HARRIS
      & HARRIS GROUP, INC.

     

    AMENDED
      AND RESTATED

    EMPLOYEE
      PROFIT SHARING PLAN

     

    Adopted
      as of July 23, 2002,

    effective
      as of the Effective Date (as defined herein)

    


    Purpose
      of Plan

     

    The
      purpose of this Plan is to provide a special incentive for designated key
      employees of Harris & Harris Group, Inc., a New York corporation (the
      "Company") to increase the future profits of the Company, by allowing such
      employees to share in the historical after-tax profits of the Company as set
      forth herein. The purpose of this restatement is to provide for the
      participation of additional Participants in the Grandfathered Investments (as
      defined herein) and to continue to compensate the Grandfathered Participants
      with respect to the Grandfathered Investments following termination of such
      individuals' employment with the Company for reasons other than Cause (as
      defined herein), in each case as set forth herein.

     

    SECTION
      1.

     

    Definitions

     

    As
      used
      herein, unless otherwise required by the context, the following terms shall
      have
      these meanings:

     

    "Award"
      shall mean an award made or due to a Participant pursuant to the provisions
      of
      the Plan.

     

    "Award
      Percentage" shall mean, with respect to any Participant for any Plan Year,
      the
      percentages established by the Committee for such Participant for such Plan
      Year
      (or, in the case of a Terminating Participant, for the Plan Year in which the
      Participant became a Terminating Participant) with respect to the various
      subsets of Qualifying Income contemplated by the Plan; provided,
      however,
      that
      the aggregate Award Percentages for all Participants for any Plan Year may
      not
      exceed 20% of Qualifying Income; and provided,
      further,
      that
      the Grandfathered Participants' Grandfathered Award Percentages with respect
      to
      the Grandfathered Investments shall be as set forth in Section 3. Except for
      the
      Plan Year in which the Effective Date occurs, the Award Percentages with respect
      to the various subsets of Qualifying Income contemplated by the Plan shall
      be
      established no later than January 1 of each Plan Year. In the event that such
      Award Percentages are not established by that date, the Award Percentages from
      the prior Plan Year shall continue to apply.

     

    "Board"
      shall mean the board of directors of the Company.


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    "Cause"
      shall mean: (1) that an employee has materially failed to perform the duties
      and
      responsibilities of his or her position with the Company for reasons other
      than
      disability or has been insubordinate; (2) that an employee has violated any
      securities law or regulation, lost appropriate required licensing, been
      convicted of a felony or a crime involving moral turpitude (regardless of
      whether involving the Company), or has not complied to a significant degree
      with
      any policy of the Company; or (3) that an employee has committed any act of
      fraud, embezzlement, or similar conduct against the Company or any of its
      shareholders constituting dishonesty, intentional breach of fiduciary
      obligation, or intentional and material wrongdoing or gross misfeasance or
      that
      results in a material economic detriment to the assets, business, or prospects
      of the Company or any of its shareholders. Whether there is Cause for the
      termination of any person's employment shall be determined by the chief
      executive officer of the Company and, with respect to the chief executive
      officer or president of the Company, the Board.

     

    "Committee"
      shall mean the Compensation Committee of the Board.

     

    "Effective
      Date" with respect to the Plan shall be the date on which the Plan is approved
      by the shareholders of the Company or, if the Committee so determines, any
      date
      after such shareholder approval and not later than January 1, 2003.

     

    "Fair
      Market Value" shall mean, with respect to any asset of the Company, the value
      thereof most recently determined by the Committee, using the valuation
      methodologies set forth in the Company's 10-K or other filings under the 1940
      Act with respect to the determination of the "net asset value" of the Company's
      assets, provided,
      however,
      that in
      no event shall this Plan be interpreted as giving the Committee the power to
      determine the "net asset value" of the Company's assets for purposes of the
      1940
      Act.

     

    "Grandfathered
      Investments" shall mean, collectively, the Tiny Technology Investments and
      the
      Non-Tiny Technology Investments.

     

    "Grandfathered
      Non-Tiny Technology Award Percentage" shall mean (a) with respect to each
      Grandfathered Participant, the reduced percentage set forth in Section 3 for
      such Participant with respect to the Non-Tiny Technology Investments plus,
      on a
      Plan-Year by Plan-Year basis, any Incremental Percentage (as defined in Section
      3) awarded to such Participant for such Plan Year, and (b) with respect to
      each
      New Participant, the Award Percentage, if any, determined by the Committee
      for
      such Participant for a particular Plan Year with respect to Grandfathered
      Non-Tiny Technology Qualifying Income for such Plan Year.

     

    "Grandfathered
      Non-Tiny Technology Qualifying Income" for a Plan Year shall mean the Qualifying
      Income of the Company for such Plan Year attributable to the Non-Tiny Technology
      Investments, less any Terminating Qualifying Income for such Plan Year
      attributable thereto.

     

    "Grandfathered
      Participants" shall mean the following persons who are Participants on the
      date
      of adoption of the Plan: Charles E. Harris, Mel P. Melsheimer, Helene Shavin
      and
      Jacqueline M. Matthews.


    
      
         

      

      
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    "Grandfathered
      Participations" shall have the meaning set forth in Section 3.

     

    "Grandfathered
      Tiny Technology Award Percentage" shall mean (a) with respect to each
      Grandfathered Participant, the reduced percentage set forth in Section 3 for
      such Participant with respect to the Tiny Technology Investments plus, on a
      Plan- Year by Plan-Year basis, any Incremental Percentage (as defined in Section
      3) awarded to such Participant for such Plan Year, and (b) with respect to
      each
      New Participant, the Award Percentage, if any, determined by the Committee
      for
      such Participant for a particular Plan Year with respect to Grandfathered Tiny
      Technology Qualifying Income for such Plan Year.

     

    "Grandfathered
      Tiny Technology Qualifying Income" for a Plan Year shall mean the Qualifying
      Income of the Company for such Plan Year attributable to the Tiny Technology
      Investments, less any Terminating Qualifying Income for such Plan Year
      attributable thereto.

     

    "Incremental
      Percentage" shall have the meaning set forth in Section 3.

     

    "Net
      Realized Income" for a Plan Year shall mean the net realized income of the
      Company as reflected in the consolidated statement of operations of the Company
      for such Plan Year. For greater clarity, such amount shall include investment
      income, fee, service, and other income, realized gains and losses, and operating
      expenses (including taxes paid or payable by the Company for such Plan Year),
      but shall be calculated without regard to dividends paid or distributions made
      to shareholders, payments under this Plan, unrealized gains or losses, and
      loss
      carryovers from other years.

     

    "New
      Investment" shall mean any investment that is made by the Company after the
      first New Participant Measuring Date that occurs after the date of adoption
      of
      the Plan, including any additional investment made after such date in a
      Grandfathered Investment.

     

    "New
      Investment Award Percentage" shall mean the Award Percentage, if any, determined
      by the Committee for any Participant for a particular Plan Year with respect
      to
      New Investment Qualifying Income for such Plan Year.

     

    "New
      Investment Qualifying Income" for a Plan Year shall mean the Qualifying Income
      of the Company for such Plan Year attributable to the New
      Investments.

     

    "New
      Participant" shall mean each Participant who begins participation in the Plan
      on
      or after the Effective Date. The Committee shall determine the date as of which
      an individual shall become a New Participant or such other date not earlier
      than
      the later of the Effective Date or the last day of the year prior to the year
      in
      which such person became an employee of the Company.

     

    "New
      Participant Measuring Date" shall mean, with respect to a New Participant,
      such
      date as the Committee shall determine in writing on or before the first award
      of
      an Award Percentage for any subset of Qualifying Income to such New
      Participant.


    
      
         

      

      
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    "1940
      Act" shall mean the Investment Company Act of 1940, as amended. 

     

    "Non-Tiny
      Technology Investments" shall mean the Company's investments on the first New
      Participant Measuring Date that occurs after the date of adoption of the Plan
      in
      the following entities: PHZ Capital Partners, L.P.; AlphaSimplex Group, LLC;
      Experion Systems, Inc.; Exponential Business Development Company; Kriton
      Medical, Inc.; NeuroMetrix, Inc.; Questech Corporation and investments in other
      companies that are not involved in nanotechnology, microelectromechanical
      systems or microsystems, in any case, which have been made on or prior to the
      first New Participant Measuring Date that occurs under the Plan.

     

    "Participant"
      shall mean each person who is or was designated by the Committee as a
      participant in the Plan, including each Grandfathered Participant, Terminating
      Participant, and New Participant.

     

    "Plan"
      shall mean the Harris & Harris Group, Inc. Amended and Restated Employee
      Profit Sharing Plan, adopted as of July 23, 2002, as amended from time to
      time.

     

    "Plan
      Year" shall mean the calendar year.

     

    "Post-Participation
      Qualifying Income" for any New Participant for a Plan Year shall mean the New
      Investment Qualifying Income of the Company for such Plan Year, less the
      pre-participation nonqualifying gain, if any, with respect to such New
      Participant. With respect to a New Participant, pre-participation nonqualifying
      gain is intended to reduce New Investment Qualifying Income for such person
      by
      the portion of net after-tax realized gains attributable to asset values as
      of
      such person's New Participant Measuring Date, and shall be so interpreted.
      For
      each New Participant, the pre-participation nonqualifying gain shall be the
      aggregate of, with respect to each portfolio investment position or portion
      thereof constituting a New Investment sold or otherwise disposed of by the
      Company during the Plan Year (determined on a first-in, first-out basis): (1)
      the Fair Market Value as of such New Participant's New Participant Measuring
      Date of any such position or portion, minus (2) the sum of (a) the tax basis
      of
      such position or portion as of such date, plus (b) a portion of the costs of
      such sale or other disposition equal to the ratio (which shall not be greater
      than 1.0) of the excess of (1) above over (2)(a) above, divided by the gain
      realized by the Company on the sale or other disposition of such position or
      portion (ignoring sale or disposition costs), plus (c) the amount of taxes
      payable by the Company for the Plan Year attributable to the excess of (1)
      above
      over the sum of (2)(a) and (b) above, plus (d) an amount equal to the expenses
      of the Company for such Plan Year (other than the amount of taxes attributable
      to sales or other dispositions of portfolio investment positions or portions
      thereof and expenses of such sales or dispositions) multiplied by a fraction
      the
      numerator of which is the excess of (1) above over (2)(a) above and the
      denominator of which is the aggregate gross income of the Company for such
      Plan
      Year before expenses and taxes of any sort.


    
      
         

      

      
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    For
      purposes of this entire definition, any calculation that would otherwise yield
      a
      negative number as the solution to the calculation shall be deemed to yield
      an
      answer of zero.

     

    Solely
      for purposes of determining the amount of the pre-participation nonqualifying
      gain with respect to any New Participant, if the proceeds received from any
      sale
      or other disposition of a New Investment position or portion thereof are less
      than the Fair Market Value of such position or portion as of the relevant New
      Participant Measuring Date, then the Fair Market Value of such position or
      portion as of the New Participant Measuring Date shall be deemed to equal the
      amount of such proceeds.

     

    In
      the
      event that multiple portfolio investment positions (or portions thereof) are
      sold or otherwise disposed of during a Plan Year, some of which are sold or
      disposed of at a gain and some of which are sold or disposed of at a loss,
      for
      purposes of calculating the pre-participation nonqualifying gain the aggregate
      net realized gain, if any, attributable to such sales or dispositions shall
      be
      allocated between or among the gain positions based on the relative amounts
      of
      the gains realized on the gain positions, consistent with the purpose of this
      Plan.

     

    "Qualifying
      Income" for a Plan Year shall mean the Net Realized Income of the Company for
      such Plan Year, less the nonqualifying gain, if any. Nonqualifying gain is
      intended to reduce Net Realized Income by the portion of net after-tax realized
      gains attributable to asset values as of September 30, 1997, and shall be so
      interpreted. The nonqualifying gain shall be the aggregate of, with respect to
      each portfolio investment position or portion thereof sold or otherwise disposed
      of by the Company during the Plan Year (determined on a first-in, first-out
      basis) and held by the Company on September 30, 1997: (1) the Fair Market Value
      as of September 30, 1997 of such position or portion, minus (2) the sum of
      (a)
      the tax basis of such position or portion as of September 30, 1997, plus (b)
      a
      portion of the costs of such sale or disposition equal to the ratio (which
      shall
      not be greater than 1.0) of the excess of (1) over (2)(a) above, divided by
      the
      gain realized by the Company on the sale or other disposition of such position
      or portion (ignoring sale or disposition costs), plus (c) the amount of taxes
      payable by the Company for the Plan Year attributable to the excess of (1)
      above
      over the sum of (2)(a) and (b) above, plus (d) an amount equal to the expenses
      of the Company for such Plan Year (other than the amount of taxes attributable
      to sales or other dispositions of portfolio investment positions or portions
      thereof and expenses of such sales or dispositions) multiplied by a fraction
      the
      numerator of which is the excess of (1) above over (2)(a) above and the
      denominator of which is the aggregate gross income of the Company for such
      Plan
      Year before expenses and taxes of any sort.

     

    For
      purposes of this entire definition, any calculation (or part thereof) that
      would
      otherwise yield a negative number as the solution to the calculation (or part)
      shall be deemed to yield an answer of zero.

     

    For
      purposes of determining the amount of the nonqualifying gain, if the proceeds
      received from any sale or other disposition of a portfolio investment position
      or portion thereof are less than the Fair Market Value of such position or
      portion as of September 30, 1997, then the Fair Market Value of such
      position or portion as of September 30, 1997 shall be deemed to equal such
      proceeds.


    
      
         

      

      
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    In
      the
      event that multiple portfolio investment positions (or portions thereof) are
      sold or otherwise disposed of during a Plan Year, some of which are sold or
      disposed of at a gain and some of which are sold or disposed of at a loss,
      for
      purposes of calculating the nonqualifying gain the aggregate net realized gain,
      if any, attributable to such sales or dispositions shall be allocated between
      or
      among the gain positions based on the relative amounts of the gains realized
      on
      the gain positions, consistent with the pur-pose of this Plan.

     

    "Terminating
      Participant" shall mean a person whose full participation in Qualifying Income
      has been terminated other than for Cause pursuant to this Plan. Following the
      action or event in a Plan Year that results in a Participant becoming a
      Terminating Participant, the person shall remain a Participant for that Plan
      Year and for succeeding Plan Years for purposes of such Participant's rights
      to
      Terminating Qualifying Income. A Terminating Participant shall cease to be
      a
      Participant when all portfolio investments held by the Company at the time
      such
      person became a Terminating Participant are sold or otherwise disposed of by
      the
      Company (determined on a first-in, first-out basis). As of the Effective Date,
      one Participant, Rachel Pernia, is the sole Terminating
      Participant.

     

    "Terminating
      Qualifying Income" for any Terminating Participant for a Plan Year shall mean
      the Net Realized Income of the Company for such Plan Year, less the terminating
      nonqualifying gain, if any. With respect to any Terminating Participant,
      terminating nonqualifying gain is intended to reduce Net Realized Income by
      the
      portion of net after-tax realized gains attributable to increases in asset
      values after the time such person becomes a Terminating Participant, as well
      as
      by the amount of nonqualifying gain (as defined in "Qualifying Income"), and
      shall be so interpreted. For each Terminating Participant, the terminating
      nonqualifying gain shall be the aggregate of:

     

    (1) with
      respect to all or any portion of any portfolio investment position
      sold or otherwise disposed of by the Company during the Plan Year (determined
      on
      a first-in, first-out basis) and held by the Company on September 30, 1997,
      (a)(i) the gain realized on such sale or other disposition (ignoring sale or
      disposition costs), plus (ii) the excess of the Fair Market Value of such
      position or portion as of September 30, 1997 over the tax basis of such position
      or portion as of September 30, 1997, minus (iii) the excess of the Fair Market
      Value of such position or portion as of the last day of the quarter ending
      on or
      immediately prior to the date such person became a Terminating Participant
      over
      the tax basis of such position or portion thereof as of such date, minus (b)
      the
      sum of (i) a portion of the costs of sale or other disposition equal to the
      ratio (which shall not be greater than 1.0) of (a) above divided by the gain
      realized by the Company on the sale or other disposition of such position or
      portion (ignoring sale or disposition costs), plus (ii) the amount of taxes
      payable by the Company for the Plan Year attributable to the excess of (a)
      over
      (b)(i) above, plus


    
      
         

      

      
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    (2) with
      respect to all or any portion of any portfolio investment position sold or
      otherwise disposed of by the Company during the Plan Year (determined on a
      first-in, first-out basis), acquired by the Company after September 30, 1997,
      and held by the Company on the date such person became a Terminating
      Participant, (a) the gain realized on such sale or other disposition (ignoring
      sale or disposition costs), minus the excess of the Fair Market Value of such
      position or portion as of the last day of the quarter ending on or immediately
      prior to the date such person became a Terminating Participant over the tax
      basis of such position or portion as of such date, minus (b) the sum of (i)
      a
      portion of the costs of sale or other disposition equal to the ratio (which
      shall not be greater than 1.0) of (a) above divided by the gain realized by
      the
      Company on the sale or other disposition of such position or portion thereof
      (ignoring sale or disposition costs), plus (ii) the amount of taxes payable
      by
      the Company for the Plan Year attributable to the excess of(a) over (b)(i)
      above, plus

     

    (3) with
      respect to all or any portion of any portfolio investment position sold or
      otherwise disposed of by the Company during the Plan Year (determined on a
      first-in, first-out basis) and acquired by the Company after the date such
      person became a Terminating Participant, (a) the gain realized on such sale
      or
      other disposition (ignoring sale or disposition costs), minus (b) the sum of(i)
      the costs of sale or other disposition, plus (ii) the amount of taxes payable
      by
      the Company for the Plan Year attributable to such sale or other disposition,
      minus

     

    (4) an
      amount
      equal to the expenses of the Company for such Plan Year (other than the amount
      of taxes attributable to sales or other dispositions of portfolio investment
      positions or portions thereof and expenses of such sales or dispositions)
      multiplied by a fraction the numerator of which is the excess of (a) the
      aggregate net realized gain from the sale or other disposition of portfolio
      investment positions or portions thereof (ignoring sale or disposition costs)
      over (b) the sum of (1)(a) above, (2)(a) above, and (3)(a) above and the
      denominator of which is the aggregate gross income of the Company for such
      Plan
      Year before expenses and taxes of any sort.

     

    For
      purposes of this entire definition, any calculation that would otherwise yield
      a
      negative number as the solution to the calculation shall be deemed to yield
      an
      answer of zero.

     

    Solely
      for purposes of determining the amount of the terminating nonqualifying gain
      with respect to any Terminating Participant, (i) if the proceeds received from
      any sale or other disposition of a portfolio investment position or portion
      thereof are less than the Fair Market Value of such position or portion as
      of
      September 30, 1997, then the Fair Market Value of such position or portion
      as of
      September 30, 1997 shall be deemed to equal the amount of such proceeds, and
      (ii) if the proceeds received from any sale or other disposition of a portfolio
      investment position or portion thereof are less than the Fair Market Value
      of
      such position or portion as of the last day of the quarter ending on or
      immediately prior to the date such person became a Terminating Participant,
      then
      the Fair Market Value of such position or portion as of the last day of the
      quarter ending on or immediately prior to the date such person became a
      Terminating Participant shall be deemed to equal the amount of such
      proceeds.


    
      
         

      

      
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    For
      purposes of (2) above, in the event the relevant portfolio investment position
      or portion thereof was acquired after the last day of the quarter ending on
      or
      immediately prior to the date a person became a Terminating Participant, the
      Fair Market Value of such position as of the end of such quarter shall be the
      acquisition cost.

     

    In
      the
      event that multiple portfolio investment positions (or portions thereof) are
      sold or otherwise disposed of during a Plan Year, some of which are sold or
      disposed of at a gain and some of which are sold or disposed of at a loss,
      for
      purposes of calculating the terminating nonqualifying gain, the aggregate net
      realized gain, if any, attributable to such sales or dispositions shall be
      allocated between or among the gain positions based on the relative amounts
      of
      the gains realized on the gain positions, consistent with the purpose of this
      Plan.

     

    "Tiny
      Technology Investments" shall mean the Company's investment as of the first
      New
      Participant Measuring Date that occurs after the date of adoption of the Plan
      in
      NanoOpto Corporation; Nanopharma Corp.; Nantero, Inc.; NeoPhotonics Corporation;
      Continuum Photonics, Inc., Nanotechnologies, Inc.; Optiva, Inc. and other
      investments in other companies involved in nanotechnology,
      microelectromechanical systems or microsystems which have been made on or prior
      to the Effective Date.

     

    SECTION
      2.

     

    Amount
      of Award: Payment of Award

     

    As
      soon
      as practicable following the end of each Plan Year, the Committee shall
      determine whether, and if so, how much, Qualifying Income exists with respect
      to
      such Plan Year and whether, and if so, how much, Terminating Qualifying Income,
      Grandfathered Non-Tiny Technology Qualifying Income, Grandfathered Tiny
      Technology Qualifying Income, New Investment Qualifying Income and
      Post-Participation Qualifying Income for each New Participant exists. The
      Committee shall make a provisional determination, based on accruals provided
      by
      management, within 45 days after the end of each Plan Year.

     

    Not
      later
      than 60 days after the end of each Plan Year the Company shall make the
      following cash payments: 

     

    (1)
      to
      each Terminating Participant an Award in an amount equal to the product of
      (a)
      90% of the estimated Terminating Qualifying Income for such Terminating
      Participant for such Plan Year, multiplied by (b) such Terminating Participant's
      Award Percentage; 

     

    (2)
      to
      each Grandfathered Participant whose employment has not been terminated for
      Cause, and to each New Participant who was employed by the Company on December
      31 of such Plan Year and whose employment has not been terminated for Cause,
      an
      Award in an amount equal to the sum of (a) the product of (x) 90% of the
      estimated Grandfathered Non-Tiny Technology Qualifying Income for such Plan
      Year, multiplied by (y) such Participant's Grandfathered Non-Tiny Technology
      Award Percentage, plus (b) the product of (x) 90% of the estimated Grandfathered
      Tiny Technology Qualifying Income for such Plan Year, multiplied by (y) such
      Participant's Grandfathered Tiny Technology Award Percentage;


    
      
         

      

      
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    (3)
      to
      each Grandfathered Participant who was employed by the Company on December
      31 of
      such Plan Year and whose employment has not been terminated for Cause, an Award
      in an amount equal to the sum of (a) the product of (x) 90% of the estimated
      New
      Investment Qualifying Income for such Plan Year, multiplied by (y) such
      Grandfathered Participant's New Investment Award Percentage, plus (b) the
      product of (x) 90% of the estimated excess of (I) the product of New Investment
      Qualifying Income for such Plan Year, multiplied by the aggregate New Investment
      Award Percentages for such Plan Year of all New Participants over (II) the
      amount, calculated separately for each New Participant and then aggregated,
      of
      the product of the Post-Participation Qualifying Income for each such New
      Participant for such Plan Year, multiplied by such New Participant's New
      Investment Award Percentage for such Plan Year, multiplied by (y) the product
      of
      1.0 multiplied by a fraction, the numerator of which is such Grandfathered
      Participant's New Investment Award Percentage for such Plan Year and the
      denominator of which is the aggregate of the New Investment Award Percentages
      for such Plan Year of all Grandfathered Participants; and

     

    (4)
      to
      each New Participant who was employed by the Company on December 31 of such
      Plan
      Year and whose employment has not been terminated for Cause, an Award in an
      amount equal to the product of (a) 90% of the estimated Post-Participation
      Qualifying Income for such New Participant for such Plan Year, multiplied by
      (b)
      such New Participant's New Investment Award Percentage.

     

    Not
      later
      than 45 days after the filing of the Company's federal income tax return for
      such Plan Year, the Committee shall finalize the foregoing determinations and
      pay to the Participants any remaining Award amounts owed to the Participants,
      determined under principles consistent with the preceding sentence. In the
      event
      that any portion of the maximum amount payable under this Plan with respect
      to
      any category of Qualifying Income for a Plan Year is not required to be paid
      pursuant to the foregoing provisions because (subject to Section 3) a
      Participant's employment terminated on or prior to December 31 of such Plan
      Year
      or for Cause, the remaining portion of such maximum amount shall be paid to
      the
      Participants eligible to participate in that category of Qualifying Income
      based
      on their relative Award Percentages for that category of Qualifying Income,
      provided,
      however,
      that
      the aggregate amount payable to all Participants for a Plan Year shall not
      exceed 20% of the Qualifying Income for the Plan Year. In the event that the
      aggregate amount of all Awards payable for any Plan Year shall be greater than
      20% of the Qualifying Income for such Plan Year (a "Plan prohibited payment"),
      each Participant's Award for such Plan Year shall be reduced, pro-rata within
      each category of Qualifying Income, by the minimum amount necessary to allow
      the
      aggregate Awards for such Plan Year not to constitute a Plan prohibited payment.
      If such a reduction is necessary, each Participant shall unconditionally forfeit
      the amount of any reduction made pursuant to this paragraph.

     

    In
      order
      to be eligible to receive an Award under this Section 2, a Participant must
      be
      employed by the Company on the final day of the Plan Year to which such Award
      relates; provided, however, that the foregoing shall not apply to Grandfathered
      Participants with respect to their Grandfathered Participations; and provided,
      further, however, if the employment of any Participant was terminated for Cause,
      such former employee shall cease to be a Participant and any Awards not yet
      paid
      to or earned by such person shall automatically be forfeited.


    
      
         

      

      
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    Notwithstanding
      any other provision of the Plan, in no event shall the aggregate amount of
      all
      Awards payable for any Plan Year during which the Company remains a "business
      development company" within the meaning of the 1940 Act be greater than the
      maximum percentage of the Company's "net income after taxes" (within the meaning
      of Section 57(n)(l)(B) of the 1940 Act or any successor provision thereto)
      permitted to be paid as profit sharing under the 1940 Act or other applicable
      law. In the event that any portion of any Award may not be paid pursuant to
      the
      limitation set forth in the preceding sentence (a "1940 Act prohibited
      payment"), each Participant's Award for such Plan Year shall be reduced,
      pro-rata within each category of Qualifying Income, by the minimum amount
      necessary to allow the aggregate Awards for such Plan Year not to constitute
      a
      1940 Act prohibited payment. If such a reduction is necessary, each Participant
      shall unconditionally forfeit the amount of any reduction made pursuant to
      this
      paragraph.

     

    Further,
      notwithstanding any provision of this Plan to the contrary, in the case of
      any
      Participant for any Plan Year, no Award of more than the excess of $1,000,000
      over the amount of other compensation paid by the Company to such Participant
      for such Plan Year (after any Award reduction described in this Section 2)
      shall
      be paid unless and until the shareholders of the Company have approved the
      making of such Awards pursuant to the requirements of Section 162(m) of the
      Internal Revenue Code of 1986, as amended.

     

    SECTION
      3.

     

    Grandfathered
      Participations

     

    As
      of the
      Effective Date, the Grandfathered Participants' Award Percentages with respect
      to the Non-Tiny Technology Investments shall be reduced by ten percent (10%),
      as
      follows: Charles E. Harris, from 13.790% to 12.411%; Mel P. Melsheimer, from
      4.233% to 3.8097%; Helene Shavin, from 1.524% to 1.3716%; and Jacqueline M.
      Matthews, from 0.453% to 0.4077%. As of the Effective Date, the Grandfathered
      Participants' Award Percentages shall be reduced with respect to the Tiny
      Technology Investments by twenty-five percent (25%), as follows: Charles E.
      Harris, from 13.790% to 10.3425%; Mel P. Melsheimer, from 4.233% to 3.17475%;
      Helene Shavin, from 1.524% to 1.143%; and Jacqueline M. Matthews, from 0.453%
      to
      0.33975%. The reduced Award Percentages set forth in this paragraph of Section
      3
      are herein referred to as the "Grandfathered Participations." The aggregate
      of
      the 10% reduction in the Award Percentages with respect to the Non-Tiny
      Technology Investments and the 25% reduction in the Award Percentages with
      respect to the Tiny Technology Investments is herein referred to as the
      "Incremental Percentage".


    
      
         

      

      
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    The
      termination of a Grandfathered Participant's employment with the Company shall
      have no adverse effect upon such Participant's Grandfathered Participations,
      unless such Grandfathered Participant is terminated by the Company for Cause,
      in
      which case such Grandfathered Participant's Grandfathered Participations (as
      well as all other Awards) shall be immediately cancelled and forfeited. The
      death of a Grandfathered Participant shall have no adverse effect upon such
      Participant's Grandfathered Participations.

     

    A
      Grandfathered Participant's rights under the Plan with respect to such
      participant's Award Percentage, if any, with respect to a New Investment or
      any
      other investment made by the Company other than the Grandfathered Investments
      shall be as determined by the Committee in its sole discretion and otherwise
      subject to the terms of the Plan. 

     

    The
      Incremental Percentages shall be allocated as Grandfathered Non-Tiny Technology
      Award Percentages and Grandfathered Tiny Technology Award Percentages each
      Plan
      Year among one or more Participants as the Committee shall determine in its
      sole
      discretion (which allocation may include the Grandfathered Participants).


     

    SECTION
      4.

     

    Administration

     

    The
      Plan
      shall be administered by the Committee with decisions taken in accordance with
      its normal procedures. Members of the Committee shall not be liable for any
      acts
      or omissions to act in the administration of the Plan.

     

    A
      secretary selected by the Committee shall keep full and accurate minutes of
      all
      meetings and records of the actions of the Committee, and these minutes and
      records shall be at all times open to inspection by the members of the Board.
      The secretary shall periodically transmit to the Board certified copies of
      any
      statements or schedules prepared in connection with the administration of the
      Plan.

     

    SECTION
      5.

     

    Amendment,
      Termination or Modification of the Plan

     

    The
      Plan
      at any time and for any reason may be modified, amended, or terminated by the
      Committee; provided,
      however,
      that
      the Grandfathered Participations may not be modified or amended. Nothing in
      this
      Plan shall preclude the Committee from, for any Plan Year, naming additional
      Participants in the Plan or changing the Award Percentage for any category
      of
      Qualifying Income (other than the reduced Grandfathered Non-Tiny Technology
      Award Percentages and Grandfathered Tiny Technology Award Percentages set forth
      in Section 3) of any Participant or New Participant (subject to the overall
      percentage limitations contained herein).


    
      
         

      

      
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    SECTION
      6.

     

    Effective
      Date

     

    The
      Plan
      shall be effective on the Effective Date.

     

    SECTION
      7.

     

    General
      Provisions

     

    Compliance
      with Legal Requirements.
      The
      Plan and the granting and payment of Awards, and the other obligations of the
      Company under the Plan shall be subject to all applicable federal and state
      laws, rules, and regulations, and to such approvals by any regulatory or
      governmental agency as may be required.

     

    Nontransferability.
      Awards
      not yet earned shall not be transferable or subject to assignment or alienation
      under any circumstances. Awards earned but not yet paid shall not be
      transferable by a Participant except by will or the laws of descent and
      distribution.

     

    No
      Right to Continued Employment.
      Nothing
      in the Plan or in any Award granted or other agreement entered into pursuant
      hereto shall confer upon any Participant the right to continue in the employ
      of
      the Company or to be entitled to any remuneration or benefits not set forth
      in
      the Plan or other agreement or to interfere with or limit in any way the right
      of the Company to terminate such Participant's employment.

     

    Withholding
      Taxes.
      Where a
      Participant or other person is entitled to receive a cash payment pursuant
      to an
      Award hereunder, the Company shall have the right to withhold any taxes or
      to
      require the Participant or such other person to pay to the Company the amount
      of
      any taxes that the Company may be required to withhold before delivery to such
      Participant or other person of such payment.

     

    Unfunded
      Status of Awards.
      The
      Plan is intended to constitute an "unfunded" plan for incentive and deferred
      compensation. With respect to any payments not yet made to a Participant
      pursuant to an Award, nothing contained in the Plan or any Award shall give
      any
      such Participant any rights that are greater than those of a general creditor
      of
      the Company.

     

    Governing
      Law.
      The
      Plan and all determinations made and actions taken pursuant hereto to the extent
      not governed by federal law shall be governed by the laws of the State of New
      York without giving effect to the conflict of laws principles
      thereof.

     

    Beneficiary.
      A
      Participant may file with the Committee a written designation of a beneficiary
      on such form as may be prescribed by the Committee and may, from time to time,
      amend or revoke such designation. If no designated beneficiary survives the
      Participant, the executor or administrator of the Participant's estate shall
      be
      deemed to be the Participant's beneficiary.


    
      
         

      

      
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