NONQUALIFIED STOCK OPTION AGREEMENT ANALYSTS INTERNATIONAL CORP.
EXHIBIT
10.3
2004
EQUITY INCENTIVE PLAN
THIS
AGREEMENT, made effective as of
this 1st day of November, 2007, by and between Analysts International Corp.,
a
Minnesota corporation (the “Company”), and Xxxxx Xxxxxxx
(“Participant”).
W
I T N E S S E T H:
WHEREAS,
Participant on the date hereof
is a key employee, officer or director of the Company or one of its
Subsidiaries; and
WHEREAS,
the Company wishes to grant a
nonqualified stock option to Participant to purchase shares of the Company’s
Common Stock pursuant to the Company’s 2004 Equity Incentive Plan (the “Plan”);
and
WHEREAS,
the Administrator of the Plan
has authorized the grant of a nonqualified 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 $1.65 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 one hundred thousand
five hundred seventy-six (100,576) shares of Common Stock at a per share price
of $1.65 on the terms and conditions set forth herein, and subject to adjustment
pursuant to Section 12 of the Plan. This Option is a nonqualified
stock option and will not be treated as an incentive stock option, as defined
under Section 422, or any successor provision, of the Internal Revenue Code
of
1986, as amended (the “Code”), and the regulations thereunder.
2. Duration
and Exercisability.
a. General. The
term during which this Option may be exercised shall terminate on the close
of
business on November 1, 2017, except as otherwise provided
in Paragraphs 2(b) through 2(d) below. This Option shall become
exercisable according to the following schedule:
1
|
Vesting
Date
|
Number/Percentage
of Shares
|
|
Date
of Grant
|
25%
|
|
First
Anniversary of Date of Grant
|
50%
|
|
Second
Anniversary of Date of Grant
|
75%
|
|
Third
Anniversary of Date of Grant
|
100%
|
In
the
event of a Change of Control (as defined in Exhibit A to Participant’s
employment agreement) on or after May 1, 2009, the Option shall vest immediately
and be fully exercisable
Once
the
Option becomes fully exercisable, Participant may continue to exercise this
Option 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 Relationship (other than Disability or Death). If
Participant ceases to be an employee of the Company or any Subsidiary 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 the termination of such relationship, and (ii) the
expiration date of this Option stated in Paragraph 2(a) above. In
such period following such termination, this Option shall be exercisable only
to
the extent the Option was exercisable on the vesting date immediately preceding
the date on which Participant’s relationship with the Company or Subsidiary has
terminated, but had not previously been exercised. To the extent this
Option was not exercisable upon the termination of such relationship, 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 ceases to be an employee of the Company or any Subsidiary because
of
disability (as defined in Code Section 22(e), or any successor provision),
this
Option shall completely terminate on the earlier of (i) the close of business
on
the twelve-month anniversary date of the termination of all
such relationships, and (ii) the expiration date of this Option stated in
Paragraph 2(a) above. In such period following such termination, this
Option shall be exercisable only to the extent the Option was exercisable on
the
vesting date immediately preceding the date on which all of Participant’s
relationships with the Company or Subsidiary have terminated, but had not
previously been exercised. To the extent this Option was not
exercisable upon the termination of such relationship, 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 date
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. 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.
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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 Board may deem advisable, by delivering
within the option 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 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 in the form
of cash, personal check, certified check or previously acquired shares of Common
Stock of the Company, or any combination thereof. Any stock so
tendered as part of such payment shall be valued at its Fair Market Value as
provided in the Plan. 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. Rights
as Shareholder. This Agreement shall not confer on
Participant any right with respect to the continuance of any relationship with
the Company or any of its Subsidiaries, nor will it interfere in any way with
the right of the Company to terminate any such
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 12 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
3
own
account without a view to any further distribution thereof and that such shares
will be not transferred or disposed of except in compliance with applicable
state and federal securities laws.
c. Mergers,
Recapitalizations, Stock Splits, Etc. Pursuant and
subject to Section 12 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. In
order to permit the
Company to comply with all applicable federal or state income tax laws or
regulations, the Company may take such action as it deems appropriate to insure
that, if necessary, all applicable federal or 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. Participant may, subject to the
approval and discretion of the Board or such administrative rules it may deem
advisable, elect to have all or a portion of such tax withholding obligations
satisfied by delivering shares of the Company’s Common Stock or by electing to
have the Company withhold shares of Common Stock
otherwise
issuable to Participant. Such shares shall have a Fair Market Value
equal to the minimum required tax withholding, based on the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes,
that are applicable to the supplemental income resulting from the exercise
of
this Option. In no event may the Company withhold shares having a
Fair Market Value in excess of such statutory minimum required tax withholding.
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. 2004
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 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.
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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 determines in its sole discretion 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, the Board of Directors of the Company shall have the right (i) to
accelerate the exercisability of this Option and the date on which this Option
must be exercised, provided that the Company gives Participant 15 days’ prior
written notice of such acceleration, and (ii) to cancel 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. 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 12 of
the Plan occurs and Participant is an “affiliate” of the Company or any
Subsidiary (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 Board 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(h) through 4(j) of this
Agreement.
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.
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
5
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.
IN
WITNESS WHEREOF, the parties hereto
have caused this Agreement to be executed on the day and year first above
written.
|
ANALYSTS
INTERNATIONAL CORPORATION
|
|
|
By
|
_______________________________________ |
|
Its
|
_______________________________________ |
| ________________________________________ | |
|
Participant
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