HARRIS
& HARRIS GROUP, INC.
DIRECTORS
STOCK PURCHASE PLAN
2001
The
Board
of Directors of Harris & Harris Group, Inc. (the “Company”) has adopted this
Director Stock Purchase Plan 2001 (the “Plan”) to enable individuals who serve
as directors of the Company (the “Directors”), through the retention by the
Company of fees paid to such Directors for services as directors, to purchase
shares of the Company’s common stock, $0.01 par value per share (the “Common
Stock”). The purpose of the Plan is to benefit the Company’s growth and success
and enabling the Company to continue to attract highly qualified persons to
serve as Directors. The provisions of the Plan are set forth below.
1.
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Shares
Subject to the Plan.
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All
shares purchased pursuant to the Plan will be purchased in the open market
on
behalf of each Director. A brokerage account will be established for each
Director at Investec Ernst & Co. (the “Broker”) or another brokerage firm to
be approved by the Board at a later date.
The
Plan
shall be administered by the Board. The Board’s actions under the Plan shall be
limited to taking all actions authorized by this Plan or as otherwise reasonably
necessary to effect the purposes hereof.
Subject
to the express provisions of the Plan, the Board shall have authority to
interpret the Plan, to prescribe, amend and rescind rules relating to it, and
to
make all other determinations necessary or advisable in administering the Plan,
all of which determinations will be final and binding upon all
persons.
4.
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Eligibility
to Participate.
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The
only
persons eligible in the Plan shall be Directors of the Company. All Directors
are required to participate in the Plan during their respective terms as members
of the Board.
From
and
after the effective date of the Plan, each Director shall have an amount equal
to fifty percent (50%) of eligible fees payable to such Director retained by
the
Company at the time such eligible fee is due to be paid. For purposes of this
Plan, “eligible fees” includes each Director’s monthly retainer and Board
meeting fees, which the Director is entitled to receive from the Company for
his
or her service as a Director. Such retained amounts will be credited to the
Director’s account under the Plan. Once a Director’s account accumulates a
minimum amount of two thousand five hundred dollars ($2,500) in value, the
Broker will purchase the
Common
Stock of the Company in an open market transaction on behalf of the Director.
A
Director may not contribute amounts to purchase Common Stock under the Plan
other than through fee retentions.
For
the
Directors who currently have a credit balance, the brokerage account will be
funded once the credit balance has been completely offset by fifty percent
(50%)
of a Director’s eligible fees. For purposes of this Plan, “credit balance” is
defined as any Common Stock purchases made by a Director or on a Director’s
behalf (i) in excess of his or her year 2000 Common Stock purchase obligation,
and (ii) prior to the date of Board approval of this Plan.
Effective
upon the date of approval of this Plan by the Board, any Company stock purchases
made directly by any Directors cannot be applied to the 50 percent stock
purchase commitment unless it is to satisfy their year 2000 Common Stock
purchase obligation.
Subject
to compliance with Section 16 of the Securities Exchange Act of 1934 which
may
affect a Director’s ability to sell or purchase shares of the Common Stock
(See
Section
11 of the Plan below), Directors may sell, transfer or assign their shares
of
Common Stock under the Plan at any time and for any reason after the shares
of
Common Stock have been purchased for their account pursuant to the
Plan.
The
purchase price of each share of Common Stock will be the fair market value.
For
purpose of this Plan, “fair market value” means, if the Common Stock is listed
on an established national or regional exchange, is admitted to quotation on
the
New York Stock Exchange or the National Association of Securities Dealers
Automated Quotation System, or is publicly traded in an established securities
market, the current quoted price on such exchange at the time the Brokers
purchase order is executed on behalf of the Director, less any applicable
brokerage commissions.
7.
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No
Right to Continued Membership on the Board.
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Neither
the Plan nor any right to purchase Common Stock under the Plan confers upon
any
Director any right to continued membership on the Board, nor will a Director’s
participation in the Plan create any obligation on the part of the Board to
nominate any Director for re-election by the Company’s
stockholders.
Unless
otherwise required by law, the Board may, at any time, amend the Plan in any
respect.
No
participating Director may assign his or her rights to purchase shares of Common
Stock under the Plan, whether voluntarily, by operation of law or otherwise.
Any
payment of cash or issuance of shares of Common Stock under the Plan may be
made
only to the participating Director (or in the event of the Director’s death, to
the Director’s estate).
Transactions
under this Plan are intended to comply with all applicable conditions of Rule
10b5-1 or any successor provision under the Securities Exchange Act of 1934
(the
“Exchange Act”). Rule 10b5-1’s provisions define when a purchase or sale
constitutes trading “on the basis of” material nonpublic information in insider
trading cases brought under Section 10(b) of the Exchange Act and Rule 10b-5
thereunder. If any provision of the Plan or action by the Board fails to so
comply, it shall be deemed null and void to the extent permitted by law and
advisable by the Board.
11.
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Section
16 of the Exchange Act.
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Purchases
and sales made by Directors of Common Stock acquired through the Plan will
not
be considered to be exempt transactions under Rule 16b-3 under the Exchange
Act
and will be subject to the reporting, matching and short-swing profit provisions
of Section 16 of the Exchange Act and the Rules promulgated
thereunder.
12.
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Effective
Date; Term and Termination of the Plan.
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The
Plan
shall be effective as of the date of adoption by the Board, which date is set
forth below. The Board may terminate the Plan at any time for any reason or
for
no reason, provided that such termination shall not impair any rights of
participating Directors.
13.
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Payment
of Plan Expenses.
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The
Company will bear all costs of administering and carrying out the Plan,
excluding any brokerage commissions payable.
This
Plan
was duly adopted and approved by the Board of Directors of the Company by
unanimous written consent on the 1st of March, 2001.