INCENTIVE STOCK OPTION AGREEMENT ANALYSTS INTERNATIONAL CORP.
EXHIBIT
10-y
2004
EQUITY INCENTIVE PLAN
THIS
AGREEMENT, made effective as of this ____ day of _____________, 20____, by and
between Analysts International Corp., a Minnesota corporation (the “Company”),
and _______________________________ (“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 Subsidiaries; 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 2004 Equity
Incentive Plan (the “Plan”); and
WHEREAS,
the Board of Directors 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 $ 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
( ) shares
of Common Stock at a per share price of $ on the
terms and conditions set forth herein, and subject to adjustment pursuant to
Section 12 of the Plan. 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 the close of
business on [insert date 10 years from date of grant], 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
of Shares
[unless
otherwise specified, grants shall vest 25% each year for four years
beginning
one year after the date of grant]
Once the
Option becomes exercisable to the extent of one hundred percent (100%) of the
aggregate number of shares specified in Paragraph 1, 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 Employment (other than Disability or Death). If
Participant’s employment with the Company or any Subsidiary 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 the
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 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 shall be exercisable 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
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upon the
date of Participant’s death, or if such person or persons do not 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 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 so exercised as to the
unexercised shares any number of times during the Option period as provided
herein.
b. Form
of Payment. Subject
to approval by 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. Employment;
Rights as Shareholder. This
Agreement shall not confer on Participant any right with respect to continuance
of employment by the Company or any of its Subsidiaries, nor will it interfere
in any way with the right of the Company to terminate such employment.
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
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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.
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 on Disqualifying Disposition. In the
event of a
disqualifying
disposition of the shares acquired through the exercise of this Option,
Participant hereby agrees to inform the Company of such disposition. Upon notice
of a disqualifying disposition, the Company may take such action as it deems
appropriate to insure that, if necessary to comply with all applicable federal
or state income tax laws or regulations, 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. 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
disqualifying disposition of the shares acquired through 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. The Plan governs this Option and, in
the event of any
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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 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
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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.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on
the day and year first above written.
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