exhibit10_4.htm


    EXHIBIT
      10.4

    


    


    NONQUALIFIED
      STOCK OPTION AGREEMENT

    


    ANALYSTS
      INTERNATIONAL CORPORATION

    2000
      NONQUALIFIED STOCK OPTION PLAN

    


    


    THIS
      AGREEMENT, made effective as of
      this 1st day of
      November, 2007, by and between Analysts International Corporation, a Minnesota
      corporation (the “Company”), and Elmer Baldwin (“Optionee”).

    


    W
      I T N E
      S S E T H:

    


    WHEREAS,
      Optionee on the date hereof is
      a key employee or officer of the Company or its Affiliate; and

    


    WHEREAS,
      the Administrator has
      authorized the grant of a nonqualified stock option to Optionee;

    


    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 Optionee 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 fifty-seven thousand
      157,000 shares of Common Stock (the “Stock”) at a per share price of $1.65 on
      the terms and conditions set forth herein, and subject to adjustment pursuant
      to
      Section 11 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 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:

    


    


    
      	 	
              Cumulative
                Percentage

            
	
              Vesting
                Date

            	
              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%

            


    

    


    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    In
      the
      event of a Change of Control (as defined in Exhibit A to Optionee’s employment
      agreement) on or after May 1, 2009, the Option shall vest immediately and be
      fully exercisable

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

    


    b.           Termination
      of Employment (Other Than Disability or Death).  If
      Optionee ceases to be an employee of the Company or an Affiliate 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 employment, 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
      Optionee’s employment with the Company or Affiliate has terminated, but had not
      previously been exercised.  To the extent this Option was not
      exercisable upon the termination of such employment, or if Optionee does not
      exercise the Option within the time specified in this Paragraph 2(b), all rights
      of Optionee under this Option shall be forfeited.

    


    c.           Disability.  If
      Optionee ceases to be an employee of the Company or an Affiliate 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 such employment, 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 Optionee’s employment with the
      Company or Affiliate have terminated, but had not previously been
      exercised.  To the extent this Option was not exercisable upon the
      termination of such relationship, or if Optionee does not exercise the Option
      within the time specified in this Paragraph 2(c), all rights of Optionee under
      this Option shall be forfeited.

    


    d.           Death.  In
      the event of Optionee’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
      Optionee’s death, and (ii) the expiration date of this Option stated in
      Paragraph 2(a) above.  In such period following Optionee’s death, this
      Option may be exercised by the person or persons to whom Optionee’s rights under
      this Option shall have passed by Optionee’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 Optionee’s death, but had not previously been
      exercised.  To the extent this Option was not exercisable upon the
      date of Optionee’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 Optionee (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 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.

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    b.           Form
      of Payment.  Subject to the approval of the
      Administrator, payment of the option price by Optionee shall be in the form
      of
      cash, personal check, certified check or previously acquired shares of 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-owned shares” means
      shares of Stock which the Optionee has owned for at least six (6) months prior
      to the exercise of the stock option, or for such other period of time as may
      be
      required by generally accepted accounting principles.

    


    c.           Stock
      Transfer Records.  As soon as practicable after the
      effective exercise of all or any part of the Option, Optionee shall be recorded
      on the stock transfer books of the Company as the owner of the shares purchased,
      and the Company shall deliver to Optionee 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
      Optionee any right with respect to the continuance of any relationship with
      the
      Company or any of its Affiliates,  nor will it interfere in any way
      with the right of the Company to terminate any such
      relationship.  Optionee shall have no rights as a shareholder with
      respect to shares subject to this Option until such shares have been issued
      to
      Optionee 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 11 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 Stock pursuant to such exercise
      will not violate any state or federal securities or other
      laws.  Optionee may be required by the Company, as a condition of the
      effectiveness of any exercise of this Option, to agree in writing that all
      Stock
      to be acquired pursuant to such exercise shall be held, until such time that
      such Stock is registered and freely tradable under applicable state and federal
      securities laws, for Optionee’s 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.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    c.           Mergers,
      Recapitalizations, Stock Splits, Etc.  Pursuant and
      subject to Section 11 of the Plan, certain changes in the number or character
      of
      the 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 Optionee’s rights with
      respect to any unexercised portion of the Option (i.e., Optionee 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 Optionee.  If the Company is unable to withhold such
      federal and state taxes, for whatever reason, Optionee 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
      a
      Optionee to satisfy such withholding tax obligations, in whole or in part (i)
      by
      delivering shares of Stock of having an equivalent fair market value, or (ii)
      by
      electing to have the Company withhold shares of Stock otherwise issuable to
      Optionee having 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 option.  In no event may the
      Company or Affiliate withhold shares having a Fair Market Value in excess of
      such statutory minimum required tax withholding.  Optionee’s election
      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.  Optionee’s election 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 Optionee, the accrued Option shall be exercisable only by
      Optionee or by the Optionee’s guardian or other legal representative, and shall
      not be assignable or transferable by Optionee, in whole or in part, other than
      by will or by the laws of descent and distribution.

    


    g.           2000
      Stock Option Plan.  The Option evidenced by this
      Agreement is granted pursuant to the Plan, a copy of which Plan has been made
      available to Optionee 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.

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    h.           Lockup
      Period Limitation.  Optionee agrees that in the event the
      Company advises Optionee 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,
      Optionee hereby agrees that for a period not to exceed 180 days from the
      prospectus, Optionee 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 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 Administrator 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 Optionee 15 days’ prior written
      notice of such acceleration, and (ii) to cancel any portion of this Option
      or
      any other option granted to Optionee 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 Optionee at the address
      of
      Optionee on file with the Company.

    


    j.           Accounting
      Compliance.  Optionee agrees that, if a merger,
      reorganization, liquidation or other “transaction” as defined in Section 11 of
      the Plan is treated as a “pooling of interests” under generally accepted
      accounting principles and Optionee is an “affiliate” of the Company or any
      Subsidiary (as defined in applicable legal and accounting principles) at the
      time of such transaction, Optionee 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 Optionee (or, in the
      case of death, Optionee’s successors) shall bear an appropriate legend to
      reflect the restrictions of Paragraph 4(b) and Paragraphs 4(h) through 4(k)
      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 Optionee and any
      successor or successors of Optionee 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.

     

    


    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

            	 _______________________________________
	 	 
	 	 _______________________________________
	 	
              Optionee

            


    

    


    



    
      
        
        

      

      
        6