Document:

exhibit10_2.htm

    

       EXHIBIT
        10.2

      

      INCENTIVE
        STOCK OPTION AGREEMENT

      

      ANALYSTS
        INTERNATIONAL CORP.

      2004
        EQUITY INCENTIVE PLAN

      

      

      THIS
        AGREEMENT, made effective as of this 1st day of
        November,
        2007, by and between Analysts International Corp., a Minnesota corporation
        (the
“Company”), and Elmer Baldwin (“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 $1.65 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 forty-two
        thousand four hundred twenty-four (242,424) shares of Common Stock at a per
        share price of $1.65 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 November 1, 1007, 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.

      

      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.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      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

              

      

      

      
        
          
          

        

        
          6exhibi10_3.htm

    EXHIBIT
      10.3

    

    NONQUALIFIED
      STOCK OPTION AGREEMENT

    

    ANALYSTS
      INTERNATIONAL CORP.

    2004
      EQUITY INCENTIVE PLAN

    

    

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

    

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      Participant on the date hereof
      is a key employee, officer or 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 Administrator of the Plan
      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 $1.65 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 one hundred thousand
      five hundred seventy-six (100,576) shares of Common Stock at a per share price
      of $1.65 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 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:

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
              Vesting
                Date

            	
              Number/Percentage
                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%

            

    

    

    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 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 Disability or Death).  If
      Participant ceases to be an employee of the Company or any Subsidiary 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 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.           Disability.  If
      Participant ceases to be an employee 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 twelve-month anniversary date of the termination of all
      such relationships, 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 Participant’s
      relationships with the Company or Subsidiary have 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(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 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 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 fail to
      exercise this Option within the time specified in this Paragraph 2(d), all
      rights under this Option shall be forfeited.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    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 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

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    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, 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.

    
      
        
        

      

      
        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.

    

    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

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    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

            

    

    

    
      
        
        

      

      
        6

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