2006 EQUITY INCENTIVE PLAN
   Section                                                                  Page
1. Purpose; Types of Awards; Construction                                      1
2. Definitions                                                                 1
3. Administration                                                              4
4. Eligibility                                                                 5
5. Stock Subject to the Plan                                                   5
6. Terms of Awards                                                             6
7. General Provisions                                                          9
                           HARRIS & HARRIS GROUP, INC.
                           2006 EQUITY INCENTIVE PLAN
            1. Purpose; Types of Awards; Construction.
      The purposes of the Harris & Harris Group, Inc. 2006 Equity Incentive Plan
(the "Plan") are to enable Harris & Harris Group, Inc. (the "Company") to afford
an incentive to non-employee and employee directors, selected officers and other
employees,  advisors and  consultants of the Company to continue as non-employee
directors,  officers, employees, advisors or consultants, as the case may be, to
increase  their  efforts on behalf of the  Company and its  subsidiaries  and to
promote the  success of the  Company's  business.  In the event that the Company
receives an exemptive  order from the U.S.  Securities  and Exchange  Commission
("SEC") to that  effect,  the Plan shall  provide for the  issuance of Awards to
former  employees of the Company,  as well.  The Plan  provides for the grant of
Options (including  "incentive stock options" and "nonqualified  stock options")
and restricted stock. The Plan is designed so that Awards granted hereunder that
are   intended  to  comply   with  the   requirements   for   "performance-based
compensation"   under   Section   162(m)  of  the  Code  may  comply  with  such
requirements. Various provisions of the Plan may require an exemptive order from
the SEC prior to their  implementation  and accordingly,  Awards will be granted
only after consultation with the Company's General Counsel.
            2. Definitions.
      For  purposes  of the Plan,  the  following  terms shall be defined as set
forth below:
                  (a) "Award" means any Option or Restricted Stock Award granted
under the Plan.
                  (b) "Award Agreement" means any written agreement, contract or
other instrument or document evidencing an Award.
                  (c) "Board" means the Board of Directors of the Company.
                  (d) "Change in  Control"  means the  occurrence  of any of the
                        (i) any Person is or becomes the "beneficial  owner" (as
                  such  term is used in Rule  13d-3  and Rule  13d-5  under  the
                  Exchange Act),  directly or  indirectly,  of securities of the
                  Company (not including in the securities beneficially owned by
                  such Person any securities  acquired directly from the Company
                  or its  affiliates)  representing  40% or more of the combined
                  voting power of the  Company's  then  outstanding  securities,
                  excluding  any Person who becomes such a  Beneficial  Owner in
                  connection  with a  transaction  described  in  clause  (i) of
                  paragraph (iii) below; or
                        (ii) the following  individuals  cease for any reason to
                  constitute a majority of the number of directors then serving:
                  individuals  who, on the Effective Date,  constitute the Board
                  and any new  director  (other  than a director  whose  initial
                  assumption  of  office  is in  connection  with an  actual  or
                  threatened  election  contest,  including but not limited to a
                  consent solicitation, relating to the election of directors of
                  the  Company)  whose  appointment  or election by the Board or
                  nomination  for  election by the  Company's  stockholders  was
                  approved or recommended by a vote of at least two-thirds (2/3)
                  of  the  directors  then  still  in  office  who  either  were
                  directors on the date hereof or whose appointment, election or
                  nomination   for  election  was   previously  so  approved  or
                  recommended; or
                        (iii) there is consummated a merger or  consolidation of
                  the  Company  or any  direct  or  indirect  subsidiary  of the
                  Company  with any other  corporation,  other  than a merger or
                  consolidation  immediately following which the individuals who
                  comprise the Board  immediately  prior  thereto  constitute at
                  least a majority of the board of  directors  of (A) any parent
                  of  the  Company  or  the  entity  surviving  such  merger  or
                  consolidation  (B) if there is no such parent,  of the Company
                  or such surviving entity; or
                        (iv) the  stockholders  of the Company approve a plan of
                  complete liquidation or dissolution of the Company or there is
                  consummated  an agreement for the sale or  disposition  by the
                  Company of all or substantially  all of the Company's  assets,
                  other  than a sale or  disposition  by the  Company  of all or
                  substantially  all of the  Company's  assets to an entity,  at
                  least  60%  of  the  combined   voting  power  of  the  voting
                  securities of which are owned by  stockholders  of the Company
                  in  substantially  the same  proportions as their ownership of
                  the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred  by  virtue  of  the  consummation  of any  transaction  or  series  of
integrated  transactions  immediately  following which the record holders of the
common stock of the Company  immediately  prior to such transaction or series of
transactions continue to have substantially the same proportionate  ownership in
an entity  which  owns all or  substantially  all of the  assets of the  Company
immediately following such transaction or series of transactions.
                  (e) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated thereunder.
                  (f) "Committee"  means the committee  established by the Board
to administer the Plan,  the  composition of which shall at all times consist of
"non-employee  directors"  within  the  meaning  of  Rule  16b-3,  and  "outside
directors" within the meaning of Section 162(m) of the Code.
                  (g) "Company" means Harris & Harris Group, Inc., a corporation
organized under the laws of the State of New York, or any successor corporation.
                  (h)  "Effective  Date" means March 29, 2006, the date on which
the Plan was adopted by the Board.
                  (i) "Exchange Act" means the Securities  Exchange Act of 1934,
as  amended  from  time to  time,  and the  rules  and  regulations  promulgated
                  (j) "Fair Market Value" means,  with respect to Stock or other
property,  the fair market value of such Stock or other  property  determined by
such  methods or  procedures  as shall be  established  from time to time by the
Board.  Unless  otherwise  determined by the Board in good faith,  the per share
Fair Market  Value of Stock as of a  particular  date shall mean (i) the closing
sales price per share of Stock on the national  securities exchange on which the
Stock is  principally  traded,  for the last preceding date on which there was a
sale of such Stock on such exchange; (ii) if the shares of Stock are then traded
in an  over-the-counter  market, the average of the closing bid and asked prices
for the shares of Stock in such  over-the-counter  market for the last preceding
date on which  there was a sale of such  Stock in such  market;  or (iii) if the
shares of Stock are not then listed on a national  securities exchange or traded
in an over-the-counter  market, such value as the Board, in its sole discretion,
shall determine.
                  (k) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
                  (l) "NQSO" means any Option that is not designated as an ISO.
                  (m) "Option"  means a right,  granted to a  Participant  under
Section 6(b)(i),  to purchase shares of Stock. An Option may be either an ISO or
an NQSO, provided that ISOs may be granted only to employees of the Company or a
"subsidiary corporation" of the Company (within the meaning of Section 424(f) of
the Code).
                  (n)  "Participant"  means  a  person  who,  as a  non-employee
director, employee director, officer or other employee, advisor or consultant to
the Company or a subsidiary  of the Company  (or, if the SEC provides  exemptive
relief to that effect,  a former  employee of the Company),  has been granted an
Award under the Plan.
                  (o) "Performance  Goals" means  performance goals based on one
or more of the  following  criteria,  determined in  accordance  with  generally
accepted  accounting  principles,   where  applicable:  (i)  pre-tax  income  or
after-tax  income;  (ii)  cumulative  realized and unrealized net  appreciation;
(iii) stock price or total stockholder return; (iv) strategic business criteria,
consisting  of  one  or  more  objectives  based  on  meeting  specified  market
penetration   or  market  share,   geographic   business   expansion,   customer
satisfaction,  employee satisfaction, human resources management, supervision of
litigation,  information  technology,  or goals relating to divestitures,  joint
ventures or similar  transactions;  or (v) any other criteria  determined by the
Board  to be  appropriate.  Where  applicable,  the  Performance  Goals  may  be
expressed in terms of attaining a specified level of the particular criterion or
the attainment of a percentage increase or decrease in the particular criterion,
and may be applied to one or more of the Company or a subsidiary of the Company,
all as determined by the Board.  The  Performance  Goals may include a threshold
level of  performance  below which no payment  will be made (or no vesting  will
occur),  levels of  performance  at which  specified  payments  will be paid (or
specified  vesting will occur) and a maximum level of performance above which no
additional  payment will be made (or at which full vesting will occur).  Each of
the foregoing  Performance Goals shall be evaluated in accordance with generally
accepted  accounting  principles,  where  applicable,  and shall be  subject  to
certification by the Board. The Board shall have the authority to make equitable
adjustments to the Performance  Goals in recognition of unusual or non-recurring
events  affecting the Company or any  subsidiary of the Company or the financial
statements  of the  Company or any  subsidiary  of the  Company,  in response to
changes in applicable  laws or regulations or to account for items of gain, loss
or expense  determined to be extraordinary or unusual in nature or infrequent in
occurrence or related to the disposal of a segment of a business or related to a
change in accounting principles.
                  (p) "Person"  shall have the meaning given in Section  3(a)(9)
of the Exchange Act, as modified and used in Sections  13(d) and 14(d)  thereof,
except  that  such  term  shall  not  include  (i)  the  Company  or  any of its
subsidiaries,  (ii) a trustee or other  fiduciary  holding  securities  under an
employee  benefit  plan  of the  Company  or any of  its  affiliates,  (iii)  an
underwriter  temporarily  holding  securities  pursuant  to an  offering of such
securities,  or  (iv)  a  corporation  owned,  directly  or  indirectly,  by the
stockholders  of the  Company in  substantially  the same  proportions  as their
ownership of stock of the Company.
                  (q) "Plan" means this Harris & Harris Group,  Inc. 2006 Equity
Incentive Plan, as amended from time to time.
                  (r) "Restricted  Stock" means an Award of shares of Stock to a
Participant  under Section 6(b)(ii) that may be subject to certain  restrictions
and to a risk of forfeiture.
                  (s) "Rule  16b-3"  means Rule  16b-3,  as from time to time in
effect  promulgated  by the SEC under Section 16 of the Exchange Act,  including
any successor to such Rule.
                  (t) "SEC" means the U.S. Securities and Exchange Commission.
                  (u)  "Securities  Act" means the  Securities  Act of 1933,  as
amended from time to time, and the rules and regulations promulgated thereunder.
                  (v) "Stock" means shares of the common stock,  par value $0.01
per share, of the Company.
            3. Administration.
      The Plan  shall be  administered  by the  Board.  The Board may  appoint a
Committee to administer all or a portion of the Plan and to make recommendations
to the Board  with  respect to the Plan and any  Award.  To the extent  that the
Board  appoints  a  Committee  to  administer  all or a  portion  of  the  Plan,
references in the Plan to "the Board" shall be  references  to "the  Committee."
The Board may  delegate to one or more agents such  administrative  duties as it
may deem advisable,  and the Committee or any other person to whom the Board has
delegated  duties as aforesaid  may employ one or more persons to render  advice
with  respect to any  responsibility  the Board or such  Committee or person may
have under the Plan.
      The Board shall have the authority in its  discretion,  subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan and
to exercise all the powers and  authorities  either  specifically  granted to it
under the Plan or  necessary or  advisable  in the  administration  of the Plan,
including,  without  limitation,  the  authority  to:  (i)  grant  Awards;  (ii)
determine  the  persons to whom and the time or times at which  Awards  shall be
granted; (iii) determine the type and number of Awards to be granted, the number
of shares  of Stock to which an Award  may  relate  and the  terms,  conditions,
restrictions and performance  criteria relating to any Award,  including but not
limited  to the  effect  of a Change in  Control  on an  Award;  (iv)  determine
Performance  Goals no  later  than  such  time as  required  to  ensure  that an
underlying  Award that is intended to comply  with the  requirements  of Section
162(m) of the Code so complies; (v) determine whether, to what extent, and under
what circumstances an Award may be settled, cancelled,  forfeited, exchanged, or
surrendered;  (vi) make  adjustments  in the terms and  conditions  of,  and the
Performance Goals (if any) included in, Awards; (vii) construe and interpret the
Plan and any Award;  (viii)  prescribe,  amend and rescind rules and regulations
relating  to the Plan;  (ix)  determine  the terms and  provisions  of the Award
Agreements (which need not be identical for each Participant);  and (x) make all
other determinations deemed necessary or advisable for the administration of the
Plan.  Notwithstanding  any other provision of the Plan or any Award  Agreement,
the Board shall not take any action  that would have the effect of reducing  the
exercise  or  purchase  price of any  Award,  whether by means of  repricing  or
cancellation  and  regrant of the  Award,  without  having  first  obtained  the
approval of the Company's stockholders.
      All decisions,  determinations  and  interpretations of the Board shall be
final and binding on all persons,  including but not limited to the Company, any
subsidiary of the Company,  any  Participant  (or any person claiming any rights
under the Plan from or through any Participant)  and any stockholder.  No member
of the Board or Committee shall be liable for any action taken or  determination
made in good faith with respect to the Plan or any Award granted hereunder.
            4. Eligibility.
      Awards  may be granted  to  Persons  who at the time of grant are  natural
persons who are non-employee directors,  employee directors,  officers and other
employees,  advisors or  consultants  of the Company,  in the  discretion of the
Board. In the event that the SEC provides  exemptive relief to that effect,  the
Board may also  grant  Awards  to  Persons  who at the time of grant are  former
employees of the  Company.  In  determining  the persons to whom Awards shall be
granted and the type of any Award  (including the number of shares to be covered
by such  Award),  the Board shall take into  account  such  factors as the Board
shall deem relevant in connection with accomplishing the purposes of the Plan.
            5. Stock Subject to the Plan.
      The  maximum  number of shares of Stock  reserved  for the grant of Awards
under the Plan  shall be equal to twenty  percent  (20%) of the total  shares of
Stock issued and  outstanding,  calculated on a fully diluted  basis,  as of any
date as of or following  the Effective  Date,  such that the number of shares of
Stock  reserved  for the grant of  Awards  under  the Plan  shall  automatically
increase (or decrease)  with each increase (or decrease) in the number of shares
of Stock issued and outstanding, calculated on a fully diluted basis. All shares
of Stock  reserved for the grant of Awards under the Plan may be made subject to
Options granted under the Plan;  provided,  however,  that in the event that the
SEC issues an exemptive  order with respect to the issuance of Restricted  Stock
Awards under the Plan,  up to  twenty-five  percent (25%) of the shares of Stock
reserved  for the grant of Awards  under the Plan may be subject  to  Restricted
Stock Awards at any time during the term of the Plan,  subject to  adjustment as
provided  herein.  No more than 1,000,000 shares of Stock may be made subject to
Awards granted to any Participant in any year, subject to adjustment as provided
herein.  Determinations  made in  respect  of the  limitations  set forth in the
immediately preceding sentence shall be made in a manner consistent with Section
162(m) of the Code.  Such  shares may, in whole or in part,  be  authorized  but
unissued  shares or shares  that  shall  have been or may be  reacquired  by the
Company in the open market, in private transactions or otherwise.  If any shares
subject to an Award are forfeited,  cancelled, exchanged or surrendered or if an
Award terminates or expires without a distribution of shares to the Participant,
or if shares of Stock are  surrendered  or  withheld  as  payment  of either the
exercise price of an Award and/or  withholding taxes in respect of an Award, the
shares of Stock  with  respect to such  Award  shall,  to the extent of any such
forfeiture,  cancellation,  exchange,  surrender,  withholding,  termination  or
expiration,  again be available for Awards under the Plan.  Upon the exercise of
any Award  granted in tandem with any other Award,  such related  Award shall be
cancelled  to the  extent of the number of shares of Stock as to which the Award
is exercised and, notwithstanding the foregoing,  such number of shares shall no
longer be available for Awards under the Plan.
      In the event that the Board  shall  determine  that any  dividend or other
distribution  (whether in the form of cash,  Stock,  deemed  dividends  or other
property), recapitalization, Stock split, reverse split, reorganization, merger,
consolidation,  spin-off,  combination,  repurchase, or share exchange, or other
similar  corporate  transaction  or  event,  affects  the  Stock  such  that  an
adjustment is  appropriate  in order to prevent  dilution or  enlargement of the
rights of Participants  under the Plan, then the Board shall make such equitable
changes or  adjustments  as it deems  necessary or appropriate to any or all of:
(i) the number and kind of shares of Stock or other  property  (including  cash)
that may  thereafter  be issued in connection  with Awards;  (ii) the number and
kind of shares of Stock or other property (including cash) issued or issuable in
respect of outstanding Awards; (iii) the exercise price, grant price or purchase
price  relating  to any  Award;  provided,  that,  with  respect  to ISOs,  such
adjustment shall be made in accordance with Section 424(h) of the Code; and (iv)
the Performance Goals applicable to outstanding  Awards. In addition,  the Board
may determine that any such equitable adjustment may be accomplished by making a
payment to the Award holder,  in the form of cash or other  property  (including
but not limited to shares of Stock).
            6. Terms of Awards.
                  (a)  General.  The term of each Award shall be for such period
as may be  determined  by the  Board.  Subject  to the terms of the Plan and any
applicable Award  Agreement,  payments to be made by the Company upon the grant,
vesting,  maturation  or  exercise  of an Award may be made in such forms as the
Board shall  determine at the date of grant or  thereafter,  including,  without
limitation,  cash, Stock or other property,  and may be made in a single payment
or transfer,  in installments  or on a deferred basis.  The Board may make rules
relating to installment or deferred  payments with respect to Awards,  including
the rate of interest to be credited with respect to such  payments.  In addition
to the foregoing,  the Board may impose on any Award or the exercise thereof, at
the date of grant or  thereafter,  such  additional  terms and  conditions,  not
inconsistent with the provisions of the Plan, as the Board shall determine.
                  (b) Terms of  Specified  Awards.  The Board is  authorized  to
grant the Awards described in this Section 6(b), under such terms and conditions
as deemed by the Board to be  consistent  with the  purposes  of the Plan.  Such
Awards may be granted with vesting,  value and/or and payment thereof contingent
upon  Performance  Goals.  Except as  otherwise  set  forth  herein or as may be
determined by the Board, each Award granted under the Plan shall be evidenced by
an Award Agreement containing such terms and conditions applicable to such Award
as the Board shall  determine at the date of grant or thereafter,  including the
effect, if any, of a Change in Control on such Award.
                        (i) Options. The Board is authorized to grant Options to
                  Participants on the following terms and conditions:
                              (A) Type of Award. The Award Agreement  evidencing
                        the grant of an Option  under the Plan  shall  designate
                        the Option as an ISO or an NQSO.
                              (B) Exercise  Price.  The exercise price per share
                        of Stock purchasable under an Option shall be determined
                        by the  Board,  but in no  event  shall  the  per  share
                        exercise  price  of any  Option  be less  than  the Fair
                        Market Value of a share of Stock on the date of grant of
                        such Option.  The exercise price for Stock subject to an
                        Option may be paid in cash,  through a "broker  cashless
                        exercise" procedure approved by the Board (to the extent
                        permitted by law) or a combination of the above,  in any
                        case in an amount having a combined  value equal to such
                        exercise  price.  An Award  Agreement may provide that a
                        Participant  may pay all or a portion  of the  aggregate
                        exercise  price by having  shares  of Stock  with a Fair
                        Market  Value  on the  date  of  exercise  equal  to the
                        aggregate exercise price withheld by the Company.
                              (C) Term and  Exercisability  of Options.  Options
                        shall be  exercisable  over the exercise  period  (which
                        shall not exceed  ten years from the date of grant),  at
                        such  times  and upon such  conditions  as the Board may
                        determine,   as  reflected   in  the  Award   Agreement;
                        provided,  that the Board  shall have the  authority  to
                        accelerate the  exercisability of any outstanding Option
                        at such time and under such  circumstances as it, in its
                        sole  discretion,  deems  appropriate.  An Option may be
                        exercised  to the  extent  of any or all full  shares of
                        Stock as to which the Option has become exercisable,  by
                        giving  written  notice of such exercise to the Board or
                        its designated agent.
                              (D)  Termination of Employment.  An Option may not
                        be  exercised  unless:  (1)  the  Participant  is then a
                        director of, in the employ of, or providing  services to
                        the  Company;  and  (2)  the  Participant  has  remained
                        continuously  so employed,  or  continuously  maintained
                        such  relationship,  since  the  date  of  grant  of the
                        Option;  provided,  that the Award Agreement may contain
                        or be amended to contain  provisions  providing  for the
                        exercisability  of any  Option  until not later than the
                        expiration date of such Option.
                              (E) Other  Provisions.  Options  may be subject to
                        such other  conditions  including,  but not  limited to,
                        restrictions on  transferability  of the shares acquired
                        upon  exercise  of  such  Options,   as  the  Board  may
                        prescribe  in its  discretion  or as may be  required by
                        applicable law.
                  (ii)  Restricted  Stock.  The  Board  is  authorized  to grant
            Restricted   Stock  to  Participants  on  the  following  terms  and
                              (A) Issuance and  Restrictions.  Restricted  Stock
                        shall be subject to such restrictions on transferability
                        and other restrictions,  if any, as the Board may impose
                        at the date of grant or thereafter,  which  restrictions
                        may lapse  separately or in  combination  at such times,
                        under  such  circumstances,  in  such  installments,  or
                        otherwise,  as the  Board may  determine.  The Board may
                        place restrictions on Restricted Stock that shall lapse,
                        in  whole  or in  part,  only  upon  the  attainment  of
                        Performance  Goals.  Unless otherwise  determined by the
                        Board, a Participant granted Restricted Stock shall have
                        all of the rights of a  stockholder  including,  without
                        limitation,  the right to vote Restricted  Stock and the
                        right to receive dividends,  including deemed dividends,
                              (B)  Forfeiture.  Upon  termination  of employment
                        with or service  to the  Company  during the  applicable
                        restriction period, Restricted Stock and any accrued but
                        unpaid  dividends that are then subject to  restrictions
                        shall  be  forfeited;   provided,  that  the  Board  may
                        provide,   by  rule  or   regulation  or  in  any  Award
                        Agreement, or may determine in any individual case, that
                        restrictions  or  forfeiture   conditions   relating  to
                        Restricted  Stock  will be waived in whole or in part in
                        the event of terminations  resulting from any cause, and
                        the Board may in other  cases  waive in whole or in part
                        the forfeiture of Restricted Stock.
                              (C)  Certificates  for  Stock.   Restricted  Stock
                        granted  under the Plan may be  evidenced in such manner
                        as  the   Board   shall   determine.   If   certificates
                        representing Restricted Stock are registered in the name
                        of the  Participant,  such  certificates  shall  bear an
                        appropriate  legend  referring to the terms,  conditions
                        and  restrictions  applicable to such Restricted  Stock,
                        and the Company shall retain physical  possession of the
                              (D)   Dividends.   Dividends,   including   deemed
                        dividends, paid on Restricted Stock shall be either paid
                        at the dividend payment date, or deferred for payment to
                        such  date as  determined  by the  Board,  in cash or in
                        shares of Stock  having a Fair Market Value equal to the
                        amount of such dividends. Unless otherwise determined by
                        the Board,  Stock distributed in connection with a stock
                        split or stock dividend,  and other property distributed
                        as a dividend,  shall be subject to  restrictions  and a
                        risk of forfeiture to the same extent as the  Restricted
                        Stock with respect to which such Stock or other property
                        has been distributed.
            7. General Provisions.
                  (a) Nontransferability.  Unless otherwise provided in an Award
Agreement,  Awards shall not be transferable by a Participant  except by will or
the laws of  descent  and  distribution  and  shall be  exercisable  during  the
lifetime of a  Participant  only by such  Participant  or his  guardian or legal
                  (b) No Right to Continued  Employment.  Nothing in the Plan or
in any Award,  any Award  Agreement or other  agreement  entered  into  pursuant
hereto shall confer upon any Participant the right to continue in the employ of,
or to continue as a director  of, or to  continue  to provide  services  to, the
Company or to be entitled to any  remuneration  or benefits not set forth in the
Plan or such Award Agreement or other agreement or to interfere with or limit in
any way the right of the Company to terminate such  Participant's  employment or
director or independent contractor relationship.
                  (c) Taxes.  The Company is  authorized  to  withhold  from any
Award granted, any payment relating to an Award under the Plan, including from a
distribution  of Stock,  or any  other  payment  to a  Participant,  amounts  of
withholding and other taxes due in connection with any transaction  involving an
Award,  and to take such other action as the Board may deem  advisable to enable
the  Company  and  Participants  to  satisfy  obligations  for  the  payment  of
withholding  taxes  and  other  tax  obligations  relating  to any  Award.  This
authority shall include authority to withhold or receive Stock or other property
and to make cash payments in respect  thereof in satisfaction of a Participant's
tax obligations.  The Board may provide in the Award Agreement that in the event
that a  Participant  is required to pay any amount to be withheld in  connection
with the issuance of shares of Stock in settlement or exercise of an Award,  the
Participant  may satisfy  such  obligation  (in whole or in part) by electing to
have the Company  withhold a portion of the shares of Stock to be received  upon
settlement  or  exercise  of such  Award  that is  equal to the  minimum  amount
required to be withheld.
                  (d) Stockholder Approval; Amendment and Termination.
                        (i) The Plan shall take effect upon its  adoption by the
                  Board but the Plan (and any grants of Awards made prior to the
                  stockholder approval mentioned herein) shall be subject to the
                  requisite approval of the stockholders of the Company.
                        (ii) The  Board  may at any  time and from  time to time
                  alter,  amend,  suspend or  terminate  the Plan in whole or in
                  part; provided,  however,  that unless otherwise determined by
                  the Board, an amendment that requires  stockholder approval in
                  order for the Plan to continue to comply with  Section  162(m)
                  or any other law,  regulation  or stock  exchange  requirement
                  shall not be effective  unless  approved by the requisite vote
                  of  stockholders.  The  Board may at any time and from time to
                  time alter,  amend,  suspend or terminate an outstanding Award
                  in  whole  or  in  part;  provided,   that  in  the  event  an
                  outstanding Option is to be terminated pursuant to this clause
                  (ii), the Option holder may be given sufficient notice of such
                  termination to permit the exercise of the then-vested  portion
                  of such Option prior to such Award termination.
                  (e) Expiration of Plan. Unless earlier terminated by the Board
pursuant  to the  provisions  of the Plan,  the Plan  shall  expire on the tenth
anniversary  of the  Effective  Date.  No Awards shall be granted under the Plan
after such  expiration  date.  Without  prejudice to the  authority of the Board
under Section  7(d)(ii),  the expiration of the Plan shall not affect  adversely
any of the rights of any Participant,  without such Participant's consent, under
any Award theretofore granted.
                  (f) Deferrals. The Board shall have the authority to establish
such procedures and programs that it deems  appropriate to provide  Participants
with the ability to defer receipt of cash,  Stock or other property payable with
respect to Awards granted under the Plan.
                  (g) No Rights to Awards; No Stockholder Rights. No Participant
shall  have any  claim to be  granted  any Award  under  the  Plan.  There is no
obligation for uniformity of treatment  among  Participants.  Except as provided
specifically  herein,  a  Participant  or a transferee of an Award shall have no
rights as a  stockholder  with respect to any shares  covered by the Award until
the date of the issuance of a stock certificate to him for such shares.
                  (h)  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.
                  (i) No Fractional  Shares. No fractional shares of Stock shall
be  issued or  delivered  pursuant  to the Plan or any  Award.  The Board  shall
determine  whether cash,  other Awards or other property shall be issued or paid
in lieu of such  fractional  shares or  whether  such  fractional  shares or any
rights thereto shall be forfeited or otherwise eliminated.
                  (j) Regulations and Other Approvals.
                        (i) The  obligation  of the  Company  to sell or deliver
                  Stock with respect to any Award  granted  under the Plan shall
                  be  subject to all  applicable  laws,  rules and  regulations,
                  including all applicable  federal and state  securities  laws,
                  and  the  obtaining  of all  such  approvals  by  governmental
                  agencies  as may be deemed  necessary  or  appropriate  by the
                        (ii)  Notwithstanding any other provision of the Plan or
                  any  Award  Agreement,  no  Award  shall  be  granted  to  any
                  Participant or become vested or  exercisable,  be exercised or
                  settled, to the extent such grant, vesting,  exercise or other
                  settlement  of such Award would cause the Company to not be in
                  compliance  with the  applicable  provisions of the Investment
                  Company  Act  of  1940.  It is  acknowledged  that  as of  the
                  Effective Date various  provisions  permissible under the Plan
                  may require, prior to their implementation, an exemptive order
                  from the SEC after  taking into account any  exemptive  relief
                  received by the Company.
                        (iii) Each Award is subject to the requirement  that, if
                  at any time the Board determines,  in its absolute discretion,
                  that  the  listing,  registration  or  qualification  of Stock
                  issuable  pursuant to the Plan is  required by any  securities
                  exchange or under any state or federal  law, or the consent or
                  approval of any  governmental  regulatory body is necessary or
                  desirable as a condition of, or in connection  with, the grant
                  of an Award or the  issuance of Stock,  no such Award shall be
                  granted or payment made or Stock issued,  in whole or in part,
                  unless  listing,  registration,   qualification,   consent  or
                  approval has been effected or obtained free of any  conditions
                  not acceptable to the Board.
                        (iv) In the event that the disposition of Stock acquired
                  pursuant  to  the  Plan  is  not  covered  by  a  then-current
                  registration  statement  under the  Securities  Act and is not
                  otherwise exempt from such  registration,  such Stock shall be
                  restricted  against  transfer  to the extent  required  by the
                  Securities  Act or regulations  thereunder,  and the Board may
                  require a Participant receiving Stock pursuant to the Plan, as
                  a condition  precedent to receipt of such Stock,  to represent
                  to the  Company in  writing  that the Stock  acquired  by such
                  Participant  is acquired  for  investment  only and not with a
                  view to distribution.
                        (v) The Board may require a Participant  receiving Stock
                  pursuant to the Plan,  as a condition  precedent to receipt of
                  such Stock, to enter into a stockholder agreement or "lock-up"
                  agreement  in  such  form  as the  Board  shall  determine  is
                  necessary or desirable to further the Company's interests.
                  (k) Governing  Law. The Plan and all  determinations  made and
actions taken pursuant  hereto shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.