NONSOLICITATION
AND NONCOMPETITION AGREEMENT
THIS
NONSOLICITATION AND NONCOMPETITION AGREEMENT (this "Agreement")
is
entered into as of July 31, 2008 by and between Harris & Harris Group, Inc.
(the "Company")
and
Charles E. Harris (the "Employee").
WHEREAS,
the Company and the Employee acknowledge that the Employee is currently party
to
the (i) Non-Qualified Stock Option Agreement dated as of June 26, 2006; (ii)
Incentive Stock Option Agreement dated as of June 26, 2006; and (iii)
Non-Qualified Stock Option Agreement dated as of June 27, 2007 (collectively,
the "Existing
Stock Option Agreements"),
in
each case, entered into pursuant to the Harris & Harris Group, Inc. 2006
Equity Incentive Plan;
WHEREAS,
the Company and the Employee acknowledge that until the Employee terminates
his
employment with the Company the Employee may become party to one or more
additional non-qualified stock option agreements entered into pursuant to the
Harris & Harris Group, Inc. 2006 Equity Incentive Plan (the "Future
Stock Option Agreement(s)";
and,
in the event such Future Stock Option Agreement(s) are implemented, together
with the Existing Stock Option Agreements, the "Stock
Option Agreements");
WHEREAS,
pursuant to Section 2(e)(iv) of each of the Stock Option Agreements the
Employee's ability to exercise certain options following termination of
employment may be extended upon the occurrence of certain conditions therein,
including, but not limited to, the Employee executing and abiding by a
post-termination nonsolicitation and/or noncompetition agreement;
WHEREAS,
the Company and the Employee acknowledge that the Employee's execution and
abiding by the terms of this Agreement, including, but not limited to, its
nonsolicitation and noncompetition provisions will satisfy the Stock Option
Agreements' requirement for the Employee to execute and abide by a
nonsolicitation and/or noncompetition agreement for the purpose of extending
the
Employee's ability to exercise certain stock options granted thereby;
and
NOW
THEREFORE, in consideration of the recitals above and the mutual promises and
obligations contained in this Agreement and in the Stock Option Agreements,
and
for other good and valuable consideration, the receipt and sufficiency of which
are mutually hereby acknowledged, the Company and the Employee agree as
follows:
1. Noncompetition.
At all
times commencing on the date first written above and extending for a period
which equals the longer of (a) three (3) years from the date first written
above, or (b) the entire duration for which Employee may exercise any option
under the Stock Option Agreements, including any applicable time extensions,
the
Employee will not engage in "Competition" (as defined below) with the Company
anywhere in the world. For purposes of clarification only, the "entire duration
for which Employee may exercise any option under the Stock Option Agreements,
including any applicable time extensions," shall be deemed expired if Employee
exercises every option Employee is granted under the Stock Option Agreements,
in
accordance with the terms of such agreements. For purposes of this Agreement,
"Competition"
shall
mean engaging in, or otherwise directly or indirectly being employed by, or
acting as an advisor, manager, consultant or lender to, or being a director,
officer, employee, contractor, principal, agent, stockholder, member, owner
or
partner of, or permitting the Employee's name to be used in connection with
the
activities of any other business or organization engaged other than incidentally
in making investments in privately-held companies in the areas of
nanotechnology, microsystems and/or microelectromechanical systems; provided,
however,
that it
shall not be a violation of this Section 1 for the Employee to become the
registered or beneficial owner of up to five percent (5.0%) of any class of
the
capital stock of an entity in Competition with the Company that is registered
under the Securities Exchange Act of 1934, as amended, provided
that the
Employee does not otherwise participate in the business of such corporation.
For
purposes of clarification only, Employee shall not be deemed to be engaged
in
Competition by investing in or being employed by or on the board of an operating
company that is not ordinarily in the business of making investments in
privately-held companies in the areas of nanotechnology, microsystems and/or
microelectromechanical systems. The Company, in its sole discretion, may waive
in writing any or all of Employee's obligations under this Section 1 upon a
majority vote of the Board of Directors of the Company authorizing it to do
so.
2. Nonsolicitation.
At all
times commencing on the date first written above and extending for a period
which equals the longer of (a) three (3) years from the date first written
above, or (b) the entire duration for which Employee may exercise any option
under the Stock Option Agreements, including any applicable time extensions,
the
Employee agrees that he or she will not directly or indirectly, on his or her
account or on account of any other individual or entity, (y) solicit, hire
or in
any manner induce or encourage any person employed by the Company or any of
its
affiliates, or any director of the Company, to leave its employ or service
with
the Company or (z) offer or cause to be offered employment to any person who
was
employed by the Company or any of its affiliates, other than an outside director
of the Company, at any time during the twelve (12) month period preceding the
date of this Agreement. For purposes of clarification only, the "entire duration
for which Employee may exercise any option under the Stock Option Agreements,
including any applicable time extensions," shall be deemed expired if Employee
exercises every option Employee is granted under the Stock Option Agreements,
in
accordance with the terms of such agreements.
3. Confidentiality.
The
Employee acknowledges and represents that (a) his or her prior employment with
the Company provided the Employee with access to, and knowledge of, non-public
information relating to the business of the Company and non-public information
relating to companies within the Company's portfolio of investments
(collectively, "Confidential
Information")
and
(b) the disclosure of any of the foregoing to existing or potential competitors
of the Company could place the Company at a serious competitive disadvantage
and
could do serious damage, financial and otherwise, to the Company or to companies
within the Company's portfolio of investments. Accordingly, the Employee
acknowledges and represents that the Employee will not, at any time in the
future, communicate, divulge or disclose to any other person or use for his
or
her own benefit or purposes any Confidential Information, except as required
by
law or court order or expressly authorized in writing by a duly authorized
representative of the Company.
4. Stock
Option Term.
Each of
the parties hereto acknowledges and agrees that (a) the stock options granted
pursuant to the Stock Option Agreements, to the extent exercisable as of the
date of termination of the Employee’s employment with the Company, shall remain
exercisable until the expiration of the term of such stock options, in
accordance with Section 2(b) of each of the Stock Option Agreements and (b)
to
the extent any such stock option is exercised more than three months following
the date of termination of the Employee’s employment with the Company, it shall
not be eligible for treatment as an “incentive stock option” within the meaning
of Section 422 of the Internal Revenue Code.
5. Enforcement.
If the
Employee breaches Sections 1, 2 or 3 of this Agreement, the Employee will
immediately cease to be eligible to exercise any option grants under any of
the
Stock Option Agreements, and will immediately become liable to the Company
for
the repayment of any amounts derived from exercising such grants after the
date
of this Agreement; provided,
however,
that
the Company, in its sole discretion, may waive in writing any or all of such
repayments, and/or interest, without waiving any of the Company's rights under
this Agreement.
6. Severability.
In the
event that any one or more of the provisions of this Agreement shall be held
to
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remainder of the Agreement shall not in any way be affected or impaired.
If any one or more of the provisions contained in this Agreement shall be held
to be excessively broad as to duration, activity or subject, such provisions
shall be construed by limiting and reducing them so as to be enforceable to
the
maximum extent allowed by applicable law.
7. Governing
Law.
This
Agreement shall be subject to and construed in accordance with the laws of
the
State of New York, without regard to its conflict of law rules. The Company
and
the Employee consent to the exclusive jurisdiction and venue in the federal
and
state courts of the State of New York, located in the City of New York, for
the
resolution of all disputes arising under, or relating to, this Agreement.
8. Waiver.
The
failure of the Company to enforce any of this Agreement's terms, provisions
or
covenants shall not be construed as a waiver of the same or of the right of
the
Company to enforce the same. Waiver by the Company of any breach or default
by
the Employee, or any other employee under a similar agreement, of any term
or
provision of this Agreement shall not operate as a waiver of any other breach
or
default.
9. Acknowledgment
of Representation.
The
Employee acknowledges that he or she is represented by legal counsel or had
sufficient opportunity to consult with such counsel in connection with this
Agreement, has been apprised of its terms and agrees with its
conditions.
10. Successors
and Assigns.
Except
as otherwise expressly provided in this Agreement, the Employee's rights and
obligations under this Agreement are personal to him or her and may not be
assigned or delegated to any other person. This Agreement shall be binding
upon,
and inure to the benefit of the Company and its successors and assigns and
upon
any person acquiring, whether by merger, consolidation, purchase of assets
or
otherwise, all or substantially all of the Company's assets and
business.
11. Entire
Agreement.
This
Agreement and the Stock Option Agreements constitute the entire agreement
between the Company and the Employee with respect to the subject matter hereof
and supersede all prior negotiations, representations, discussions,
arrangements, understandings and agreements concerning their subject matter.
This Agreement may not be amended or modified other than by a writing signed
by
the Employee and a duly authorized representative of the Company.
IN
WITNESS WHEREOF, the Company and the Employee have executed this Agreement
as of
the date first written above.
| EMPLOYEE |
COMPANY |
| |
|
|
Charles
E. Harris
|
By: /s/ Douglas W. Jamison
Douglas
W. Jamison,
President
|