Exhibit 10.3


 


INCENTIVE STOCK OPTION AGREEMENT


 


TOWER TECH HOLDINGS INC.


2007 EQUITY INCENTIVE PLAN


 


THIS AGREEMENT is entered into and effective as of the    
day of                 ,
20    , by and between  Tower
Tech Holdings Inc., a Nevada corporation  (the
“Company”) and                               (“Participant”).


 


RECITALS


 


A.            Participant on the
date hereof is a key employee or officer of the Company or one of its
Affiliates; and


 


B.            The Company wishes
to grant incentive stock options to Participant pursuant to this Agreement and
the 2007 Equity Incentive Plan (the “Plan”); and


 


C.            The Administrator
has authorized the grant of an incentive stock option to Participant to give
Participant an inducement to acquire a proprietary interest in the Company and
an added incentive to advance the interests of the Company and has determined
that, as of the effective date of this Agreement, the fair market value of the
Company’s common stock is                  
Dollars ($                )
per share.


 


AGREEMENTS


 


In consideration of the premises and of the mutual covenants herein
contained, the parties hereto agree as follows:


 


ARTICLE I. GRANT OF OPTION


 


The Company hereby grants to Participant the right, privilege, and
option (the “Option”) to purchase up to                        (                       )
shares (the “Option Shares”) of the Company’s Common Stock, according to the
terms and subject to the conditions hereinafter set forth and as set forth in
the Plan. [The per share price to be paid by
Participant in the event of an exercise of the Option shall be                        
Dollars ($                  ) OR: Because Participant owns stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or its Parent or any Subsidiary, the per
share price to be paid by Participant in the event of an exercise of the Option
shall be                  
Dollars ($               ),
which is not less than one hundred ten percent (110%) of the fair market value
of the Company’s Common Stock at the date of grant of this Option.]  The Option is intended to be an
“incentive stock option,” as defined in Section 422 of the Internal Revenue
Code as amended (the “Code”), to the extent permitted by Section 422(d) of the
Code.


 


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ARTICLE II. DURATION OF OPTION AND
EXERCISABILITY


 


A.            Initial Period of
Exercisability. Except as provided in Articles II.B. and II.C. below, the
Option shall become exercisable according to the following schedule. Once the
Option becomes fully exercisable Participant may continue to exercise this
Option under the terms and conditions of this Agreement until the first of the
termination of this Option as provided herein or the Expiration Date (as
defined below). 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 or Expiration Date such previously unpurchased shares in
addition to those Participant is otherwise entitled to purchase. Except as
otherwise provided in Articles II.B. and II.C. below, the term during which
this Option may be exercised will continue until 5:00 p.m. (Central time) on [the date that is no more than ten (10) years
following the date of grant of this Option OR: for greater than ten percent
(10%) holders insert the date that is no more than five (5) years following the
date of grant of this Option] 
(the “Expiration Date”), unless extension of the term is permissible
under Code Section 424(a). In no event shall this Option be exercisable after
the Expiration Date.


 




	
   

  	
   

  	
  Number of Option Shares

  
	
  Vesting Date

  	
   

  	
  Available for Exercise

  






 


B.            Termination of
Employment for Reasons Other Than Death or Disability. Except as provided
in Article III below, in the event Participant ceases to be a key employee or
officer of the Company or any Affiliate for any reason other than death or an
event that constitutes permanent and total disability within the meaning of
Section 22(e)(3) of the Code (“Disability”), any unexercised portion of this
Option which was exercisable as of the date of such termination may be
exercised, in whole or in part, by Participant before the earlier of (i) the
close of business on the three-month anniversary date of such termination of
employment, and (ii) the Expiration Date. To the extent this Option was not
exercisable upon such termination of employment, or if Participant does not
exercise the unexercised portion of the Option that was exercisable within the
time specified in this Article II.B., all rights of Participant under this
Option shall terminate, and the Option shall thereafter be void.


 


C.            Termination of
Employment Due to Death or Disability. In the event Participant ceases to
be a key employee or officer of the Company or any Affiliate by reason of death
or Disability, any unexercised portion of this Option which was exercisable as
of the date of such termination may be exercised, in whole or in part, by
Participant (or by Participant’s heirs or legal representative(s) in the event
of death or Disability) before the earlier of (i) the close of business on the
twelve-month anniversary date of such termination of employment and (ii) the
Expiration Date. To the extent this Option was not exercisable upon such
termination of employment, or if Participant does not exercise the unexercised
portion of the Option that was exercisable within the time specified in this
Article II.C., all rights of Participant under this Option shall terminate, and
the Option shall thereafter be void.


 


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ARTICLE III. CHANGE OF CONTROL


 


A.            Acceleration. Notwithstanding
anything in the Plan or this Agreement to the contrary, if, upon or within one
year of a Change of Control (as defined below), the Company or a succeeding
entity terminates Participant’s employment relationship, this Option shall
become immediately and fully exercisable upon such Change of Control and shall
remain exercisable until the earlier of (i) the Expiration Date, and (ii) the
date determined by the Administrator in connection with the terms of the Plan
(including, without limitation, upon consummation of the Change of Control, if
so determined by the Administrator). If Participant does not exercise this
Option, as the case may be, within the time specified in this Article III.A.,
all rights of Participant under this Option shall be forfeited. If Participant
exercises this Option on a date that is after the three-month anniversary of
the date of his termination of employment, this Option shall be treated as a
nonqualified stock option and shall no longer qualify as an incentive stock
option under Code Section 422.


 


B.            Change of Control Defined. For
purposes of this Article III, a “Change of Control” means:


 


i. The consummation of any merger, consolidation, exchange, or
reorganization to which the Company is a party if the individuals and entities
who were stockholders of the Company immediately prior to the effective date of
such transaction have, immediately following the effective date of such
transaction, beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of less than fifty percent (50%) of the total
combined voting power of all classes of securities issued by the surviving
corporation;


 


ii. The stockholders of the Company approve any plan or proposal for
the liquidation of the Company;


 


iii. A sale, lease or other transfer of all or substantially all of the
assets of the Company to any person or entity which is not an Affiliate of the
Company; or


 


iv. The acquisition, without prior approval by resolution adopted by
the Board, of direct or indirect beneficial ownership (as defined in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of the Company
representing, in the aggregate, more than fifty percent (50%) or more of the
total combined voting power of all classes of the Company’s then-issued and
outstanding securities by any person or entity or by a group of associated
persons or entities acting in concert; provided, however, that a Change of
Control will not be deemed to occur if such acquisition is initiated by
Participant or an entity in which Participant owns fifty percent (50%) or more
of the total combined voting power of all classes of such entity’s securities,
or if Participant or such entity is a member of the group of associated persons
or entities acting in concert.


 


C. Limitation on Change of Control Payments. Participant shall
not be entitled to receive any Change of Control Payment, as defined below,
which would constitute a “parachute payment” for purposes of Code Section 280G,
or any successor provision, and the regulations thereunder. In the event any
Change of Control Payment payable to Participant would constitute


 


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a “parachute
payment,” Participant shall have the right to designate those Change of Control
Payments which would be reduced or eliminated so that Participant will not
receive a “parachute payment.”  For
purposes of this Article III.C., a “Change of Control Payment” shall mean any
payment, benefit or transfer of property in the nature of compensation paid to
or for the benefit of Participant under any arrangement which is considered contingent
on a Change of Control for purposes of Code Section 280G, including, without
limitation, any and all of the Company’s salary, bonus, incentive, restricted
stock, stock option, equity-based compensation or benefit plans, programs or
other arrangements, and shall include the acceleration of this Option.


 


ARTICLE IV. MANNER OF OPTION EXERCISE


 


A.            Notice. This
Option may be exercised by Participant in whole or in part from time to time,
subject to the conditions contained in the Plan and herein, by delivery, in
person or by registered mail, to the Company at its principal executive office,
of a written notice of exercise. Such notice shall be in a form satisfactory to
the Administrator, shall identify the Option, shall specify the number of
Option Shares with respect to which the Option is being exercised, and shall be
signed by the person or persons so exercising the Option. Such notice shall be
accompanied by payment in full of the total purchase price of the Option Shares
purchased; 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. In the event that the Option is being exercised, as
provided by the Plan and Article II.C., above, by Participant’s heirs or legal
representative(s), the notice shall be accompanied by appropriate proof of
right of such person or persons to exercise the Option. As soon as practicable
after the effective exercise of the Option, Participant (or Participant’s heirs
or legal representative(s) in the event of death or Disability) shall be
recorded on the stock transfer books of the Company as the owner of the Option
Shares purchased, and the Company may deliver to Participant (or Participant’s
heirs or legal representative(s)) 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.


 


B.            Payment. At
the time of exercise of this Option, Participant may determine whether to pay
the total purchase price of the Option Shares to be purchased solely in cash
(including a personal check or a certified or bank cashier’s check, payable to
the order of the Company) or by transfer from Participant to the Company of previously-owned
shares of Common Stock of the Company with a then current aggregate Fair Market
Value equal to such total purchase price, or by a combination of cash and such
previously-owned shares of Common Stock. The Administrator may reject
Participant’s election to pay all or part of the purchase price under this
Option with previously-owned shares of common stock and may require such
purchase price to be paid entirely in cash if, in the sole discretion of the
Administrator, payment in previously-owned shares would cause the Company to be
required to recognize a charge to earnings in connection therewith. For
purposes of this Agreement, (a) “previously-owned shares” shall mean shares of
Common Stock of the Company that Participant has owned for at least six months
prior to the time of exercise, and (b) “Fair Market Value” will be determined
as set forth in the Plan.


 


C.            Investment
Purpose. The Company shall not be required to issue or deliver any shares
of Common Stock under this Option unless (a)(1) such shares are covered by an
effective and current registration statement under the Securities Act of 1933
and applicable state securities laws or


 


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(2) if the
Administrator has determined not to so register such shares, exemptions from
registration under the Securities Act of 1933 and applicable state securities
laws are available for such issuance (as determined by counsel to the Company)
and the Company has received from Participant (or Participant’s heirs(s) or
legal representative(s), in the event of death or Disability) any
representations or agreements requested by the Company in order to permit such
issuance to be made pursuant to such exemptions, and (b) the Company has
obtained any other consent, approval or permit from any state or federal
governmental agency which the Administrator shall, in its sole discretion upon
the advice of counsel, deem necessary or advisable. Unless a registration
statement under the Securities Act of 1933 is in effect with respect to the
issuance or transfer of Option Shares, transfer of such shares shall be
restricted unless the Company receives an opinion of counsel satisfactory to
the Company to the effect that registration under the Securities Act of 1933
and applicable state securities laws is not required with respect to such
transfer.


 


ARTICLE V. NONTRANSFERABILITY


 


This Option shall not be transferable by Participant, either
voluntarily or involuntarily, or subject to any lien, directly or indirectly,
by operation of law or otherwise, except as provided in the Plan. Any attempt
to transfer or encumber this Option other than in accordance with the Plan
shall void this Option and this Option, to the extent not fully exercised,
shall terminate.


 


ARTICLE VI. LIMITATION OF LIABILITY


 


Nothing in this Agreement shall be construed to (a) limit in any way
the right of the Company or any Affiliate to terminate the status of
Participant as an employee of the Company at any time, or (b) be evidence of
any agreement or understanding, express or implied, that the Company or any
Affiliate will employ Participant in any particular position, at any particular
rate of compensation or for any particular period of time.


 


ARTICLE VII. DISPOSITIONS AND WITHHOLDING
TAXES


 


A.            Notification of
Disqualifying Disposition.       Prior
to making a disposition (as defined in Section 424(c) of the Code) of any
shares of Common Stock acquired pursuant to the exercise of this Option before
the expiration of two years after the date hereof or before the expiration of
one year after the date on which such shares of Common Stock were transferred
to Participant pursuant to exercise of this Option, Participant shall send
written notice to the Company of the proposed date of such disposition, the
number of shares to be disposed of, the amount of proceeds to be received from
such disposition and any other information relating to such disposition that
the Company may reasonably request. The right of Participant to make such a
disposition shall be conditioned on the receipt by the Company of all amounts
necessary to satisfy any federal, state or local withholding tax requirements
attributable to such disposition. The Administrator shall have the right, in
its sole discretion, to endorse any certificates representing the Option Shares
with a legend restricting transfer and to cause a stop transfer order to be
entered with the Company’s transfer agent until such time as the Company
receives the amounts necessary to satisfy such withholding requirements or
until the later of the expiration of two years from the date hereof or one year
from the date on which such shares were transferred to Participant pursuant to
the exercise of this Option.


 


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B.            General
Obligation. The Company is entitled to (a) withhold and deduct from future
payments to Participant, or make other arrangements for the collection of, all
legally required amounts necessary to satisfy any federal, state or local
withholding tax requirements attributable to Participant’s exercise of this
Option, including, without limitation, a disposition of shares of Common Stock
described in Article VII.A. above, that causes this Option to cease to qualify
as an “incentive stock option” within the meaning of Section 422 of the Code
and the regulations thereunder, or (b) require Participant promptly to remit
the amount of such withholding to the Company before acting on any such
disposition of shares of Common Stock. In the event that the Company is unable
to withhold such amounts, 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, state or local law.


 


C.            Use of Shares.
The Administrator may, in its sole discretion and subject to such rules as the
Administrator may adopt, permit Participant to satisfy, in whole or in part,
any withholding tax obligation which may arise in connection with the exercise
of this Option either by electing to have the Company withhold from the shares
of Common Stock to be issued upon the exercise of this Option that number of
shares of common stock, or by electing to deliver to the Company
previously-owned shares of common stock, in either case having a Fair Market
Value (determined as set forth in the Plan) on the date such tax is determined
under the Code (the “Tax Date”) equal to the amount necessary to satisfy the
minimum required tax withholding amount 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 withhold shares having a Fair Market Value in excess of
such statutory minimum required tax withholding. Participant’s election to have
the company withhold shares of Common Stock or to deliver previously-owned
shares of Common Stock upon exercise is irrevocable and is subject to the
consent of the Administrator and shall 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. To the extent that shares
of Common Stock may be issued prior to the Tax Date to the electing
Participant, Participant hereby agrees to surrender that number of shares on
the Tax Date having an aggregate Fair Market Value (determined as set forth in
the Plan) equal to the withholding tax due.


 


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ARTICLE VIII. CAPITAL ADJUSTMENTS


 


Pursuant and subject to Section 14 of the Plan, in the event of an
increase or decrease in the number of shares of common stock resulting from a
stock split, reverse stock split, stock dividend, combination of shares, rights
offering, reclassification of the common stock, or any other change in the
corporate structure or shares of the Company, the Administrator, in order to
prevent dilution or enlargement of the rights of Participant, may make
appropriate adjustment as to the number and kind of securities subject to this
Option. Any such adjustment affecting this Option shall be made without change
in the aggregate purchase price applicable to the unexercised portion of the
Option but with an appropriate adjustment in the price for each share or other
unit of any security subject to the Option. Without the consent of Participant,
however, no such change shall be made in the terms of the Option if such change
would disqualify the Option from treatment as an “incentive stock option”
within the meaning of Code Section 422, or any successor provision, or would be
considered a modification, extension or renewal of an option under Code Section
424(h), or any successor provision.


 


ARTICLE IX. BINDING EFFECT


 


This Agreement shall be binding upon the heirs, executors,
administrators and successors of the parties hereto.


 


ARTICLE X. 2007 EQUITY INCENTIVE PLAN 


 


The Option represented by this Agreement has been granted under, and is
subject to the terms of, the Plan. The terms of the Plan are hereby
incorporated by reference herein in their entirety and Participant, by
execution hereof, acknowledges having received a copy of the Plan. Capitalized
terms not defined herein shall have the meaning set forth in the Plan. The provisions
of this Agreement shall be interpreted as to be consistent with the Plan and
any ambiguities herein shall be interpreted by reference to the Plan. In the
event that any provision hereof is inconsistent with the terms of the Plan, the
latter shall prevail.


 


ARTICLE XI. MISCELLANEOUS


 


A.            Employment or
Other Relationship; Rights as Stockholder. This Agreement shall not confer
on Participant any right with respect to the continuance of employment or any
other relationship with the Company or any of its Affiliates, nor will it
interfere in any way with the right of the Company to terminate such employment
or relationship. Participant shall have no rights as a stockholder with respect
to shares subject to the Option until such shares have been issued to Participant
upon exercise of the 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 14 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


 


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securities or
other laws. Participant may be required by the Company, as a condition of the
effectiveness of any exercise of this Option, to agree in writing that all
Common Stock to be acquired pursuant to such exercise shall be held, until such
time that such Common Stock is registered and freely tradable under applicable
state and federal securities laws, for Participant’s own account without a view
to any further distribution thereof, that the certificates for such shares
shall bear an appropriate legend to that effect and that such shares will be
not transferred or disposed of except in compliance with applicable state and
federal securities laws.


 


C.            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 stockholders 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).


 


D.            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 this Agreement 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.


 


E.             Accounting
Compliance. Participant agrees that, in the event a Change of Control
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
Change of Control, 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. For purposes of this Agreement, the term “Change of
Control” shall have the meaning set forth in Article III above.


 


F.             Stock Legend.
The certificates for any shares of Common Stock purchased by Participant (or,
in the case of death, Participant’s heirs or legal representative(s)) shall
bear an appropriate legend to reflect the restrictions of this Article XI and
Article IV.C., provided, however, that failure to so endorse any of such
certificates shall not render invalid or inapplicable this Article XI.


 


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G.            Shares Reserved.
The Company shall at all times during the term of the option period reserve and
keep available such number of shares as will be sufficient to satisfy the
requirements of this Agreement.


 


H.            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 and 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 ten (10) years. If the parties cannot agree on an
arbitrator within twenty (20) days, any party may request that a judge of the
Circuit Court of Manitowoc County, Wisconsin 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 disputes. 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 fee, administrative fees, travel expenses, out-of-pocket expenses
and reasonable attorney’s fees. Unless otherwise agreed by the parties, the
place of any arbitration proceedings shall be Green Bay, Wisconsin.


 


ARTICLE XII. GOVERNING LAW


 


This Agreement and all rights and obligations hereunder shall be
construed in accordance with the Plan and governed by the laws of the State of
Wisconsin.


 


[Signature
page follows.]


 


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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.


 


	
   

  	
  TOWER TECH HOLDINGS INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARTICIPANT

  	
   

  
	
   

  	
   

  	
   

  
	
  By execution
  hereof, the

  Participant acknowledges having

  received a copy of the Plan.

  	
   

  	
   

  



 


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