Document:

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.

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      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.

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      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:                    

       

      
 

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

       

      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)Unassociated Document

    EXECUTION
      COPY

    

    2,545,000
      Shares

    

    HARRIS
      & HARRIS GROUP, INC.

    

    Common
      Stock

    

    PLACEMENT
      AGENCY AGREEMENT

    

    June
      16,
      2008

    

    ThinkPanmure,
      LLC

    600
      Montgomery Street, 8th Floor

    San
      Francisco, California 94111

    

    Ladies
      and Gentlemen:

    

    Harris
      & Harris Group, Inc., a New York corporation (the “Company”),
      proposes, subject to the terms and conditions stated herein, to
      issue
      and sell
      to
      certain investors (each an “Investor”
and,
      collectively, the “Investors”),
      up to
      2,545,000 shares (the “Shares”)
      of the
      Company’s common stock, $0.01 par value per share (the “Common
      Stock”).
      The
      Company desires to engage ThinkPanmure, LLC as its exclusive placement agent
      (the “Placement
      Agent”)
      in
      connection with such issuance and sale. The Shares are more fully described
      in
      the Registration Statement (as
      hereinafter defined).

     

    1.  Agreement
      to Act as Placement Agent; Delivery and Payment.
      On
      the
      basis of the representations, warranties and agreements of the Company herein
      contained, and subject to the terms and conditions set forth in this
      Agreement:

     

    (a)    The
      Company hereby engages the Placement Agent to act as its exclusive placement
      agent in connection with the issuance and sale, by the Company, of Shares to
      the
      Investors and the Placement Agent hereby agrees, as an agent of the Company,
      to
      use its best efforts to solicit offers to purchase the Shares from the Company
      upon the terms and conditions set forth in the Prospectus (as defined below).
      The Company expressly acknowledges and agrees that this Agreement shall not
      give
      rise to a commitment by the Placement Agent or any of its affiliates to
      underwrite or purchase any of the Shares or otherwise provide any financing,
      and
      the Placement Agent shall have no authority to bind (and agrees not to purport
      to bind) the Company in respect of the sale of any Shares. 

     

    (b)    Concurrently
      with the execution and delivery of this Agreement, the Company, the Placement
      Agent and JPMorgan Chase, as escrow agent (the “Escrow
      Agent”),
      shall
      enter into an escrow agreement, dated as of the date hereof (the “Escrow
      Agreement”),
      pursuant to which an escrow account will be established, at the Company's
      expense, for the benefit of the Company and the Investors (the
      “Escrow
      Account”).
      Prior to the Closing Date, (i) each Investor will deposit in the Escrow Account
      an amount equal to $6.15 per Share multiplied by the number of Shares to be
      purchased by such Investor (the “Purchase
      Amount”),
      and (ii) the Escrow Agent will notify the Company and the Placement Agent in
      writing of the amount of funds deposited in the Escrow Account. 

     

    (c)    Upon
      the
      occurrence of the Closing (as hereinafter defined), the Company shall cause
      to
      be paid to the Placement Agent, by wire transfer of immediately available funds
      payable to the order of the Placement Agent from the Escrow Account, to an
      account designated by the Placement Agent, an aggregate of six percent (6.0%)
      of
      the gross proceeds received by the Company from its sale of the Shares at such
      Closing to all Investors (the “Agency
      Fee”).
      

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

     

    (d)    Payment
      of the purchase price for, and delivery of, the Shares shall be made at a
      closing (the “Closing”)
      at the
      offices of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
      Company, located at Four
      Times Square, New York, New York
      at 10:00
      a.m., local time, on June 20, 2008 or at such other time and date as the
      Investor and the Company determine pursuant to Rule 15c6-1(a) under the Exchange
      Act (such date of payment and delivery being herein referred to as the
“Closing
      Date”),
      and
      upon satisfaction of the conditions set forth in this Agreement and the
      Subscription Agreements (as defined below), the Company shall deliver the
      Shares, which shall be registered in the name or names and shall be in such
      denominations as the Placement Agent may request at least one business day
      before the Closing Date, to the Investors, which delivery, with respect to
      the
      Shares, may be made through the facilities of the Depository Trust Company's
      DWAC system, and the Escrow Agent will disburse the aggregate funds in the
      Escrow Account to the Company reduced by an amount equal to the sum of the
      aggregate Agency Fee payable to the Placement Agent and the Placement Agent’s
      bona fide written estimate of the amount, if any, of expenses for which the
      Placement Agent is entitled to reimbursement pursuant hereto, with such amounts
      being delivered to the Placement Agent, by wire in federal (same day) funds,
      as
      provided in the Escrow Agreement.
      All such
      actions taken at the Closing shall be deemed to have occurred simultaneously.
      Each
      of the Company and the Placement Agent hereby agree to deliver to the Escrow
      Agent a Closing Notice in the form attached as Exhibit C to the Escrow
      Agreement at least one day prior to the Closing Date.  At least one day
      prior to the Closing Date, the Placement Agent shall submit to the Company
      its
      bona fide written estimate of the amount, if any, of expenses for which such
      Placement Agent is entitled to reimbursement pursuant hereto. 

     

    (e)    The
      sale
      of the Shares shall be made pursuant to subscription agreements in the form
      included as Exhibit
      A
      hereto
      (the “Subscription
      Agreements”).
      The
      Company shall have the sole right to accept offers to purchase the Shares and
      may reject any such offer in whole or in part, and, except as set forth in
      Section 4 hereof, in no event shall fees be payable on any proposed purchase
      which is rejected for any reason or which otherwise does not close for any
      reason.

     

    (f)    Prior
      to
      the earlier of (i) the date on which this Agreement is terminated and (ii)
      the
      Closing Date, the Company shall not, without the prior written consent of the
      Placement Agent, solicit or accept offers to purchase Shares of the Company
      (other than pursuant to the exercise of options or warrants to purchase shares
      of Common Stock that are outstanding at the date hereof) otherwise than through
      the Placement Agent in accordance herewith.

     

    2.  Representations
      and Warranties of the Company.
      The
      Company represents and warrants to the Placement Agent as of the date hereof,
      and as of the Closing Date, as follows:

    

    (a)    Registration
      Statement.
      The
      Company meets the requirements for the use of Form N-2 under the Securities
      Act
      of 1933 (the "Securities
      Act"),
      and a
      registration statement (Registration No. 333-138996) on Form N-2 relating to
      the
      Shares being offered by the Company, and such amendments thereof as may have
      been required to the date of this Agreement, have been prepared by the Company
      in accordance with the provisions of the Securities Act and the rules and
      regulations (collectively referred to as the "Rules
      and Regulations")
      of the
      Securities and Exchange Commission (the "Commission")
      thereunder, and such registration statement has been filed with and has been
      declared effective by the Commission. A final prospectus supplement containing
      information permitted to be omitted at the time of effectiveness by Rule 430C
      of
      the Rules and Regulations will be filed promptly by the Company with the
      Commission in accordance with Rule 497 of the Rules and Regulations.

    

    (i)
       The
      term
      "Registration
      Statement"
      as used
      in this Agreement means the registration statement, as amended at the time
      it
      became effective, including all documents filed as a part thereof, and including
      any information contained in a prospectus subsequently filed with the Commission
      pursuant to Rule 497 under the Securities Act and deemed to be a part of the
      registration statement at the time of effectiveness pursuant to Rule 430C under
      the Securities Act, and as supplemented or amended, prior to the execution
      of
      this Agreement, including all financial schedules and exhibits thereto. 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.

    

    
      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

    

    

    

    (ii) The
      term
      "Base
      Prospectus"
      as used
      in this Agreement means the base prospectus, dated as of May 29, 2008, included
      in the Registration Statement at the time it was declared effective by the
      Commission. The term "Preliminary
      Prospectus"
      as used
      in this Agreement means any preliminary prospectus supplement specifically
      relating to the Shares in the form that is first filed with the Commission
      pursuant to Rule 497 under the Securities Act. The term "Prospectus
      Supplement"
      as used
      in this Agreement means the final prospectus supplement specifically relating
      to
      the Shares in the form that is first filed with the Commission pursuant to
      Rule
      497 under the Securities Act after the date and time this Agreement is executed
      and delivered by the parties hereto. The term “Prospectus”
as
      used
      in this Agreement means the Base Prospectus together with the Prospectus
      Supplement.

     

    (iii)
       The
      term
      "Time
      of Sale"
      as used
      in this Agreement means the time of execution of this Agreement. 

    

    (iv)
       The
      term
      "Pricing
      Information"
      as used
      in this Agreement, means the information included on Schedule
      I
      hereto
      (which information the Placement
      Agent
      has
      informed the Company is being conveyed orally by the Placement
      Agent
      to
      prospective purchasers at or prior to confirming sales of the shares in the
      offering).

    

    (v) The
      term
“Disclosure
      Package”
as
      used
      in this Agreement, means the Preliminary Prospectus and the Pricing Information,
      all considered together.

    

    (b)    Registration
      Statement; Disclosure Package and Prospectus.
      No
      order preventing or suspending the use of the Base Prospectus has been issued
      by
      the Commission, and no stop order suspending the effectiveness of the
      Registration Statement or any post-effective amendment thereto has been issued,
      and no proceedings for that purpose have been instituted or, to the Company's
      knowledge, are threatened by the Commission. The Registration Statement complied
      when it became effective, in all material respects, with the requirements of
      Form N-2 under the Securities Act. The conditions to the use of Form N-2 in
      connection with the offering and sale of the Shares as contemplated hereby
      have
      been satisfied. The Registration Statement did not, as of the Time of Sale,
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein not
      misleading; the Disclosure Package, as of the Time of Sale, did not contain
      an
      untrue statement of a material fact or omit to state a material fact necessary
      in order to make the statements therein, in the light of the circumstances
      under
      which they were made, not misleading; and the Prospectus, as of the date that
      it
      is filed with the Commission and as of the Closing Date, will not contain an
      untrue statement of a material fact or omit to state a material fact necessary
      in order to make the statements therein, in the light of the circumstances
      under
      which they were made, not misleading; provided, in each case, that the Company
      makes no representations or warranty with respect to any Placement Agent
      Information (as defined in Section
      7).
      

     

    (c)    Organization.
      The
      Company has been duly incorporated and is validly existing as a corporation
      in
      good standing under the laws of the State of New York, with the corporate power
      and authority necessary to own, lease and operate its properties and to conduct
      its business as described in the Registration Statement, the Disclosure Package
      and the Prospectus.

    

    
      
        
          
          

        

        
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    (d)  Capitalization.
      The
      authorized capital stock of the Company consists of (i) 45,000,000 shares of
      Common Stock and (ii) 2,000,000 shares of preferred stock, par value $0.10
      per
      share (the "Preferred
      Stock").
      As of
      the date hereof, 23,314,573 shares of Common Stock are issued and outstanding
      and no shares of Preferred Stock are issued and outstanding. 

    

    (e)  The
      Shares.
      The
      Shares have been duly and validly authorized by the Company and, when issued,
      delivered and paid for in accordance with the terms of this Agreement and the
      Subscription Agreements, will have been duly and validly issued and will be
      fully paid and nonassessable.

    

    (f)  Description
      of Capital Stock.
      The
      terms of the capital stock of the Company, including the Shares, conforms in
      all
      material respects to the description thereof contained in the Registration
      Statement, the Disclosure Package and the Prospectus. 

    

    (g)  Authorization
      and Execution.
      This
      Agreement and each Subscription Agreement has been duly authorized, executed
      and
      delivered by the Company.

    

    (h)  Subsidiaries.
      None
      of
      the Company’s subsidiaries are significant subsidiaries (as such term is defined
      in Rule 1-02(w) of Regulation S-X promulgated by the Commission). The Company
      owns all of the issued and outstanding capital stock of each of the subsidiaries
      listed on Schedule
      II
      attached
      hereto (collectively, the “Subsidiaries”).
      Each
      of the Subsidiaries has been duly organized and is validly existing and in
      good
      standing under the laws of its jurisdiction of organization; each of the
      Subsidiaries has the power and authority to own, lease and operate its
      properties and conduct its business as described in the Disclosure Package
      and
      the Prospectus. All of the outstanding shares of capital stock of each of the
      Subsidiaries held directly or indirectly by the Company have been duly
      authorized and validly issued, are fully paid and non-assessable, have been
      issued in compliance with all applicable securities laws, were not issued in
      violation of any preemptive right, resale right, right of first refusal or
      similar right to subscribe for or purchase securities of the Subsidiaries and
      are owned by the Company or another Subsidiary subject to no security interest,
      other encumbrance or adverse claims. 

     

    (i)  No
      Violation or Default.
      The
      Company is not in breach or violation of or in default under (i) the provisions
      of its charter or by-laws, (ii) any material agreement filed as an exhibit
      to
      the Registration Statement, or (iii) any federal or state statute or law, any
      rule or regulation issued pursuant to any federal or state statute or law,
      or
      any order issued pursuant to any federal or state statute or law by any court
      or
      governmental agency or body having jurisdiction over the Company, except, with
      respect to clauses (ii) and (iii) above, as described in the Disclosure Package
      and the Prospectus or, to the extent any such contravention would not,
      individually or in the aggregate, have a material adverse effect on the
      business, properties, prospects, financial condition or results of operations
      of
      the Company (a "Material
      Adverse Effect").
      

    

    (j)  No
      Conflicts.
      The
      execution, delivery and performance by the Company of this Agreement, each
      Subscription Agreement and the Escrow Agreement, including the issuance and
      sale
      by the Company of the Shares, will not conflict with or result in a breach
      or
      violation of, or constitute a default under (i) the provisions of its charter
      or
      by-laws, (ii) any material agreement filed as an exhibit to the Registration
      Statement, or (iii) any federal or state statute or law, any rule or regulation
      issued pursuant to any federal or state statute or law, or any order issued
      pursuant to any federal or state statute or law by any court or governmental
      agency or body having jurisdiction over the Company, except, with respect to
      clauses (ii) and (iii) above, as described in the Disclosure Package and the
      Prospectus or, to the extent any such contravention would not, individually
      or
      in the aggregate, have a Material Adverse Effect.  

    

    
      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

    

    

     

    (k)  No
      Consents Required.
      No
      filing with, or authorization, approval, consent or order of, any court or
      governmental agency or body is required for the issuance and sale of the Shares,
      except as referred to in this Agreement, the Registration Statement,
      the
      Disclosure Package
      or the
      Prospectus and (i) such as have been already obtained or as may be required
      under the Securities Act, the Investment Company Act of 1940, as amended (the
      "Investment
      Company Act")
      or the
      Securities Exchange Act of 1934, as amended (the "Exchange
      Act"),
      (ii)
      such as may be required under the rules and regulations of the Financial
      Industry Regulatory Authority (“FINRA”),
      or
      (iii) such as may be required under the "blue sky" laws of any jurisdiction
      in
      connection with the purchase and distribution of the Shares in the manner
      contemplated in this Agreement, the Registration Statement,
      the
      Disclosure Package
      and the
      Prospectus. 

    

    (l)  Disclosure.
      The
      statements set forth in the Prospectus under the captions "Taxation" and
      "Certain Governmental Regulations," insofar as they purport to describe the
      provisions of the laws referred to therein, are accurate and complete in all
      material respects.

    

    (m)  Absence
      of Material Changes. Subsequent
      to the respective dates as of which information is given in the Disclosure
      Package and the Prospectus, and other than as contemplated therein, there has
      not been (i) any material adverse change in the business, properties, prospects,
      financial condition or results of operations of the Company, (ii) any
      transaction which is material to the Company, (iii) any material change in
      the
      capital stock, or any material change in the outstanding indebtedness, of the
      Company, or (v) any dividend or distribution declared, paid or made on the
      capital stock of the Company.

    

    (n)  Legal
      Proceedings.
      Except
      as described in the
      Disclosure Package
      and the
      Prospectus, there are no legal proceedings pending or, to the Company's
      knowledge, threatened to which the Company or any of its properties is or would
      be subject at law or in equity, before or by any federal or state court or
      governmental agency or body, except any such legal proceedings, which if
      resolved adversely to the Company, would not result in a judgment, decree or
      order having, individually or in the aggregate, a Material Adverse
      Effect. 

     

    (o)  Good
      Title to Property.
      The
      Company has
      good and
      valid title to all property (whether real or personal) described in the
Disclosure
      Package, the Prospectus Supplement and, except to the extent modified by the
      Prospectus Supplement,
      the Base
      Prospectus as being owned by it, except such property as shall have been
      disposed of in the ordinary course after the date thereof, in each case free
      and
      clear of all liens, claims, security interests, other encumbrances or defects
      except such as are described in the Disclosure
      Package
      and the
      Prospectus and those that would not, individually or in the aggregate materially
      affect the value of such property and do not materially interfere with the
      use
      made and proposed to be made of such property by the Company. All of the
      property described in the Disclosure
      Package, the Prospectus Supplement and, except to the extent modified by the
      Prospectus Supplement,
      the Base
      Prospectus as being held under lease by the Company, except such property as
      shall have been disposed of in the ordinary course after the date thereof,
      is
      held thereby under valid, subsisting and enforceable leases (except as the
      enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
      moratorium or other similar laws affecting the enforcement of creditors’ rights
      generally and by general equitable principles), without any liens, restrictions,
      encumbrances or claims, except those that, individually or in the
      aggregate, are not material or do not materially interfere with the use made
      and
      proposed to be made of such property by the Company. 

    

    

    
      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

    

    

    (p)  Intellectual
      Property Rights.
      Except
      as set forth on Schedule
      2(p)
      attached
      hereto, the Company does not own any patent applications, patents, trademarks
      (both registered and unregistered), tradenames, copyrights, trade secrets or
      other proprietary information which are necessary for the conduct of its
      business, except where the failure to own such rights would not, individually
      or
      in the aggregate, result in a Material Adverse Effect. 

    

    (q)  Financial
      Statements.
      The
      consolidated financial statements of the Company, together with the related
      schedules and notes thereto, set forth or incorporated by reference in the
      Registration Statement, the Disclosure Package and the Prospectus present fairly
      in all material respects the consolidated financial condition of the Company
      as
      of the dates indicated and the consolidated results of operations, cash flows
      and changes in net assets of the Company for the periods specified and have
      been
      prepared in conformity with United States generally accepted accounting
      principles, consistently applied throughout the periods involved. 

    

    (r)  Independent
      Accountants.
      To the
      Company’s knowledge, PricewaterhouseCoopers LLP, who have certified the
      consolidated financial statements of the Company, is (i) an independent
      public accounting firm within the meaning of the Securities Act and the Rules
      and Regulations, (ii) a registered public accounting firm (as defined in Section
      2(a)(12) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
      Act”)),
      and (iii) not in violation of the auditor independence requirements of the
      Sarbanes-Oxley Act as such requirements apply to their relationship with the
      Company.

     

    (s)  Taxes.
      The
      Company has timely filed all material federal and state income and franchise
      tax
      returns (or timely filed applicable extensions therefore) that have been
      required to be filed and is not in default in the payment of any taxes which
      were payable pursuant to said returns or any assessments with respect thereto,
      except to the extent that the failure to timely file or pay would not,
      individually or in the aggregate, have a Material Adverse Effect.

    

    (t)  Nasdaq;
      Exchange Act Registration.
      The
      Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
      Act and is accepted for quotation on the Nasdaq Global Market, and the Company
      has taken no action designed to terminate the registration of the Common Stock
      under the Exchange Act or delisting the Common Stock from the Nasdaq Global
      Market, nor, except as disclosed in the Registration Statement,
      the
      Disclosure Package
      and the
      Prospectus, has the Company received any notification that the Commission or
      FINRA is contemplating terminating such registration or listing. Except as
      disclosed in the Registration Statement,
      the
      Disclosure Package
      and the
      Prospectus, the Company has complied in all material respects with the
      applicable requirements of the Nasdaq Global Market for maintenance of inclusion
      of the Common Stock thereon. 

    

    (u)  Accounting
      Controls.
      The
      Company maintains a system of internal accounting controls sufficient to provide
      reasonable assurances that (i) transactions are executed in accordance with
      management's general or specific authorization; (ii) transactions are recorded
      as necessary to permit preparation of financial statements in conformity with
      generally accepted accounting principles and to maintain accountability for
      assets; (iii) access to assets is permitted only in accordance with management's
      general or specific authorization; and (iv) the recorded accountability for
      assets is compared with existing assets at reasonable intervals and appropriate
      action is taken with respect to any differences. 

     

    (v)  Disclosure
      Controls.
      The
      Company has established, maintains and evaluates "disclosure controls and
      procedures" (as such term is defined in Rule 13a-15e and 15d-15e under the
      Exchange Act), which (i) are designed to ensure that material information
      required to be disclosed by the Company in the reports that it files under
      the
      Exchange Act is made known to the Company's principal executive officer and
      its
      principal financial officer, particularly during the periods in which the
      periodic reports required under the Exchange Act are being prepared, and such
      disclosure controls and procedures are effective to perform the functions for
      which they were established; the Company's auditors and the Audit Committee
      of
      the Board of Directors of the Company have been advised of: (i) any significant
      deficiencies and material weaknesses in the design or operation of internal
      control over financial reporting (as such term is defined in Rule 13a-15f and
      15d-15f under the Exchange Act) which could adversely affect the Company's
      ability to record, process, summarize, and report financial data; and (ii)
      any
      fraud, whether or not material, that involves management or other employees
      who
      have a role in the Company's internal control over financial reporting; any
      material weaknesses in internal control over financial reporting have been
      identified for the Company's auditors; and since the date of the most recent
      evaluation of such internal control over financial reporting, there have been
      no
      changes in internal control over financial reporting or in other factors that
      could significantly affect internal control over financial reporting, including
      any corrective actions with regard to significant deficiencies and material
      weaknesses. 

     

    

    
      
        
          
          

        

        
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    (w)  Sarbanes-Oxley
      Act.
      The
      Company, and to its knowledge, all of the Company's directors or officers,
      in
      their capacities as such, is in compliance in all material respects with all
      applicable provisions of the Sarbanes-Oxley Act.

     

    (x)  Investment
      Company Act; Compliance.
      The
      Company has elected to be regulated as a "business development company" under
      the Investment Company Act and has not withdrawn such election, and the
      Commission has not ordered that such election be withdrawn nor to the Company's
      knowledge have proceedings to effectuate such withdrawal been initiated or
      threatened by the Commission. Except as set forth in the Registration
      Statement,
      the
      Disclosure Package
      and the
      Prospectus, the Company’s current business operations and investments and
      contemplated business operations and investments are in compliance in all
      material respects with the provisions of the Investment Company Act and the
      rules and regulations of the Commission thereunder (as set forth in the Code
      of
      Federal Regulations (“CFR”))
      applicable to business development companies and, after giving effect to the
      issuance and sale of the Shares, will be in compliance in all material respects
      with such provisions and rules and regulations (as set forth in the CFR). The
      provisions of the corporate charter and bylaws of the Company and the investment
      policies described in the Registration Statement,
      the
      Disclosure Package
      and the
      Prospectus are not inconsistent with the requirements of the Investment Company
      Act and the rules and regulations of the Commission thereunder (as set forth
      in
      the CFR) applicable to a business development company.

    

    (y)  Insurance.
      The
      Company maintains insurance in such amounts and covering such risks as it
      reasonably considers to be adequate for the conduct of its business and the
      value of its properties and as is customary for companies engaged in similar
      businesses in similar industries. All such insurance is fully in force on the
      date hereof and will be fully in force as of the Closing Date. The Company
      has
      no reason to believe that it will not be able to renew its existing insurance
      coverage as and when such coverage expires or to obtain similar coverage from
      similar insurers as may be necessary to continue its business at a cost that
      would not have a Material Adverse Effect.

    

    (z)  Brokers
      Fees.
      The
      Company is not a party to any contract, agreement or understanding with any
      person (other than this Agreement) that would give rise to a valid claim against
      the Company or the Placement Agent for a brokerage commission, finder’s fee or
      other like payment in connection with the offering and sale of the
      Shares.

     

    (aa)  No
      Stabilization.
      Neither
      the Company, nor, to the Company's knowledge, any of its officers, directors,
      affiliates or controlling persons, has taken or will take, directly or
      indirectly, any action designed or intended to stabilize or manipulate the
      price
      of any security of the Company to facilitate the sale or resale of the
      Shares.

    

    
      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

    

    

    

    (bb)  FINRA
      Affiliations.
      To the
      Company’s knowledge, there are no affiliations or associations between (i) any
      member of FINRA and (ii) the Company or any of the Company’s officers, directors
      or 5% or greater securityholders, except as set forth in the Registration
      Statement,
      the
      Disclosure Package
      and the
      Prospectus.

    

    (cc)  No
      Labor Disputes.
      The
      Company is not involved in any labor dispute nor, to the knowledge of the
      Company, is any such dispute threatened, which dispute would have a Material
      Adverse Effect.

    

    (dd)  ERISA.
      The
      Company is in compliance in all material respects with all presently applicable
      provisions of the Employee Retirement Income Security Act of 1974, as amended,
      including the regulations and published interpretations thereunder
      (“ERISA”);
      no
“reportable event” (as defined in ERISA) has occurred with respect to any
“pension plan” (as defined in ERISA) maintained by the Company or for which the
      Company would reasonably be expected to have any liability; the Company has
      not
      incurred and does not expect to incur liability under (i) Title IV of ERISA
      with
      respect to termination of, or withdrawal from, any “pension plan” or (ii)
      Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
      the regulations and published interpretations thereunder (the “Code”);
      and
      each “pension plan” maintained by the Company that is intended to be qualified
      under Section 401(a) of the Code has received a determination letter from the
      Internal Revenue Service to the effect that it is so qualified and nothing
      has
      occurred, whether by action or by failure to act, which would reasonably be
      expected to cause the loss of such qualification.

    

    (ee)  Statistical
      or Market-Related Data.
      Any statistical, industry-related and market-related data included in the
      Registration Statement, the Disclosure Package and the Prospectus, are based
      on
      or derived from sources that the Company reasonably and in good faith believes
      to be reliable and accurate, and such data agree with the sources from which
      they are derived. 

    

    3.  Covenants. The
      Company covenants and agrees with the Placement Agent as follows:

    

    (a)  Prospectus
      Supplement.
      The
      Company shall file the Prospectus Supplement with the Commission within the
      time
      periods specified by Rule 497 and Rule 430C under the Securities
      Act. 

    

    (b)  Notice
      to Placement Agent.
      During
      any period when a prospectus relating to the Shares is required to be delivered
      under the Securities Act in connection with the offering contemplated by this
      Agreement (the
      “Prospectus
      Delivery Period”),
      the
      Company will notify the Placement Agent promptly, and will, if requested,
      confirm such notification in writing: (i) of the receipt of any comments
      of, or requests for additional or supplemental information from, the Commission;
      (ii) of the time and date of any filing of any post-effective amendment to
      the
      Registration Statement or any amendment or supplement to any Preliminary
      Prospectus or the Prospectus, (iii) the time and date when any post-effective
      amendment to the Registration Statement becomes effective; (iv) of the
      issuance by the Commission of any stop order suspending the effectiveness of
      the
      Registration Statement, or any post-effective amendment thereto or any order
      preventing or suspending the use of any Preliminary Prospectus or the
      Prospectus, or the initiation of any proceedings for that purpose or the threat
      thereof; and (v) of receipt by the Company of any notification with respect
      to any suspension of the approval of the Shares from any securities exchange
      upon which they are listed for trading or included or designated for quotation,
      or the initiation or threatening of any proceeding for such purpose. The Company
      will use its reasonable best efforts to prevent the issuance or invocation
      of
      any such stop order or suspension by the Commission and, if any such stop order
      or suspension is so issued or invoked, to obtain as soon as possible the
      withdrawal or removal thereof.

    

    
      
        
          
          

        

        
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    (c)  Filing
      of Amendments or Supplements.
      If,
      during the Prospectus Delivery Period, any event shall occur or condition exist
      as a result of which, in the judgment of the Company or in the reasonable
      opinion of the Placement Agent, it becomes necessary to amend or supplement
      the
      Prospectus in order to make the statements therein, in the light of the
      circumstances when the Prospectus is delivered to an Investor, not misleading,
      or if it is necessary to amend or supplement the Prospectus to comply with
      applicable law, forthwith to prepare, file with the Commission and furnish,
      at
      its own expense, to the Placement Agent, either amendments or supplements to
      the
      Prospectus so that the statements in the Prospectus as so amended or
      supplemented will not, in the light of the circumstances when the Prospectus
      is
      delivered to an Investor, be misleading or so that the Prospectus, as amended
      or
      supplemented, will comply with law. 

    

    (d)  Delivery
      of Copies.
      The
      Company will deliver promptly to the Placement Agent and its counsel such number
      of the following documents as the Placement Agent shall reasonably request:
      (i)
      conformed copies of the Registration Statement as originally filed with the
      Commission and each amendment thereto (in each case excluding exhibits), (ii)
      copies of each Preliminary Prospectus, if any; (iii) during the Prospectus
      Delivery Period, copies of the Prospectus (or any amendments or supplements
      thereto); and (iv) all correspondence to and from, and all documents issued
      to
      and by, the Commission in connection with the registration of the Shares under
      the Securities Act. 

    

    (e)  Blue
      Sky Laws.
      The
      Company will promptly take or cause to be taken, from time to time, such actions
      as the Placement Agent may reasonably request to qualify the Shares for offering
      and sale under the state securities, or blue sky, laws of such states as the
      Placement Agent may reasonably request and to maintain such qualifications
      in
      effect so long as the Placement Agent may reasonably request for the
      distribution of the Shares, provided,
      that in
      no event shall the Company be obligated to qualify as a foreign corporation
      in
      any jurisdiction in which it is not so qualified or to file a general consent
      to
      service of process in any jurisdiction or subject itself to taxation as doing
      business in any jurisdiction. The Company will advise the Placement Agent
      promptly of the suspension of the qualification or registration of (or any
      exemption relating to) the Shares for offering, sale or trading in any
      jurisdiction or any initiation or threat of any proceeding for any such purpose,
      and in the event of the issuance of any order suspending such qualification,
      registration or exemption, the Company shall use its best efforts to obtain
      the
      withdrawal thereof at the earliest possible moment.

    

    (f)  Use
      of Proceeds.
      The
      Company will apply the net proceeds from the sale of the Shares in the manner
      set forth in the Prospectus under the heading “Use of Proceeds”. 

     

    (g)  Lock-Up
      Period.
      Beginning on the date hereof and continuing for
      a period
      of 90 days after the date of the Prospectus (the “Lock-Up
      Period”),
      the
      Company will not (1) offer to sell, hypothecate, pledge, announce the
      intention to sell, sell, contract to sell, sell any option or contract to
      purchase, purchase any option or contract to sell, grant any option, right
      or
      warrant to purchase or otherwise transfer or dispose of, directly or indirectly,
      or establish or increase a put equivalent position or liquidate or decrease
      a
      call equivalent position within the meaning of Section 16 of the Exchange Act,
      with respect to, any shares of Common Stock, any securities convertible into
      or
      exercisable or exchangeable for Common Stock; (2) file or cause to become
      effective a registration statement under the Securities Act relating to the
      offer and sale of any shares of Common Stock or securities convertible into
      or
      exercisable or exchangeable for Common Stock except for a registration statement
      on Form S-8 relating to employee benefit plans or (3) enter into any swap or
      other agreement that transfers, in whole or in part, any of the economic
      consequences of ownership of the Common Stock, whether any such transaction
      described in clause (1), (2) or (3) above is to be settled by delivery of Common
      Stock or such other securities, in cash or otherwise, without the prior written
      consent of the Placement Agent (which consent may be withheld in its sole
      discretion), other than: (i) the Shares to be sold hereunder, (ii) the
      issuance of employee stock options or restricted stock awards pursuant to equity
      incentive plans described in the Registration Statement (excluding the exhibits
      thereto),
      the
      Disclosure Package
      and the
      Prospectus, (iii) issuances of Common Stock upon the exercise of options or
      warrants (either upon current terms thereof or upon subsequently amended terms
      but excluding a general repricing) disclosed as outstanding in the Registration
      Statement (excluding the exhibits thereto),
      the
      Disclosure Package
      and the
      Prospectus or upon the conversion or exchange of convertible or exchangeable
      securities outstanding as of the date of this Agreement; (iv) the issuance
      by
      the Company of any shares of Common Stock as consideration for mergers,
      acquisitions, other business combinations, or strategic alliances, occurring
      after the date of this Agreement; provided
      that
      each recipient of shares pursuant to this clause (iv) agrees that all such
      shares remain subject to restrictions substantially similar to those contained
      in this Section
      3(g);
      or (v)
      the purchase or sale of the Company’s securities pursuant to a plan, contract or
      instruction that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B)
      that was in effect prior to the date hereof. Notwithstanding the foregoing,
      the
      Company shall be permitted to establish a 10b5-1 trading plan that complies
      with
      Rule 10b5-1 under the Exchange Act, or to amend an existing 10b5-1 trading
      plan
      in accordance with Rule 10b5-1 under the Exchange Act, provided, in each case,
      that no sales or other dispositions of shares of the Common Stock under such
      10b5-1 trading plans that were not in effect prior to the date hereof by any
      person that has signed or is otherwise bound by a Lock-Up Agreement (as defined
      below) will be permitted during the Lock-Up Period, as the same may be extended
      hereby. For the purpose of allowing the Placement Agent to comply with FINRA
      Rule 2711(f)(4), if (1) during the last 17 days of the Lock-Up Period, the
      Company releases earnings results or publicly announces other material news
      or a
      material event relating to the Company occurs or (2) prior to the expiration
      of
      the Lock-Up Period, the Company announces that it will release earnings results
      during the 16-day period beginning on the last day of the Lock-Up Period, then
      in each case the Lock-Up Period will be extended until the expiration of the
      18-day period beginning on the date of release of the earnings results or the
      public announcement regarding the material news or the occurrence of the
      material event, as applicable, unless the Placement Agent waives, in writing,
      such extension. Without the prior written consent of the Placement Agent, the
      Company agrees not to accelerate the vesting of any option or warrant or the
      lapse of any repurchase right prior to the expiration of the Lock-Up
      Period. 

     

    

    
      
        
          
          

        

        
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    (h)  Lock-Up
      Agreements.
      The
      Company will cause each of its executive officers and directors whose names
      are
      set forth on Exhibit
      C
      hereto
      to furnish to the Placement Agent, on the date hereof, a letter, substantially
      in the form of Exhibit
      B
      hereto
      (the “Lock-Up
      Agreement”).
      

    

    (i)  Public
      Communications.
      Prior
      to the earlier of the termination of this Agreement or the Closing Date, the
      Company will not issue any press release or other communication directly or
      indirectly or hold any press conference with respect to the business,
      properties, financial condition, results of operations or prospects of the
      Company, or the offering of the Shares, without the prior consent of the
      Placement Agent, unless in the reasonable judgment of the Company and its
      counsel, and after notification to the Placement Agent, such press release
      or
      communication is required by law or by Nasdaq rules, in which case the Company
      shall use its reasonable best efforts to allow the Placement Agent reasonable
      time to comment on such release or other communication in advance of such
      issuance. 

    

    (j)  Stabilization. The
      Company will not take, directly or indirectly, any action designed, or that
      might reasonably be expected to cause or result in, or that will constitute,
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Shares.

    

    

    
      
        
          
          

        

        
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    (k)  Listing.
      The
      Company shall use its commercially reasonable efforts to cause the Shares to
      be
      listed for quotation on the Nasdaq Global Market at the Closing Date and to
      maintain a listing on a national securities exchange after the Closing Date.
      

    

    (l)  Broker’s
      Fee.
      The
      Company will not incur any liability for any finder’s or broker’s fee or agent’s
      commission in connection with the execution and delivery of this Agreement
      or
      the consummation of the transactions contemplated hereby, except as set forth
      in
      this Agreement.

    

    (m)    Abbreviated
      Registration Statements.
      If the
      Company elects to rely upon Rule 462(b) under the Securities Act, the Company
      shall file one or more registration statements under Rule 462(b) with the
      Commission in compliance with Rule 462(b), and the Company shall at the time
      of
      filing either pay to the Commission the filing fee for such Rule 462(b)
      registration statements or give irrevocable instructions for the payment of
      such
      fee pursuant to the Rules and Regulations.

    

    4.  Costs
      and Expenses.
      The
      Company will pay or reimburse if paid by the Placement Agent all reasonable
      costs and expenses incident to the performance of the obligations of the Company
      under this Agreement and in connection with the transactions contemplated
      hereby, including but not limited to costs and expenses of or relating to (i)
      the
      preparation, printing and filing of the Registration Statement, each Preliminary
      Prospectus and the Prospectus, and any amendment or supplement to any of the
      foregoing and the printing and furnishing of copies of each thereof to the
      Placement Agent and dealers (including costs of mailing and
      shipment),
      (ii)
      the registration, issue, sale and delivery of the Shares including any stock
      or
      transfer taxes and stamp or similar duties payable upon the sale, issuance
      or
      delivery of the Shares and the printing, delivery, and shipping of the
      certificates representing the Shares, (iii)
      the registration or qualification of the Shares
      for offer and sale under the securities or Blue Sky laws of such jurisdictions
      designated pursuant to Section 3(e),
      (including the reasonable legal fees and filing fees, and other disbursements
      of
      counsel to the Placement Agent in connection therewith), and, if reasonably
      requested by the Placement Agent, the preparation and printing and furnishing
      of
      copies of any blue sky surveys to the Placement Agent and to dealers,
      (iv)
      the fees and expenses of any transfer agent or registrar for the Shares, (v)
      any
      filings required to be made by the Placement Agent or the Company with FINRA,
      and the reasonable fees, disbursements and other charges of counsel for the
      Placement Agent in connection therewith (including all COBRADesk
      fees),
      (vi)
      fees, disbursements and other charges of counsel to the Company (except as
      otherwise set forth below), (vii) listing fees, if any, for the listing or
      quotation of the Shares on the Nasdaq Global Market, (viii) fees and
      disbursements of the Company’s auditor incurred in delivering the letter(s)
      described in Section
      5(i)
      of this
      Agreement, (ix) fees of the Escrow Agent, (x) the reasonable out-of-pocket
      expenses of the Placement Agent (including the reasonable fees, disbursements
      and other charges of one counsel to the Placement Agent (in addition to (iii)
      and (v) above) in connection with the performance of services hereunder, and
      (xi) the
      costs and expenses of the Company in connection with the marketing of the
      offering and the sale of the Shares
      to prospective investors including,
      but not limited to, those related to any presentations or meetings undertaken
      in
      connection therewith including, without limitation, expenses associated with
      the
      production of road show slides and graphics, fees and expenses of any
      consultants engaged with the written consent of the Company in connection with
      the road show presentations, travel, lodging and other expenses incurred by
      the
      officers of the Company and any such consultants, and the cost of any aircraft
      or other transportation chartered in connection with the road show.
      Notwithstanding the foregoing, in no event shall the Company be obligated to
      reimburse the Placement Agent pursuant to this Section
      4
      in an
      amount in excess of $75,000 in the aggregate (less the reasonable and documented
      fees, disbursements and other charges of counsel to the Company incurred in
      connection with such counsel's representation with respect to the matter
      described under the caption “Risk Factors—We may have a contingent liability
      arising out of a possible violation of Section 5 of the Securities Act of 1933
      in connection with the distribution of a management presentation to prospective
      purchasers of our common stock” in the Preliminary Prospectus and the
      Prospectus) without the Company’s prior written consent.

    

    
      
        
          
          

        

        
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    5.  Conditions
      of Placement Agent’s Obligations.
      The
      obligations of the Placement Agent hereunder are subject to the following
      conditions:

    

    (a)  Filings
      with the Commission.
      The
      Preliminary Prospectus (if any) and the Prospectus required to be filed under
      the Securities Act or the Rules and Regulations shall have been filed with
      the
      Commission pursuant to Rule 497 and Rule 430C in
      the manner and within the time period so required.
      

    

    (b)  No
      Stop Orders.
      Prior
      to the Closing: (i) no stop order suspending the effectiveness of the
      Registration Statement or any part thereof, preventing or suspending the use
      of
      the Base Prospectus, any Preliminary Prospectus or the Prospectus or any part
      thereof shall have been issued under the Securities Act and no proceedings
      for
      that purpose shall have been initiated or threatened by the Commission, (ii)
      no
      order suspending the qualification or registration of the Shares under the
      securities or blue sky laws of any jurisdiction shall be in effect and (iii)
      all
      requests for additional information on the part of the Commission (to be
      included in the Registration Statement,
      the
      Disclosure Package
      or the
      Prospectus) shall have been complied with to the reasonable satisfaction of
      the
      Placement Agent.

    

    (c)    Action
      Preventing Issuance.
      No
      action shall have been taken and no statute, rule, regulation or order shall
      have been enacted, adopted or issued by any governmental agency or body which
      would, as of the Closing Date, prevent the issuance or sale of the Shares;
      and
      no injunction, restraining order or order of any other nature by any federal
      or
      state court of competent jurisdiction shall have been issued as of the Closing
      Date which would prevent the issuance or sale of the Shares.

    

    (d)  Objection
      of Placement Agent.
      No
      Prospectus or amendment or supplement to the Registration Statement shall have
      been filed to which the Placement Agent shall have objected in writing, which
      objection shall not be unreasonable. The Placement Agent shall not have in
      good
      faith advised the Company on or prior to the Closing Date that the Registration
      Statement or any amendments thereof or supplements thereto contains an untrue
      statement of fact which, in its opinion, is material, or omits to state a fact
      which, in its opinion, is material and is required to be stated therein or
      necessary to make the statements therein not misleading, or that the Disclosure
      Package or the Prospectus or any amendment thereof or supplement thereto
      contains an untrue statement of fact which, in its opinion, is material, or
      omits to state a fact which, in its opinion, is material and is required to
      be
      stated therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading.

    

    (e)  No
      Material Adverse Change.
      Prior
      to the Closing, there shall not have occurred any change, or any development
      involving a prospective change, in the business, properties, financial
      condition, results of operations or prospects of the Company, taken as a whole,
      from that set forth in the
      Disclosure Package and the Prospectus
      that, in the Placement Agent’s judgment, is material and adverse and that makes
      it, in the Placement Agent’s judgment, impracticable to market the Shares on the
      terms and in the manner contemplated in the Disclosure Package and the
      Prospectus.

    

    (f)  Representations
      and Warranties.
      Each of
      the representations and warranties of the Company contained herein shall be
      true
      and correct in all material respects (except for those representations and
      warranties which are qualified by materiality, in which case such
      representations and warranties shall be true and correct in all respects) when
      made and on and as of the Closing Date, as if made on such date (except that
      those representations and warranties that address matters only as of a
      particular date shall remain true and correct in all material respects (except
      for those representations and warranties which are qualified by materiality,
      in
      which case such representations and warranties shall be true and correct in
      all
      respects) as of such date), and all covenants and agreements herein contained
      to
      be performed on the part of the Company and all conditions herein contained
      to
      be fulfilled or complied with by the Company at or prior to the Closing Date
      shall have been duly performed, fulfilled or complied with in all material
      respects.

    

    
      
        
          
          

        

        
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    (g)  Opinion
      of Counsel to the Company.
      The
      Placement Agent shall have received from Skadden, Arps, Slate, Meagher &
Flom LLP, counsel to the Company, such counsel’s written opinion, addressed to
      the Placement Agent and dated the Closing Date, to the effect set forth in
      Exhibit
      D
      hereto.
Such
      counsel shall also have furnished to the Placement Agent a letter, addressed
      to
      the Placement Agent and dated the Closing Date, to the effect set forth in
      Exhibit
      E
      hereto.

    

    (h)  Opinion
      of Counsel to the Placement Agent.
      The
      Placement Agent shall have received from Goodwin Procter LLP, counsel to the
      Placement Agent, such opinion or opinions (including negative assurance), dated
      the Closing Date and addressed to the Placement Agent, covering
      such matters as are customarily covered in transactions of this type.

    

    (i)  Accountant’s
      Comfort Letter and Bring-Down Letter.
      The
      Company shall have requested and caused PricewaterhouseCoopers LLP to have
      furnished to the Placement Agent, at the Time of Sale and at the Closing Date,
      letters, dated respectively as of the Time of Sale and as of the Closing Date,
      in form and substance satisfactory to the Placement Agent and
      PricewaterhouseCoopers LLP, confirming that it is an independent registered
      public accounting firm within the meaning of the Securities Act and the
      Investment Company Act and the Rules and Regulations thereunder and the Public
      Company Accounting Oversight Board (“PCAOB”)
      and stating in effect that:

    

    (i) In
      their
      opinion, the consolidated financial statements of the Company and its
      Subsidiaries audited by them and included in the Registration Statement comply
      as to form in all material respects with the applicable accounting requirements
      of the Securities Act and the related Rules and Regulations adopted by the
      Commission. 

     

    (ii) On
      the
      basis of procedures (but not an audit in accordance with the standards of the
      PCAOB) consisting of:

     

    a. Reading
      the minutes of meetings of the board of directors of the Company and committees
      of such board of directors for the year ended December 31, 2007 and through
      a
      specified date, as set forth in the minute books through a specified date not
      more than (i) five business days (with respect to the letter to be delivered
      at
      the Time of Sale) and (ii) two business days (with respect to the letter to
      be
      delivered at the Closing Date) prior to the date of delivery of such letter;
      

     

    b. Performing
      the procedures specified by the PCAOB for a review of interim financial
      information as described in SAS 100, Interim Financial Information, on the
      unaudited consolidated interim statements of assets and liabilities, including
      the unaudited consolidated schedule of investments, as of March 31, 2008 and
      unaudited consolidated statements of operations, of cash flows and unaudited
      financial highlights for the three month periods ended March 31, 2008 and 2007,
      and of changes in net assets for the three months ended March 31, 2008 included
      in the Registration Statement; and 

     

    c. Making
      inquiries of certain officials of the Company who have responsibility for
      financial and accounting matters regarding the specific items for which
      representations are requested below, nothing has come to their attention as
      a
      result of the foregoing procedures that caused them to believe
      that:

     

     

    

    
      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

    

    

     

    i. the
      unaudited consolidated financial statements referred to in subclause (b) above
      do not comply as to form in all material respects with the applicable accounting
      requirements of the Securities Act and the related Rules and Regulations adopted
      by the Commission; 

     

    ii. Any
      material modifications should be made to the unaudited consolidated financial
      statements included in the Registration Statement for them to be in conformity
      with generally accepted accounting principles; 

     

    iii. At
      the
      date of the latest available interim financial data and at a specified date
      not
      more than (i) five business days (with respect to the letter to be delivered
      at
      the Time of Sale) and (ii) two business days (with respect to the letter to
      be
      delivered at the Closing Date) prior to the date of the delivery of such letter,
      there was any change in the capital stock, increase in long term debt, or
      decrease in consolidated net assets of the Company as compared with amounts
      shown in the March 31, 2008 unaudited statements of assets and liabilities
      included in the Registration Statement, except in all instances for changes,
      increases or decreases which the Registration Statement discloses have occurred
      or may occur. 

     

    (iii) The
      letter shall also state that they have: 

     

    a. Read
      certain items identified in the Registration Statement under the captions
“Selected Condensed Consolidated Financial Data”, “Selected Quarterly Data
      (Unaudited)” , “Management’s Discussion and Analysis of Financial Condition and
      Results of Operations”, “Risk Factors”, “Price Range of Common Stock”,
“Business”, “General Description of Portfolio Companies”, “Investment Policies”,
“Management of the Company” and “Recent Developments” which are expressed in
      dollars (or percentages derived from such dollar amounts) and have been obtained
      from accounting records which are subject to control over financial reporting
      or
      which have been derived directly from such accounting records by analysis or
      computation, and is in agreement with such records or computations made
      therefrom. 

     

    (j)  Officer’s
      Certificate.
      The
      Placement Agent shall have received on the Closing Date a certificate, addressed
      to the Placement Agent and dated the Closing Date, of the principal executive
      officer and the principal financial officer of the Company, acting in such
      capacities, to the effect that: 

    

    (i)  each
      of
      the representations, warranties and agreements of the Company in this Agreement
      were true and correct in all material respects (except for those representations
      and warranties which are qualified by materiality, in which case such
      representations and warranties shall be true and correct in all respects) when
      originally made and are true and correct in all material respects (except for
      those representations and warranties which are qualified by materiality, in
      which case such representations and warranties shall be true and correct in
      all
      respects) as of the Closing Date; and the Company has complied in all material
      respects with all agreements and satisfied all the conditions on its part
      required under this Agreement to be performed or satisfied at or prior to the
      Closing Date; 

    

    (ii)  subsequent
      to the date of the most recent financial statements included in, or incorporated
      by reference in, each of the Registration Statement, the Disclosure Package
      and
      the Prospectus, there has not been a material
      adverse change or any development involving a prospective material adverse
      change in the
      business, properties, financial condition, results of operations or prospects
      of
      the Company taken
      as
      a whole,
      and

    
      
        
          
          

        

        
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    (iii)  no
      stop
      order suspending the effectiveness of the Registration Statement or any part
      thereof or any amendment thereof or the qualification of the Shares for offering
      or sale, nor suspending or preventing the use of the Prospectus shall have
      been
      issued, and no proceedings for that purpose shall be pending or, to their
      knowledge, threatened by the Commission or any state or regulatory
      body.

    

    (k)  Secretary’s
      Certificate.
      On the
      Closing Date, the Company shall have furnished to the Placement Agent a
      Secretary’s Certificate of the Company.

    

    (l)  The
      Nasdaq Global Market.
      The
      Nasdaq Global Market shall not have raised any objections to the listing or
      authorization for trading of the Shares as of the Closing Date.

    

    (m)  No
      FINRA Objection.
      FINRA
      shall not have raised any unresolved objection with respect to the fairness
      and
      reasonableness of the placement agency terms and arrangements relating to the
      issuance and sale of the Shares.

    

    (n)  Lock-Up
      Agreements.
      The
      Placement Agent shall have received copies of the executed Lock-Up Agreements
      executed by each person listed on Exhibit
      C
      hereto,
      and such Lock-Up Agreements shall be in full force and effect on the Closing
      Date.

     

    (o)  Abbreviated
      Registration Statements.
      If the
      Company has elected to rely upon Rule 462(b), any registration statement filed
      under Rule 462(b) shall have become effective in compliance with Rule
      462(b).

     

     

    (p)  Subscription
      Agreements.
      The
      Company shall have entered into the Subscription Agreements with each of the
      Investors, and such agreements shall be in full force and effect on the Closing
      Date.

     

     

    (q)  Escrow
      Agreement.
      The
      Company shall have entered into the Escrow Agreement, and such agreement shall
      be in full force and effect on the Closing Date.

     

    (r)  Additional
      Documents.
      Prior
      to the Closing Date, the Company shall have furnished or caused to be furnished
      to the Placement Agent such further information, certificates or documents
      as
      the Placement Agent shall have reasonably requested.

     

    6.  Indemnification
      and Contribution.
      

    

    (a)  Indemnification
      of the Placement Agent.
      The
      Company agrees to indemnify, defend and hold harmless the Placement Agent,
      its
      directors and officers, and each person, if any, who controls the Placement
      Agent within the meaning of either Section 15 of the Securities Act or
      Section 20 of the Exchange Act, and the successors and assigns of all of
      the foregoing persons, from and against any loss, damage, claim or liability,
      to
      which, jointly or severally, the Placement Agent or any such person may become
      subject under the Securities Act, the Exchange Act, or other federal or state
      statutory law or regulation, the common law or otherwise, (including in
      settlement of any litigation, if such settlement is effected with the written
      consent of the Company), insofar as such loss, damage, claim or liability (or
      actions in respect thereof as contemplated below) arises out of or is based
      upon: (i)
      any
      untrue statement or alleged untrue statement of a material fact contained in
      the
      Registration Statement, or any amendments thereto or the omission or alleged
      omission to state a material fact required to be stated therein or necessary
      to
      make the statements therein not misleading; or (ii)
      any
      untrue statement or alleged untrue statement of a material fact contained in
      the
      Base Prospectus, any Preliminary Prospectus or the Prospectus, or in
      any
      materials or information provided to investors by, or with the approval of,
      the
      Company in connection with the marketing of the offering of the Common Stock
      (“Marketing
      Materials”),
      including any roadshow or investor presentations made to investors by the
      Company (whether in person or electronically) or
      the
      omission or alleged omission to state therein a material fact required to be
      stated therein or necessary to make the statements made therein, in light of
      the
      circumstances under which they were made, not misleading; and, in the case
      of
      (i) and (ii) above, to reimburse the Placement Agent and each such controlling
      person for any and all reasonable expenses (including reasonable fees and
      disbursements of counsel) as such expenses are incurred by the Placement Agent
      or such controlling person in connection with investigating, defending,
      settling, compromising or paying any such loss, claim, damage, liability,
      expense or action; provided,
      however,
      that
      the foregoing indemnity shall not apply to any loss, claim, damage, liability
      or
      expense to the extent, but only to the extent, it arises out of or is based
      upon
      (x) any untrue statement or alleged untrue statement of a material fact
      contained in or omitted from the Registration
      Statement, the Base Prospectus, any Preliminary Prospectus, the Prospectus,
      or
      any such amendment or supplement, or in any Marketing Materials,
      in
      reliance upon and in conformity with information concerning the Placement Agent
      furnished in writing by or on behalf of the Placement Agent to the Company
      expressly for use therein, which information the parties hereto agree is limited
      to the Placement Agent Information (as defined in Section
      7)
      or (y)
      the matter described under the caption “Risk Factors—We may have a contingent
      liability arising out of a possible violation of Section 5 of the Securities
      Act
      of 1933 in connection with the distribution of a management presentation to
      prospective purchasers of our common stock” in the Preliminary Prospectus and
      the Prospectus.

    

    
      
        
          
          

        

        
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    (b)  Indemnification
      of the Company.
      The
      Placement Agent agrees to indemnify, defend and hold harmless the Company,
      its
      directors and officers, and any person, if any, who controls the Company within
      the meaning of either Section 15 of the Securities Act or Section 20
      of the Exchange Act, and the successors and assigns of all of the foregoing
      persons, from and against any loss, claim, damage, liability or expense, as
      incurred to which, jointly or severally, the Company or any such person may
      become subject under the Securities Act, the Exchange Act, or
      other
      federal or state statutory law or regulation, the
      common law or otherwise (including
      in settlement of any litigation, if such settlement is effected with the written
      consent of the Placement Agent), insofar
      as such loss, claim, damage, liability or expense (or
      actions in respect thereof as contemplated below) arises
      out of or is based upon (i)
      any
      untrue statement or alleged untrue statement of a material fact contained in
      the
      Registration Statement, or any amendments thereto, or the omission or alleged
      omission to state a material fact required to be stated therein or necessary
      to
      make the statements therein not misleading; (ii)
      any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      Preliminary Prospectus, the Disclosure Package, the Prospectus, or any amendment
      or supplement thereto, or the omission or alleged omission to state therein
      a
      material fact required to be stated therein or necessary to make the statements
      made therein, in light of the circumstances under which they were made, not
      misleading, in the case of each of (i) and (ii) above, to the extent but only
      to
      the extent, that such untrue
      statement or alleged untrue statement or omission or alleged omission was made
      in the Registration Statement, any Preliminary Prospectus, the Disclosure
      Package, the Prospectus or any amendments or supplements thereto in reliance
      upon and in conformity with information concerning the Placement Agent furnished
      in writing by or on behalf of the Placement Agent to the Company expressly
      for
      use therein, which
      information the parties hereto agree is limited to the Placement Agent
      Information (as defined in Section
      7)
      and
      shall reimburse the Company, or any such director, officer or controlling person
      for any legal and other expenses reasonably incurred by the Company, or any
      such
      director, officer or controlling person in connection with investigating,
      defending, settling, compromising or paying any such loss, claim, damage,
      liability, expense or action.
      Notwithstanding
      the provisions of this Section
      6(b),
      in no
      event shall any indemnity by the Placement Agent under this Section
      6(b)
      exceed
      the total compensation received by such Placement Agent in accordance with
      Section
      1(c).
      

    

    
      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

    

    

    

    (c)  Notice
      and Procedures.
      If
      any action, suit or proceeding (each, a “Proceeding”)
      is brought against a person (an “indemnified
      party”)
      in respect of which indemnity may be sought against the Company or the Placement
      Agent (as applicable, the “indemnifying
      party”)
      pursuant to subsection (a) or (b), respectively, of this Section 6,
      such indemnified party shall promptly notify such indemnifying party in writing
      of the institution of such Proceeding and such indemnifying party shall assume
      the defense of such Proceeding, including the employment of counsel reasonably
      satisfactory to such indemnified party and payment of all reasonable fees and
      expenses; provided,
      however,
      that the omission to so notify such indemnifying party shall not relieve such
      indemnifying party from any liability which such indemnifying party may have
      to
      any indemnified party or otherwise, except to the extent the indemnifying party
      does not otherwise learn of the Proceeding and such failure results in the
      forfeiture by the indemnifying party of substantial rights or defenses. The
      indemnified party or parties shall have the right to employ its or their own
      counsel in any such case, but the fees and expenses of such counsel shall be
      at
      the expense of such indemnified party or parties unless (i) the employment
      of
      such counsel shall have been authorized in writing by the indemnifying party
      in
      connection with the defense of such Proceeding, (ii) the indemnifying party
      shall not have, within a reasonable period of time in light of the
      circumstances, employed counsel to defend such Proceeding or (iii) such
      indemnified party or parties shall have reasonably concluded that there may
      be
      one or more legal defenses available to it or them which are different from,
      additional to or in conflict with those available to such indemnifying party
      (in
      which case such indemnifying party shall not have the right to direct the
      defense of such Proceeding on behalf of the indemnified party or parties ),
      in
      any of which events such reasonable fees and expenses shall be borne by such
      indemnifying party and paid as incurred (it being understood, however, that
      such
      indemnifying party shall not be liable for the expenses of more than one
      separate counsel (in addition to any local counsel) in any one Proceeding or
      series of related Proceedings in the same jurisdiction representing the
      indemnified parties who are parties to such Proceeding). An indemnifying party
      shall not be liable for any settlement of any Proceeding effected without its
      written consent but, if settled with its written consent or if there be a final
      judgment for the plaintiff, such indemnifying party agrees to indemnify and
      hold
      harmless the indemnified party or parties from and against any loss or liability
      by reason of such settlement or judgment. Notwithstanding the foregoing
      sentence, if at any time an indemnified party shall have requested an
      indemnifying party to reimburse the indemnified party for fees and expenses
      of
      counsel as contemplated by the second sentence of this Section 6(c),
      then the indemnifying party agrees that it shall be liable for any settlement
      of
      any Proceeding effected without its written consent if (i) such settlement
      is entered into more than 60 days after receipt by such indemnifying party
      of
      the aforesaid request, (ii) such indemnifying party shall not have fully
      reimbursed the indemnified party in accordance with such request prior to the
      date of such settlement and (iii) such indemnified party shall have given
      the indemnifying party at least 30 days’ prior notice of its intention to
      settle. No indemnifying party shall, without the prior written consent of the
      indemnified party, effect any settlement, compromise or consent to the entry
      of
      judgment in any pending or threatened Proceeding in respect of which any
      indemnified party is or could have been a party and indemnity could have been
      sought hereunder by such indemnified party, unless such settlement includes
      an
      unconditional release of such indemnified party from all liability on claims
      that are the subject matter of such Proceeding and does not include an admission
      of fault or culpability or a failure to act by or on behalf of such indemnified
      party. Notwithstanding anything to the contrary contained in this Section
      6,
      any losses, claims, damages, liabilities or expenses for which an indemnified
      party is entitled to indemnification, reimbursement or interim payment or
      contribution under this Section
      6
      shall be subject to the requirements of Release No. 11330 and Section 17(i)
      of
      the Investment
      Company Act
      and, subject thereto, shall be paid by the indemnifying party to the indemnified
      party as such losses, claims, damages, liabilities or expenses are
      incurred.

    

    
      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

    

     

    (d)  Contribution.
      If
      the indemnification provided for in this Section 6
      is unavailable to an indemnified party under subsections (a) or (b) of
      this Section 6
      or insufficient to hold an indemnified party harmless in respect of any losses,
      claims, damages, liabilities or expenses referred to therein, then
      each
      applicable indemnifying party shall, in lieu of indemnifying such indemnified
      party, contribute to the amount paid or payable by such indemnified party as
      a
      result of the losses, claims, damages, liabilities or expenses referred to
      in
      subsection (a) or (b) above, (i) in such proportion as is appropriate
      to reflect the relative benefits received by the indemnifying party or parties
      on the one hand and the indemnified party or parties on the other from the
      offering of the Shares
      or
      (ii) if the allocation provided by clause (i) above is not permitted
      by applicable law, in such proportion as is appropriate to reflect not only
      the
      relative benefits referred to in clause (i) above but also the relative
      fault of the indemnifying party or parties on the one hand and the indemnified
      party or parties on the other hand in connection with the statements or
      omissions that resulted in such losses, claims, damages, liabilities or
      expenses, as well as any other relevant equitable considerations. The relative
      benefits received by the Company on the one hand and the Placement Agent on
      the
      other hand shall be deemed to be in the same respective proportions as the
      total
      net proceeds from the offering of the Shares (before deducting expenses)
      received by the Company and the total placement agent commissions received
      by
      the Placement Agent, in each case as set forth on the cover of the Prospectus,
      bear to the aggregate public offering price of the Shares. The relative fault
      of
      the Company on the one hand and the Placement Agent on the other hand shall
      be
      determined by reference to, among other things, whether the untrue or alleged
      untrue statement of a material fact or the omission or alleged omission to
      state
      a material fact relates to information supplied by the Company, on the one
      hand,
      or by the Placement Agent, on the other hand, and the parties’ relevant intent,
      knowledge, access to information and opportunity to correct or prevent such
      untrue statement or omission. The Company and the Placement Agent agree that
      it
      would not be just and equitable if contribution pursuant to this
      subsection (d) were to be determined by pro rata allocation or by any other
      method of allocation which does not take account of the equitable considerations
      referred to in the first sentence of this Section 6(d).
      The
      amount paid or payable by an indemnified party as a result of the losses,
      claims, damages or liabilities referred to in the first sentence of this
Section 6(d)
      shall be
      deemed to include any legal or other expenses reasonably incurred by such
      indemnified party in connection with investigating or defending against any
      action or claim which is the subject of this Section 6(d).
      Notwithstanding the provisions of this Section 6(d),
      the
      Placement Agent shall not be required to contribute any amount in excess of
      the
      total commissions received by such Placement Agent in accordance with
Section
      1(c).
      No
      person guilty of fraudulent misrepresentation (within the meaning of
      Section 11(f) of the Securities Act) shall be entitled to contribution from
      any person who was not guilty of such fraudulent misrepresentation.

    

    (e)  Representations
      and Agreements to Survive Delivery.
      The
      obligations of the Company under this Section 6
      shall be
      in addition to any liability which the Company may otherwise have.
      The indemnity and contribution agreements contained in this Section 6
      and the covenants, agreements, warranties and representations of the Company
      contained in this Agreement shall remain operative and in full force and effect
      regardless of (i) any termination of this Agreement, (ii) any investigation
      made
      by or on behalf of the Placement Agent, any person who controls the Placement
      Agent within the meaning of either Section 15 of the Securities Act or
      Section 20 of the Exchange Act or any affiliate of the Placement Agent, or
      by or on behalf of the Company, its directors or officers or any person who
      controls the Company within the meaning of either Section 15 of the
      Securities Act or Section 20 of the Exchange Act, and (iii) the issuance
      and delivery of the Shares.
      The Company and the Placement Agent agree promptly to notify each other of
      the
      commencement of any Proceeding against it and, in the case of the Company,
      against any of the Company’s officers or directors in connection with the
      issuance and sale of the Shares,
      or in connection with the Registration Statement, the Disclosure
      Package
      or the
      Prospectus.

    
      

      7.  Information
        Furnished by Placement Agent.
        The
        Company acknowledges that the statements set forth in (i) the first sentence
        of
        the first paragraph under the caption “Risk Factors—We may have a contingent
        liability arising out of a possible violation of Section 5 of the Securities
        Act
        of 1933 in connection with the distribution of a management presentation
        to
        prospective purchasers of our common stock,” and (ii) the eleventh and fifteenth
        paragraphs under the caption “Plan of Distribution” in the Preliminary
        Prospectus and the Prospectus (the “Placement
        Agent Information”)
        constitute the Placement Agent Information referred to in Sections
        2
        and
6
        hereof.

    

    

    

    
      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

    

    

    8.  Termination.
      The
      Placement Agent shall have the right to terminate this Agreement by giving
      notice as hereinafter specified at any time at or prior to the Closing Date,
      without liability on the part of the Placement Agent to the Company, if (i)
      prior to delivery and payment for the Shares (A) trading in securities generally
      shall have been suspended on or by the New York Stock Exchange, the American
      Stock Exchange, the Nasdaq Global Market or in the over-the-counter market,
      (each, a “Trading
      Market”),
      (B) trading in the Common Stock of the Company shall have been suspended on
      any such exchange, in the over-the-counter market or by the Commission,
      (C) a general moratorium on commercial banking activities shall have been
      declared by federal or New York state authorities or a material disruption
      shall
      have occurred in commercial banking or securities settlement or clearance
      services in the United States, (D) there shall have occurred any outbreak
      or material escalation of hostilities or acts of terrorism involving the United
      States or there shall have been a declaration by the United States of a national
      emergency or war, (E) there shall have occurred any other calamity or crisis
      or
      any material change in general economic, political or financial conditions
      in
      the United States or elsewhere, if the effect of any such event specified in
      clause (D) or (E), in the judgment of the Placement Agent, is material and
      adverse and makes it impractical or inadvisable to proceed with the completion
      of the sale of and payment for the Shares on the Closing Date on the terms
      and
      in the manner contemplated by this Agreement, the Disclosure Package and the
      Prospectus,
      (ii)
      since the time of execution of this Agreement or the earlier respective dates
      as
      of which information is given in the Disclosure Package, there has been any
      Material
      Adverse Effect or the
      Company shall have sustained a loss or interference with its business by strike,
      fire, flood, earthquake, accident or other calamity, whether or not covered
      by
      insurance, of such character that in the judgment of the Placement Agent would,
      individually or in the aggregate, result in a Material Adverse
      Effect
      and which would, in the judgment of the Placement Agent, make it impracticable
      or inadvisable to proceed with the offering or the delivery of the Shares
      on the terms and in the manner contemplated in the Disclosure Package, (iii)
      the
      Company shall have failed, refused or been unable
      to
      comply with the terms or perform any agreement or obligation of this Agreement
      or any Subscription Agreement, other than by reason of a default by the
      Placement Agent, or (iv)
      any condition of the Placement Agent’s obligations hereunder is not fulfilled or
      waived.
      Any such
      termination shall be without liability of any party to any other party except
      that the provisions of Section 4,
      Section 6,
      and
Section
      11
      hereof
      shall at all times be effective notwithstanding such termination.  

    

    9.  Notices.
      All
      statements, requests, notices and agreements hereunder shall be in writing
      or by
      facsimile, and:

    

    (a)    if
      to the
      Placement Agent, shall be delivered or sent by mail or facsimile transmission
      to
      :

     

    ThinkPanmure,
      LLC

    600
      Montgomery Street, 8th Floor

    San
      Francisco, California 94111

    Attention:
      Ted Mitchell 

    Facsimile
      No.: 415-249-0975

     

    

    
      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

    

    

    with
      a
      copy (which shall not constitute notice) to: 

     

    Goodwin
      Procter LLP

    The
      New
      York Times Building

    620
      Eighth Avenue

    New
      York,
      New York 10018

    Attention:
      Michael D. Maline, Esq. 

    Facsimile
      No.: 212-355-3333

     

    
      	 	
              (b)

            	
              if
                to the Company shall be delivered or sent by mail or facsimile
                transmission 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

    

    Any
      such
      statements, requests, notices or agreements shall be effective only upon
      receipt. Any party to this Agreement may change such address for such
      statements, requests, notices or agreements by sending to the parties to this
      Agreement written notice of a new address for such purpose.

    

    10.  Persons
      Entitled to Benefit of Agreement.
      This
      Agreement has been and is made for the benefit of the Placement Agent, the
      Company and their respective successors and assigns and, to the extent expressed
      herein, for the benefit of persons controlling the Placement Agent or the
      Company, and the directors and officers of the Company and the Placement Agent,
      and their respective successors and assigns, and no other person shall acquire
      or have any right under or by virtue of this Agreement. The term “successors and
      assigns” shall not include any Investor merely because of such
      purchase.

    

    11.  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York, without giving effect to the conflicts of laws provisions
      thereof.

    

    12.  No
      Fiduciary Relationship.
      The Company hereby acknowledges and agrees that the Placement Agent is acting
      solely as a placement agent in connection with the offering of the Shares.
      The
      Company further acknowledges that the Placement Agent is acting pursuant to
      a
      contractual relationship created solely by this Agreement entered into on an
      arm’s-length basis and in no event do the parties intend that the Placement
      Agent act or be responsible as a fiduciary to the Company, its management,
      stockholders, creditors or any other person in connection with any activity
      that
      the Placement Agent may undertake or has undertaken in furtherance of the
      offering of the Shares, either before or after the date hereof. The Placement
      Agent hereby expressly disclaims any fiduciary or similar obligations to the
      Company, either in connection with the transactions contemplated by this
      Agreement or any matters leading up to such transactions, and the Company hereby
      confirms its understanding and agreement to that effect. The price of the
Shares
      set forth in this Agreement was established by the Company following discussions
      and arm’s-length negotiations with the Investors and the Placement Agent, and
      the Company is capable of evaluating and understanding, and understands and
      accepts, the terms, risks and conditions of the transactions contemplated by
      this Agreement. The Company has been advised that the Placement Agent and its
      affiliates are engaged in a broad range of transactions which may involve
      interests that differ from those of the Company and that the Placement Agent
      has
      no obligation to disclose such interests and transactions to the Company by
      virtue of any fiduciary, advisory or agency relationship. The Company and the
      Placement Agent agree that they are each responsible for making their own
      independent judgments with respect to any such transactions. The Company hereby
      waives and releases, to the fullest extent permitted by law, any claims that
      the
      Company may have against the Placement Agent with respect to any breach or
      alleged breach of any fiduciary or similar duty to the Company in connection
      with the transactions contemplated by this Agreement or any matters leading
      up
      to such transactions and agrees that the Placement Agent shall have no liability
      (whether direct or indirect) to the Company in respect of such a fiduciary
      duty
      claim to any person asserting a fiduciary duty claim on behalf of the
      Company.

    

    
      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

    

    

    

    13.  Headings.
      The
      Section headings in this Agreement have been inserted as a matter of convenience
      of reference and are not a part of this Agreement.

    

    14.  Amendments
      and Waivers.
      No
      supplement, modification or waiver of this Agreement shall be binding unless
      executed in writing by the party to be bound thereby. The failure of a party
      to
      exercise any right or remedy shall not be deemed or constitute a waiver of
      such
      right or remedy in the future. No waiver of any of the provisions of this
      Agreement shall be deemed or shall constitute a waiver of any other provision
      hereof (regardless of whether similar), nor shall any such waiver constitute
      a
      continuing waiver unless otherwise expressly provided. 

    

    15.  Submission
      to Jurisdiction.
      Except
      as set forth below, no Proceeding may be commenced, prosecuted or continued
      in
      any court other than the courts of the State of New York located in the City
      and
      County of New York or in the United States District Court for the Southern
      District of New York, which courts shall have jurisdiction over the adjudication
      of such matters, and the Company and the Placement Agent each hereby consents
      to
      the jurisdiction of such courts and personal service with respect thereto.
      

    

    16.  Counterparts.
      This
      Agreement may be executed in one or more counterparts and, if executed in more
      than one counterpart, the executed counterparts shall each be deemed to be
      an
      original and all such counterparts shall together constitute one and the same
      instrument. Delivery of an executed counterpart by facsimile shall be effective
      as delivery of a manually executed counterpart thereof.

    

    17.  Research
      Analyst Independence.
      The Company acknowledges that the Placement Agent’s research analysts and
      research department are required to be independent from its investment banking
      division and are subject to certain regulations and internal policies, and
      that
      such Placement Agent’s research analysts may hold views and make statements or
      investment recommendations and/or publish research reports with respect to
      the
      Company and/or the offering that differ from the views of the Placement Agent’s
      investment banking division. The Company hereby waives and releases, to the
      fullest extent permitted by law, any claims that the Company may have against
      the Placement Agent with respect to any conflict of interest that may arise
      from
      the fact that the views expressed by its independent research analysts and
      research department may be different from or inconsistent with the views or
      advice communicated to the Company by such Placement Agent’s investment banking
      division. The Company acknowledges that the Placement Agent is a full service
      securities firm and as such from time to time, subject to applicable securities
      laws, rules and regulations, may effect transactions for its own account or
      the
      account of its customers and hold long or short positions in debt or equity
      securities of the Company;
      provided, however,
      that nothing in this Section 17 shall relieve the Placement Agent of any
      responsibility or liability that it may otherwise bear in connection with
      activities in violation of applicable securities laws, rules and
      regulations.

    

    
      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

    

    

    

    18.  Entire
      Agreement.
      This
      Agreement constitutes the entire agreement of the parties to this Agreement
      and
      supersedes all prior written or oral and all contemporaneous oral agreements,
      understandings and negotiations with respect to the subject matter
      hereof.

    

    19.  Partial
      Unenforceability.
      The
      invalidity or unenforceability of any section, paragraph, clause or provision
      of
      this Agreement shall not affect the validity or enforceability of any other
      section, paragraph, clause or provision hereof.

    
      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

      

    

    

    If
      the
      foregoing is in accordance with your understanding of the agreement between
      the
      Company and the Placement Agent, kindly indicate your acceptance in the space
      provided for that purpose below.

     

    Very
      truly yours,

    

    HARRIS
      & HARRIS GROUP, INC.

    

    By:_/s/Douglas
      W. Jamison________

    Name:
      Douglas W. Jamison

    Title:
      President

    

    

    

    Accepted
      as of

    the
      date
      first above written:

     

    THINKPANMURE,
      LLC

    

    By: _/s/Ted
      Mitchell______

    Name:
      Ted
      Mitchell

    Title:
      Partner

    

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Schedules
      and Exhibits

    

    
      	
              Schedule
                2(p):

            	
              Intellectual
                Property

            

    

    

    
      	
              Schedule
                I:

            	
              Information
                to be Conveyed Orally

            

    

    

    
      	
              Schedule
                II:

            	
              Subsidiaries

            

    

    

    
      	
              Exhibit
                A:

            	
              Form
                of Subscription Agreement

            

    

    

    
      	
              Exhibit
                B:

            	
              Form
                of Lock-Up Agreement

            

    

    

    
      	
              Exhibit
                C:

            	
              List
                of Directors and Executive Officers Executing Lock-Up
                Agreements

            

    

    

    
      	
              Exhibit
                D:

            	
              Form
                of Opinion of Counsel to the
                Company

            

    

    

    
      	
              Exhibit
                E:

            	
              Form
                of Letter of Counsel to the Company

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

    Schedule
      2(p)

    

    Intellectual
      Property

    

    

    "Harris
      & Harris Group, Inc." is a registered service mark owned by the
      Company.

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

    

    Schedule
      I

    

    Information
      to be Conveyed Orally

    

    Number
      of
      Shares to be Issued: 2,545,000

    

    Offering
      Price Per Share: $6.15
      

    

    Gross
      Proceeds: $15,651,750

    

    Aggregate
      Placement Agency Fees: $939,105

    
 

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Schedule
      II

    

    Subsidiaries

    

    

      
        	
                Name

              	
                Jurisdiction

              	
                Percentage
                  Ownership

              
	 	 	 
	
                Harris
                  & Harris Enterprises, Inc.* 

              	
                Delaware

              	
                100%*

              

      

    
      	
              *
                

            	
              Harris
                & Harris Enterprises, Inc. is the sole general partner of Harris
                Partners I, L.P., the sole limited partner of which is Harris & Harris
                Group, Inc.

            

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Exhibit
      A

     

    Form
      of Subscription Agreement

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
 

    Exhibit
      B

    

    Form
      of Lock-Up Agreement

     

    ___________,
      2008

     

    ThinkPanmure,
      LLC

    600
      Montgomery Street, 8th Floor

    San
      Francisco, California 94111

    

    Ladies
      and Gentlemen:

     

    The
      undersigned understands that you, as Placement Agent, propose to enter into
      the
      Placement Agency Agreement (the “Placement
      Agreement”)
      with Harris & Harris Group, Inc., a New York corporation (the “Company”),
      providing for the offering (the “Offering”)
      of shares (the “Shares”)
      of common
      stock, $0.01 par value per share (the “Common
      Stock”),
      of the Company. Capitalized terms used herein and not otherwise defined shall
      have the meanings set forth in the Placement Agreement.

     

    In
      consideration of the foregoing, and in order to induce you to participate in
      the
      Offering, and for other good and valuable consideration receipt of which is
      hereby acknowledged, the undersigned hereby agrees that, without your prior
      written consent (which
      consent may be withheld in your sole discretion), the undersigned will not,
      during the period (the “Lock-Up
      Period”)
      beginning on the date hereof and ending on the date 90 days
      after the date of the final prospectus (including the final prospectus
      supplement) to be used in confirming the sale of the Shares, (1) offer, pledge,
      announce the intention to sell, sell, contract to sell, sell any option or
      contract to purchase, purchase any option or contract to sell, grant any option,
      right or warrant to purchase, or otherwise transfer or dispose of, directly
      or
      indirectly, or file (or participate in the filing of) a registration statement
      with the Securities and Exchange Commission in respect of, any shares of Common
      Stock or any securities convertible into or exercisable or exchangeable for
      Common Stock (including without limitation, Common Stock which may be deemed
      to
      be beneficially owned by the undersigned in accordance with the rules and
      regulations of the Securities and Exchange Commission and securities which
      may
      be issued upon exercise of a stock option or warrant)
      except for a registration statement on Form S-8 relating to employee benefit
      plans,
      (2) enter into any swap or other agreement that transfers, in whole or in part,
      any of the economic consequences of ownership of the Common Stock, whether
      any
      such transaction described in clause (1) or (2) above is to be settled by
      delivery of Common Stock or such other securities, in cash or otherwise, (3)
      make any demand for or exercise any right with respect to, the registration
      of
      any shares of Common Stock or any security convertible into or exercisable
      or
      exchangeable for Common Stock, or (4) publicly announce an intention to effect
      any transaction specific in clause (1), (2) or (3) above.

    

    Notwithstanding
      the foregoing, the restrictions set forth in clause (1) and (2) above shall
      not
      apply to (a) transfers (i) as a bona fide gift or gifts, provided that the
      donee
      or donees thereof agree to be bound in writing by the restrictions set forth
      herein, (ii) to any trust for the direct or indirect benefit of the undersigned
      or the immediate family of the undersigned, provided that the trustee of the
      trust agrees to be bound in writing by the restrictions set forth herein, and
      provided further that any such transfer shall not involve a disposition for
      value, (iii) with your prior written consent or (iv) effected pursuant to any
      exchange of “underwater” options with the Company, (b) the acquisition or
      exercise of any stock option issued pursuant to the Company’s existing
equity
      incentive
      plans, including any exercise effected by the delivery of shares of Common
      Stock
      of the Company held by the undersigned, (c)
      the surrender of shares of Common Stock to the Company to pay required tax
      withholdings due upon the vesting of any restricted stock awards, or
      (d)
      the purchase or sale of the Company’s securities pursuant to a plan, contract or
      instruction that satisfies all of the requirements of Rule 10b5-1(c)(1)(i)(B)
      that was in effect prior to the date hereof. For purposes of this Lock-Up
      Agreement, “immediate family” shall mean any relationship by blood, marriage or
      adoption, not more remote than first cousin. None of the restrictions set forth
      in this Lock-Up Agreement shall apply to Common Stock acquired in open market
      transactions.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

     

    Notwithstanding
      anything herein to the contrary, nothing herein shall prevent the undersigned
      from establishing a 10b5-1 trading plan that complies with Rule 10b5-1 under
      the
      Exchange Act, or from amending an existing 10b5-1 trading plan in accordance
      with Rule 10b5-1 under the Exchange Act, provided, in each case, that no sales
      or other dispositions of shares of the Common Stock under such 10b5-1 trading
      plans that were not in effect prior to the date hereof by any person that has
      signed or is otherwise bound by a lock-up agreement (including the undersigned)
      will be permitted during the Lock-Up Period, as the same may be extended
      hereby.

    

    For
      the purpose of allowing you to comply with FINRA Rule 2711(f)(4), if (1) during
      the last 17 days of the Lock-Up Period, the Company releases earnings results
      or
      publicly announces other material news or a material event relating to the
      Company occurs or (2) prior to the expiration of the Lock-Up Period, the Company
      announces that it will release earnings results during the 16-day period
      beginning on the last day of the Lock-Up Period, then in each case the Lock-Up
      Period will be extended until the expiration of the 18-day period beginning
      on
      the date of release of the earnings results or the public announcement regarding
      the material news or the occurrence of the material event, as applicable, unless
      you waive, in writing, such extension. The undersigned hereby acknowledges
      that
      the Company has agreed not to accelerate the vesting of any option or warrant
      or
      the lapse of any repurchase right prior to the expiration of the Lock-Up Period.
      In furtherance of the foregoing, the Company, and any duly appointed transfer
      agent for the registration or transfer of the securities described herein,
      are
      hereby authorized to decline to make any transfer of securities if such transfer
      would constitute a violation or breach of this Lock-Up Agreement.

    

    The
      foregoing restrictions are expressly agreed to preclude the undersigned from
      engaging in any hedging or other transaction which is designed to or reasonably
      expected to lead to or result in a sale or disposition of the Common Stock
      even
      if such Common Stock would be disposed of by someone other than the undersigned.
      Such prohibited hedging or other transactions would include without limitation
      any short sale or any purchase, sale or grant of any right (including without
      limitation any put option or put equivalent position or call option or call
      equivalent position) with respect to any of the Common Stock or with respect
      to
      any security that includes, relates to, or derives any significant part of
      its
      value from such Common Stock.

     

    The
      undersigned hereby represents and warrants that the undersigned has full power
      and authority to enter into this Lock-Up Agreement. All authority herein
      conferred or agreed to be conferred and any obligations of the undersigned
      shall
      be binding upon the successors, assigns, heirs or personal representatives
      of
      the undersigned.

    

    The
      undersigned also agrees and consents to the entry of stop transfer instructions
      with the Company’s transfer agent and registrar against the transfer of the
      undersigned’s shares of Common Stock except in compliance with the foregoing
      restrictions.

     

    The
      undersigned understands that, if the Placement Agreement does not become
      effective by June 30, 2008, or if the Placement Agreement (other than the
      provisions thereof which survive termination) shall terminate or be terminated
      prior to payment for and delivery of the Shares to be sold thereunder, the
      undersigned shall be released from all obligations under this Lock-Up
      Agreement.

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

     

    This
      Lock-Up Agreement shall be governed by and construed in accordance with the
      laws
      of the State of New York, without regard to the conflict of laws principles
      thereof.

    
      	 	 
	
               

            	
              
                Very
                  truly yours,

                 

                Print
                  Name: __________________________

                 

                Print
                  Title: ___________________________

                 

                 

                Signature:
                  ____________________________

              

            

    

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

    

    Exhibit
      C

    

    List
      of Directors and Executive Officers

    Executing
      Lock-Up Agreements

    

    

    Charles
      E. Harris

    Douglas
      W. Jamison

    Daniel
      B.
      Wolfe

    Alexei
      A.
      Andreev

    Michael
      A. Janse

    Sandra
      Matrick Forman

    Misti
      Ushio

    Patricia
      N. Egan

    Mary
      P.
      Brady

    Jennifer
      M. McGovern

    Susan
      T.
      Harris

    Lori
      D.
      Pressman

    W.
      Dillaway Ayres, Jr. 

    C.
      Wayne
      Bardin

    Dr.
      Phillip A. Bauman

    G.
      Morgan
      Browne

    Dugald
      A.
      Fletcher 

    Charles
      E. Ramsey

    James
      E.
      Roberts

    Richard
      P. Shanley

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Exhibit
      D

    

    Form
      of Opinion of Counsel to the Company

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    Exhibit
      E

    

    Form
      of Letter of Counsel to the Company

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