INCENTIVE STOCK OPTION AGREEMENT ANALYSTS INTERNATIONAL CORP.
Exhibit
10-kk
2004
EQUITY INCENTIVE PLAN
THIS
AGREEMENT, made effective as of this ____ day of January 3, 2007, 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”);
WHEREAS,
certain of the terms of this Stock Option Agreement (the “Agreement”) are
included herein pursuant to the Company’s 2007 Long-Term Incentive 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 $1.91 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 (the “Shares”) at a per share price of $1.91 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 January 2, 2017, except as otherwise provided in Paragraphs 2(b)
through 2(d) below. This Option shall become exercisable according to the
following terms:
(i)
If
the
Company’s audited annual period financial statements for its 2007 fiscal year
demonstrate that the Company generated positive net income during its 2007
fiscal year (“2007 Net Income”), the Option granted hereunder shall become
exercisable with respect to 331/3%
of the
Shares;
(ii)
If the
Company’s audited annual period financial statements for its 2008 fiscal year
demonstrate that the Company’s 2008 net income was at least five percent (5%)
greater than the 2007 Net Income, the Option granted hereunder shall become
exercisable with respect to 331/3%
of the
Shares;
(iii) If
the
Company’s audited annual period financial statements for its 2009 fiscal year
demonstrate that the Company’s 2009 net income was at least ten percent (10%)
greater than the 2007 Net Income, the Option granted hereunder shall become
exercisable with respect to 331/3%
of the
Shares;
If
the
vesting provisions of any of the Sections 2(a)(i)-2(a)(iii) are not satisfied
for any vesting period, the Option that would have become exercisable with
respect to such Shares shall be forfeited only with respect to such period
in
which the vesting provisions were not satisfied. Once the Option becomes
exercisable with respect to any portion of the Shares, 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 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 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 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, which 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 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 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.
|
ANALYSTS
INTERNATIONAL CORPORATION
|
|
|
By
|
__________________________________ |
|
Its
|
__________________________________ |
| __________________________________ | |
|
Participant
|
