be nonqualified deferred compensation) under Code section 409A and such payment
delay is required to comply with the requirements of Code Section 409A.  Any severance compensation payment delayed by
reason of the prior sentence shall be paid out or provided in a single lump sum
at the end of such required delay period in order to catch up to the original
payment schedule.

 

3.                                      Outplacement
Benefits

 

The Company shall reimburse
the Participant for the reasonable expenses incurred by the Participant for
outplacement services.  The maximum
amount of reimbursement shall not exceed $20,000, as adjusted for inflation
after 2007 in accordance with the consumer price index for the Honolulu
metropolitan area.  If the Company
provides the outplacement services in-kind (by contracting with an outplacement
services provider), the outplacement services must be completed by the end of
the second full calendar year following the Participant’s Date of
Termination.  If, with the Company’s
permission, the Participant contracts on his or her own for outplacement
services, the Participant must incur the expenses by the end of the second full
calendar year following the Participant’s Date of Termination, and the Company
shall reimburse the Participant as the expenses are incurred and substantiated,
but no later than December 31 of the third full calendar year following
the Participant’s Date of Termination.

 

4.                                      Relocation
Benefits

 

The Company shall reimburse
the Participant for the reasonable moving expenses incurred by the Participant
in relocating his or her primary residence within twenty-four (24) months
following a Qualifying Termination.  The
Company shall not provide relocation benefits in excess of the benefits customarily
provided by the Company to transferred employees prior to the Change in Control
as part of the Company’s relocation practices and policies, and shall not
reimburse expenses that are reimbursable by another employer.  Reasonable moving expenses shall be limited
to expenses for the movement of household goods, shipment of automobiles,
airfare, and other travel expenses in connection with house-hunting activities
in the new location of residence, expenses for the sale of the Participant’s
primary residence, any loss on the sale of the Participant’s primary residence
and expenses for the purchase of a primary residence at the new location.  The maximum reimbursement for real estate
transaction expenses (e.g. any loss on the sale of the Participant’s primary
residence, expenses for the sale of the former primary residence, and expenses
for the purchase of the new primary residence) shall not exceed a total of
$100,000.  The maximum reimbursement for
all other reasonable moving expenses shall not exceed a total of $50,000.  The moving expenses must be incurred within
twenty-four (24) months following a Qualifying Termination.  The Company shall reimburse the moving
expenses as they are incurred and substantiated, but no later than December 31
of the third full calendar year following the Participant’s Date of
Termination.

 

B-2

 

5.                                      Payment
for Restrictive Covenants

 

a.                                     Amount.  If for the twelve (12) month period
immediately following the Participant’s Date of Termination the Participant
refrains from engaging in those activities prohibited under Article 10 of
the Plan (i.e., the Participant complies with the Plan’s non-competition,
non-solicitation, non-disclosure and non-disparagement provisions), the Company
shall pay the Participant the following amount:

 

i.                                        An amount equal
to one (1) times the Participant’s highest annual Base Salary earned at
any time during the three (3) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries; plus

 

ii.                                     An amount equal
to one (1) times (a) the Participant’s annual bonus target percentage
under the Bank of Hawaii Corporation Executive Incentive Plan (or any successor
or alternative plan or arrangement providing for an annual incentive bonus)
during the Fiscal Year in which the Participant’s Date of Termination occurs,
multiplied by (b) the Participant’s highest annual Base Salary earned at
any time during the three (3) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries.

 

b.                                     Time
and Form of Payment.  The
Company shall make the payment described in this Section 5 to the
Participant in a lump sum in the thirteenth month following the Participant’s
Date of Termination.

 

6.                                      Parachute
Payments

 

a.                                     Reduction
of Severance Benefits.  If
it is determined that any payment, award, benefit, or distribution by the
Company or its Subsidiaries (or by an entity which effectuates a Change in
Control or any of its affiliated entities) to or for the benefit of the
Participant pursuant to the terms of this Plan or otherwise, including, without
limitation, the lapse or termination of any restriction on or the vesting or
exercisability of any equity compensation award (collectively, the “Benefit
Payments”) would be subject to Excise Tax, then the Benefit Payments shall be
reduced as provided below to the extent that the value of the aggregate reduced
Benefit Payments that the Participant is entitled to receive shall be one
dollar ($1) less than the maximum amount the Participant may receive without
becoming subject to the Excise Tax.  Reductions
under this paragraph shall be taken first from the portion of the Participant’s
Benefit Payments, if any, that is attributable to equity compensation under Section 4.4
of the Plan, the vesting and payment of which would otherwise be accelerated on
account of a Change in Control, and next from Severance Benefits payable in
cash under Section 2 of this Appendix B. 
If the reduced Benefit Payments would be subject to Excise Tax even if
the foregoing unvested equity compensation and Severance Benefits are
completely eliminated, then the unvested equity 

 

B-3

 

compensation shall be completely forfeited and the Severance Benefits
payable in cash under Section 2 of this Appendix B shall be reduced to
zero ($0).

 

b.                                     Determination.  All determinations required to be made under
this Section 6, shall be made by an outside “Big 4” or similar accounting
firm chosen and paid for by the Company (the “Accounting Firm”).  Within thirty (30) calendar days after the
date of the Change in Control and at such other times as may be appropriate,
the Participant shall direct the Accounting Firm to make its determination in
accordance with Section 1.280G-1 of the Treasury Regulations, and within
thirty (30) calendar days after the Accounting Firm receives such direction, it
shall submit its determination and detailed supporting calculations
(collectively, the “Determination”) to both the Company and the
Participant.  The Accounting Firm shall
furnish an opinion (addressed to both the Participant and the Company) as to
the effect of this Section 6 on the Participant’s Benefit Payments.  If the Accounting Firm determines that no
Excise Tax is payable by the Participant, it shall furnish an opinion
(addressed to both the Participant and the Company) or other evidence
reasonably acceptable to the Participant and the Company that the there is
substantial authority not to report any Excise Tax on the Participant’s federal
income tax return.  The Determination by
the Accounting Firm shall be binding upon the Company and the Participant
absent manifest error.

 

c.                                     Cooperation
with Accounting Firm.  The Company
and the Participant shall each provide the Accounting Firm access to and copies
of any books, records, and documents in their possession that are reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm, in connection with the preparation and issuance of the Determination
under this Section 6.

 

d.                                     Tax
Return Filing.  The
Participant shall file the Participant’s federal, state, and local income tax
returns on a consistent basis with the Determination of the Accounting
Firm.  The Participant shall make proper
payment of the amount of any Excise Tax, and at the request of the Company,
provide to the Company evidence of such payment.

 

e.                                     Internal
Revenue Service Claims.  The
Participant shall notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would
subject the Participant to an Excise Tax with respect to amounts paid by the
Company.  Such notification shall be
given as promptly as practicable but no later than fifteen (15) business days
after the Participant actually receives notice of such claim.  The Participant shall further apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the
Participant).  The Participant shall not
pay such claim prior to the earlier of (a) the expiration of the 30-calendar-day
period following the date on which the Participant gives notice to the Company,
or (b) the date that any payment of an amount with respect to such claim
is due.  If the Company notifies the
Participant in writing prior to the expiration of such period that it desires
to contest such claim, the Participant shall (i) provide the Company with
any written records or documents in the Participant’s possession relating to
such claim reasonably requested by the Company, (ii) take such action in
connection with contesting such claim as the Company will reasonably request in
writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney selected by the
Company who is competent in the subject 

 

B-4

 

matter, (iii) cooperate with the Company in good faith in order
effectively to contest such claim, and (iv) permit the Company to
participate in any proceedings relating to such claim; provided, however, that
the Company will bear and pay directly all costs and expenses (including
interest and penalties) incurred in connection with such contest.  The Company’s control of any contested claim
will be limited to issues with respect to which an Excise Tax would apply on
amounts paid to the Participant by the Company, and the Participant shall be
solely responsible to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.

 

B-5Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This
Employment Agreement (“Agreement”) is made and entered into by and between
Analysts International Corporation, 3601 W. 76th Street,
Minneapolis, Minnesota 55435 (“AIC” or the “Company”) and Andrew K. Borgstrom,
5562 Linden Avenue, La Grange Highlands, Illinois
60525 (“Executive”).

 

RECITALS

 

The
Company desires to retain the Executive and the Executive desires to accept employment
with the Company under the terms and provisions set forth below.

 

NOW,
THEREFORE, in consideration of the mutual promises and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive hereby
agree as follows

 

AGREEMENT

 

1.                                       Term. The Term of this Agreement
shall commence on the date on which it is last signed by Company or Executive
and shall continue through March 31, 2011 (the “Initial Period”). It shall
be extended for one additional year thereafter (the “Renewal Period”), at the option
of the Company, provided the Company provides notice to Executive of the
renewal at least ninety (90) days prior to the expiration of the Initial
Period. Thereafter, the Agreement shall be automatically self-renewing for
additional one year Renewal Periods unless either party provides the other with
notice of non-renewal at least ninety (90) days prior to the expiration of the
current term. The Initial Period and any Renewal Period(s) are herein referred
to collectively as the “Employment Period.” Notwithstanding anything to the
contrary contained herein, the Employment Period is subject to termination
pursuant to Section 7.

 

2.                                       Employment; Best Efforts. The Company
agrees to employ and engage the services of Executive during the Employment
Period as President and Chief Executive Officer of the Company, reporting to
the Board of Directors, and the Executive agrees to serve the Company in such
capacity, on a full-time basis subject to his ongoing work as Chair of
RapiDemand Corp., during the Employment Period of this Agreement.  In that capacity, and without limitation,
Executive shall perform such duties and responsibilities on behalf of the
Company as are customary of the chief executive officer of a publicly traded
company of similar size and operations, to a level consistent with the highest
standards of one holding such position in similar businesses or enterprises and
agrees not to render services to anyone other than the Company (or its parent
or subsidiaries) for compensation as an employee, consultant, or otherwise during
the term of this Agreement, except as provided in this Section 2, in Section 3
below or with prior consent of the Board of Directors. Executive shall perform
faithfully the responsibilities assigned to him in accordance with this Agreement.

 

3.                                       Personal Activities; Boards of Directors. The provisions of Section 2
of this Agreement will not be deemed to prohibit Executive from devoting
reasonable time to personal matters, or from serving as Chair of RapiDemand Corp., with or without compensation,
provided that such activities do not interfere with Executive’s primary duties
to the Company, present a conflict with the interests of the Company or violate
the Board’s policies communicated to Executive relating to service as a board
member to publicly held companies or codes of conduct for its employees. After
the date of this Agreement, Executive will accept a new appointment or election
to the board of another company only with the prior consent of the Company’s
Board of 

 

 

Directors.

 

4.                                       Location. Executive will provide his
services in the Minneapolis, Minnesota area. Notwithstanding the foregoing, the
parties recognize and acknowledge that Executive may be required to spend
considerable business time in locations other than the Minneapolis, Minnesota
area.  AIC will lease an apartment for
Executive in or around Edina, Minnesota (not to exceed a monthly rental of
$1,600.00) and will either lease a car for Executive (not to exceed a monthly
lease cost of $440.00) or reimburse Executive for car expense up to $440 per
month.  AIC will also reimburse Executive
for reasonable airfare for travel between Chicago and Minneapolis (not to
exceed four round-trips a month). Reimbursements will be made in accordance
with Company policies, but in no event later than December 31 of the
calendar year after the year in which the expense was incurred.  Reimbursements in one year will not affect
the expenses available for reimbursement in any subsequent year.  The right to reimbursement is not subject to
liquidation or exchange for any other benefit.

 

5.                                       Compensation and other Employment Terms.

 

5.1.                              Base
Salary. During the Employment
Period, the Company shall pay Executive an annualized base salary of
$390,000.00 (“Base Salary”).  The Base
Salary shall be payable in cash, subject to applicable withholdings, in
accordance with the then-current payment policies of the Company for its executives.

 

5.2.                              Incentive
Compensation Bonus. As further
compensation, Executive will be eligible to earn an annual bonus in such amount
as the Board of Directors, in its sole discretion, shall determine; provided, however, that if AIC attains profitability (i.e., achieves net income as reflected in its quarterly
statements of operations) during at least two consecutive quarters in fiscal
year 2010, Executive shall be paid a bonus for fiscal year 2010 of not less
than $100,000. No bonus shall be payable for services performed in 2010 if AIC
does not attain profitability during at least two consecutive quarters in
fiscal year 2010. Any bonus earned shall be payable in cash, subject to
applicable withholdings, within 30 days of the Company’s filing of its Form 10-K
for fiscal year 2010 (or, in the event that payment is not made by March 15,
no later than December 31 of such calendar year).

 

5.3.                              Stock Options.
Simultaneously with executing this Agreement, AIC is also granting Executive
750,000 stock options as set forth in the Incentive Stock Option Agreement
attached hereto as Exhibit A.

 

5.4.                              Fringe Benefits. The Company
will also provide Executive the following:

 

5.4.1.                     Medical Insurance Costs.  The
Company will pay the full cost for family health insurance coverage, including
co-pays and deductibles, if any, for Executive, comparable to that provided to
other senior executives of the Company.

 

5.4.2                        Paid Time Off. Executive
shall be entitled to paid time off at his discretion and as business conditions
warrant. If necessary due to business conditions of the Company, Executive
agrees to obtain concurrence from the Chairman of the Board prior to taking paid time
off of more than five (5) consecutive business days.

 

5.4.3.                     Paid Parking.  The Company will provide Executive with a
paid 

 

2

 

indoor, underground parking
spot, if available from the building, at the Company’s office building
presently located at 3601 West 76th Street, Minneapolis, Minnesota 55435.

 

5.4.4.                     Business
Expenses. Executive will be entitled to reimbursement of all
reasonable, business-related travel and other expenses incurred by Executive in
the ordinary course of business on behalf of the Company, so long as such expenses
are incurred, documented and authorized pursuant to the Company’s expense reimbursement
policies. Reimbursements
will be made in accordance with Company policies, but in no event later than December 31
of the calendar year after the year in which the expense was incurred.  Reimbursements in one year will not affect
the expenses available for reimbursement in any subsequent year.  The right to reimbursement is not subject to
liquidation or exchange for any other benefit.

 

6.                                       Insurance
Policies.

 

The Company will keep all Directors and Officers insurance policies
current and will identify Executive, if appropriate, on all such policies

 

7.                                       Termination.

 

7.1.                              Death. This Agreement shall terminate automatically upon the Executive’s
death. All compensation then accrued hereunder shall be paid to the Executive’s
beneficiaries, representatives or heirs, as appropriate.

 

7.2.                              Disability. If, as a result of the Executive’s incapacity due to physical or
mental illness, the Executive (a) shall have been absent from the full-time
performance of his duties with the Company for three consecutive months, and (b) shall
not, within 30 days after written notice of disability termination is given to
the Executive, have returned to the full-time performance of his duties, the
Company may terminate the Executive’s employment for disability. During such
period of absence, the Executive shall continue in employment and receiving the
benefits provided in Section 5 hereof, and thereafter the Executive’s
benefits shall be determined under any applicable disability insurance plan or
policy that may then be in effect.

 

7.3.                              Cause. The Company may terminate the Executive’s employment for Cause. For
purposes of this Agreement, “Cause” shall mean (A) any act of dishonesty
or knowing and willful breach of fiduciary duty on the Executive’s part which
is intended to result in his personal enrichment at the expense of the Company;
(B) commission of a felony involving dishonest or unethical conduct that a
reasonable person would consider damaging to the reputation of the Company, or (C) refusal
to comply with the reasonable directions of the Company’s Board of Directors.
If the Executive’s employment is terminated for Cause, the Company shall pay
the Executive his full accrued Base Salary through the date of termination at
the rate in effect at the time of such termination, and the Company shall have
no further obligation to the Executive under this Agreement. Any unpaid
incentive compensation or performance bonus shall be forfeited if the Executive
is terminated for Cause.

 

7.4.                              Termination
by the Company or Executive Other than for Cause. This Agreement
may be terminated by AIC or Borgstrom at any time without cause with ninety 

 

3

 

(90) days advance written notice to the other party. In the event AIC
terminates this Agreement without cause, AIC may provide payments due in lieu
of notice and no severance shall be payable.

 

7.5.                              Mutual Agreement. This
Agreement may also be terminated by mutual agreement of the parties.

 

8.                                       Intellectual
Property Rights.

 

8.1.                              Non-infringement.  Executive agrees that all work products
created or produced by Executive during the course of his employment with the
Company will be Executive’s original work
and will not infringe upon or violate any patent, copyright, trade secret,
contractual or other proprietary right of any third party.

 

8.2.                              Disclosure. 
Executive agrees to disclose and describe to the Company, on a timely
basis, all works of authorship, inventions and all other intellectual property
that Executive may solely or jointly discover, conceive, create, develop,
produce or reduce to practice while employed by the Company (“Company
Inventions”).

 

8.3.                              Assignment. 
Executive hereby assigns and agrees to assign to the Company, or its
designee, Executive’s entire right, title, and interest in and to all Company
Inventions. Executive represents that the Company’s rights in all such Company
Inventions will be free and clear of any encumbrances, liens, claims,
judgments, causes of action or other legal rights or impediments.

 

8.4.                              Independent Development. 
NOTICE: Pursuant to Minnesota Statutes § 181.78, Executive is hereby
notified that the foregoing agreement does not apply to an invention for which
no equipment, supplies, facility or trade secret information of the Company was
used and which was developed entirely on the employee’s own time, and (1) which
does not relate (a) directly to the business of the Company (or a Client)
or (b) to the Company’s (or its Client’s) actual or demonstrably anticipated
research or development, or (2) which does not result from any work
performed by the employee for the Company or its Clients.  For purposes of this Section 10.4, the
term “Client” shall have the same meaning as set forth in Section 12.2 of
this Agreement.

 

8.5.                              Works for Hire.  Executive acknowledges and agrees that all
original works of authorship which are made by Executive (solely or jointly
with others) within the scope of his employment and which are protectable by
copyrights, are “works made for hire” as that term is defined in the United
States Copyright Act (17 U.S.C. § 101) and that, as such, all rights comprising
copyright under the United States Copyright laws will vest solely and
exclusively in his employer, the Company. 
Executive hereby irrevocably and unconditionally waives all so-called
moral rights that may vest in Executive (whether before, on or after the date
hereof) in connection with Executive’s authorship of any copyright works in the
course of his employment with the Company, wherever in the world enforceable,
including without limitation the right to be identified as the author of any
such works and the right of integrity (i.e., not to
have any such works subjected to derogatory treatment), and Executive agrees
never to assert any such moral rights with respect to any Company Invention.

 

8.6.                              Enforcement; Cooperation.  Executive agrees to perform, during and after
his employment, all acts reasonably deemed necessary or desirable by the
Company to 

 

4

 

permit and assist it, at its
expense, in obtaining and enforcing the full benefits, enjoyment, rights and title
throughout the world in the Company Inventions hereby assigned to the
Company.  Such acts may include, but are
not limited to, execution of documents and assistance or cooperation in the
registration and enforcement of applicable patents, copyrights, maskworks or
other legal proceedings.

 

8.7.                              Attorney in Fact.  In the event that the Company is unable for
any reason, whether during or after Executive’s employment by the Company, to
secure Executive’s signature to any document required to apply for or execute
any patent, design rights, registered designs, trademarks, copyright, maskwork
or other applications with respect to any Company Inventions (including
improvements, renewals, extensions, continuations, divisions or continuations
in part thereof), Executive hereby irrevocably designates and appoints the
Company and its duly authorized officers and agents as Executive’s agents and
attorneys-in-fact to act for and on his behalf and instead of Executive, to
execute and file any such application and to do all other lawfully permitted
acts to further the prosecution and issuance of patents, copyrights, maskworks
or other rights thereon with the same legal force and effect as if executed by
Executive.

 

9.                                       Confidentiality.

 

9.1.                              Confidential Nature of Relationship.  Executive acknowledges that his employment by
the Company creates a relationship of confidence and trust with respect to
Confidential Information (as hereinafter defined).  During the course of his employment with the
Company, the Company agrees to provide Executive with access to Confidential
Information.  Executive expressly
undertakes to retain in strict confidence all Confidential Information
transmitted or disclosed to Executive by the Company or the Company’s clients,
and will never make any use of such information except as (and then, only to
the extent) required to perform Executive’s employment duties for the
Company.  Executive will take such
protective measures as may be reasonably necessary to preserve the secrecy and
interest of the Company in the Confidential Information.  If Executive becomes aware of any unauthorized
use or disclosure of Confidential Information by any person or entity,
Executive will promptly and fully advise the Company of all facts known to
Executive concerning such unauthorized use or disclosure.

 

9.2.                              Definition.  “Confidential
Information” means all confidential or proprietary information and data, in
their broadest context, originated by, on behalf of the Company or its clients
and within the knowledge or possession of the Company (including any
subsidiary, division or legal affiliate thereof).  Without in any way limiting the foregoing,
Confidential Information includes, but is not limited to: information that has
been designated as proprietary and/or confidential; information constituting
trade secrets; information of a confidential nature that, by the nature of the
circumstances surrounding the disclosure, should in good faith be treated as
proprietary and/or confidential; and Company Inventions. Confidential Information
also includes information of a confidential nature relating to the Company’s
clients, prospective clients, strategic business relationships, products,
services, suppliers, personnel, pricing, recruiting strategies, job candidate
information, employee information, sales strategies, technology, methods,
processes, research, development, systems, techniques, finances, accounting,
purchasing and business plans.

 

5

 

9.3.                              Exclusions. 
Confidential Information does not include information which: (A) is
generic; (B) is or becomes part of the public domain through no act or
omission of Executive; (C) was in Executive’s possession prior to the
disclosure and was not obtained by Executive in breach, either directly or
indirectly, of any obligation to the Company or any client of the Company’s; (D) is
disclosed to Executive by a third party without restriction on disclosure; or (E) is
independently developed by Executive using his own resources, entirely on his own
time, and without the use of any Confidential Information.

 

9.4.                              Protected Health Information.  If during the course of his employment with
the Company, Executive receives any “protected health information” regarding
any individual other than Executive, as that term is defined in 45 CFR, Part 164,
Subpart E (“Privacy of Individually Identifiable Health Information”): (A) Executive
agrees to maintain all such information in strict confidence in accordance with
the requirements of the Health Insurance Portability and Accountability Act of
1996 (HIPAA); (B) Executive agrees that he will make no use whatsoever of
any such information except as required to perform Executive’s employment
duties; and (C) Executive agrees that he will never record, store, file or
otherwise maintain, in any computer or other storage device owned by the
Company or by Executive, any “protected health information” other than in accordance
with Company policy. Executive agrees to alert the Company promptly if he becomes
aware of any misuse or unauthorized disclosure of any such information.

 

9.5.                              Additional Confidentiality Agreements.  Executive agrees to execute such additional
non-disclosure and confidentiality agreements as the Company’s clients may from
time to time request the Company to have its key employees execute in order for
the Company to conduct business with its clients.

 

10.                                 Use of
Confidential or Material Non-Public Information; Codes of Conduct.

 

10.1.                        Confidential or Material, Non-Public Information.  Executive acknowledges that he is prohibited
from using or sharing any Confidential Information for personal gain or
advantage (in securities transactions or otherwise), or for the personal gain
or advantage of anyone with whom Executive improperly shares such information.  Specifically as to material, non-public
information of the Company, Executive agrees to comply during the Employment
Period with the Company’s insider trading policy in effect at the commencement
of employment and as amended from time to time.

 

10.2.                        Codes of Conduct.  Executive agrees to carefully review, sign
and fully comply with any Code of Conduct (or similar policy) of the Company
either having general applicability to its employees or specifically to Executive.

 

11.                                 Restrictions
against Solicitation;
Non-Interference.

 

During
his employment by the Company and for a period of eighteen (18) months after termination of such
employment for any reason, Executive agrees that he will not engage in the
following conduct.

 

11.1.                        Restrictions against Solicitation.  Executive
will not, directly or indirectly, initiate any solicitation or recruitment
effort for the purpose of attempting to hire any employee of the Company or to
induce any employee of the Company to leave his employment with the Company
other than through general solicitation or advertisement not directed at
Company employees.

 

6

 

11.2.                        Non-interference.  Executive will not, directly or indirectly,
intentionally disrupt, damage, impair, impede or interfere with the contractual
relationship between the Company and any of its clients.

 

12.                                 Restrictions
Against Competition.

 

12.1.                        Restricted Period.  During his employment by the Company and for
a period of eighteen (18)
months after termination of such employment for any reason, Executive agrees
not to engage in any Competitive Acts with any
Client or prospective Client of the Company within the prior 12 months prior to termination of
Executive’s employment.

 

12.2.                        Definitions.  For purposes of this Section 12, the following terms shall be defined as
follows.

 

“Competitive Acts” means soliciting, selling,
marketing, brokering, providing or managing any services of the sort that the
Company provides to its Clients (“Services”) for any Client, whether directly
as an employee of a Client or indirectly as an employee, subcontractor, partner
or owner of a Competitor.

 

“Client” means: (A) any Company client
for whom Executive provided Services at any time during the previous two years
of Executive’s employment with the Company; or (B) any Company client or
prospective client to whom Executive solicited, proposed, marketed or sold
Services at any time during the previous two years of Executive’s employment
with the Company; (C) any third party having a written partnership,
alliance or teaming agreement or similar strategic business relationship with
the Company, for whom Executive provided Services at any time during the
previous two years of Executive’s employment with the Company.

 

“Competitor”
means any third party offering technical consulting services within the United
States that compete with the Company or are similar in kind or nature to the
services provided by the Company while Executive is employed by the Company.

 

13.                                 Reasonableness
of Restrictions;
Representations of Executive; Extension of Restrictions; Enforcement.

 

13.1.                        Reasonableness of Restrictions.  Executive acknowledges that the restrictions
set forth in this Agreement are reasonable in terms of both the Company’s need
to protect its legitimate business interests and Executive’s ability to pursue
alternative employment opportunities in the event his employment with the Company
terminates.

 

13.2.                        Representations of Executive.  Executive represents that his performance of
all the terms of this Employment Agreement and his performance as an employee
of the Company does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by Executive prior to his
employment with the Company.  Executive
will not disclose to the Company, or induce the Company to use, any
confidential or proprietary information or material belonging to any previous
employer of Executive or others. 
Executive is not a party to any other agreement that would interfere
with his full compliance with this Executive Agreement.  Executive agrees not to enter into any
agreement, whether written or oral, in conflict with the provisions of this
Agreement.

 

7

 

13.3.                        Extension of Restrictions.  The period of all restrictions under this
Agreement will automatically be extended by a period equal in length to any
period in which Executive violates his obligations under this Agreement.

 

13.4.                        Enforcement.  In addition to any other relief or remedies
afforded by law or in equity, if Executive breaches Sections 11 or 12 of this
Agreement, Executive agrees that the Company shall be entitled, as a matter of
right, to injunctive relief in any court of competent jurisdiction.  Executive recognizes and hereby admits that
irreparable damage will result to the Company if he violates or threatens to
violate the terms of Section 11 or 12 of this Agreement.  This Section 13.4 shall not preclude the
granting of any other appropriate relief including, without limitation, money
damages against Executive for breach of Section 11 or 12 of this Agreement.

 

14.                                 Return of
Property.

 

Upon
any termination of his employment with the Company, Executive agrees to
promptly return to the Company: (A) all materials of any kind in Executive’s
possession (or under Executive’s control) incorporating Confidential
Information or otherwise relating to the Company’s business (including but not
limited to all such materials and/or information stored on any computer or
other storage device owned or used by Executive); and (B) all Company property
in Executive’s possession, including (but not limited to) computers, cellular
telephones, pagers, credit cards, keys, records, files, manuals, books, forms,
documents, letters, memoranda, data, tables, photographs, video tapes, audio
tapes, computer disks and other computer storage media, all materials that
include trade secrets, and all copies, summaries or notes of any of the foregoing.

 

15.                                 Assignment.

 

This
Agreement sets forth personal obligations of Executive, which may not be transferred
or assigned by Executive.  The Company
may assign this Agreement to any successor to substantially all of its assets
or business, or affiliates of any such successor, upon delivery to Executive of
a guaranty by the Company of fulfillment of the Company’s obligations to the
Executive hereunder that is reasonably acceptable to the Executive.

 

16.                                 Non-Disparagement.

 

Executive
agrees not to engage in any form of conduct or make any statements or representations
to current or prospective customers of the
Company, media outlets, employees or management of a corporation or business in
direct competition with the Company, or otherwise publish statements or
representations to the public at large which may be actionable, that
disparage, characterize in demeaning manner or question the Company’s business practices,
products, advice, quality of employees and staff, or otherwise harm the public
reputation or good will of the Company, its employees, or management.

 

The
Company agrees not to engage in any form of conduct or make any statements or
representations to current or
prospective customers of Executive, media outlets, employees or management of a corporation or business
in direct competition with Executive, or otherwise publish statements or
representations to the public at large which may be actionable, that
disparage, characterize in demeaning manner or question the Executive’s business practices,
products, advice, quality of employees and staff, or otherwise harm the public
reputation or good will of the Executive, his employees, or management.

 

8

 

17.                                 Indemnity;
Cooperation in Legal Actions.

 

17.1.                        Indemnity.  The
Company will indemnify Executive against any claims arising from or related to
his good faith performance of his duties and obligations hereunder to the
fullest extent allowed by Company By-laws and Minnesota law.

 

17.2.                        Cooperation in
Legal Actions.  In
connection with any action or proceeding against Executive, whether pending or
threatened, for which the Company is obliged to indemnify Executive, the
Company will pay or reimburse Executive in advance of the final disposition for
reasonable expenses, including reasonable attorneys’ fees, necessarily incurred
by Executive.  Executive will cooperate
fully with the Company, at no expense to Executive, in the defense of any
action, suit, claim, or proceeding commenced or threatened against the Company
in conjunction with any action, suit, claim or proceeding commenced or
threatened against him.  In addition to
the foregoing, Executive further agrees to provide assistance to the Company,
at the Company’s expense, as may be reasonably requested by the Company or its
attorneys in connection with the litigation of any action, suit, claim, or
proceeding involving the Company, whether not pending or to be commenced, which
arises out of or is related to any matters in which Executive was involved or
for which he was responsible during the term of his employment with the Company.

 

18.                                 Survival.

 

The
rights and obligations set forth in Sections 8-17 and 22 shall survive the
termination or expiration of this Agreement, regardless of whether Executive resigns or is involuntarily discharged.

 

19.                                 Miscellaneous.

 

19.1.                        Headings; Construction.  The headings of Sections and paragraphs
herein are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions of this Agreement.  This Agreement shall be construed without
regard to any presumption or other rule requiring construction hereof
against the party causing this Agreement to be drafted.

 

19.2.                        Benefit. 
Subject to Section 17, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.

 

19.3.                        Waiver.  Any
delay by either party in asserting a right under this Agreement or any failure
by either party to assert a right under this Agreement will not constitute a
waiver by the asserting party of any right hereunder, and the asserting party
may subsequently assert any or all of its rights hereunder as if the delay or
failure to assert rights had not occurred.

 

19.4.                        Severability.  If the final determination of a court of competent
jurisdiction declares, after the expiration of the time within which judicial
review (if permitted) of such determination may be perfected, that any term of
provision hereof is invalid or unenforceable, (a) the remaining terms and
provisions hereof shall be unimpaired, and (b) the invalid or
unenforceable term or provision shall be deemed replaced by a term or provision

 

9

 

that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision.

 

20.           Entire
Agreement;
Amendment.

 

20.1.        Entire Agreement.  Both Executive and the Company agree that
this Agreement and Exhibit A to this Agreement (Executive’s stock option agreement) constitute the
entire agreement between them with respect to the subject matter thereof.  There were no inducements or representations
leading to the execution of this Agreement except as stated in this
Agreement.  Accordingly, this Agreement
(together with Exhibit A to this Agreement) expressly supersedes any and
all prior oral and written agreements, representations and promises between the
parties relating to Executive’s employment with the Company.

 

20.2.        Amendment.  This Agreement may be amended or modified
only with the written consent of both Executive and the Company.  No oral waiver, amendment or modification
will be effective under any circumstances whatsoever.

 

21.           Notices.

 

21.1.        Any notice hereunder by either party to the other
shall be given in writing by personal delivery or certified mail, return receipt requested.  If addressed to Executive, the notice shall
be delivered or mailed to Executive at the address most recently communicated
in writing by Executive to the Company, or if addressed to the company, the notice
shall be delivered or mailed to the Company at its executive offices to the
attention of the Board of Directors of the Company with a copy to the attention of the General Counsel. 
A notice shall be deemed given, if by personal delivery, on the date of
such delivery or, if by certified mail, on the delivery date shown on the
applicable return receipt.

 

22.           Governing Law;
Disputes; Arbitration of Termination of Employment for Cause.

 

22.1.        Governing Law;
Disputes.  This Agreement will be
governed by and construed in accordance with the laws of the State of
Minnesota, as such laws are applied to agreements entered into and to be
performed entirely within Minnesota between Minnesota residents.  Except as set forth in Section 22.2
below, the undersigned each irrevocably consent to the jurisdiction of the
United States District Court for the District of Minnesota and the courts of
the State of Minnesota in any suit, action, or proceeding brought under, based on or related
to or in connection with this Agreement, and each of the undersigned agrees
that either of the aforesaid courts will be the exclusive original forum for
any such action.

 

22.2.        Arbitration of
Termination of Employment for Cause.  Any dispute arising out of or relating to
termination of Executive’s employment for Cause pursuant to Section 6 of
this Agreement, shall be discussed between the disputing parties in a good
faith effort to arrive at a mutual settlement of any such controversy.  If, notwithstanding, such dispute cannot be resolved,
such dispute shall be settled by binding arbitration.  Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.  The arbitrator shall be a retired state or
federal judge or an attorney who has practiced securities or business law or business litigation
for at least 20 years.  If the parties 

 

10

 

cannot agree on an arbitrator
within 20 days, any party may request that the chief judge of the District
Court for Hennepin County, Minnesota, select an arbitrator.  Arbitration will be conducted pursuant to the
provisions of this Agreement, and the employment arbitration rules of the
American Arbitration Association, unless such rules are inconsistent with
the provisions of this Agreement. 
Limited civil discovery shall be permitted for the production of
documents and taking of depositions. 
Unresolved discovery disputes may be brought to the attention of the
arbitrator who may dispose of such dispute. 
The arbitrator shall have the authority to award any remedy or relief
that a court of this state could order or grant; provided, however, that punitive
or exemplary damages shall not be awarded. 
The Company shall pay the fees and expenses of the arbitrator.  Unless otherwise agreed by the parties, the
exclusive location of any arbitration proceedings shall be Hennepin County,
Minnesota.

 

23.           Code Section 409A.  Notwithstanding anything herein
to the contrary, to the maximum extent permitted by applicable law, amounts
payable to Executive pursuant to Section 7 shall be made in reliance upon
Treas. Reg. Section 1.409A-1(b)(9) (Separation Pay Plans) or Treas.
Reg. Section 1.409A-1(b)(4) (Short-Term Deferrals).  For this purpose, each payment shall be
considered a separate and distinct payment. 
However, to the extent any such payments are treated as non-qualified
deferred compensation subject to Section 409A of  the Internal Revenue Code of 1986, as amended
(the “Code”), then (i) no amount shall be payable pursuant to Section 7.4
unless Executive’s termination of employment constitutes a “separation from service”
within the meaning of Treas. Reg. Section 1.409A-1(h) and (ii) if
Executive is deemed at the time of his separation from service to be a “specified
employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then
to the extent delayed commencement of any portion of the termination benefits
to which Executive is entitled under this Agreement is required in order to
avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the
Code, such portion of Executive’s termination benefits shall not be provided to
Executive prior to the earlier of (i) the expiration of the six-month period
measured from the date of Executive’s “separation from service” with the
Company (as such term is defined in the Treasury Regulations issued under Section 409A
of the Code) or (ii) the date of Executive’s death.  Upon the earlier of such dates, all payments
deferred pursuant to this Section 23 shall be paid in a lump sum to
Executive, and any remaining payments due under the Agreement shall be paid as
otherwise provided herein.  The
determination of whether Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of
the Code as of the time of his separation from service shall be made by the
Company in accordance with the terms of Section 409A of the Code and applicable
guidance thereunder (including without limitation Treas. Reg. Section 1.409A-1(i) and
any successor provision thereto).

 

The parties acknowledge and
agree that, to the extent applicable, this Agreement shall be interpreted in
accordance with, and the parties agree to use their best efforts to achieve
timely compliance with, Section 409A of the Code and the Department of
Treasury Regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other guidance that may be
issued after the date hereof.

 

[SIGNATURES ON FOLLOWING PAGE]

 

11

 

IN WITNESS WHEREOF, the parties have executed this Employment Agreement by their signatures below:

 

	
  Analysts
  International Corporation

  	
   

  	
  Andrew
  K. Borgstrom (“Executive”)

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  K.K. Burhardt

  	
   

  	
  By:

  	
  /s/
  A. Borgstrom

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chair,
  Board of Directors

  	
   

  	
  Date
  signed:

  	
  12.17.09

  
	
   

  	
   

  	
   

  	
   

  
	
  Date
  signed:

  	
  12.17.09

  	
   

  	
   

  
							

 

12

 

Exhibit A

 

INCENTIVE STOCK OPTION
AGREEMENT

 

ANALYSTS INTERNATIONAL
CORPORATION

2009 EQUITY INCENTIVE PLAN

 

THIS AGREEMENT, made effective as of this 17th day of December, 2009,
by and between Analysts International Corporation, a Minnesota corporation (the
“Company”), and Andrew K. Borgstrom (“Participant”).

 

W I T N E S S E T H:

 

WHEREAS, Participant on the date hereof is a key employee or officer of
the Company or one of its Affiliates; and

 

WHEREAS, the Company wishes to grant an incentive stock option to
Participant to purchase shares of the Company’s Common Stock pursuant to the
Company’s 2009 Equity Incentive Plan (the “Plan”); and

 

WHEREAS, the Administrator of the Plan has authorized the grant of an
incentive stock option to Participant and has determined that, as of the
effective date of this Agreement, the fair market value of the Company’s Common
Stock is $0.6814 per share;

 

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

 

1.             Grant
of Option.  The Company
hereby grants to Participant on the date set forth above (the “Date of Grant”),
the right and option (the “Option”) to purchase all or portions of an aggregate
of Seven Hundred Fifty Thousand (750,000) shares of Common Stock, according to
the terms and conditions hereinafter set forth and as set forth in the Plan,
and subject to adjustment pursuant to Section 14 of the Plan. The per
share price to be paid by Participant in the event of an exercise of the Option
shall be $0.6814.  This Option is
intended to be an incentive stock option within the meaning of Section 422,
or any successor provision, of the Internal Revenue Code of 1986, as amended
(the “Code”), and the regulations thereunder, to the extent permitted under
Code Section 422(d).

 

2.             Duration
and Exercisability.

 

a.             General.  The term during which this Option may be
exercised shall terminate on December 16, 2014, except as otherwise
provided in Paragraphs 2(b) through 2(d) below. This Option shall
become immediately exercisable as to One Hundred Eight-Seven Thousand Five
Hundred (187,500) shares. The remaining shares shall vest as to One Hundred
Eight-Seven Thousand Five Hundred (187,500) shares each year, on the
anniversary date of the Date of Grant, commencing on December 17, 2010,
and continuing until the shares are fully

 

 

exercisable.
 Once the Option becomes exercisable in
accordance with the preceding schedule as to any number of the shares specified
in Paragraph 1, Participant may continue to exercise this Option with respect
to such shares under the terms and conditions of this Agreement until the
termination of the Option as provided herein. 
If Participant does not purchase upon an exercise of this Option the
full number of shares which Participant is then entitled to purchase,
Participant may purchase upon any subsequent exercise prior to this Option’s
termination such previously unpurchased shares in addition to those Participant
is otherwise entitled to purchase.

 

b.             Termination
of Employment (other than Disability or Death).  If Participant’s employment with the Company
or any Affiliate is terminated for any reason other than disability or death,
this Option shall completely terminate on the earlier of (i) the close of
business on the three-month anniversary date of such termination of employment,
and (ii) the expiration date of this Option stated in Paragraph 2(a) above.  In such period following the termination of
Participant’s employment, this Option shall be exercisable only to the extent
the Option was exercisable on the vesting date immediately preceding such
termination of employment, but had not previously been exercised.  To the extent this Option was not exercisable
upon such termination of employment, or if Participant does not exercise the
Option within the time specified in this Paragraph 2(b), all rights of
Participant under this Option shall be forfeited.

 

c.             Disability.  If Participant’s employment terminates
because of disability (as defined in Code Section 22(e), or any successor
provision), this Option shall terminate on the earlier of (i) the close of
business on the twelve-month anniversary date of such termination of
employment, and (ii) the expiration date of this Option stated in
Paragraph 2(a) above. In such period following the termination of
Participant’s employment, this Option shall be exercisable only to the extent
the Option was exercisable on the vesting date immediately preceding such
termination of employment, but had not previously been exercised.  To the extent this Option was not exercisable
upon such termination of employment, or if Participant does not exercise the
Option within the time specified in this Paragraph 2(c), all rights of
Participant under this Option shall be forfeited.

 

d.             Death.  In the event of Participant’s death, this
Option shall terminate on the earlier of (i) the close of business on the
twelve-month anniversary of the date of Participant’s death, and (ii) the
expiration date of this Option stated in Paragraph 2(a) above.  In such period following Participant’s death,
this Option may be exercised by the person or persons to whom Participant’s
rights under this Option shall have passed by Participant’s will or by the laws
of descent and distribution only to the extent the Option was exercisable on
the vesting date immediately preceding the date of Participant’s death, but had
not previously been exercised. To the extent this Option was not exercisable
upon the date of Participant’s death, or if such person or persons fail to
exercise this Option within the time specified in this Paragraph 2(d), all
rights under this Option shall be forfeited.

 

3.             Manner
of Exercise.

 

a.             General.  The Option may be exercised only by
Participant (or other proper party in the event of death or incapacity),
subject to the conditions of the Plan and subject to such other administrative rules as
the Administrator may deem advisable, by delivering within the option

 

2

 

period
written notice of exercise to the Company at its principal office. The notice
shall state the number of shares as to which the Option is being exercised and
shall be accompanied by payment in full of the option price for all shares
designated in the notice.  The exercise
of the Option shall be deemed effective upon receipt of such notice by the Company
and upon payment that complies with the terms of the Plan and this
Agreement.  The Option may be exercised
with respect to any number or all of the shares as to which it can then be
exercised and, if partially exercised, may be so exercised as to the
unexercised shares any number of times during the option period as provided
herein.

 

b.             Form of
Payment.  Subject to
the approval of the Administrator, payment of the option price by Participant
shall be made (i) in cash, or with a personal check or certified check, (ii) by
the transfer from Participant to the Company of previously acquired shares of
Common Stock, (iii) through the withholding of shares of Common Stock from
the number of shares otherwise issuable upon the exercise of the Option (e.g., a net share settlement), (iv) through
broker-assisted cashless exercise, or (v) by a combination thereof.  For purposes of this Agreement, “previously
acquired shares of Common Stock” shall include shares of Common Stock that are
already owned by Participant at the time of exercise.

 

c.             Stock
Transfer Records.  As soon as
practicable after the effective exercise of all or any part of the Option,
Participant shall be recorded on the stock transfer books of the Company as the
owner of the shares purchased, and the Company shall deliver to Participant one
or more duly issued stock certificates evidencing such ownership.  All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company.

 

4.             Miscellaneous.

 

a.             Employment or Other Relationship; Rights
as Shareholder.  This Agreement
shall not confer on Participant any right with respect to the continuance of
employment or any other relationship with the Company or any of its Affiliates,
nor will it interfere in any way with the right of the Company to terminate
such employment or relationship. 
Participant shall have no rights as a shareholder with respect to shares
subject to this Option until such shares have been issued to Participant upon
exercise of this Option.  No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property), distributions or other rights for which the
record date is prior to the date such shares are issued, except as provided in Section 14
of the Plan.

 

b.             Securities
Law Compliance.  The
exercise of all or any parts of this Option shall only be effective at such
time as counsel to the Company shall have determined that the issuance and
delivery of Common Stock pursuant to such exercise will not violate any state
or federal securities or other laws. 
Participant may be required by the Company, as a condition of the
effectiveness of any exercise of this Option, to agree in writing that all
Common Stock to be acquired pursuant to such exercise shall be held, until such
time that such Common Stock is registered and freely tradable under applicable
state and federal securities laws, for Participant’s own account without a view
to any further distribution thereof, that the certificates for such shares
shall bear an appropriate legend to that effect and that such shares will be
not transferred or disposed of except in compliance with applicable state and
federal securities laws.

 

3

 

c.             Mergers,
Recapitalizations, Stock Splits, Etc.  Except as otherwise specifically provided in
any employment, change of control, severance or similar agreement executed by
the Participant and the Company, pursuant and subject to Section 14 of the
Plan, certain changes in the number or character of the Common Stock of the
Company (through sale, merger, consolidation, exchange, reorganization,
divestiture (including a spin-off), liquidation, recapitalization, stock split,
stock dividend or otherwise) shall result in an adjustment, reduction or
enlargement, as appropriate, in Participant’s rights with respect to any
unexercised portion of the Option (i.e., Participant shall have such “anti-dilution”
rights under the Option with respect to such events, but shall not have “preemptive”
rights).

 

d.             Shares
Reserved.  The Company
shall at all times during the option period reserve and keep available such
number of shares as will be sufficient to satisfy the requirements of this
Agreement.

 

e.             Withholding  Taxes.  To
permit the Company to comply with all applicable federal and state income tax
laws or regulations, the Company may take such action as it deems appropriate
to ensure that, if necessary, all applicable federal and state payroll, income
or other taxes are withheld from any amounts payable by the Company to
Participant.  If the Company is unable to
withhold such federal and state taxes, for whatever reason, Participant hereby
agrees to pay to the Company an amount equal to the amount the Company would
otherwise be required to withhold under federal or state law.  Subject
to such rules as the Administrator may adopt, the Administrator may, in
its sole discretion, permit Participant to satisfy such withholding tax
obligations, in whole or in part (i) by delivering shares of Common Stock,
or (ii) by electing to have the Company withhold shares of Common Stock
otherwise issuable to Participant, in either case having a Fair Market Value,
as of the date the amount of tax to be withheld is determined under applicable
tax law, equal to the minimum amount
required to be withheld for tax purposes. 
Participant’s request to deliver shares or to have shares withheld for
purposes of such withholding tax obligations shall be made on or before the
date that triggers such obligations or, if later, the date that the amount of
tax to be withheld is determined under applicable tax law.  Participant’s request shall be approved by
the Administrator and otherwise comply with such rules as the
Administrator may adopt to assure compliance with Rule 16b-3 or any
successor provision, as then in effect, of the General Rules and
Regulations under the Securities and Exchange Act of 1934, if applicable.

 

f.              Nontransferability.  During the lifetime of Participant, the
accrued Option shall be exercisable only by Participant or by the Participant’s
guardian or other legal representative, and shall not be assignable or
transferable by Participant, in whole or in part, other than by will or by the
laws of descent and distribution.

 

g.             2009
Equity Incentive Plan.  The
Option evidenced by this Agreement is granted pursuant to the Plan, a copy of
which Plan has been made available to Participant and is hereby incorporated
into this Agreement.  This Agreement is
subject to and in all respects limited and conditioned as provided in the Plan.
All defined terms of the Plan shall have the same meaning when used in this
Agreement.  The Plan governs this Option
and, in the event of any

 

4

 

questions
as to the construction of this Agreement or in the event of a conflict between
the Plan and this Agreement, the Plan shall govern, except as the Plan
otherwise provides.

 

h.             Lockup
Period Limitation. 
Participant agrees that in the event the Company advises Participant
that it plans an underwritten public offering of its Common Stock in compliance
with the Securities Act of 1933, as amended, and that the underwriter(s) seek
to impose restrictions under which certain shareholders may not sell or
contract to sell or grant any option to buy or otherwise dispose of part or all
of their stock purchase rights of the underlying Common Stock, Participant
hereby agrees that for a period not to exceed 180 days from the prospectus,
Participant will not sell or contract to sell or grant an option to buy or
otherwise dispose of this Option or any of the underlying shares of Common
Stock without the prior written consent of the underwriter(s) or its
representative(s).

 

i.              Blue
Sky Limitation. Notwithstanding anything in
this Agreement to the contrary, in the event the Company makes any public
offering of its securities and it is determined that it is necessary to reduce
the number of issued but unexercised stock purchase rights so as to comply with
any state securities or Blue Sky law limitations with respect thereto, and such
determination is affirmed by the Board of Directors, unless the Board of
Directors determines otherwise, (i) the exercisability of this Option and
the date on which this Option must be exercised shall be accelerated, provided
that the Company agrees to give Participant 15 days’ prior written notice of
such acceleration, and (ii) any portion of this Option or any other option
granted to Participant pursuant to the Plan which is not exercised prior to or
contemporaneously with such public offering shall be canceled.  Notice shall be deemed given when delivered
personally or when deposited in the United States mail, first class postage
prepaid and addressed to Participant at the address of Participant on file with
the Company.

 

j.              Accounting
Compliance.  Participant
agrees that, if a merger, reorganization, liquidation or other “transaction” as
defined in Section 14 of the Plan occurs and Participant is an “affiliate”
of the Company or any Affiliate (as defined in applicable legal and accounting
principles) at the time of such transaction, Participant will comply with all
requirements of Rule 145 of the Securities Act of 1933, as amended, and
the requirements of such other legal or accounting principles, and will execute
any documents necessary to ensure such compliance.

 

k.             Stock
Legend.  The
Administrator may require that the certificates for any shares of Common Stock
purchased by Participant (or, in the case of death, Participant’s successors)
shall bear an appropriate legend to reflect the restrictions of Paragraph 4(b) and
Paragraphs 4(g) through 4(i) of this Agreement; provided, however,
that failure to so endorse any of such certificates shall not render invalid or
inapplicable Paragraph 4(b) or Paragraphs 4(g) through 4(i).

 

l.              Scope
of Agreement.  This
Agreement shall bind and inure to the benefit of the Company and its successors
and assigns and Participant and any successor or successors of Participant
permitted by Paragraph 2 or Paragraph 4(f) above.

 

5

 

m.            Arbitration.  Any
dispute arising out of or relating to this Agreement or the alleged breach of
it, or the making of this Agreement, including claims of fraud in the
inducement, shall be discussed between the disputing parties in a good faith
effort to arrive at a mutual settlement of any such controversy.  If, notwithstanding, such dispute cannot be
resolved, such dispute shall be settled by binding arbitration.  Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.  The arbitrator shall be a retired state or
federal judge or an attorney who has practiced securities or business
litigation for at least 10 years.  If the
parties cannot agree on an arbitrator within 20 days, any party may request
that the chief judge of the District Court for Hennepin County, Minnesota,
select an arbitrator.  Arbitration will
be conducted pursuant to the provisions of this Agreement, and the commercial
arbitration rules of the American Arbitration Association, unless such rules are
inconsistent with the provisions of this Agreement.  Limited civil discovery shall be permitted
for the production of documents and taking of depositions.  Unresolved discovery disputes may be brought
to the attention of the arbitrator who may dispose of such dispute.  The arbitrator shall have the authority to
award any remedy or relief that a court of this state could order or grant;
provided, however, that punitive or exemplary damages shall not be
awarded.  The arbitrator may award to the
prevailing party, if any, as determined by the arbitrator, all of its costs and
fees, including the arbitrator’s fees, administrative fees, travel expenses,
out-of-pocket expenses and reasonable attorneys’ fees.  Unless otherwise agreed by the parties, the
place of any arbitration proceedings shall be Hennepin County, Minnesota.

 

5.             Change
of Control. 
Notwithstanding anything in the Plan or this Agreement to the contrary,
this Option shall become fully vested and exercisable upon a “Change of Control”
as defined in the Plan.

 

ACCORDINGLY, the parties hereto have caused this Agreement to be
executed on the day and year first above written.

 

	
   

  	
  ANALYSTS
  INTERNATIONAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Participant

  

 

6

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