AMENDED AND RESTATED SEVERANCE COMPENSATION AGREEMENTTermination Severance Agreement |
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AMENDED
AND RESTATED
SEVERANCE
COMPENSATION AGREEMENT
This
is a
SEVERANCE COMPENSATION AGREEMENT, originally effective August 15, 1990 and
now
amended and restated effective as of January 1, 2005, by and between Harris
& Harris Group, Inc., a New York corporation (the "Company"), and Charles E.
Harris (the "Executive"). This amendment and restatement is made to update
the
Plan for Internal Revenue Code (the "Code") Section 409A.
WHEREAS,
the Company and the Executive are parties to an employment agreement effective
as of August 2, 2007 (the "Employment Agreement") providing for the employment
of the Executive by the Company for a period and upon the other terms and
conditions therein stated; and
WHEREAS,
the Company considers the maintenance of a sound and vital senior management
to
be essential to protecting and enhancing the interests of the Company and its
shareholders; and
WHEREAS,
the Company recognizes that, as is the case with many publicly owned
corporations, the possibility of a change in control of the Company may arise
and that such possibility, and the uncertainty and questions which it may raise
among senior management, may result in the departure or distraction of senior
management personnel to the detriment of the Company and its shareholders;
and
WHEREAS,
accordingly the Company has determined that appropriate steps should be taken
to
reinforce and encourage the continued attention and dedication of members of
the
Company's senior management to their assigned duties and long-range
responsibilities without distraction in circumstances arising from the
possibility of a change in control of the Company; and
WHEREAS,
the Company believes it important and in the best interests of the Company
and
its shareholders, should the Company face the possibility of a change in
control, that the senior management of the Company be able to assess and advise
the Board of Directors of the Company whether such a proposed change in control
would be in the best interests of the Company and its shareholders and to take
such other action regarding such a proposal as the Board of Directors might
determine to be appropriate, without senior management being influenced by
the
uncertainties of their own employment situations; and
WHEREAS,
in order to induce the Executive to remain in the employ of the Company in
the
event of any actual or threatened change in control of the Company, the Company
has determined to set forth the severance benefits which the Company will
provide to the Executive under the circumstances set forth below.
NOW,
THEREFORE, the parties hereto hereby agree as follows:
1.
Definitions.
(a) All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Employment Agreement.
(b) "Change
in Control" shall mean the occurrence of any of the following
events:
(i)
any
person, within the meaning of Section 13(d)(3) of the Securities Exchange Act
of
1934, as amended (the "Exchange Act") , or group of persons, within the meaning
of Exchange Act Rule 13d-5, other than the Company or any of its subsidiaries,
becomes a beneficial owner, directly or indirectly, of thirty percent (30%)
or
more in voting power or amount of the Company's then outstanding equity
securities, without the approval of not less than two-thirds of the Board in
existence prior to such ownership;
(ii)
individuals
who constitute the Board on any day (the "Incumbent Board") cease for any reason
other than their deaths or resignations to constitute at least a majority of
the
Board on the following day (which day shall be considered the day upon which
occurs the Change in Control), provided that any individual becoming a director
subsequent to the date of this Agreement whose election or nomination for
election by the Company's shareholders was approved by a vote of not less than
three-quarters of the Incumbent Board or not less than two-thirds of the then
incumbent Nominating Committee of the Board shall be for purposes of this
subsection considered as though such person were a member of the Incumbent
Board;
(iii)
The
necessary majority of the Company's shareholders approve any reorganization
(other than a mere change in identity, form or place of organization of the
Company, however effected), merger or consolidation of the Company, or any
other
transaction with one or more business entities or persons as a result of which
the stock of the Company is exchanged for or converted into cash or property
or
securities not issued by the Company, or as a result of which there is a change
in ownership of existing equity securities of the Company or the issuance of
new
equity securities of the Company (or the right or option to acquire such equity
securities) which equals or exceeds thirty percent (30%) in voting power or
amount of the equity securities of the Company outstanding upon completion
of
such transaction, unless such reorganization, merger consolidation or other
transaction shall have been affirmatively recommended to the Company's
shareholders by not less than two-thirds of the Incumbent Board;
(iv)
the
necessary majority of the Company's shareholders approve the sale of (or
agreement to sell or grant of a right or option to purchase as to) all or
substantially all of the assets of the Company to any person or business entity,
unless such sale or other transaction shall have been affirmatively recommended
to the Company's shareholders by not less than two-thirds of the
Board;
(v)
the
dissolution or liquidation of the Company;
(vi)
the
occurrence of any circumstance having the effect that persons who were nominated
for election as directors by the Board shall fail to become directors of the
Company other than because of their death or withdrawal;
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2
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(vii)
a
change
in control of a nature that would be required to be reported in response to
Item
1(a) of the Current Report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Exchange Act, unless such change in
control is approved by not less than two-thirds of the Board in existence prior
to such change in control;
(viii) such
other events as the Board may designate.
2. Termination
of Employment.
If
the
Executive is an employee of the Company on the day before a Change in Control
and the Executive's Period of Employment (as defined in the Employment
Agreement, being a Code Section 409A separation from service definition) with
the Company terminates (i) by the Executive or (ii) by the Company as a Without
Cause Termination, in either case within one year from the date of such Change
in Control, the Company hereby agrees to provide to the Executive the following
benefits:
(a) a
lump
sum payment, payable in cash, cashier's check or by wire, six months and one
day
after the date of such termination of Executive's Period of Employment, equal
to
2.99 times the Executive's average Base Salary plus other amounts included
in
the Executive's income as compensation from the Company, but excluding bonus,
incentive,
