EXECUTION COPY
 
ESCROW AGREEMENT
 
THIS ESCROW AGREEMENT (“Agreement”) is made and entered into as of the 16th day
of June, 2008, by and among JPMorgan Chase Bank, N.A., a national banking
association (the “Escrow Agent”), Harris & Harris Group, Inc., a New York
corporation (the “Company”), and ThinkPanmure, LLC (the “Placement Agent”).
 
Background
 
WHEREAS, the Company proposes to issue and sell an aggregate of up to 2,545,000
shares of its common stock, $0.01 par value per share (the "Shares") for an
aggregate of up to $15,651,750, all as described in the Company's registration
statement on Form N-2 (Registration No. 333-138996) filed with the Securities
and Exchange Commission (which together with all amendments and supplements
thereto, is referred to herein as the "Registration Statement");
 
WHEREAS, the Shares are being offered by the Company to purchasers identified by
the Placement Agent, pursuant to the terms of the Placement Agency Agreement
(the “Placement Agency Agreement”) dated June 16, 2008, by and between the
Company and the Placement Agent, and the subscription agreements (collectively,
the “Subscription Agreements”) dated the date hereof between the Company and
each purchaser named therein (each a “Purchaser,” and collectively, the
“Purchasers”);
 
WHEREAS, unless the transactions contemplated by the Subscription Agreements and
the Placement Agency Agreement have been abandoned pursuant to the terms
thereof, or unless otherwise agreed to by the Company and the Placement Agent,
the closing of the purchase and sale of the Shares shall take place on June 20,
2008 (the “Closing Date”);
 
WHEREAS, with respect to all subscription payments received from the Purchasers,
the Company and the Placement Agent propose to establish an escrow account with
the Escrow Agent in the name of the Company at 4 New York Plaza, 21st Floor, New
York, New York 10004; and
 
WHEREAS, upon execution of the Subscription Agreements by the Company, the
Escrow Agent is willing to receive and disburse the proceeds from the offering
of the Shares in accordance herewith. The Escrow Agent's duties are limited to
this Agreement and shall only act in accordance with the terms and conditions
contained herein.
 
Terms
 
NOW, THEREFORE, in consideration of the mutual agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
 
1. Establishment of Escrow. The Escrow Agent hereby agrees to establish a
non-interest bearing trust account pursuant to Rule 15c-2-4 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended (the "Escrow Account"), for the deposit with the Escrow Agent of the
Escrowed Funds (defined below) and to receive and disburse the Escrowed Funds in
accordance with the terms and conditions of this Agreement.
 

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2. Deposit of Escrowed Funds. The Company and the Placement Agent hereby appoint
the Escrow Agent as their escrow agent for the purposes set forth herein, and
the Escrow Agent hereby accepts such appointment under the terms and conditions
set forth herein. The Placement Agent is hereby directed by the Company to
instruct each Purchaser for the Shares identified on Exhibit A attached hereto
to wire to the Escrow Agent immediately available funds of such Purchaser
delivered in payment for the Shares such Purchaser agrees to purchase (the
“Escrowed Funds”). Upon receipt of Escrowed Funds from each Purchaser, the
Escrow Agent shall credit such Escrowed Funds to an Escrow Account held by the
Escrow Agent. The wire instructions to which each Purchaser shall wire or
deposit such funds are set forth in the notice provision for the Escrow Agent in
Section 10 to this Agreement and in Exhibit A to the Subscription Agreements.
 
3. Acceptance. Upon receipt of the Escrowed Funds, the Escrow Agent shall
acknowledge such receipt in writing (which may be via electronic mail) to the
Company and the Placement Agent and shall hold and disburse the same pursuant to
the terms and conditions of this Agreement. The Escrow Agent shall have no duty
to verify whether the amounts and property delivered comport with the
requirements of any other agreement.
 
4. List of Purchasers. Exhibit A hereto contains the name of, the address of
record, the number of Shares subscribed for by, and the subscription amount to
be delivered to the Escrow Agent on behalf of each Purchaser whose funds are
being deposited. The Escrow Agent shall notify the Placement Agent and the
Company of any discrepancy between the subscription amounts set forth on any
list delivered pursuant to this Section 4 and the subscription amounts received
by the Escrow Agent. The Escrow Agent is authorized to revise such list to
reflect the actual subscription amounts received and the release of any
subscription amounts pursuant to Section 5.
 
5. Withdrawal of Subscription Amounts.
 
(a) If the Escrow Agent shall receive a notice, substantially in the form of
Exhibit B hereto (an “Offering Termination Notice”) from the Company, the Escrow
Agent shall promptly after receipt of such Offering Termination Notice, and in
no event more than five (5) business days thereafter, send to each Purchaser
listed on the list held by the Escrow Agent pursuant to Section 4 whose total
subscription amount shall not have been released pursuant to paragraph (b) or
(c) of this Section 5, in the manner set forth in paragraph (d) of this Section
5, a check to the order of such Purchaser in the amount of the remaining
subscription amount held by the Escrow Agent on behalf of such Purchaser as set
forth on such list held by the Escrow Agent. The Escrow Agent shall notify the
Company and the Placement Agent of the distribution of such funds to the
Purchasers.
 
(b) In the event that (i) the Shares have been subscribed for and funds in
respect thereof shall have been deposited with the Escrow Agent in accordance
with this Agreement on or before the Closing Date and (ii) no Offering
Termination Notice shall have been delivered to the Escrow Agent, the Company
and the Placement Agent shall deliver to the Escrow Agent a joint notice, not
more than three (3) business days prior to the Closing Date, substantially in
the form of Exhibit C hereto (a “Closing Notice”), designating the proceeds
which are to be distributed on such Closing Date, and identifying the Purchasers
and the number of Shares to be sold to each thereof on such Closing Date. The
Escrow Agent, after receipt of such Closing Notice, on such Closing Date, shall
pay to the Company, the Placement Agent and its counsel (if applicable), by wire
transfer of immediately available funds and otherwise in the manner specified in
such Closing Notice, an amount equal to the aggregate of the subscription
amounts paid by the Purchasers identified in such Closing Notice for the Shares
to be sold on such Closing Date as set forth on the list held by the Escrow
Agent pursuant to Section 4.
 
 

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(c) If at any time and from time to time prior to the release of any Purchaser’s
total subscription amount pursuant to paragraph (a) or (b) of this Section 5
from the Escrow Account, the Company shall deliver to the Escrow Agent a notice,
substantially in the form of Exhibit D hereto (a “Subscription Termination
Notice”), to the effect that any or all of the subscriptions of such Purchaser
have been rejected by the Company (a “Rejected Subscription”), the Escrow Agent,
promptly after receipt of such Subscription Termination Notice, shall promptly
send to such Purchaser, in the manner set forth in paragraph (d) of this Section
5, a check to the order of such Purchaser in the amount of such Rejected
Subscription amount.
 
(d) For the purposes of this Section 5, any check that the Escrow Agent shall be
required to send to any Purchaser shall be sent to such Purchaser by first class
mail, postage prepaid, at such Purchaser’s address furnished to the Escrow Agent
pursuant to Section 4.
 
6. Escrow Agent; Duties and Liabilities.
 
(a) It is expressly understood and agreed by the parties that (i) the duties of
the Escrow Agent, as herein specifically provided, are purely ministerial in
nature; (ii) the Escrow Agent shall not have any duty to deposit the Escrowed
Funds except as provided herein, (iii) the Escrow Agent shall not be responsible
or liable in any manner whatsoever for, or have any duty to inquire into, the
sufficiency, correctness, genuineness or validity of the notices it receives
hereunder, or the identity, authority or rights of any of the parties; (iv) the
Escrow Agent shall have no duties or responsibilities in connection with the
Escrowed Funds, other than those specifically set forth in this Agreement; (v)
the Escrow Agent shall not incur any liability in acting in good faith upon any
signature, written notice, request, waiver, consent, receipt, or any other paper
or document believed by the Escrow Agent to be genuine and to have been signed
or sent by the proper parties, without further inquiry or investigation; (vi)
the Escrow Agent may assume that any person purporting to have authority to give
notices on behalf of any of the parties in accordance with the provisions hereof
has been duly authorized to do so; (vii) the Escrow Agent shall incur no
liability whatsoever except for such resulting from its fraud, willful
misconduct or gross negligence, so long as the Escrow Agent has acted in good
faith in the performance of its duties hereunder; (viii) the Escrow Agent agrees
that all property held by the Escrow Agent under this Agreement shall be
segregated from all other property held by the Escrow Agent and shall be
identified as being held in connection with this Agreement; and (ix) upon the
Escrow Agent’s performance of its obligations under Section 5 hereof, the Escrow
Agent shall be relieved of all liability, responsibility and obligation with
respect to the Escrowed Funds or arising out of or under this Agreement.
 
(b) The Escrow Agent shall not be under any obligation to take any legal action
in connection with this Agreement or towards its enforcement or performance, or
to appear in, prosecute or defend any action or legal proceeding, or to file any
return, or pay or withhold any income or other tax payable with respect to any
Escrowed Funds or the disbursement thereof, or any payment of or in respect of
which shall constitute a Loss under Section 7 below.
 
(c) In the event of any disagreement relating to the Escrowed Funds or the
disbursement thereof resulting in adverse claims or demands being made in
connection with the Escrowed Funds or in the event that the Escrow Agent is in
doubt as to what action it should take hereunder, the Escrow Agent shall be
entitled to retain the Escrowed Funds, but only to the extent of the Escrowed
Funds in controversy, until the Escrow Agent shall have received (i) a final
non-appealable order of a court of competent jurisdiction regarding the proper
disposition; or (ii) a joint letter of instruction from the Company and the
Placement Agent directing delivery of the Escrowed Funds, in which event the
Escrow Agent shall disburse the Escrowed Funds in accordance with such order or
letter. Any court order shall be accompanied by a legal opinion by counsel for
the presenting party satisfactory to the Escrow Agent to the effect that the
order is final and non-appealable. The Escrow Agent shall act on such court
order and legal opinion without further question. If a proceeding for such
determination is not begun and diligently continued, the Escrow Agent may make
an ex parte application, or bring any appropriate action, for leave to deposit
the Escrowed Funds in the Supreme Court of the State of New York, County of New
York seeking such determination or such declaratory relief as the Escrow Agent
shall deem reasonably necessary under the circumstances, and the parties each
hereby irrevocably consent to the entering of such an ex parte order pursuant to
all applicable laws, rules and procedures of the State of New York and such
court. The Escrow Agent shall be reimbursed by the Company, for all of the
Escrow Agent’s reasonable costs and expenses of such action or proceeding,
including, without limitation, reasonable attorneys’ fees and disbursements.
This Section 6(c) shall survive any termination of this Agreement or the
resignation or removal of the Escrow Agent in accordance with Section 6(h)
below.
 
 

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(d) The Escrow Agent does not have any interest in the Escrowed Funds deposited
hereunder and is serving as escrow agent only and having only possession
thereof.
 
(e) None of the provisions of this Agreement shall require the Escrow Agent to
expend or risk its own funds or otherwise to incur any liability, financial or
otherwise, in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers if it shall have reasonable grounds for believing
that repayment of such funds or indemnity satisfactory to it against such risk
or liability is not assured to it.
 
(f) The Escrow Agent may consult with independent counsel and the advice or any
opinion of counsel shall be full and complete authorization and protection in
respect of any action reasonably taken or omitted by it hereunder in accordance
with such advice or opinion of counsel.
 
(g) The Escrow Agent may at any time resign by giving thirty (30) days' prior
written notice of resignation to the Company and the Placement Agent. Upon
receiving such notice of resignation, the Company and the Placement Agent shall
promptly appoint a successor and, upon the acceptance by the successor of such
appointment and transfer of all Escrowed Funds to such successor, release the
resigning Escrow Agent from its obligations hereunder (other than obligations
and liabilities arising by reason of the prior fraud, willful misconduct or
gross negligence of the Escrow Agent) by written instrument, a copy of which
instrument shall be delivered to the resigning Escrow Agent and the successor.
If no successor shall have been so appointed and have accepted appointment
within forty-five (45) days after the giving of such notice of resignation, the
resigning Escrow Agent may petition any court of competent jurisdiction for the
appointment of a successor.
 
The Company and the Placement Agent may at any time, by issuing a joint written
instruction to the Escrow Agent, terminate the appointment of the Escrow Agent.
Such joint written instruction shall specify the date upon which such
termination shall take effect. Thereafter, the Escrow Agent shall have no
further obligation hereunder (other than obligations and liabilities arising by
reason of the prior fraud, willful misconduct or gross negligence of the Escrow
Agent) except to hold the Escrowed Funds as depository. The Company and the
Placement Agent agree that in the event of such termination, they will cooperate
with each other to jointly appoint a banking corporation, trust company or
attorney as successor Escrow Agent. The Escrow Agent shall refrain from taking
any action until receiving written instructions jointly signed by the Company
and the Placement Agent designating the successor Escrow Agent.

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(h) Any partnership or other similar entity into which the Escrow Agent may be
merged or converted or with which it may be consolidated, or any partnership,
corporation or other similar entity resulting from any merger, conversion or
consolidation to which the Escrow Agent shall be a party, or any partnership,
corporation or other similar entity succeeding to the business of the Escrow
Agent shall be the successor of the Escrow Agent hereunder without the execution
or filing of any paper with any party hereto or any further act on the part of
any of the parties hereto except where an instrument of transfer or assignment
is required by law to effect such succession, anything herein to the contrary
notwithstanding.
 
(i) No printed or other matter in any language which mentions the Escrow Agent’s
name or the rights, powers, or duties of the Escrow Agent shall be issued by the
other parties hereto or on such parties’ behalf unless the Escrow Agent shall
first have given its specific written consent thereto. The Escrow Agent hereby
consents to the use of its name and the reference to the escrow arrangement in
the Subscription Agreements, the Placement Agency Agreement, the Registration
Statement and any other documents related thereto.
 
7. Indemnification of Escrow Agent. The Company hereby agrees to indemnify and
hold the Escrow Agent harmless from any and all liabilities, obligations,
damages, losses, claims, encumbrances, costs or expenses (including reasonable
attorneys’ fees and expenses) (any or all of the foregoing herein referred to as
a “Loss”) arising hereunder or under or with respect to the Escrowed Funds,
except for Losses resulting from (a) fraud, willful misconduct or gross
negligence of the Escrow Agent, or (b) its following any instructions or other
directions from the Company, to the extent that its following any such
instruction or direction is expressly forbidden by the terms hereof. If any such
action shall be brought against the Escrow Agent, it shall notify the
Company. Anything in this Agreement to the contrary notwithstanding, in no event
shall the Escrow Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Escrow Agent has been advised of the likelihood of such loss or damage
and regardless of the form of action.
 
The parties hereto acknowledge that the foregoing indemnities shall survive the
resignation or the removal of the Escrow Agent or the termination of this
Agreement.
 
8. Fees. The Company agrees to pay the Escrow Agent the administration fee of
$2,500, which shall be paid by the Company within two (2) business days
following the execution of this Agreement or as otherwise agreed to by the
Company and the Escrow Agent.
 
9. Security Procedures. In the event funds transfer instructions are given
(other than in writing at the time of execution of this Agreement, as indicated
in Schedule 1 attached hereto), whether in writing, by telecopier or otherwise,
the Escrow Agent is authorized to seek confirmation of such instructions by
telephone call-back to the person or persons designated on Schedule 2 hereto,
and the Escrow Agent may rely upon the confirmation of anyone purporting to be
the person or persons so designated. The individuals authorized to give and
confirm funds transfer instructions may be changed only in a writing actually
received and acknowledged by the Escrow Agent. The Escrow Agent and the
beneficiary’s bank in any funds transfer may rely solely upon any account
numbers or similar identifying numbers provided by the Company or the Placement
Agent to identify (a) the beneficiary, (b) the beneficiary’s bank, or (c) an
intermediary bank. The Escrow Agent may apply any of the Escrowed funds for any
payment order it executes using any such identifying number, even when its use
may result in a person other than the beneficiary being paid, or the transfer of
funds to a bank other than the beneficiary’s bank or an intermediary bank
designated. The parties to this Agreement acknowledge that these security
procedures are commercially reasonable. All funds transfer instructions must
include the signature of the person(s) authorizing said funds transfer, which
shall be an individual who is designated to give funds transfer instructions as
designated in Schedule 2.
 
 

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10. Notices. Any notice or demand desired or required to be given hereunder
shall be in writing and deemed given when sent by facsimile transmission with
receipt confirmed to the telephone number below and addressed as follows:
 

 
a.
If to the Escrow Agent, to:

 
JPMorgan Chase Bank, N.A.
Escrow Services
4 New York Plaza, 21st Floor
New York, NY 10004
Facsimile: (212)623-6168
Attention: Chris Vetri/Debbie DeMarco

with wire transfers to:

JPMorgan Chase Bank
ABA #             
Account No.:             
Account Name: Harris & Harris Group Subscription
Attention: Chris Vetri

 
b.
If to the Company, to:

 
Harris & Harris Group, Inc.
111 West 57th Street
New York, New York 10019
Attention: General Counsel
Facsimile No.: 212-582-9563
 
with copies to:
 
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Richard T. Prins, Esq.
Facsimile No.: 212-735-2000

 
c.
If to the Placement Agent, to:

 

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ThinkPanmure, LLC
600 Montgomery St., 8th Floor
San Francisco, CA 94111
Facsimile: (415) 249-0975
Attention: Ted Mitchell

with copies to:

Goodwin Procter LLP
The New York Times Building
620 Eighth Avenue
New York, New York 10018
Facsimile No.: 212-355-3333
Attention: Michael D. Maline, Esq.

or to such other address or account information as hereafter shall be designated
in writing by the applicable party to the other parties hereto. In the event
that the Escrow Agent, in its sole discretion, shall determine that an emergency
exists, the Escrow Agent may use such other means of communication as the Escrow
Agent deems appropriate. For the purposes of this Agreement, “business day”
shall mean any day other than a Saturday, Sunday or any other day on which the
Escrow Agent located at the notice address set forth in this section is
authorized or required by law or executive order to remain closed.
 
11. Entire Agreement. This Agreement and any exhibits and schedules hereto
constitute the entire agreement between the parties hereto pertaining to the
subject matters hereof, and supersede all negotiations, preliminary agreements
and all prior and contemporaneous discussions and understandings of the parties
in connection with the subject matters hereof. Any exhibits and schedules hereto
are hereby incorporated into and made a part of this Agreement.
 
12. Amendments. No amendment, waiver, change or modification of any of the
terms, provisions or conditions of this Agreement shall be effective unless made
in writing and signed by all parties or by their duly authorized agents. Waiver
of any provision of this Agreement shall not be deemed a waiver of future
compliance therewith and such provision shall remain in full force and effect.
 
13. Severability. In the event any provision of this Agreement is held invalid,
illegal or unenforceable, in whole or in part, the remaining provisions of this
Agreement shall not be affected thereby and shall continue to be valid and
enforceable.
 
14. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of New York without regard to any applicable
principles of conflicts of law.
 
15. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS AND APPELLATE COURTS FROM ANY THEREOF. EACH
PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF TO SUCH PARTY BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, TO SUCH PARTY, AT ITS ADDRESS SPECIFIED HEREIN. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
 
 

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16. Headings and Captions. The titles or captions of paragraphs in this
Agreement are provided for convenience of reference only, and shall not be
considered a part hereof for purposes of interpreting or applying this
Agreement, and such titles or captions do not define, limit, extend, explain or
describe the scope or extent of this Agreement or any of its terms or
conditions.
 
17. Gender and Number. Words and phrases herein shall be construed as in the
singular or plural number and as masculine, feminine or neuter gender, according
to the context.
 
18. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Facsimiles may also be deemed originals
for the purpose of this Agreement.
 
19. Binding Effect on Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
legal representatives, heirs, successors and assigns, and the subscribers of the
Shares. Nothing in this Agreement, express or implied, is intended to confer
upon any party, other than the parties hereto (and their respective legal
representatives, heirs, successors and assigns), any rights, remedies,
obligations or liabilities.
 
19. Account Opening Information. To help the government fight the funding of
terrorism and money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that identifies each
person who opens an account. When an account is opened, the Escrow Agent will
ask for information that will allow it to identify relevant parties. Upon
execution of this Agreement, each party shall provide the Escrow Agent with a
fully executed W-8 or W-9 Internal Revenue Service form, which shall include
their Tax Identification Number (TIN) as assigned by the Internal Revenue
Service.
 
20. Force Majeure. In the event that any party or the Escrow Agent is unable to
perform its obligations under the terms of this Agreement because of acts of
God, war, terrorism, fire, floods, electrical outages, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other cause
reasonably beyond its control, the Escrow Agent shall not be liable for damages
to the other parties for any damages resulting from such failure to perform
otherwise from such causes. Performance under this Agreement shall resume when
the Escrow Agent is able to perform substantially.
 
21. Termination. Upon delivery of the Escrowed Funds to the Company, or the
Purchasers pursuant to Section 5 hereof, by the Escrow Agent, this Agreement
shall terminate, subject to the provisions of Section 7 hereof.
 
 

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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of
the date first above written.

 
ESCROW AGENT:
COMPANY:
   
JPMORGAN CHASE BANK, N.A.
HARRIS & HARRIS GROUP, INC.
 
 
By: _/s/Debra A. DeMarco________
Name: Debra A. DeMarco
Title: Vice President
 
 
By: /s/Douglas W. Jamison_______
Name:  Douglas W. Jamison
Title: President 
   
PLACEMENT AGENT:
     
THINKPANMURE, LLC
 
 
 
By: _/s/Ted Mitchell_____________
Name: Ted Mitchell
Title: Partner
 
           

 

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EXHIBIT A
 
SUMMARY OF ESCROWED FUNDS TO BE RECEIVED

 
Name and Address of Purchaser
Number of
Shares
Subscription
Amount
Receipt Confirmed
by Escrow Agent

 

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EXHIBIT B
 
FORM OF OFFERING TERMINATION NOTICE

____________ __, 2008

JPMorgan Chase Bank, N.A.
Escrow Services
4 New York Plaza, 21st Floor
New York, NY 10004
Attention: _______________

Dear Sir or Madam:

Pursuant to Section 5(a) of the Escrow Agreement dated as of ____________, 2008
(the “Escrow Agreement”) by and among ThinkPanmure, LLC, Harris & Harris Group,
Inc. (the “Company”) and you, the Company hereby notifies you of the termination
of the offering of the Shares (as that term is defined in the Escrow Agreement)
and directs you to make payments to the Purchasers as provided for in Section
4(a) of the Escrow Agreement.
 

Very truly yours,
 
HARRIS & HARRIS GROUP, INC.
 
By:                        
Name:
Title:

 

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EXHIBIT C
 
FORM OF CLOSING NOTICE
________________, 2008

JPMorgan Chase Bank, N.A.
Escrow Services
4 New York Plaza, 21st Floor
New York, NY 10004
Attention: _______________

Dear Sir or Madam:

Pursuant to Section 5(b) of the Escrow Agreement dated as of _________, 2008
(the “Escrow Agreement”), by and among ThinkPanmure, LLC (the “Placement
Agent”), Harris & Harris Group, Inc. (the “Company”) and you, the Company hereby
certifies that it has received subscriptions for the Shares (as that term is
defined in the Escrow Agreement) and the Company will, subject to and in
accordance with the terms of the Placement Agency Agreement and the Subscription
Agreements, as defined in the Escrow Agreement, sell and deliver Shares to the
Purchasers thereof at a closing to be held on ____________, 2008 (the “Closing
Date”). The names of the Purchasers concerned, the number of Shares subscribed
for by each of such Purchasers and the related subscription amounts are set
forth on Schedule A annexed hereto.
 
Please accept these instructions as standing instructions for the closing to be
held on the Closing Date. The parties hereto certify that their instructions may
be transmitted to you via facsimile.
 
We hereby request that the aggregate subscription amount be paid as follows:
 
1. To the Company, $_________, pursuant to the following wire transfer
instructions:
 
Bank: __________
ABA Number: __________
Account Number: __________
Account Name: __________
Attention: _____________
Reference: _____________

2. To the Placement Agent, $_________, pursuant to the following wire transfer
instructions:
 
Bank: __________
ABA Number: __________
Account Number: __________
Account Name: __________
Attention: _____________
Reference: __________

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3. To JPMorgan Chase Bank, N.A. as Escrow Agent, $2,500, pursuant to the
following wire transfer instructions:
 
Bank: JPMorgan Chase Bank, N.A.
ABA Number: ________________
Account Number: ____________________
Account Name: ____________________
Attention: ____________________
Reference: Escrow Agent Fees

These instructions may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which together shall constitute
one and the same instrument.
 
[Signatures on following page]

C-2

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Very truly yours,
 
HARRIS & HARRIS GROUP, INC.

 
By:                        
Name:
Title:
 
THINKPANMURE, LLC

 
By:                        
Name:
Title:

 

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SCHEDULE A
 
Name of Purchaser
Number of
Shares
Subscription
Amount

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EXHIBIT D
 
FORM OF SUBSCRIPTION TERMINATION NOTICE

________________, 2008

JPMorgan Chase Bank, N.A.
Escrow Services
4 New York Plaza, 21st Floor
New York, NY 10004
Attention: _______________

Dear Sir or Madam:

Pursuant to Section 5(c) of the Escrow Agreement dated as of _________, 2008
(the “Escrow Agreement”), by and among ThinkPanmure, LLC, Harris & Harris Group,
Inc. (the “Company”) and you, the Company hereby notifies you that the following
subscription(s) have been rejected:
 
Name of
PURCHASER
 
Number of Subscribed
SHARES REJECTED
 
Dollar Amount of
REJECTED SUBSCRIPTION
         

Very truly yours,
 
HARRIS & HARRIS GROUP, INC.

By:                    
Name:
Title:

D-1

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SCHEDULE 1

Name of Company: Harris & Harris Group, Inc.
Wiring Instructions:

Bank Name: ___________
ABA Number: ___________
Account Number: ___________
Account Name: ___________
For Further Credit: ___________

Name of Placement Agent: ThinkPanmure, LLC
Wiring Instructions:

Bank Name: ___________
ABA Number: ___________
Account Number: ___________
Account Name: ___________
For Further Credit: ___________

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SCHEDULE 2

Telephone Number(s) for Person(s)
Designated to Give and Confirm Funds Transfer Instructions

If to Company:

 
Name
 
Telephone Number
Signature Specimen
           
1.
Daniel Wolfe
 
(212) 582-0900
/s/ Daniel Wolfe
           
2.
Sandra Forman
 
(212) 582-0900
/s/ Sandra Forman
           
3.
Patricia Egan
 
(212) 582-0900
/s/ Patricia Egan
           
If to Placement Agent:
                     
Name
 
Telephone Number
Signature Specimen
           
1.
Ted Mitchell
 
(415) 249-6388
/s/ Ted Mitchell
           
2.
 
                   
3.
         

Telephone call backs shall be made to both Company and the Placement Agent if
joint instructions are required pursuant to the agreement. All funds transfer
instructions must include the signature of the person(s) authorizing said funds
transfer.
 
Periodically, you may issue payment orders to us to transfer funds by federal
funds wire. We review the orders to determine compliance with the governing
documentation and to confirm signature by the appropriate party, in accordance
with the above list. Bank policy requires that, where practicable, we undertake
callbacks to a party other than the individual who signed the payment order to
verify the authenticity of the payment order.
 
Inasmuch as you are the only employee in your office who can confirm wire
transfers, we will call you to confirm any federal funds wire transfer payment
order purportedly issued by you. Your continued issuance of payment orders to us
and confirmation in accordance with this procedure will constitute your
agreement (1) to the callback security procedure outlined herein and (2) that
the security procedure outlined herein constitutes a commercially reasonable
method of verifying the authenticity of payment orders. Moreover, you agree to
accept any risk associated with a deviation from this bank policy.
 

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