Unassociated Document


    

      Form
        of

      Subscription
        Agreement

      


      Harris
        & Harris Group, Inc.

      111
        West
        57th Street

      New
        York,
        New York 10019

      


      Ladies
        and Gentlemen:

       

      The
        undersigned (the “Investor”)
        hereby
        confirms and agrees with you as follows: 

       

      1. The
        subscription terms set forth herein (the “Subscription”)
        are
        made as of the date set forth below between Harris & Harris Group, Inc., a
        New York corporation (the “Company”),
        and
        the Investor.

       

      2. The
        Company has authorized the sale and issuance of up to 2,700,000
        shares (the “Shares”)
        of the
        Company’s common stock, $0.01 par value per share (the “Common
        Stock”),
        for a
        purchase price of $6.15 per Share. The Investor acknowledges that the Company
        intends to enter into subscriptions in substantially the same form as this
        Subscription with certain other third-party investors and intends to offer
        and
        sell (the “Offering”)
        the
        Shares pursuant to the Registration Statement, the Disclosure Package and
        the
        Prospectus (as such terms are defined below). The Company may accept or reject
        this Subscription or any one or more other subscriptions with other investors
        in
        its sole discretion.

       

      3. As
        of the
        Closing (as defined below) and subject to the terms and conditions hereof,
        the
        Company and the Investor agree that the Investor will purchase from the Company
        and the Company will issue and sell to the Investor, such number of Shares
        as is
        set forth on the signature page hereto (the “Signature
        Page”)
        at the
        purchase price of $6.15 per Share. The Investor acknowledges that the offering
        is not a firm commitment underwriting and that there is no minimum offering
        amount. 

       

      4. The
        completion of the purchase and sale of the Shares shall occur at a closing
        (the
“Closing”)
        that,
        in accordance with Rule 15c6-1 promulgated under the Securities Exchange
        Act of
        1934, as amended (the “Exchange
        Act”),
        is
        expected to occur on or about June 20, 2008. At the Closing, (a) the Company
        shall cause its transfer agent to release to the Investor the number of Shares
        being purchased by the Investor (using customary book-entry procedures),
        and (b)
        the aggregate purchase price for the Shares being purchased by the Investor
        will
        be delivered by JPMorgan Chase Bank, N.A., as escrow agent, on behalf of
        the
        Investor, by wire transfer of immediately available funds to the Company.
        Physical certificates representing the Shares purchased by the Investor will
        not
        be issued to the Investor; instead, such Shares will be credited to the Investor
        using customary procedures for DWAC transfers through the facilities of The
        Depository Trust Company (“DTC”).
        The
        provisions set forth in Exhibit
        A
        hereto
        shall be incorporated herein by reference as if set forth fully
        herein.

       

      5. The
        Company has filed or will file with the Securities and Exchange Commission
        (the
“Commission”)
        (i) a
        Registration Statement on Form N-2 (File No. 333-138996), including all
        amendments thereto, the exhibits and any schedules thereto, the documents
        otherwise deemed to be a part thereof or included therein (the “Registration
        Statement”)
        by the
        rules and regulations of the Commission (the “Rules
        and Regulations”)
        in
        conformity with the Securities Act of 1933, as amended (the “Securities
        Act”),
        including Rule 497 thereunder, (ii) a prospectus (the “Base
        Prospectus”),
        (iii)
        if necessary, a preliminary prospectus supplement related to the Offering
        (together with the Base Prospectus, the “Preliminary
        Prospectus”),
        and
        (iv) a final prospectus supplement related to the Offering (together with
        the
        Base Prospectus, the “Prospectus”).
        If
        the Company has filed one or more abbreviated registration statements to
        register additional shares of Common Stock pursuant to Rule 462(b) under
        the
        Rules and Regulations (each a “Rule
        462(b) Registration Statement”),
        then
        any reference herein to the term “Registration
        Statement”
shall
        also be deemed to include any such Rule 462(b) Registration Statement. The
        Base
        Prospectus, any Preliminary Prospectus, and the pricing information contained
        in
        this Subscription are collectively the “Disclosure
        Package”.
        The
        Investor hereby confirms that it has had full access to the Disclosure Package,
        including the Company’s financial information incorporated by reference therein,
        and was able to read, review, download and print such materials.

       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      6. The
        Company has entered into a Placement Agency Agreement (the “Placement
        Agreement”),
        dated
        June 16, 2008 with ThinkPanmure, LLC (the “Placement
        Agent”),
        which
        will act as the Company’s exclusive placement agent with respect to the Offering
        and receive a fee in connection with the sale of the Shares. The Placement
        Agreement contains certain representations and warranties of the Company.
        The
        Company acknowledges and agrees that the Investor may rely on the
        representations and warranties made by it to the Placement Agent in Section
        2 of
        the Placement Agreement to the same extent as if such representations and
        warranties had been incorporated in full herein and made directly to the
        Investor. Capitalized terms used, but not otherwise defined, herein shall
        have
        the meanings ascribed to such terms in the Placement Agreement.

       

      7. The
        obligations of the Company and the Investor to complete the transactions
        contemplated by this Subscription shall be subject to the
        following:

       

      a. The
        Company’s obligation to issue and sell the Shares to the Investor shall be
        subject to the following conditions, any one or more of which may be waived
        by
        the Company: (i) the acceptance by the Company of this Subscription (as may
        be
        indicated by the Company’s execution of the Signature Page hereto), (ii) the
        receipt by the Company of a wire transfer of the full purchase price for
        the
        Shares being purchased hereunder as set forth on the Signature Page and (iii)
        the accuracy of the representations and warranties made by the Investor and
        the
        fulfillment of those undertakings of the Investor to be fulfilled prior to
        the
        Closing Date.

      


      b. The
        Investor’s obligation to purchase the Shares will be subject to the condition
        that the Placement Agent shall not have: (i) terminated the Placement Agreement
        pursuant to the terms thereof or (ii) determined that the conditions to closing
        in the Placement Agreement have not been satisfied. The Investor’s obligations
        are expressly not conditioned on the purchase by any or all of the other
        investors of the Shares that they have agreed to purchase from the Company.
        

      


      8. The
        Company hereby makes the following representations, warranties and covenants
        to
        the Investor:

       

      a. The
        Company has the requisite corporate power and authority to enter into and
        to
        consummate the transactions contemplated by this Subscription and otherwise
        to
        carry out its obligations hereunder. The execution and delivery of this
        Subscription by the Company and the consummation by it of the transactions
        contemplated hereunder have been duly authorized by all necessary corporate
        action on the part of the Company. This Subscription has been duly executed
        by
        the Company and, when delivered in accordance with the terms hereof, will
        constitute the valid and binding obligation of the Company enforceable against
        the Company in accordance with its terms, except as may be limited by applicable
        bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
        or
        other similar laws affecting the enforcement of creditors’ and contracting
        parties’ rights generally or by general principles of equity (regardless of
        whether such enforceability is considered in a proceeding in equity or at
        law).

       

      b. The
        Company will (i) before the opening of trading on the Nasdaq Global Market
        on
        the next trading day after the date hereof, issue a press release, disclosing
        all material aspects of the transactions contemplated hereby and (ii) make
        such
        filings and provide such notices as required by the Commission with respect
        to
        the transactions contemplated hereby. The Company will not identify the Investor
        by name in any press release or public filing, or otherwise publicly disclose
        the Investor’s name, without the Investor’s prior written consent, unless
        required by law or the rules and regulations of any self-regulatory organization
        or governmental authority to which the Company or its securities are
        subject.

       


      
        
           

        

        
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      9. The
        Investor hereby makes the following representations, warranties and covenants
        to
        the Company:

       

      a. The
        Investor represents that (i) it has had full access to the Disclosure Package,
        including the Company’s financial information incorporated by reference therein,
        prior to or in connection with its receipt of this Subscription, (ii) it
        is
        knowledgeable, sophisticated and experienced in making, and is qualified
        to
        make, decisions with respect to investments in securities representing an
        investment decision like that involved in the purchase of the Shares, (iii)
        it
        is acquiring the Shares for its own account, or an account over which it
        has
        investment discretion, and does not have any agreement or understanding,
        directly or indirectly, with any person or entity to distribute any of the
        Shares, and (iv) it is not an affiliate of the Company as that term is defined
        under Rule 501(b) of the Securities Act.

       

      b. The
        Investor has the requisite power, authority and capacity to enter into this
        Subscription and to consummate the transactions contemplated hereby. The
        execution and delivery of this Subscription by the Investor and the consummation
        by it of the transactions contemplated hereunder have been duly authorized
        by
        all necessary action on the part of the Investor. This Subscription has been
        executed by the Investor and, when delivered in accordance with the terms
        hereof, will constitute a valid and binding obligation of the Investor
        enforceable against the Investor in accordance with its terms, except as
        enforceability may be limited by applicable bankruptcy, insolvency,
        reorganization, moratorium, fraudulent conveyance or other similar laws
        affecting the enforcement of creditors’ and contracting parties’ rights
        generally or by general principles of equity (regardless of whether such
        enforceability is considered in a proceeding in equity or at law).

       

      c. The
        Investor understands that nothing in this Subscription or any other materials
        presented to the Investor in connection with the purchase and sale of the
        Shares
        constitutes legal, tax or investment advice. The Investor has consulted such
        legal, tax and investment advisors as it, in its sole discretion, has deemed
        necessary or appropriate in connection with its purchase of Shares.

       

      d. Neither
        the Investor nor any Person acting on behalf of, or pursuant to any
        understanding with or based upon any information received from, the Investor
        has, directly or indirectly, as of the date of this Subscription, engaged
        in any
        transactions in the securities of the Company (including, without limitation,
        any Short Sales involving the Company’s securities) since the time that the
        Investor was first contacted by the Placement Agent or the Company with respect
        to the transactions contemplated hereby. “Short Sales” include, without
        limitation, all “short sales” as defined in Rule 200 promulgated under
        Regulation SHO under the Exchange Act, whether or not against the box, and
        all
        types of direct and indirect stock pledges, forward sale contracts, options,
        puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule
        16a-1(h) under the Exchange Act) and similar arrangements (including on a
        total
        return basis), and sales and other transactions through non-U.S. broker dealers
        or foreign regulated brokers. The Investor covenants that neither it, nor
        any
        Person acting on behalf of, or pursuant to any understanding with or based
        upon
        any information received from, the Investor will engage in any transactions
        in
        the securities of the Company (including, without limitation, Short Sales)
        prior
        to the time that the transactions contemplated by this Subscription are publicly
        disclosed. The Investor agrees that it will not use any of the Shares acquired
        pursuant to this Subscription to cover any short position in the Common Stock
        if
        doing so would be in violation of applicable securities laws. 

       


      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      


      e. The
        Investor represents that, except as set forth below, (i) it has had no position,
        office or other material relationship within the past three years with the
        Company or persons known to it to be affiliates of the Company, (ii) it is
        not
        a, and it has no direct or indirect affiliation or association with any,
        FINRA
        member or an Associated Person (as such term is defined under FINRA Membership
        and Registration Rules Section 1011) as of the date hereof, and (iii) after
        giving effect to the Offering, neither it nor any group of investors (as
        identified in a public filing made with the Commission) of which it is a
        member,
        will acquire, or obtain the right to acquire, 20% or more of the Common Stock
        (or securities convertible or exercisable for Common Stock) or the voting
        power
        of the Company. 

       

      Exceptions:

         

        
          

        

      

      (If
        no
        exceptions, write “none.” If left blank, response will be deemed to be
“none.”)

       

      f. The
        Investor, if outside the United States, will comply with all applicable laws
        and
        regulations in each foreign jurisdiction in which it purchases, offers, sells
        or
        delivers Shares or has in its possession or distributes any offering material,
        in all cases at its own expense.

       

      g. Neither
        the Investor nor, to the knowledge of the Investor, any Person controlling
        or
        controlled by the Investor, is a country, territory, individual or entity
        named
        on an Office of Foreign Assets Control (“OFAC”)
        list,
        or a person or entity prohibited under the programs administered by OFAC.
        

       

      10. No
        offer
        by the Investor to buy Shares will be accepted and no part of the aggregate
        purchase price will be delivered to the Company until the Investor has received
        the Disclosure Package and the Company has accepted such offer by countersigning
        a copy of this Subscription, and any such offer may be withdrawn or revoked,
        without obligation or commitment of any kind, at any time prior to the Company
        (or the Placement Agent on behalf of the Company) sending (orally, in writing
        or
        by electronic mail) notice of its acceptance of such offer. This Subscription
        will constitute only an indication of interest, involving no obligation or
        commitment of any kind, until the Disclosure Package has been delivered or
        made
        available to the Investor and this Subscription is accepted and countersigned
        by
        or on behalf of the Company.

       

      11. The
        Company and the Investor hereby appoint JPMorgan Chase Bank, N.A. as the
“Escrow
        Agent” under this Subscription to serve from the date hereof until the Closing.
        The Investor and the Company hereby irrevocably authorize the Escrow Agent
        to
        take all actions, to make all decisions and to exercise all powers and remedies
        on its behalf under the provisions of this Subscription, including without
        limitation all such actions, decisions and powers as are reasonably incidental
        thereto.

       

      12. Notwithstanding
        any investigation made by any party to this Subscription, all covenants,
        agreements, representations and warranties made by the Company and the Investor
        herein will survive the execution of this Subscription, the delivery to the
        Investor of the Shares being purchased and the payment therefor.

       

      13. All
        notices, requests, consents and other communications hereunder shall be in
        writing, shall be mailed (A) if within domestic United States by first-class
        registered or certified airmail, or nationally recognized overnight express
        courier, postage prepaid or by facsimile, or (B) if delivered from outside
        the
        United States, by International Federal Express or facsimile, and shall be
        deemed given (i) if delivered by first-class registered or certified mail
        domestic, three business days after so mailed, (ii) if delivered by a nationally
        recognized overnight courier, one business day after so mailed, (iii) if
        delivered by International Federal Express, two business days after so mailed,
        and (iv) if delivered by facsimile, upon electronic confirmation of receipt
        and
        shall be delivered as addressed as follows:

       


      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      


      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
        a
        copy (which shall not constitute notice) 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

      


      If
        to the
        Investor, at its address set forth on the Signature Page, or to such other
        address or addresses as hereafter shall be designated in writing by the
        applicable party to the other party hereto.

      


      14. This
        Subscription may not be modified or amended except pursuant to an instrument
        in
        writing signed by the Company and the Investor.

       

      15. In
        case
        any provision contained in this Subscription should be invalid, illegal or
        unenforceable in any respect, the validity, legality and enforceability of
        the
        remaining provisions contained herein will not in any way be affected or
        impaired thereby.

       

      16. This
        Subscription will be governed by, and construed in accordance with, the laws
        of
        the State of New York.

       

      17. This
        Subscription may be executed in one or more counterparts, each of which will
        constitute an original, but all of which, when taken together, will constitute
        but one instrument, and will become effective when one or more counterparts
        have
        been signed by each party hereto and delivered to the other parties.


       

      18. The
        Investor acknowledges and agrees that the Investor’s receipt of the Company’s
        counterpart to this Subscription shall constitute written confirmation of
        the
        Company’s sale of Shares to such Investor.

       

      19. In
        the
        event that the Placement Agreement is terminated by the Placement Agent pursuant
        to the terms thereof, this Subscription shall terminate without any further
        action on the part of the parties hereto.

       


      
        
           

        

        
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      INVESTOR
        SIGNATURE PAGE

       

       

      Number
        of
        Shares:                    

       

      Purchase
        Price Per Share: $                    

       

      Aggregate
        Purchase Price: $                    

      


       

      Please
        confirm that the foregoing correctly sets forth the agreement between us
        by
        signing in the space provided below for that purpose.

      


       

      Dated
        as
        of: June 16, 2008


       

                          

      
        INVESTOR

         

        By:                    

        Print
          Name:                    

        Title:                    

        Name
          in
          which Shares are to be registered: ____________________________

        Mailing
          Address:  ____________________________

        ____________________________

        ____________________________

        Taxpayer
          Identification Number: _________________________

        Manner
          of
          Settlement: DWAC 

      

      
        	 	 
	
                Name
                  of DTC Participant (broker-dealer at which the account or accounts
                  to be
                  credited with the Shares are maintained)

              	 
	 	 
	
                DTC
                  Participant Number

              	 
	 	 
	
                Name
                  of Account at DTC Participant being credited with the
                  Shares

              	 
	 	 
	
                Account
                  Number at DTC Participant being credited with the Shares

              	 


      

      


       


      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      


      


      Agreed
        and Accepted this 16th day of June 2008:


       

      HARRIS
        & HARRIS GROUP, INC.


      


      By:                    

      Title:                    

       

      
 

      
        
           

        

        
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      EXHIBIT
        A

       

      INSTRUCTION
        SHEET FOR INVESTOR - PRICING

      (to
        be
        read in conjunction with the entire Subscription)

       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      INSTRUCTION
        SHEET FOR INVESTOR - CLOSING

      (to
        be
        read in conjunction with the entire Subscription)