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.
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.
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.
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:
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.
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
|
|
Agreed
and Accepted this 16th day of June 2008:
HARRIS
& HARRIS GROUP, INC.
By:
Title:
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)