Nonqualified Stock Option Agreement for Board Members










EXHIBIT
10-u




NONQUALIFIED
STOCK OPTION AGREEMENT

FOR
BOARD MEMBERS




ANALYSTS
INTERNATIONAL CORP. 

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 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 Board of Directors 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 $____ 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 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  ,
 , except as
otherwise provided in Paragraphs 2(b) through 2(e) below. This Option shall
become exercisable according to the following schedule:





















 

Vesting
Date    Number/Percentage
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 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 Retirement, Disability or
Death). If
Participant ceases to be a director of the Company or any Subsidiary for any
reason other than retirement, 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. Retirement. If
Participant ceases to be a director of the Company or any Subsidiary because of
retirement, this Option shall completely terminate on the earlier of (i) the
close of business on the five-year
anniversary of the
date of the termination of such relationship, and (ii) the expiration date
of this Option stated in Paragraph 2(a) above. Upon such termination, this
Option shall immediately become fully exercisable to the extent of 100% of the
shares specified in Paragraph 1, less any shares previously purchased by
Participant. 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. For purposes of this Agreement, “retirement” shall mean
termination of service at or after age 65 with ten (10) or more years of service
as a director of the Company or any Subsidiary.




d. Disability. If
Participant ceases to be a director 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 five-year
anniversary of the
date of the termination of such relationship, and (ii) the expiration date
of this Option stated in Paragraph 2(a) above. Upon such termination, this
Option shall immediately become fully exercisable to the extent of 100% of the
shares specified in Paragraph 1, less any 








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shares
previously purchased by Participant. If Participant does not exercise the Option
within the time specified in this Paragraph 2(d), all rights of Participant
under this Option shall be forfeited.

 



e. Death. In the
event of Participant’s death, this Option shall terminate on the earlier of (i)
the close of business on the five-year
anniversary of the
date of Participant’s death, and (ii) the expiration date of this Option stated
in Paragraph 2(a) above. Upon the date of Participant’s death, this Option shall
immediately become fully exercisable to the extent of 100% of the shares
specified in Paragraph 1, less any shares previously purchased by Participant.
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. If such
person or persons fail to exercise this Option within the time specified in this
Paragraph 2(e), 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 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 








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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 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,









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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.




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.













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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 CORP.

	 	 	 
	 	 	 
	
      By:
	 
	 	
      Its:
	 
	 	 	 
	 	 	 
	 
	
      Participant













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