exhibit10_1.htm


    EXHIBIT
      10.1

    


    


    INCENTIVE
      STOCK OPTION AGREEMENT

    


    ANALYSTS
      INTERNATIONAL CORP.

    2004
      EQUITY INCENTIVE PLAN

    


    


    THIS
      AGREEMENT, made effective as of this 16th
      day of
      January, 2008, by and between Analysts International Corp., a Minnesota
      corporation (the “Company”), and Robert E. Woods (“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 Administrator 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 $1.29 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 two hundred fifty thousand (250,000)
      shares of Common Stock at a per share price of $1.29 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 16, 2018, 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/Percentage

              
	 	 
	
                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 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.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    


    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.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    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 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.  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.

    


    
      
        
        

      

      
        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

            	 ______________________________________
	 	 
	 	_______________________________________
	 	
              Participant

            


    

    


    



    
      
        
        

      

      
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