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
