Exhibit 10.1

 

Execution Version

 

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

 

 

$120,000,000

 

 

4.28% Series 2020 Senior Notes, Tranche A, due February 5, 2025

4.31% Series 2020 Senior Notes, Tranche B, due June 3, 2025

 

 

______________

 

Master Note Purchase Agreement

 

______________

 

 

Dated February 5, 2020

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Table of Contents

 

Section

Heading

Page

     

Section 1.

Authorization of Notes

1

     

Section 2.

Sale and Purchase of Notes

1

Section 2.1.

Sale and Purchase of Series 2020 Notes

1

Section 2.2.

Additional Series of Notes

2

     

Section 3.

Closing

3

     

Section 4.

Conditions to Closing

3

Section 4.1.

Representations and Warranties

3

Section 4.2.

Performance; No Default

3

Section 4.3.

Compliance Certificates

4

Section 4.4.

Opinions of Counsel

4

Section 4.5.

Purchase Permitted By Applicable Law, Etc

4

Section 4.6.

Sale of Other Notes

4

Section 4.7.

Payment of Special Counsel Fees

4

Section 4.8.

Private Placement Number

5

Section 4.9.

Changes in Corporate Structure

5

Section 4.10.

Funding Instructions

5

Section 4.11.

Proceedings and Documents

5

Section 4.12.

Rating

5

Section 4.13.

Second Closing

5

Section 4.14.

Conditions to Issuance of Additional Notes

5

     

Section 5.

Representations and Warranties of the Company

6

Section 5.1.

Organization; Power and Authority

6

Section 5.2.

Authorization, Etc

6

Section 5.3.

Disclosure

6

Section 5.4.

Organization and Ownership of Shares of Subsidiaries; Affiliates

7

Section 5.5.

Financial Statements; Material Liabilities

8

Section 5.6.

Compliance with Laws, Other Instruments, Etc

8

Section 5.7.

Governmental Authorizations, Etc

8

Section 5.8.

Litigation; Observance of Agreements, Statutes and Orders

8

Section 5.9.

Taxes

9

Section 5.10.

Title to Property; Leases

9

 

-i-

--------------------------------------------------------------------------------

 

 

Section 5.11.

Licenses, Permits, Etc

9

Section 5.12.

Compliance with Employee Benefit Plans

9

Section 5.13.

Private Offering by the Company

10

Section 5.14.

Use of Proceeds; Margin Regulations

11

Section 5.15.

Existing Indebtedness; Future Liens

11

Section 5.16.

Foreign Assets Control Regulations, Etc

12

Section 5.17.

Reserved

12

Section 5.18.

Environmental Matters

12

Section 5.19.

Investment Company Act

13

Section 5.20.

Priority of Obligations

13

     

Section 6.

Representations of the Purchasers

13

Section 6.1.

Purchase for Investment

13

Section 6.2.

Source of Funds

14

Section 6.3.

Investment Experience; Access to Information

15

Section 6.4.

Authorization

16

Section 6.5.

Reliance

16

     

Section 7.

Information as to Company

16

Section 7.1.

Financial and Business Information

16

Section 7.2.

Officer’s Certificate

19

Section 7.3.

Visitation

19

Section 7.4.

Electronic Delivery

20

     

Section 8.

Payment and Prepayment of the Notes

21

Section 8.1.

Maturity

21

Section 8.2.

Optional Prepayments with Prepayment Settlement Amount

21

Section 8.3.

Allocation of Partial Prepayments

21

Section 8.4.

Maturity; Surrender, Etc

22

Section 8.5.

Purchase of Notes

22

Section 8.6.

Make-Whole Amount; Prepayment Settlement Amount

22

Section 8.7.

Payments Due on Non-Business Days

25

Section 8.8.

Change in Control

25

Section 8.9.

Optional Prepayments of Non-Consenting Holders

26

     

Section 9.

Affirmative Covenants

26

Section 9.1.

Compliance with Laws

26

Section 9.2.

Insurance

26

Section 9.3.

Maintenance of Properties

27

Section 9.4.

Payment of Taxes and Claims

27

Section 9.5.

Corporate Existence, Etc

27

Section 9.6.

Books and Records

27

Section 9.7.

Subsidiary Guarantors

28

 

-ii-

--------------------------------------------------------------------------------

 

 

Section 9.8.

Status of BDC

29

Section 9.9.

Investment Policies

29

Section 9.10.

Rating Confirmation

29

     

Section 10.

Negative Covenants

29

Section 10.1.

Transactions with Affiliates

29

Section 10.2.

Merger, Consolidation, Fundamental Changes, Etc

31

Section 10.3.

Line of Business

32

Section 10.4.

Economic Sanctions, Etc

32

Section 10.5.

Liens

33

Section 10.6.

Restricted Payments

36

Section 10.7.

Investments

37

Section 10.8.

Certain Financial Covenants

40

     

Section 11.

Events of Default

41

     

Section 12.

Remedies on Default, Etc

44

Section 12.1.

Acceleration

44

Section 12.2.

Holder Action

44

Section 12.3.

Rescission

45

Section 12.4.

No Waivers or Election of Remedies, Expenses, Etc

45

     

Section 13.

Registration; Exchange; Substitution of Notes

45

Section 13.1.

Registration of Notes

45

Section 13.2.

Transfer and Exchange of Notes

45

Section 13.3.

Replacement of Notes

46

     

Section 14.

Payments on Notes

47

Section 14.1.

Place of Payment

47

Section 14.2.

Payment by Wire Transfer

47

Section 14.3.

Tax Forms

48

     

Section 15.

Expenses, Etc

48

Section 15.1.

Transaction Expenses

48

Section 15.2.

Certain Taxes

49

Section 15.3.

Survival

49

     

Section 16.

Survival of Representations and Warranties; Entire Agreement

50

     

Section 17.

Amendment and Waiver

50

Section 17.1.

Requirements

50

 

-iii-

--------------------------------------------------------------------------------

 

 

Section 17.2.

Solicitation of Holders of Notes

51

Section 17.3.

Binding Effect, Etc

52

Section 17.4.

Notes Held by Company, Etc

52

     

Section  18.

Notices

52

     

Section  19.

Reproduction of Documents

53

     

Section  20.

Confidential Information

53

     

Section 21.

Substitution of Purchaser

54

     

Section 22.

Miscellaneous

55

Section 22.1.

Successors and Assigns

55

Section 22.2.

Accounting Terms

55

Section 22.3.

Severability

56

Section 22.4.

Construction, Etc

56

Section 22.5.

Counterparts

56

Section 22.6.

Governing Law

56

Section 22.7.

Jurisdiction and Process; Waiver of Jury Trial

56

     

Signature

 

1

 

-iv-

--------------------------------------------------------------------------------

 

 

Schedule A

—

Defined Terms

     

Schedule 1(a)

—

Form of 4.28% Series 2020 Senior Notes, Tranche A, due February 5, 2025

     

Schedule 1(b)

—

Form of 4.31% Series 2020 Senior Notes, Tranche B, due June 3, 2025

     

Schedule 4.4(a)

—

Form of Opinion of Special Counsel for the Company

     

Schedule 4.4(b)

—

Form of Opinion of Special Counsel for the Purchasers

     

Schedule 5.3

—

Disclosure Materials

     

Schedule 5.4

—

Subsidiaries of the Company and Ownership of Subsidiary Stock

     

Schedule 5.5

—

Financial Statements

     

Schedule 5.15

—

Existing Indebtedness

     

Schedule 10.1

—

Transactions with Affiliates

     

Schedule 10.5

—

Liens

     

Schedule 10.7

—

Investments

     

Exhibit S

—

Form of Supplement to Note Purchase Agreement

     

Purchaser Schedule

—

Information Relating to Purchasers

 

 

-v-

--------------------------------------------------------------------------------

 

 

HERCULES CAPITAL, INC.

400 Hamilton Avenue, Suite 310

Palo Alto, California 94301

 

$50,000,000 4.28% Series 2020 Senior Notes, Tranche A, due February 5, 2025

$70,000,000 4.31% Series 2020 Senior Notes, Tranche B, due June 3, 2025

 

 

 

February 5, 2020

 

 

To Each of the Purchasers Listed in

the Purchaser Schedule Hereto:

 

Ladies and Gentlemen:

 

Hercules Capital, Inc., a Maryland corporation (the “Company”), agrees with each
of the Purchasers as follows:

 

Section 1.

Authorization of Notes.

 

The Company will authorize the issue and sale of (i) $50,000,000 aggregate
principal amount of its 4.28% Series 2020 Senior Notes, Tranche A due February
5, 2025 (the “Tranche A Notes”) and (ii) $70,000,000 aggregate principal amount
of its 4.31% Series 2020 Senior Notes, Tranche B due June 3, 2025 (the “Tranche
B Notes”, collectively with the Tranche A Notes, as amended, restated or
otherwise modified from time to time pursuant to Section 17 and including any
such notes issued in substitution therefor pursuant to Section 13, the “Series
2020 Notes”). The Series 2020 Notes shall be substantially in the form set out
in Schedule 1(a) and Schedule 1(b), as applicable. Certain capitalized and other
terms used in this Agreement are defined in Schedule A and, for purposes of this
Agreement, the rules of construction set forth in Section 22.4 shall govern.

 

The Series 2020 Notes, together with each Series of Additional Notes which may
from time to time be issued pursuant to the provisions of Section 2.2, are
collectively referred to as the “Notes” (such term shall also include any such
notes as amended, restated or otherwise modified from time to time pursuant to
Section 17 and including any such notes issued in substitution therefor pursuant
to Section 13).

 

Section 2.

Sale and Purchase of Notes.

 

Section 2.1.     Sale and Purchase of Series 2020 Notes. Subject to the terms
and conditions of this Agreement, the Company will issue and sell to each
Purchaser and each Purchaser will purchase from the Company, at each Closing
provided for in Section 3, Series 2020 Notes in the principal amount and tranche
specified opposite such Purchaser’s name in the Purchaser Schedule at the
purchase price of 100% of the principal amount thereof. The Purchasers’
obligations hereunder are several and not joint obligations and no Purchaser
shall have any liability to any Person for the performance or non-performance of
any obligation by any other Purchaser hereunder.

 

 

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 2.2.     Additional Series of Notes. The Company may, from time to time,
in its sole discretion but subject to the terms hereof, issue and sell prior to
February 5, 2030 one or more additional Series of its promissory notes under the
provisions of this Agreement pursuant to a supplement (a “Supplement”)
substantially in the form of Exhibit S. Each additional Series of Notes (the
“Additional Notes”) issued pursuant to a Supplement shall be subject to the
following terms and conditions:

 

(i)     each Series of Additional Notes, when so issued, shall be differentiated
from all previous Series by sequential designation inscribed thereon;

 

(ii)     Additional Notes of the same Series may consist of more than one
different and separate tranches and may differ with respect to outstanding
principal amounts, maturity dates, interest rates and premiums, if any, and
price and terms of redemption or payment prior to maturity, but all such
different and separate tranches of the same Series shall vote as a single class
and constitute one Series;

 

(iii)     each Series of Additional Notes shall be dated the date of issue, bear
interest at such rate or rates, mature on such date or dates, be subject to such
mandatory and optional prepayment on the dates and at the premiums, if any, have
such additional or different conditions precedent to closing, such
representations and warranties and such additional covenants as shall be
specified in the Supplement under which such Additional Notes are issued and
upon execution of any such Supplement, this Agreement shall be amended (a) to
reflect such additional covenants without further action on the part of the
holders of the Notes outstanding under this Agreement, provided, that any such
additional covenants shall inure to the benefit of all holders of Notes so long
as any Additional Notes issued pursuant to such Supplement remain outstanding,
and (b) to reflect such representations and warranties as are contained in such
Supplement for the benefit of the holders of such Additional Notes in accordance
with the provisions of Section 16;

 

(iv)     each Series of Additional Notes issued under this Agreement shall be in
substantially the form of Exhibit 1 to Exhibit S hereto with such variations,
omissions and insertions as are necessary or permitted hereunder;

 

(v)     the minimum principal amount of any Note issued under a Supplement shall
be $100,000, except as may be necessary to evidence the outstanding amount of
any Note originally issued in a denomination of $100,000 or more;

 

(vi)     all Additional Notes shall rank pari passu with all other outstanding
Notes; and

 

-2-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(vii)     no Additional Notes shall be issued hereunder if at the time of
issuance thereof and after giving effect to the application of the proceeds
thereof, any Default or Event of Default shall have occurred and be continuing.

 

Section 3.

Closing.

 

The sale and purchase of the Series 2020 Notes to be purchased by each Purchaser
shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe Street,
Chicago, IL 60603, at 8:00 am Chicago time, at not more than two closings
(individually, a “Closing” and, collectively, the “Closings”). The first Closing
shall be in respect of the Tranche A Notes and shall be held on February 5, 2020
or on such other Business Day thereafter as may be agreed upon by the Company
and the Purchasers of the Tranche A Notes (the “First Closing”) and the second
Closing shall be in respect of the Tranche B Notes and shall be held on June 3,
2020 or on such other Business Day thereafter as may be agreed upon by the
Company and the Purchasers of the Tranche B Notes (such date, the “Second
Closing Date” and such Closing, the “Second Closing”). At each Closing, the
Company will deliver to each applicable Purchaser the Series 2020 Notes of the
tranche to be purchased by such Purchaser in the form of a single Series 2020
Note for such tranche of Notes to be purchased by such Purchaser (or such
greater number of Series 2020 Notes in denominations of at least $100,000 as
such Purchaser may request) dated the date of such Closing and registered in
such Purchaser’s name (or in the name of its nominee), against delivery by such
Purchaser to the Company or its order of immediately available funds in the
amount of the purchase price therefor by wire transfer of immediately available
funds for the account of the Company pursuant to the applicable funding
instructions in Section 4.10. If at a Closing the Company shall fail to tender
such Series 2020 Notes to any Purchaser as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been fulfilled to
such Purchaser’s satisfaction, such Purchaser shall, at its election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure by the
Company to tender such Notes or any of the conditions specified in Section 4 not
having been fulfilled to such Purchaser’s satisfaction.

 

Section 4.

Conditions to Closing.

 

Each Purchaser’s obligation to purchase and pay for the Notes to be sold to such
Purchaser at the applicable Closing is subject to the fulfillment to such
Purchaser’s satisfaction, prior to or at such Closing, of the following
conditions:

 

Section 4.1.     Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be correct when made and at
such Closing.

 

Section 4.2.     Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at such Closing. Before and
after giving effect to the issue and sale of the Notes (and the application of
the proceeds thereof as contemplated by Section 5.14) at such Closing, no Change
in Control or Event of Default shall have occurred and be continuing.

 

-3-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 4.3.     Compliance Certificates.

 

(a)     Officer’s Certificate. The Company shall have delivered to such
Purchaser an Officer’s Certificate, dated the date of such Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

 

(b)     Secretary’s Certificate. The Company shall have delivered to such
Purchaser a certificate of its Secretary or Assistant Secretary, dated the date
of such Closing, certifying as to (i) the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and this Agreement and (ii) the Company’s organizational documents as
then in effect.

 

Section 4.4.     Opinions of Counsel. Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the date of
such Closing (a) from Dechert LLP, special counsel for the Company, covering the
matters set forth in Schedule 4.4(a) and covering such other matters incident to
the transactions contemplated hereby as such Purchaser or its counsel may
reasonably request (and the Company hereby instructs its counsel to deliver such
opinion to the Purchasers) and (b) from Chapman and Cutler LLP, the Purchasers’
special counsel in connection with such transactions, substantially in the form
set forth in Schedule 4.4(b) and covering such other matters incident to such
transactions as such Purchaser may reasonably request.

 

Section 4.5.     Purchase Permitted By Applicable Law, Etc. On the date of such
Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including Regulation T, U or X of the Board of Governors of
the Federal Reserve System) and (c) not subject such Purchaser to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
such Purchaser, such Purchaser shall have received an Officer’s Certificate
certifying as to such matters of fact as such Purchaser may reasonably specify
to enable such Purchaser to determine whether such purchase is so permitted.

 

Section 4.6.     Sale of Other Notes. Contemporaneously with such Closing the
Company shall sell to each other Purchaser and each other Purchaser shall
purchase the Notes to be purchased by it at such Closing as specified in the
Purchaser Schedule.

 

Section 4.7.     Payment of Special Counsel Fees. Without limiting Section 15.1,
the Company shall have paid on or before such Closing the reasonable and
documented out-of-pocket fees, charges and disbursements of the Purchasers’
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least two Business Days
prior to such Closing.

 

-4-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 4.8.     Private Placement Number. A Private Placement Number issued by
Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have
been obtained for each tranche of the Notes.

 

Section 4.9.     Changes in Corporate Structure. The Company shall not have
changed its jurisdiction of incorporation or organization, as applicable, or
been a party to any merger or consolidation (in each case, other than as
permitted under Section 10.2) or succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.

 

Section 4.10.     Funding Instructions. At least one Business Day prior to the
date of such Closing, each Purchaser shall have received written instructions
signed by a Responsible Officer on letterhead of the Company specifying (i) the
name and address of the transferee bank, (ii) such transferee bank’s ABA number
and (iii) the account name and number into which the purchase price for the
Notes is to be deposited.

 

Section 4.11.     Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory to such Purchaser and its special counsel, and such Purchaser and
its special counsel shall have received all such counterpart originals or
certified or other copies of such documents as such Purchaser or such special
counsel may reasonably request.

 

Section 4.12.     Rating. On the date of the First Closing, the Notes shall be
rated “BBB-” or better by Kroll.

 

Section 4.13.     Second Closing. In the case of the Second Closing, the
transactions contemplated herein with respect to the First Closing shall have
been consummated, except to the extent of any failure of such transactions so to
have been consummated that was caused by any failure of any Purchaser to perform
its obligations hereunder.

 

Section 4.14.     Conditions to Issuance of Additional Notes. The obligations of
the Additional Purchasers to purchase any Additional Notes shall be subject to
the following conditions precedent, in addition to the conditions specified in
the Supplement pursuant to which such Additional Notes may be issued:

 

(a)     Compliance Certificate. A duly authorized Senior Financial Officer shall
execute and deliver to each Additional Purchaser an Officer’s Certificate dated
the date of issue of such Series of Additional Notes stating that such officer
has reviewed the provisions of this Agreement (including any Supplements hereto)
and setting forth the information and computations (in sufficient detail)
required in order to establish whether the Company is in compliance with the
requirements of Section 10.8 on such date (based upon the financial statements
for the most recent fiscal quarter ended prior to the date of such certificate
but after giving effect to the issuance of the Additional Series of Notes and
the application of the proceeds thereof).

 

-5-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(b)     Execution and Delivery of Supplement. The Company and each such
Additional Purchaser shall execute and deliver a Supplement substantially in the
form of Exhibit S hereto.

 

(c)     Representations of Additional Purchasers. Each Additional Purchaser
shall have confirmed in the Supplement that the representations set forth in
Section 6 are true with respect to such Additional Purchaser on and as of the
date of issue of the Additional Notes.

 

(d)     Execution and Delivery of Guaranty Ratification. Each Subsidiary
Guarantor, if any, shall execute and deliver a ratification of its Subsidiary
Guaranty.

 

Section 5.

Representations and Warranties of the Company.

 

The Company represents and warrants to each Purchaser as of the date of the
applicable Closing (or, if any such representations and warranties expressly
relate to an earlier date, then as of such earlier date) that:

 

Section 5.1.     Organization; Power and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, except where the failure to do so would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. The
Company has the corporate power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver this Agreement and
the Notes and to perform the provisions hereof and thereof.

 

Section 5.2.     Authorization, Etc. This Agreement and the Notes have been duly
authorized by all necessary corporate action on the part of the Company, and
this Agreement constitutes, and upon execution and delivery thereof each Note
will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

Section 5.3.     Disclosure. (a) The Company, through its agent, Goldman Sachs,
has delivered to each Purchaser a copy of a Private Placement Memorandum, dated
January 2, 2020 (the “Memorandum”), relating to the transactions contemplated
hereby in connection with the Series 2020 Notes. The Memorandum fairly
describes, in all material respects, the general nature of the business and
principal properties of the Company and its Subsidiaries. This Agreement, the
Memorandum, the financial statements listed in Schedule 5.5 and the documents,
certificates or other writings delivered to the Purchasers by or on behalf of
the Company (other than financial projections, pro forma financial information
and other forward-looking information referenced in Section 5.3(b), information
relating to third parties and general economic information) prior to January 17,
2020 in connection with the transactions contemplated hereby and identified in
Schedule 5.3 (this Agreement, the Memorandum and such documents, certificates or
other writings and such financial statements delivered to each Purchaser being
referred to, collectively, as the “Disclosure Documents”), taken as a whole, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Disclosure Documents, since December 31, 2018, there has been no change in the
financial condition, operations, business or properties of the Company or any
Subsidiary except changes that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. There is no fact known
to the Company that would reasonably be expected to have a Material Adverse
Effect that has not been set forth herein or in the Disclosure Documents.

 

-6-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(b)     All financial projections, pro forma financial information and other
forward-looking information which has been delivered to each Purchaser by or on
behalf of the Company in connection with the transactions contemplated by this
Agreement are based upon good faith assumptions and, in the case of financial
projections and pro forma financial information, good faith estimates, in each
case, believed to be reasonable at the time made, it being recognized that (i)
such financial information as it relates to future events is subject to
significant uncertainty and contingencies (many of which are beyond the control
of the Company) and are therefore not to be viewed as fact, and (ii) actual
results during the period or periods covered by such financial information may
materially differ from the results set forth therein.

 

Section 5.4.     Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists as of the date of the applicable Closing of (i) the Company’s
Subsidiaries, showing, as to each Subsidiary, the name thereof, the jurisdiction
of its organization, the percentage of shares of each class of its capital stock
or similar equity interests outstanding owned by the Company and each other
Subsidiary and whether such Subsidiary is a Subsidiary Guarantor, and (ii) the
Company’s directors and senior officers.

 

(b)     All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
and its Subsidiaries have been validly issued, and, to the extent applicable,
are fully paid and non-assessable and are owned by the Company or another
Subsidiary free and clear of any Lien that is prohibited by this Agreement.

 

(c)     Each Subsidiary is a corporation or other legal entity duly organized,
validly existing and, where applicable, in good standing under the laws of its
jurisdiction of organization, and is duly qualified as a foreign corporation or
other legal entity and, where applicable, is in good standing in each
jurisdiction in which such qualification is required by law, except where the
failure to do so would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business it transacts
and proposes to transact, except where the failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(d)     No Subsidiary is subject to any legal, regulatory, contractual or other
restriction (other than the agreements listed on Schedule 5.4 and customary
limitations imposed by corporate law or similar statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Company or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of such
Subsidiary.

 

-7-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 5.5.     Financial Statements; Material Liabilities. The Company has
delivered to each Purchaser copies of the financial statements of the Company
and its Subsidiaries listed on Schedule 5.5. All of such financial statements
(including in each case the related schedules and notes, but excluding all
financial projections, pro forma financial information and other forward-looking
information) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments and lack of footnotes).

 

Section 5.6.     Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Agreement and the Notes will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Subsidiary under, any (A) indenture, mortgage, deed of trust, loan, purchase
or credit agreement, lease or any other agreement or instrument to which the
Company or any Subsidiary is bound or by which the Company or any Subsidiary or
any of their respective properties may be bound or affected or (B) the corporate
charter or by-laws of the Company, (ii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree or
ruling of any court, arbitrator or Governmental Authority applicable to the
Company or any Subsidiary or (iii) violate any provision of any statute or other
rule or regulation of any Governmental Authority applicable to the Company or
any Subsidiary, in each case, except where any of the foregoing (other than
clause (i)(B) above), individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.

 

Section 5.7.     Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes, other than any filing required
under the Securities Exchange Act of 1934 or the rules or regulations
promulgated thereunder on Form 8-K, Form 10-Q or Form 10-K.

 

Section 5.8.     Litigation; Observance of Agreements, Statutes and Orders.
(a) There are no actions, suits, investigations or proceedings pending or, to
the best knowledge of the Company, threatened against or affecting the Company
or any Subsidiary or any property of the Company or any Subsidiary in any court
or before any arbitrator of any kind or before or by any Governmental Authority
that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(b)     Neither the Company nor any Subsidiary is (i) in default under any
agreement or instrument to which it is a party or by which it is bound, (ii) in
violation of any order, judgment, decree or ruling of any court, any arbitrator
of any kind or any Governmental Authority or (iii) in violation of any
applicable law, ordinance, rule or regulation of any Governmental Authority
(including Environmental Laws, the USA PATRIOT Act or any of the other laws and
regulations that are referred to in Section 5.16), which default or violation
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

-8-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 5.9.     Taxes. The Company and its Subsidiaries have filed all tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which, individually or in the aggregate, is not Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.

 

Section 5.10.     Title to Property; Leases. The Company and its Subsidiaries
have good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary after such date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.

 

Section 5.11.     Licenses, Permits, Etc. (a) The Company and its Subsidiaries
own or possess all licenses, permits, franchises, authorizations, patents,
copyrights, proprietary software, service marks, trademarks and trade names, or
rights thereto, that individually or in the aggregate are Material, without
known conflict with the rights of others, except for any such conflicts that,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.

 

(b)     To the best knowledge of the Company, no product or service of the
Company or any of its Subsidiaries infringes in any material respect any
license, permit, franchise, authorization, patent, copyright, proprietary
software, service mark, trademark, trade name or other right owned by any other
Person, except for any such infringements that, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.

 

(c)     To the best knowledge of the Company, there is no Material violation by
any Person of any right of the Company or any of its Subsidiaries with respect
to any license, permit, franchise, authorization, patent, copyright, proprietary
software, service mark, trademark, trade name or other right owned or used by
the Company or any of its Subsidiaries.

 

Section 5.12.     Compliance with Employee Benefit Plans. (a) The Company and
each ERISA Affiliate have operated and administered each Plan in compliance with
all applicable laws except for such instances of noncompliance as have not
resulted in and would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.  Except as has not resulted in
or would not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect: (i) neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in section 3(3) of ERISA), and (ii) no event, transaction or condition has
occurred or exists that could, individually or in the aggregate, reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to section 430(k) of the Code or to any
such penalty or excise tax provisions under the Code or section 4068 of ERISA or
by the granting of a security interest in connection with the amendment of a
Pension Plan under section 412 of the Code.

 

-9-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(b)     The present value of the aggregate benefit liabilities under each of the
Pension Plans, determined as of the end of such Pension Plan’s most recently
ended plan year on the basis of the actuarial assumptions specified for funding
purposes in such Pension Plan’s most recent actuarial valuation report, did not
exceed the aggregate current value of the assets of such Pension Plan allocable
to such benefit liabilities by an amount that has resulted in or could,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. The term “benefit liabilities” has the meaning specified in
section 4001(a)(16) of ERISA and the terms “current value” and “present value”
have the meaning specified in section 3(26) and section 3(27), respectively, of
ERISA.

 

(c)     The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate have resulted in or would reasonably be
expected to result in a Material Adverse Effect.

 

(d)     The expected postretirement benefit obligation (determined as of the
last day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Accounting Standards Codification Topic
715-60, without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its Subsidiaries is
not reasonably likely to result in a Material Adverse Effect.

 

(e)     The execution and delivery of this Agreement and the issuance and sale
of the Notes hereunder do not involve any transaction that is subject to the
prohibitions of section 406(a) of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation
by the Company to each Purchaser in the first sentence of this Section 5.12(e)
is made in reliance upon and subject to the accuracy of such Purchaser’s
representation in Section 6.2.

 

(f)     The Company and its Subsidiaries do not have any Non-U.S. Plans that
have resulted or could, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.

 

Section 5.13.     Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Series 2020 Notes or any
substantially similar debt Securities for sale to, or solicited any offer to buy
the Series 2020 Notes or any substantially similar debt Securities from, or
otherwise approached or negotiated in respect thereof with, any Person other
than the Purchasers and not more than 35 other Institutional Investors, each of
which has been offered the Series 2020 Notes at a private sale for investment.
Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Series 2020 Notes to the
registration requirements of section 5 of the Securities Act or to the
registration requirements of any Securities or blue sky laws of any applicable
jurisdiction.

 

-10-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 5.14.     Use of Proceeds; Margin Regulations. The Company will apply
the proceeds of the sale of the Series 2020 Notes hereunder for the general
corporate purposes of the Company and its Subsidiaries and as otherwise set
forth in the section of the Memorandum entitled “Use of Proceeds”. No part of
the proceeds from the sale of the Series 2020 Notes hereunder will be used,
directly or indirectly, for the purpose of buying or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading
in any Securities under such circumstances as to involve the Company in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock
does not constitute more than 25% of the value of the consolidated assets of the
Company and its subsidiaries and the Company does not have any present intention
that margin stock will constitute more than 25% of the value of such assets. As
used in this Section, the terms “margin stock” and “purpose of buying or
carrying” shall have the meanings assigned to them in said Regulation U.

 

Section 5.15.     Existing Indebtedness; Future Liens. (a) Except as described
therein, Schedule 5.15 sets forth a complete and correct list of all outstanding
Indebtedness of the Company and its Subsidiaries as of February 5, 2020, since
which date there has been no Material change in the amounts, interest rates,
sinking funds, installment payments or maturities of the Indebtedness of the
Company or its Subsidiaries. As of February 5, 2020, neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Indebtedness of the Company or such
Subsidiary and, to the knowledge of the Company, no event or condition exists
with respect to any Indebtedness of the Company or any Subsidiary that would
permit (or that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Indebtedness to become due and payable before its
stated maturity or before its regularly scheduled dates of payment.

 

(b)     Except as disclosed in Schedule 5.15 (as may be updated by the Company
from time to time), neither the Company nor any Subsidiary has agreed or
consented to cause or permit any of its property, whether now owned or hereafter
acquired, to be subject to a Lien that secures Indebtedness or to cause or
permit in the future (upon the happening of a contingency or otherwise) any of
its property, whether now owned or hereafter acquired, to be subject to a Lien
that secures Indebtedness.

 

(c)     Neither the Company nor any Subsidiary is a party to, or otherwise
subject to any provision contained in, any instrument evidencing Indebtedness of
the Company or such Subsidiary, any agreement relating thereto or any other
agreement (including its charter or any other organizational document) which
limits the amount of, or otherwise imposes restrictions on the incurring of,
Indebtedness of the Company, except as disclosed in Schedule 5.15 (as may be
updated by the Company from time to time).

 

-11-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 5.16.     Foreign Assets Control Regulations, Etc.. (a) Neither the
Company nor any Controlled Entity (i) is a Blocked Person or Canada Blocked
Person, (ii) has been notified that its name appears or may in the future appear
on a State Sanctions List or (iii) is a target of sanctions that have been
imposed by Canada, the United Nations or the European Union.

 

(b)     Neither the Company nor any Controlled Entity (i) has violated, been
found in violation of, or been charged or convicted under, any applicable U.S.
Economic Sanctions Laws, Canadian Economic Sanctions Laws, Anti-Money Laundering
Laws or Anti-Corruption Laws or (ii) to the Company’s knowledge, is under
investigation by any Governmental Authority for possible violation of any U.S.
Economic Sanctions Laws, Canadian Economic Sanctions Laws, Anti-Money Laundering
Laws or Anti-Corruption Laws.

 

(c)     No part of the proceeds from the sale of the Notes hereunder:

 

(i)     constitutes or will constitute funds obtained on behalf of any Blocked
Person or Canada Blocked Person or will otherwise be used by the Company or any
Controlled Entity, directly or indirectly, (A) in connection with any investment
in, or any transactions or dealings with, any Blocked Person or Canada Blocked
Person, (B) for any purpose that would cause any Purchaser to be in violation of
any U.S. Economic Sanctions Laws or Canadian Economic Sanctions or (C) otherwise
in violation of any U.S. Economic Sanctions Laws or Canadian Economic Sanctions
Laws;

 

(ii)     will be used, directly or indirectly, in violation of, or cause any
Purchaser to be in violation of, any applicable Anti-Money Laundering Laws; or

 

(iii)    will be used, directly or indirectly, for the purpose of making any
improper payments, including bribes, to any Governmental Official or commercial
counterparty in order to obtain, retain or direct business or obtain any
improper advantage, in each case which would be in violation of, or cause any
Purchaser to be in violation of, any applicable Anti-Corruption Laws.

 

(d)     The Company has established procedures and controls which it reasonably
believes are adequate (and otherwise comply with applicable law) to ensure that
the Company and each Controlled Entity is and will continue to be in compliance
with all applicable U.S. Economic Sanctions Laws, Canadian Economic Sanctions
Laws, Anti-Money Laundering Laws and Anti-Corruption Laws.

 

Section 5.17.     [Reserved].

 

Section 5.18.     Environmental Matters. (a) Neither the Company nor any
Subsidiary has received any written claim and no proceeding has been instituted
asserting any claim against the Company or any of its Subsidiaries or with
respect to any real property now or formerly owned, leased or operated by any of
them, alleging any damage to the environment or violation of any Environmental
Laws, except, in each case, such as would not reasonably be expected to result
in a Material Adverse Effect.

 

-12-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(b)     Neither the Company nor any Subsidiary has knowledge of any facts which
would reasonably be expected to give rise to any claim, public or private, of
violation of or liability under Environmental Laws by the Company or any
Subsidiary, except, in each case, such as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.

 

(c)     Neither the Company nor any Subsidiary has handled, stored, or disposed
of any Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them in a manner which has violated any Environmental Law
that would, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

 

(d)     Neither the Company nor any Subsidiary has had a release of any
Hazardous Materials in a manner which would reasonably be expected to give rise
to liability under any Environmental Law that would, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.

 

Section 5.19.     Investment Company Act. (a) The Company has elected to be
regulated as a “business development company” within the meaning of the
Investment Company Act.

 

(b)     The business and other activities of the Company and its Subsidiaries,
including the issuance of the Notes hereunder, the application of the proceeds
and repayment thereof by the Company and the consummation of the transactions
contemplated by this Agreement do not result in a violation or breach in any
material respect of the provisions of the Investment Company Act or any rules,
regulations or orders issued by the SEC thereunder, in each case that are
applicable to the Company and its Subsidiaries.

 

(c)     The Company is in compliance in all respects with the Investment
Policies, except to the extent that the failure to so comply would not
reasonably be expected to have a Material Adverse Effect.

 

Section 5.20.     Priority of Obligations. The payment obligations of the
Company under this Agreement and the Notes, and the payment obligations of any
Subsidiary Guarantor under its Subsidiary Guaranty, rank at least pari passu,
without preference or priority, with all other unsecured and unsubordinated
Indebtedness of the Company and such Subsidiary Guarantor, as applicable.

 

Section 6.

Representations of the Purchasers.

 

Section 6.1.     Purchase for Investment. Each Purchaser severally represents
that it is purchasing the Notes for its own account or for one or more separate
accounts maintained by such Purchaser or for the account of one or more pension
or trust funds and not with a view to the distribution thereof, provided that
the disposition of such Purchaser’s or their property shall at all times be
within such Purchaser’s or their control. Each Purchaser understands that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.

 

-13-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 6.2.     Source of Funds. Each Purchaser severally represents that at
least one of the following statements is an accurate representation as to each
source of funds (a “Source”) to be used by such Purchaser to pay the purchase
price of the Notes to be purchased by such Purchaser hereunder:

 

(a)     the Source is an “insurance company general account” (as the term is
defined in the United States Department of Labor’s Prohibited Transaction
Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as
defined by the annual statement for life insurance companies approved by the
NAIC (the “NAIC Annual Statement”)) for the general account contract(s) held by
or on behalf of any employee benefit plan together with the amount of the
reserves and liabilities for the general account contract(s) held by or on
behalf of any other employee benefit plans maintained by the same employer (or
affiliate thereof as defined in PTE 95-60) or by the same employee organization
in the general account do not exceed 10% of the total reserves and liabilities
of the general account (exclusive of separate account liabilities) plus surplus
as set forth in the NAIC Annual Statement filed with such Purchaser’s state of
domicile; or

 

(b)     the Source is a separate account that is maintained solely in connection
with such Purchaser’s fixed contractual obligations under which the amounts
payable, or credited, to any employee benefit plan (or its related trust) that
has any interest in such separate account (or to any participant or beneficiary
of such plan (including any annuitant)) are not affected in any manner by the
investment performance of the separate account;

 

(c)     the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within
the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the
Company in writing pursuant to this clause (c), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund;

 

(d)     the Source constitutes assets of an “investment fund” (within the
meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part VI of the QPAM
Exemption), no employee benefit plan’s assets that are managed by the QPAM in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or
by the same employee organization and managed by such QPAM, represent more than
20% of the total client assets managed by such QPAM, the conditions of Part I(c)
and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM maintains an ownership interest in the
Company that would cause the QPAM and the Company to be “related” within the
meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM
and (ii) the names of any employee benefit plans whose assets in the investment
fund, when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within the
meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization, represent 10% or more of the assets of such investment
fund, have been disclosed to the Company in writing pursuant to this clause (d);

 

-14-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(e)     the Source constitutes assets of a “plan(s)” (within the meaning of
Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset
manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption),
the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of “control” in Part IV(d)(3) of the INHAM Exemption) owns a 10%
or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e);

 

(f)     the Source is a governmental plan; or

 

(g)     the Source is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans, each of which has
been heretofore identified to the Company in writing pursuant to this clause
(f); or

 

(h)     the Source does not include assets of any employee benefit plan, other
than a plan that is not subject to ERISA or section 4975 of the Code.

 

As used in this Section 6.2, the terms “employee benefit plan” and “separate
account” shall have the respective meanings assigned to such terms in section 3
of ERISA.

 

Section 6.3.     Investment Experience; Access to Information. Each Purchaser
severally represents that it (a) is an “accredited investor” as defined in Rule
501(a) of Regulation D promulgated under the Securities Act and an
“Institutional Account” as defined in FINRA Rule 4512(c), (b) either alone or
together with its representatives has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of this
investment and make an informed decision to so invest, and has so evaluated the
risks and merits of such investment, (c) has the ability to bear the economic
risks of this investment and can afford a complete loss of such investment,
(d) understands the terms of and risks associated with the purchase of the
Notes, including, without limitation, a lack of liquidity, pricing availability
and risks associated with the industry in which the Company operates, (e) has
had the opportunity to review (i) the Disclosure Documents, (ii) the Annual
Report on Form 10-K for the Company for the fiscal year ended December 31, 2018,
(iii) the Quarterly Report on Form 10-Q for the Company for the quarter ended
September 30, 2019 and (iv) such other disclosure regarding the Company, its
business and its financial condition as such Purchaser has determined to be
necessary in connection with the purchase of the Notes, and (f) has had an
opportunity to ask such questions and make such inquiries concerning the
Company, its business and its financial condition as such Purchaser has deemed
appropriate in connection with such purchase and to receive satisfactory answers
to such questions and inquiries.

 

-15-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 6.4.     Authorization. Each Purchaser severally represents that (a) it
has full power and authority to enter into this Agreement and (b) this
Agreement, when executed and delivered by such Purchaser, will constitute valid
and legally binding obligations of such Purchaser, enforceable in accordance
with their terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and any other laws of general
application affecting enforcement of creditors’ rights generally, and as limited
by laws relating to the availability of specific performance, injunctive relief
or other equitable remedies.

 

Section 6.5.     Reliance. Each Purchaser severally (a) acknowledges that
Goldman Sachs, as placement agent for the Notes, may rely on the representations
and warrants of such Purchaser contained in this Section 6 as if it were a party
to this Agreement; (b) represents and warrants that such Purchaser is not
relying upon, and has not relied upon, any statement, representation or warranty
made by Goldman Sachs, any of its Affiliates or any of its or their Control
persons, officers, directors or employees, in making its investment or decision
to invest in the Company; and (c) agrees (for itself and for each account for
which such Purchaser is acquiring the Notes) that none of Goldman Sachs, any of
its Affiliates or any of its or their Control persons, officers, directors or
employees shall be liable to any Purchaser in connection with its purchase of
the Notes.

 

Section 7.

Information as to Company

 

Section 7.1.     Financial and Business Information. The Company shall deliver
to each Purchaser and each holder of a Note that, in each case, is an
Institutional Investor:

 

(a)     Quarterly Statements — within 60 days (or such shorter period as is 15
days greater than the period applicable to the filing of the Company’s Quarterly
Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether the
Company is subject to the filing requirements thereof) after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of:

 

(i)     a consolidated balance sheet of the Company and its consolidated
subsidiaries as at the end of such quarter, and

 

(ii)     consolidated statements of operations, changes in net assets and cash
flows of the Company and its consolidated subsidiaries, for such quarter and (in
the case of the consolidated statements of operations for the second and third
quarters) for the portion of the fiscal year ending with such quarter,

 

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally
(other than absence of footnotes and year-end adjustments), and certified by a
Senior Financial Officer as fairly presenting, in all material respects, the
financial position of the Company and its consolidated subsidiaries being
reported on and their results of operations and cash flows, subject to changes
resulting from year-end adjustments;

 

-16-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(b)     Annual Statements — within 105 days (or such shorter period as is 15
days greater than the period applicable to the filing of the Company’s Annual
Report on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the
Company is subject to the filing requirements thereof) after the end of each
fiscal year of the Company, duplicate copies of:

 

(i)     a consolidated balance sheet of the Company and its consolidated
subsidiaries as at the end of such year, and

 

(ii)     consolidated statements of operations, changes in net assets and cash
flows of the Company and its consolidated subsidiaries for such year,

 

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon (without a “going concern” qualification or
exception as to the Company (other than as a result of the impending maturity or
any prospective default under any credit document of the Company, including this
Agreement and the Notes) and without any qualification or exception as to the
scope of the audit on which such opinion is based) of independent public
accountants of recognized national standing, which opinion shall state that such
financial statements present fairly, in all material respects, the financial
position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in the circumstances;

 

(c)     SEC and Other Reports — promptly upon their becoming available, one copy
of (i) each financial statement, report, notice, proxy statement or similar
document sent by the Company or any Subsidiary to its public Securities holders
generally, and (ii) each regular or periodic report, each registration statement
(without exhibits except as expressly requested by such holder), and each
prospectus and all amendments thereto filed by the Company or any Subsidiary
with the SEC and of all press releases and other statements made available
generally by the Company or any Subsidiary to the public concerning developments
that are Material;

 

(d)     Notice of Event of Default — promptly, and in any event within 5
Business Days, after a Responsible Officer becoming aware of the existence of
any Event of Default or that any Person (other than a Purchaser or a holder of a
Note) has given any notice or taken any action with respect to a claimed default
hereunder or that any Person (other than a Purchaser or a holder of a Note) has
given any notice or taken any action with respect to a claimed default of the
type referred to in Section 11(f), a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;

 

-17-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(e)     Employee Benefits Matters — promptly, and in any event within 5 days,
after a Responsible Officer becoming aware of any of the following, a written
notice setting forth the nature thereof and the action, if any, that the Company
or an ERISA Affiliate proposes to take with respect thereto:

 

(i)     with respect to any Pension Plan, any reportable event, as defined in
section 4043(c) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof;

 

(ii)     the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
or the receipt by the Company or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan;

 

(iii)     any event, transaction or condition that would reasonably be expected
to result in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in section
3(3) of ERISA), or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant to Title I
or IV of ERISA or such penalty or excise tax provisions, if such liability or
Lien, taken together with any other such liabilities or Liens then existing,
would reasonably be expected to have a Material Adverse Effect; or

 

(iv)     receipt of notice of the imposition of a financial penalty (which for
this purpose shall mean any tax, penalty or other liability, whether by way of
indemnity or otherwise) with respect to one or more Non-U.S. Plans that would
reasonably be expected to have a Material Adverse Effect;

 

(f)     Notices from Governmental Authority — promptly, and in any event within
30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any Governmental Authority relating to any order, ruling,
statute or other law or regulation that would reasonably be expected to have a
Material Adverse Effect and to the extent such notice is required to be
disclosed in connection with any regulation or disclosure obligations under the
Securities Act;

 

(g)     Resignation or Replacement of Auditors — within 10 days following the
date on which the Company’s auditors resign or the Company elects to change
auditors, as the case may be, notification thereof, together with such further
information as the Required Holders may request;

 

(h)     Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or properties of the Company or any of its Subsidiaries or relating to
the ability of the Company to perform its obligations hereunder and under the
Notes as from time to time may be reasonably requested by the Required Holders,
in each case to the extent reasonably available to the Company; and

 

-18-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(i)     Supplements — promptly, and in any event within 10 Business Days after
the execution and delivery of any Supplement, a copy thereof.

 

Section 7.2.     Officer’s Certificate. Each set of financial statements
delivered to a Purchaser or holder of a Note pursuant to Section 7.1(a) or
Section 7.1(b) shall be accompanied by a certificate of a Senior Financial
Officer:

 

(a)     Covenant Compliance — setting forth the information from such financial
statements that is required in order to establish whether the Company was in
compliance with the requirements of Section 10.8 during the quarterly or annual
period covered by the financial statements then being furnished (including with
respect to each such provision that involves mathematical calculations, the
information from such financial statements that is required to perform such
calculations) and detailed calculations of the maximum or minimum amount, ratio
or percentage, as the case may be, permissible under the terms of such Section,
and the calculation of the amount, ratio or percentage then in existence. In the
event that the Company or any Subsidiary has made an election to measure any
financial liability using fair value (which election is being disregarded for
purposes of determining compliance with this Agreement pursuant to Section 22.2)
as to the period covered by any such financial statement, such Senior Financial
Officer’s certificate as to such period shall include a reconciliation from GAAP
with respect to such election;

 

(b)     Event of Default — certifying that such Senior Financial Officer has
reviewed the relevant terms hereof and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the certificate
and that such review shall not have disclosed the existence during such period
of any condition or event that constitutes an Event of Default or, if any such
condition or event existed or exists (including any such event or condition
resulting from the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof and
what action the Company shall have taken or proposes to take with respect
thereto; and

 

(c)     Subsidiary Guarantors – setting forth a list of all Subsidiaries that
are Subsidiary Guarantors and certifying that each Subsidiary that is required
to be a Subsidiary Guarantor pursuant to Section 9.7 is a Subsidiary Guarantor,
in each case, as of the date of such certificate of Senior Financial Officer.

 

Section 7.3.     Visitation. The Company shall permit the representatives of
each Purchaser and each holder of a Note that, in each case, is an Institutional
Investor:

 

(a)     No Default — if no Event of Default then exists and is continuing, at
the expense of such holder and upon at least ten (10) Business Days’ prior
notice to the Company, to visit the principal executive office of the Company,
to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company’s officers, and (with the consent of the Company,
which consent will not be unreasonably withheld) its independent public
accountants, and (with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; provided, that such visitation rights set forth
in this clause (a) may only be exercised once per calendar year for each holder
of a Note; and

 

-19-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(b)     Default — if an Event of Default then exists and is continuing, at the
expense of the Company and upon at least ten (10) Business Days’ prior notice to
the Company, to visit and inspect any of the offices or properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such reasonable times and as often as may
be reasonably requested.

 

Section 7.4.     Electronic Delivery. Financial statements, opinions of
independent certified public accountants, other information and Officer’s
Certificates that are required to be delivered by the Company pursuant to
Sections 7.1(a), (b), (c) or (i) and Section 7.2 shall be deemed to have been
delivered if the Company satisfies any of the following requirements with
respect thereto:

 

(a)     such financial statements satisfying the requirements of Section 7.1(a)
or (b) and related Officer’s Certificate satisfying the requirements of Section
7.2 and any other information required under Section 7.1(c) are delivered to
each holder of a Note by e-mail at the e-mail address set forth in such holder’s
Purchaser Schedule or as communicated from time to time in a separate writing
delivered to the Company;

 

(b)     the Company shall have timely filed such Form 10–Q or Form 10–K,
satisfying the requirements of Section 7.1(a), Section 7.1(b) or Section 7.1(i),
as the case may be, with the SEC on EDGAR and shall have made such form
accessible from its home page on the internet, which is located at
http://www.htgc.com/ as of the date of this Agreement and shall have delivered
and, with respect to Section 7.1(a) or Section 7.1(b), the related Officer’s
Certificate satisfying the requirements of Section 7.2 to each holder of a Note
by electronic mail;

 

(c)     such financial statements satisfying the requirements of Section 7.1(a)
or Section 7.1(b) and related Officer’s Certificate(s) satisfying the
requirements of Section 7.2 and any other information required under Section
7.1(c), or any Supplement referred to in Section 7.1(i), as applicable, is/are
timely posted by or on behalf of the Company on IntraLinks or on any other
similar website to which each holder of Notes has free access; or

 

(d)     the Company shall have timely filed any of the items referred to in
Section 7.1(c) or Section 7.1(i) with the SEC on EDGAR and shall have made such
items available on its home page on the internet or on IntraLinks or on any
other similar website to which each holder of Notes has free access;

 

-20-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

provided however, that in no case shall access to such financial statements,
other information and Officer’s Certificates be conditioned upon any waiver or
other agreement or consent (other than confidentiality provisions consistent
with Section 20 of this Agreement); provided further, that in the case of any of
clauses (b), (c) or (d), the Company shall have given each holder of a Note
prior written notice, which may be by e-mail, included in the Officer’s
Certificate delivered pursuant to Section 7.2 or in accordance with Section 18,
of such posting or filing in connection with each delivery, provided further,
that upon request of any holder to receive paper copies of such forms, financial
statements, other information and Officer’s Certificates or to receive them by
e-mail, the Company will promptly e-mail them or deliver such paper copies, as
the case may be, to such holder.

 

Section 8.                 Payment and Prepayment of the Notes.

 

Section 8.1.     Maturity. As provided therein, the entire unpaid principal
balance of each Note shall be due and payable on the Maturity Date thereof.

 

Section 8.2.     Optional Prepayments with Prepayment Settlement Amount. The
Company may, at its option, upon notice as provided below, prepay at any time
all, or from time to time any part of, the Notes, in an amount not less than 10%
of the aggregate principal amount of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, and the
Prepayment Settlement Amount determined for the prepayment date with respect to
such principal amount. The Company will give each holder of Notes written notice
of each optional prepayment under this Section 8.2 not less than 10 days and not
more than 60 days prior to the date fixed for such prepayment unless the Company
and the Required Holders agree to another time period pursuant to Section 17.
Each such notice shall specify such date (which shall be a Business Day), the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be paid on the prepayment date
with respect to such principal amount being prepaid, and shall be accompanied by
a certificate of a Senior Financial Officer as to the Prepayment Settlement
Amount due in connection with such prepayment, setting forth the details of such
computation.

 

Section 8.3.     Allocation of Partial Prepayments. In the case of each partial
prepayment of the Notes pursuant to Section 8.2, the principal amount of the
Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment. In the case of
each partial prepayment of the Notes pursuant to Section 8.9, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes held
by Non-Consenting Holders at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment.

 

-21-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 8.4.     Maturity; Surrender, Etc.      In the case of each prepayment
of Notes pursuant to this Section 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Prepayment Settlement Amount, if any. From and after such
date, unless the Company shall fail to pay such principal amount when so due and
payable, together with the interest and Prepayment Settlement Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.

 

Section 8.5.     Purchase of Notes. The Company will not and will not permit any
Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except (a) upon the payment or
prepayment of the Notes in accordance with this Agreement and the Notes or (b)
pursuant to an offer to purchase made by the Company or an Affiliate pro rata to
the holders of all Notes at the time outstanding upon the same terms and
conditions. Any such offer shall provide each holder with sufficient information
to enable it to make an informed decision with respect to such offer, and shall
remain open for at least 10 Business Days. If the holders of more than 25% of
the principal amount of the Notes then outstanding accept such offer, the
Company shall promptly notify the remaining holders of such fact and the
expiration date for the acceptance by holders of Notes of such offer shall be
extended by the number of days necessary to give each such remaining holder at
least 5 Business Days from its receipt of such notice to accept such offer. The
Company will promptly cancel all Notes acquired by it or any Affiliate pursuant
to any payment, prepayment or purchase of Notes pursuant to this Agreement and
no Notes may be issued in substitution or exchange for any such Notes. For the
avoidance of doubt, no Prepayment Settlement Amount shall be owed in connection
with any prepayment made pursuant to this Section 8.5(b).

 

Section 8.6.     Make-Whole Amount; Prepayment Settlement Amount.

 

“Prepayment Settlement Amount” means,

 

(a)      with respect to any Tranche A Note, an amount equal to the “Prepayment
Settlement Amount”, as follows:

 

 

Prepaid or accelerated during the period

 

Prepayment Settlement Amount

     

On or before February 5, 2023

 

Make-Whole Amount

     

After February 5, 2023
but on or before
February 5, 2024

 

an amount equal to 2.0% of the

principal amount of the Tranche A

Notes or portion thereof to be

prepaid or accelerated

     

After February 5, 2024
but on or before
August 5, 2024

 

an amount equal to 1.0% of the

principal amount of the Tranche A

Notes or portion thereof to be

prepaid or accelerated

 

-22-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

After August 5, 2024, the Prepayment Settlement Amount with respect to the
Tranche A Notes shall be zero; and

 

(b)      with respect to any Tranche B Note, an amount equal to the “Prepayment
Settlement Amount”, as follows:

 

 

Prepaid or accelerated during the period

 

Prepayment Settlement Amount

     

On or before June 3, 2023

 

Make-Whole Amount

     

After June 3, 2023
but on or before
June 3, 2024

 

an amount equal to 2.0% of the

principal amount of the Tranche B

Notes or portion thereof to be

prepaid or accelerated

     

After June 3, 2024
but on or before
December 3, 2024

 

an amount equal to 1.0% of the

principal amount of the Tranche B

Notes or portion thereof to be

prepaid or accelerated

 

After December 3, 2024, the Prepayment Settlement Amount with respect to the
Tranche B Notes shall be zero.

 

“Make-Whole Amount” means, with respect to any Note, an amount equal to the
excess, if any, of the Discounted Value of the Remaining Scheduled Payments with
respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings: “Called Principal” means, with respect to any Note,
the principal of such Note that is to be prepaid pursuant to Section 8.2 or has
become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.

 

“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

 

-23-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

“Reinvestment Yield” means, with respect to the Called Principal of any Note,
the sum of (a) 0.50% plus (b) the yield to maturity implied by the “Ask
Yield(s)” reported as of 10:00 a.m. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called Principal, on the
display designated as “Page PX1” (or such other display as may replace Page PX1)
on Bloomberg Financial Markets for the most recently issued actively traded
on-the-run U.S. Treasury securities (“Reported”) having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. If
there are no such U.S. Treasury securities Reported having a maturity equal to
such Remaining Average Life, then such implied yield to maturity will be
determined by (i) converting U.S. Treasury bill quotations to bond equivalent
yields in accordance with accepted financial practice and (ii) interpolating
linearly between the “Ask Yields” Reported for the applicable most recently
issued actively traded on-the-run U.S. Treasury securities with the maturities
(1) closest to and greater than such Remaining Average Life and (2) closest to
and less than such Remaining Average Life. The Reinvestment Yield shall be
rounded to the number of decimal places as appears in the interest rate of the
applicable Note.

 

If such yields are not Reported or the yields Reported as of such time are not
ascertainable (including by way of interpolation), then “Reinvestment Yield”
means, with respect to the Called Principal of any Note, the sum of (x) 0.50%
plus (y) the yield to maturity implied by the U.S. Treasury constant maturity
yields reported, for the latest day for which such yields have been so reported
as of the second Business Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable
successor publication) for the U.S. Treasury constant maturity having a term
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. If there is no such U.S. Treasury constant maturity having a
term equal to such Remaining Average Life, such implied yield to maturity will
be determined by interpolating linearly between (1) the U.S. Treasury constant
maturity so reported with the term closest to and greater than such Remaining
Average Life and (2) the U.S. Treasury constant maturity so reported with the
term closest to and less than such Remaining Average Life. The Reinvestment
Yield shall be rounded to the number of decimal places as appears in the
interest rate of the applicable Note.

 

“Remaining Average Life” means, with respect to any Called Principal, the number
of years obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number of
years, computed on the basis of a 360-day year comprised of twelve 30-day months
and calculated to two decimal places, that will elapse between the Settlement
Date with respect to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.

 

“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the Notes, then the amount of the next succeeding
scheduled interest payment will be reduced by the amount of interest accrued to
such Settlement Date and required to be paid on such Settlement Date pursuant to
Section 8.2 or Section 12.1.

 

-24-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.

 

Section 8.7.     Payments Due on Non-Business Days. Anything in this Agreement
or the Notes to the contrary notwithstanding, (x) except as set forth in clause
(y), any payment of interest on any Note that is due on a date that is not a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day; and (y) any payment of principal of or Make-Whole
Amount on, or the Prepayment Settlement Amount on, any Note (including principal
due on the Maturity Date of such Note) that is due on a date that is not a
Business Day shall be made on the next succeeding Business Day and shall include
the additional days elapsed in the computation of interest payable on such next
succeeding Business Day.

 

Section 8.8.     Change in Control. (a) Notice of Change in Control. The Company
will, within fifteen Business Days after any Responsible Officer has knowledge
of the occurrence of any Change in Control, give written notice of such Change
in Control or Control Event to each holder of Notes. Such notice shall contain
and constitute an offer to prepay Notes as described in subparagraph (b) of this
Section 8.8 and shall be accompanied by the certificate described in
subparagraph (e) of this Section 8.8.

 

(b)     Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraph (a) of this Section 8.8 shall be an offer to prepay, in accordance
with and subject to this Section 8.8, all, but not less than all, the Notes held
by each holder (in this case only, “holder” in respect of any Note registered in
the name of a nominee for a disclosed beneficial owner shall mean such
beneficial owner) on a date specified in such offer (the “Section 8.8 Proposed
Prepayment Date”). Such date shall be not less than 30 days and not more than 60
days after the date of such offer (if the Section 8.8 Proposed Prepayment Date
shall not be specified in such offer, the Section 8.8 Proposed Prepayment Date
shall be the first Business Day after the 45th day after the date of such
offer).

 

(c)     Acceptance/Rejection. A holder of Notes may accept the offer to prepay
made pursuant to this Section 8.8 by causing a notice of such acceptance to be
delivered to the Company not later than 15 Business Days after receipt by such
holder of the most recent offer of prepayment. A failure by a holder of Notes to
respond to an offer to prepay made pursuant to this Section 8.8 shall be deemed
to constitute rejection of such offer by such holder.

 

(d)     Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.8 shall be at 100% of the principal amount of such Notes, together
with interest on such Notes accrued to, but excluding, the date of prepayment,
but without Make-Whole Amount, Prepayment Settlement Amount or other premium.

 

-25-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(e)     Officer’s Certificate. Each offer to prepay the Notes pursuant to this
Section 8.8 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Section 8.8 Proposed Prepayment Date; (ii) that such offer is made
pursuant to this Section 8.8; (iii) the principal amount of each Note offered to
be prepaid; (iv) the interest that would be due on each Note offered to be
prepaid, accrued to, but excluding, the Section 8.8 Proposed Prepayment Date;
(v) that the conditions of this Section 8.8 have been fulfilled; and (vi) in
reasonable detail, the nature and date of the Change in Control.

 

Section 8.9.     Optional Prepayments of Non-Consenting Holders. In the event
that the Company has requested an amendment or waiver pursuant to Section 17.1
and the terms of Section 17.1(c) apply, the Company may within 60 days of such
request, at its option, upon notice as provided below, prepay all, or any part
of, the Notes held by Non-Consenting Holders, at 100% of the principal amount so
prepaid, together with interest accrued thereon to, but excluding, the date of
prepayment, but without Make-Whole Amount, Prepayment Settlement Amount or any
other premium. The Company will give each Non-Consenting Holder written notice
of each optional prepayment under this Section 8.9 not less than five
(5) Business Days and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify such date (which shall be a Business
Day), the aggregate principal amount of the Notes to be prepaid on such date,
the principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.3), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid.

 

Section 9.

Affirmative Covenants.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 9.1.     Compliance with Laws. Without limiting Section 10.4, the
Company will, and will cause each of its Subsidiaries to, comply with all laws,
ordinances or governmental rules or regulations to which each of them is subject
(including ERISA, Environmental Laws, the USA PATRIOT Act and the other laws and
regulations that are referred to in Section 5.16) and will obtain and maintain
in effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

Section 9.2.     Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain insurance with respect to their respective properties
and businesses against such casualties and contingencies, of such types, on such
terms and in such amounts (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with respect thereto) as is
customary in the case of entities engaged in the same or a similar business and
similarly situated.

 

-26-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 9.3.     Maintenance of Properties. The Company will, and will cause
each of its Subsidiaries to, maintain and keep, or cause to be maintained and
kept, their respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, provided that this
Section 9.3 shall not prevent the Company or any Subsidiary from discontinuing
the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has
concluded that such discontinuance would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

Section 9.4.     Payment of Taxes and Claims. The Company will, and will cause
each of its Subsidiaries to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent the same have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that have
or might become a Lien on properties or assets of the Company or any Subsidiary,
provided that neither the Company nor any Subsidiary need pay any such tax,
assessment, charge, levy or claim if (i) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (ii) the nonpayment of all such taxes,
assessments, charges, levies and claims would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

 

Section 9.5.     Corporate Existence, Etc. Subject to Section 10.2, the Company
will at all times preserve and keep its corporate existence in full force and
effect. Subject to Section 10.2, the Company will at all times preserve and keep
in full force and effect the corporate existence of each of its Subsidiaries
(unless merged into the Company or a Wholly-Owned Subsidiary) and all rights and
franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise would not,
individually or in the aggregate, have a Material Adverse Effect.

 

Section 9.6.     Books and Records. The Company will, and will cause each of its
Subsidiaries to, maintain proper books of record and account in conformity with
GAAP and all applicable requirements of any Governmental Authority having legal
or regulatory jurisdiction over the Company or such Subsidiary, as the case may
be. The Company will, and will cause each of its Subsidiaries to, keep books,
records and accounts which, in reasonable detail, accurately reflect all
transactions and dispositions of assets. The Company and its Subsidiaries have
devised a system of internal accounting controls sufficient to provide
reasonable assurances that their respective books, records, and accounts
accurately reflect all transactions and dispositions of assets and the Company
will, and will cause each of its Subsidiaries to, continue to maintain such
system.

 

-27-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 9.7.     Subsidiary Guarantors. (a) The Company will cause each of its
Subsidiaries (other than Foreign Subsidiaries) that guarantees or otherwise
becomes liable at any time, whether as a borrower or an additional or co -
borrower or otherwise, for or in respect of any Indebtedness under any Material
Credit Facility for which the Company is a borrower or guarantor to concurrently
therewith:

 

(i)          enter into (A) an agreement in form and substance satisfactory to
the Required Holders providing for the guaranty by such Subsidiary, on a joint
and several basis with all other such Subsidiaries providing a guaranty, of (x)
the prompt payment in full when due of all amounts payable by the Company
pursuant to the Notes (whether for principal, interest, Make-Whole Amount or
otherwise) and this Agreement, including all indemnities, fees and expenses
payable by the Company thereunder and (y) the prompt, full and faithful
performance, observance and discharge by the Company of each and every covenant,
agreement, undertaking and provision required pursuant to the Notes or this
Agreement to be performed, observed or discharged by it (a “Subsidiary
Guaranty”) or (B) a joinder to the Subsidiary Guaranty; and

 

(ii)          deliver the following to each holder of a Note:

 

(A)     an executed counterpart of such Subsidiary Guaranty or a joinder
thereto;

 

(B)     a certificate signed by an authorized responsible officer of such
Subsidiary containing representations and warranties on behalf of such
Subsidiary to the same effect, mutatis mutandis, as those contained in Sections
5.1, 5.2, 5.6 and 5.7 of this Agreement (but with respect to such Subsidiary and
such Subsidiary Guaranty rather than the Company);

 

(C)     all documents as may be reasonably requested by the Required Holders to
evidence the due organization, continuing existence and, where applicable, good
standing of such Subsidiary and the due authorization by all requisite action on
the part of such Subsidiary of the execution and delivery of such Subsidiary
Guaranty and the performance by such Subsidiary of its obligations thereunder;
and

 

(D)     an opinion of counsel reasonably satisfactory to the Required Holders
covering such matters relating to such Subsidiary and such Subsidiary Guaranty
as the Required Holders may reasonably request.

 

(b)     At the election of the Company and by written notice to each holder of
Notes, any Subsidiary Guarantor may be discharged from all of its obligations
and liabilities under its Subsidiary Guaranty and shall be automatically
released from its obligations thereunder without the need for the execution or
delivery of any other document by the holders, provided that (i) if such
Subsidiary Guarantor is a guarantor or is otherwise liable for or in respect of
any Material Credit Facility, then such Subsidiary Guarantor has been released
and discharged (or will be released and discharged concurrently with the release
of such Subsidiary Guarantor under its Subsidiary Guaranty) under such Material
Credit Facility, (ii) at the time of, and after giving effect to, such release
and discharge, no Default or Event of Default shall be existing, (iii) no amount
is then due and payable under such Subsidiary Guaranty, (iv) if in connection
with such Subsidiary Guarantor being released and discharged under any Material
Credit Facility (other than in connection with a sale of such Subsidiary or its
Equity Interests), any fee or other form of consideration is given to any holder
of Indebtedness under such Material Credit Facility specifically for such
release, the holders of the Notes shall receive equivalent consideration
substantially concurrently therewith and (v) each holder shall have received a
certificate of a Responsible Officer certifying as to the matters set forth in
clauses (i) through (iv).

 

-28-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 9.8.     Status of BDC. The Company shall at all times maintain its
status as a “business development company” under the Investment Company Act.

 

Section 9.9.     Investment Policies. The Company shall at all times be in
compliance with its Investment Policies, except to the extent that the failure
to so comply would not reasonably be expected to result in a Material Adverse
Effect.

 

Section 9.10.     Rating Confirmation. The Company covenants and agrees that, at
its sole cost and expense, it shall cause to be maintained at all times a Rating
from at least one NRSRO (but solely to the extent such a Rating is reasonably
available) that indicates that it will monitor the rating on an ongoing basis.
No later than June 30 of each year (beginning June 30, 2020) the Company further
covenants and agrees it shall provide a notice to each of the holders of the
Notes sent in the manner provided in Section 18 with respect to all then current
Ratings (but solely to the extent such Ratings are reasonably available).

 

Section 10.

Negative Covenants.

 

The Company covenants that so long as any of the Notes are outstanding:

 

Section 10.1.     Transactions with Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into directly or indirectly any transaction
or group of related transactions (including the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or any of its subsidiaries) involving payment
in excess of $1,000,000, except

 

(a)     in the ordinary course and pursuant to the reasonable requirements of
the Company’s or such Subsidiary’s business and upon fair and reasonable terms
no less favorable to the Company or such Subsidiary than would be obtainable in
a comparable arm’s-length transaction with a Person not an Affiliate;

 

(b)     transactions not prohibited under this Agreement or the Notes;

 

(c)     transactions with Affiliates that are set forth in Schedule 10.1;

 

(d)     transactions with one or more Affiliates (including co-investments) as
permitted by any SEC exemptive order (as may be amended from time to time), any
no-action letter or as otherwise permitted by applicable law, rule or regulation
or SEC staff interpretations thereof or based on advice of counsel;

 

(e)     transactions between or among, on the one hand, the Company and/or any
of its Subsidiaries, and, on the other hand, any SBIC Subsidiary or any
“downstream affiliate” (as such term is used under the rules promulgated under
the Investment Company Act) company of the Company and/or any of its
Subsidiaries at prices and on terms and conditions, taken as a whole, not
materially less favorable to the Company and/or such Subsidiaries than in good
faith is believed could be obtained on an arm’s-length basis from unrelated
third parties,

 

-29-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(f)     a transaction that has been approved by a majority of the independent
directors of the board of directors of the Company;

 

(g)     any Investment that results in the creation of an Affiliate;

 

(h)     any issuance, sale or grant of securities or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of
employment arrangements, stock options, restricted stock awards or units and
stock ownership plans or other compensation, severance or retention awards or
plans approved by the board of directors of the Company or any Subsidiary;

 

(i)     (i) any collective bargaining, employment, retention or severance
agreement or compensatory arrangement entered into by the Company or any of its
direct or indirect subsidiaries with their respective current or former
officers, directors, members of management, managers, employees, consultants or
independent contractors or those of the Company, (ii) any agreement pertaining
to the repurchase of Equity Interests pursuant to rights with current or former
officers, directors, members of management, managers, employees, consultants or
independent contractors and (iii) transactions pursuant to any employee
compensation, benefit plan, stock option plan or arrangement, any health,
disability or similar insurance plan which covers current or former officers,
directors, members of management, managers, employees, consultants or
independent contractors or any employment contract or arrangement;

 

(j)     customary compensation to Affiliates in connection with financial
advisory, financing, underwriting or placement services or in respect of other
investment banking activities and other transaction fees, which payments are
approved by the majority of the members of the board of directors (or similar
governing body) or a majority of the disinterested members of the board of
directors of the Company in good faith;

 

(k)     transactions and payments required under the definitive agreement for
any acquisition or Investment permitted under this Agreement (to the extent any
seller, employee, officer or director of an acquired entity becomes an Affiliate
in connection with such transaction);

 

(l)     the payment of customary fees and reasonable out-of-pocket costs to, and
indemnities provided on behalf of, members of the board of directors (or similar
governing body), officers, employees, members of management, managers,
consultants and independent contractors of the Company and/or any of its direct
or indirect subsidiaries in the ordinary course of business;

 

(m)     transactions with customers, clients, suppliers, joint ventures,
purchasers or sellers of goods or services or providers of employees or other
labor entered into in the ordinary course of business, which are (i) fair to the
Company and/or the applicable Subsidiary in the good faith determination of the
board of directors (or similar governing body) of the Company or the senior
management thereof or (ii) on terms at least as favorable as might reasonably be
obtained from a Person other than an Affiliate; and

 

-30-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(n)     the Company may issue and sell Equity Interests to its Affiliates.

 

Section 10.2.     Merger, Consolidation, Fundamental Changes, Etc. The Company
will not, and will not permit any Subsidiary Guarantor to, consolidate with or
merge with any other Person or convey, transfer or lease all or substantially
all of its assets in a single transaction or series of transactions to any
Person except:

 

(a)     in the case of any such transaction involving the Company, the successor
formed by such consolidation or the survivor of such merger or the Person that
acquires by conveyance, transfer or lease all or substantially all of the assets
of the Company as an entirety, as the case may be, shall be a solvent
corporation or limited liability company organized and existing under the laws
of the United States or any state thereof (including the District of Columbia),
and, if the Company is not such corporation or limited liability company, (i)
such corporation or limited liability company shall have executed and delivered
to each holder of any Notes its assumption of the due and punctual performance
and observance of each covenant and condition of this Agreement and the Notes
and (ii) such corporation or limited liability company shall have caused to be
delivered to each holder of any Notes an opinion of nationally recognized
independent counsel, or other independent counsel reasonably satisfactory to the
Required Holders, to the effect that all agreements or instruments effecting
such assumption are enforceable in accordance with their terms and comply with
the terms hereof;

 

(b)     in the case of any such transaction involving a Subsidiary Guarantor,
the successor formed by such consolidation or the survivor of such merger or the
Person that acquires by conveyance, transfer or lease all or substantially all
of the assets of such Subsidiary Guarantor as an entirety, as the case may be,
shall be (1) the Company, such Subsidiary Guarantor or another Subsidiary
Guarantor; or (2) a solvent corporation or limited liability company (other than
the Company or another Subsidiary Guarantor) that is organized and existing
under the laws of the United States or any state thereof (including the District
of Columbia) and, if such Subsidiary Guarantor is not such corporation or
limited liability company, (A) such corporation or limited liability company
shall have executed and delivered to each holder of Notes its assumption of the
due and punctual performance and observance of each covenant and condition of
the Subsidiary Guaranty of such Subsidiary Guarantor and (B) the Company shall
have caused to be delivered to each holder of Notes an opinion of nationally
recognized independent counsel, or other independent counsel reasonably
satisfactory to the Required Holders, to the effect that all agreements or
instruments effecting such assumption are enforceable in accordance with their
terms and comply with the terms hereof;

 

(c)     the Equity Interests of any Subsidiary Guarantor may be sold,
transferred or otherwise disposed of to an Obligor;

 

(d)     any Subsidiary Guarantor may be liquidated or dissolved; provided that
(i) in connection with such liquidation or dissolution, any and all of the
assets of such Subsidiary Guarantor shall be distributed or otherwise
transferred to an Obligor and (ii) the Company determines in good faith that
such liquidation is in the best interests of the Company and is not materially
disadvantageous to the holders of the Notes.

 

-31-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(e)     in the cases of clauses (a) and (b)(2) above, each Subsidiary Guarantor
under any Subsidiary Guaranty that is outstanding at the time such transaction
or each transaction in such a series of transactions occurs reaffirms its
obligations under such Subsidiary Guaranty in writing at such time pursuant to
documentation that is reasonably acceptable to the Required Holders; and

 

(f)     in the case of clause (a) above, immediately before and immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing.

 

No such conveyance, transfer or lease of substantially all of the assets of the
Company or any Subsidiary Guarantor shall have the effect of releasing the
Company or such Subsidiary Guarantor, as the case may be, or any successor
corporation or limited liability company that shall theretofore have become such
in the manner prescribed in this Section 10.2, from its liability under (x) this
Agreement or the Notes (in the case of the Company) or (y) the Subsidiary
Guaranty (in the case of any Subsidiary Guarantor), unless, in the case of the
conveyance, transfer or lease of substantially all of the assets of a Subsidiary
Guarantor, such Subsidiary Guarantor is released from its Subsidiary Guaranty in
accordance with Section 9.7(b) in connection with or immediately following such
conveyance, transfer or lease.

 

Section 10.3.     Line of Business. The Company will not and will not permit any
Subsidiary to engage in any business if, as a result, the general nature of the
business in which the Company and its Subsidiaries, taken as a whole, would then
be engaged would be substantially changed from the general nature of the
business in which the Company and its Subsidiaries, taken as a whole, are
engaged on the date of this Agreement as described in the Company’s most recent
Form 10-K, other than (i) ancillary or support businesses; (ii) any business in
or related to private credit or that other business development companies enter
into or are engaged in; or (iii) otherwise in accordance with its Investment
Policies.

 

Section 10.4.     Economic Sanctions, Etc. The Company will not, and will not
permit any Controlled Entity to (a) become (including by virtue of being owned
or controlled by a Blocked Person or Canada Blocked Person), own or control a
Blocked Person or Canada Blocked Person or (b) directly or indirectly have any
investment in or engage in any dealing or transaction (including any investment,
dealing or transaction involving the proceeds of the Notes) with any Person if
such investment, dealing or transaction (i) would cause any holder or any
affiliate of such holder to be in violation of, or subject to sanctions under,
any law or regulation applicable to such holder, or (ii) is prohibited by or
subject to sanctions under any U.S. Economic Sanctions Laws or Canadian Economic
Sanctions Laws.

 

-32-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 10.5.     Liens. The Company will not and will not permit any of its
Subsidiaries to directly or indirectly create, incur, assume or permit to exist
(upon the happening of a contingency or otherwise) any Lien on or with respect
to any property or asset (including any document or instrument in respect of
goods or accounts receivable) of the Company or any such Subsidiary, whether now
owned or held or hereafter acquired, or any income or profits therefrom, or
assign or otherwise convey any right to receive income or profits, except:

 

(a)     any Lien on any property or asset of the Company or a Subsidiary
existing on the date of this Agreement and set forth in Schedule 10.5, provided
that (i) no such Lien shall extend to any other property or asset of the Company
or any of its Subsidiaries, and (ii) any such Lien shall secure only those
obligations which it secures on the date of this Agreement and extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount thereof;

 

(b)     Liens imposed by any Governmental Authority for taxes, assessments or
charges not yet due or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company in accordance with GAAP;

 

(c)     Liens of clearing agencies, broker-dealers and similar Liens incurred in
the ordinary course of business, provided that such Liens (i) attach only to the
securities (or proceeds) being purchased or sold and (ii) secure only
obligations incurred in connection with such purchase or sale, and not any
obligation in connection with margin financing;

 

(d)     Liens imposed by law, such as materialmen’s, mechanics’, carriers’,
workmens’, storage, landlord, and repairmen’s Liens and other similar Liens
arising in the ordinary course of business and securing obligations (other than
Indebtedness for borrowed money) not yet due or that are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the books of the Company or any of its direct or indirect
subsidiaries in accordance with GAAP;

 

(e)     Liens incurred or pledges or deposits made to secure obligations
incurred in the ordinary course of business under workers’ compensation laws,
unemployment insurance or other similar social security legislation (other than
in respect of employee benefit plans subject to ERISA) or to secure public or
statutory obligations;

 

(f)     Liens securing the performance of, or payment in respect of, bids,
insurance premiums, deductibles or co-insured amounts, tenders, government or
utility contracts (other than for the repayment of borrowed money), surety,
stay, customs and appeal bonds and other obligations of a similar nature
incurred in the ordinary course of business;

 

(g)     Liens arising out of judgments or awards that have been in force for
less than the applicable period for taking an appeal so long as such judgments
or awards do not constitute an Event of Default;

 

(h)     customary rights of setoff and liens upon (i) deposits of cash in favor
of banks or other depository institutions in which such cash is maintained in
the ordinary course of business, (ii) cash and financial assets held in
securities accounts in favor of banks and other financial institutions with
which such accounts are maintained in the ordinary course of business and
(iii) assets held by a custodian in favor of such custodian in the ordinary
course of business, in the case of each of clauses (i) through (iii) above,
securing payment of fees, indemnities, charges for returning items and other
similar obligations;

 

-33-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(i)     Liens arising solely from precautionary filings of financing statements
under the Uniform Commercial Code of the applicable jurisdictions;

 

(j)     zoning restrictions, easements, rights-of-way, encroachments,
protrusions, licenses, or other restrictions on, and other minor defects or
irregularities affecting, the use of any real estate (including leasehold
title), in each case which do not interfere with or affect in any material
respect the ordinary course conduct of the business of the Company and the
Subsidiary Guarantors;

 

(k)     purchase money Liens on specific equipment and fixtures provided that
(i) such Liens only attach to such equipment and fixtures, (ii) the Indebtedness
secured thereby is incurred in the ordinary course of business to finance
equipment and fixtures and (iii) the Indebtedness secured thereby does not
exceed the lesser of the cost and the fair market value of such equipment and
fixtures at the time of the acquisition thereof;

 

(l)     deposits of money securing leases to which the Company or any Subsidiary
is a party as lessee made in the ordinary course of business;

 

(m)     Liens consisting of any (i) interest or title of a lessor or sub-lessor
under any lease of real estate not prohibited hereunder, (ii) landlord lien
permitted by the terms of any lease, (iii) restriction or encumbrance to which
the interest or title of such lessor or sub-lessor may be subject or (iv)
subordination of the interest of the lessee or sub-lessee under such lease to
any restriction or encumbrance referred to in the preceding clause (iii);

 

(n)     Liens (i) solely on any cash earnest money deposits made by the Company
and/or any of its Subsidiaries in connection with any letter of intent or
purchase agreement with respect to any Investment permitted hereunder or (ii)
consisting of an agreement to dispose of any property;

 

(o)     Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or similar
agreements entered into in the ordinary course of business of the Company and/or
any Subsidiary;

 

(p)     leases, licenses, subleases or sublicenses granted to others in the
ordinary course of business which do not (i) interfere in any material respect
with the business of the Company and its Subsidiaries or (ii) secure any
Indebtedness;

 

(q)     Liens on Securities that are the subject of repurchase agreements
constituting permitted Investments arising out of such repurchase transaction;

 

(r)     Liens arising (i) out of conditional sale, title retention, consignment
or similar arrangements for the sale of any assets or property in the ordinary
course of business or (ii) by operation of law under Article 2 of the UCC (or
similar law of any jurisdiction);

 

-34-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(s)     Liens in favor of any Obligor;

 

(t)     Liens securing obligations under Swap Contracts permitted under
Section 10.7(c);

 

(u)     (i) Liens on Equity Interests of joint ventures or non-Obligors securing
capital contributions to, or obligations of, such Persons and (ii) customary
rights of first refusal and tag, drag and similar rights in joint venture
agreements and agreements with respect to non-Obligors;

 

(v)     Liens on cash or Cash Equivalents arising in connection with the
defeasance, discharge or redemption of Indebtedness;

 

(w)     any encumbrance or restriction assumed in connection with an acquisition
of the property or Equity Interests of any Person, so long as such encumbrance
or restriction relates solely to the property so acquired (or to the Person or
Persons (and its or their subsidiaries) bound thereby) and was not created in
connection with or in anticipation of such acquisition;

 

(x)     any right of offset, banker’s lien, security interest or other like
right against any Portfolio Investments held by a custodian;

 

(y)     Liens on Equity Interests in any SBIC Subsidiary created in favor of the
SBA or its designee;

 

(z)     Liens on Equity Interests in any Structured Subsidiary in favor of and
required by any lender providing third-party financing to such Structured
Subsidiary;

 

(aa)     prior to release of the relevant escrow, Liens on cash or Cash
Equivalents (and the related escrow accounts) constituting the proceeds, and the
related prefunding of interest, premiums and other customary amounts, from an
issuance into (and pending the release from) escrow,

 

(bb)     Liens securing collateral posted as margin to secure obligations under
any Indebtedness so long as, after giving pro forma effect to such Liens, the
Company is in compliance with Section 10.8;

 

(cc)     Liens on Special Equity Interests included in the Investments of the
Company or any of its subsidiaries but only to the extent securing obligations
in the manner provided in the definition of “Special Equity Interests”;

 

(dd)     Liens on assets securing Indebtedness so long as, after giving pro
forma effect to such Liens, the Company is in compliance with Section 10.8; and

 

(ee)     Liens on assets securing other obligations in an aggregate principal
amount at any time outstanding not to exceed $500,000.

 

-35-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 10.6.     Restricted Payments. The Company will not, nor will it permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, except that any Obligor may declare and
pay:

 

(a)     dividends with respect to the capital stock of the Company or such
Subsidiary (including, for the avoidance of doubt, pursuant to any distribution
or dividend reinvestment plan of the Company or such Subsidiary) to the extent
payable in additional shares of the stock, units or interests or the Company or
such Subsidiary;

 

(b)     Restricted Payments to the Company or any Subsidiary or, other than the
Company, to each other owner of Equity Interests of such Subsidiary based on
their relative ownership interests;

 

(c)     Restricted Payments in or with respect to any taxable year of the
Company (or any calendar year, as relevant) in amounts not to exceed 125% of the
higher of (x) the net investment income of the Company for the applicable year
determined in accordance with GAAP and as specified in the annual financial
statements most recently delivered pursuant to Section 7.1(b) and (y) for so
long as the Company maintains its status as a RIC under the Code, the amounts
that are required to be distributed to: (i) allow the Company to satisfy the
minimum distribution requirements that would be imposed by Section 852(a) of the
Code (or any successor thereto) to maintain its eligibility to be taxed as a RIC
for any such taxable year, (ii) reduce to zero for any such taxable year the
Company’s liability for federal income taxes imposed on (A) its investment
company taxable income pursuant to Section 852(b)(1) of the Code (or any
successor thereto) and (B) its net capital gain pursuant to Section 852(b)(3) of
the Code (or any successor thereto), and (iii) reduce to zero the Company’s
liability for federal excise taxes for any such calendar year imposed pursuant
to Section 4982 of the Code (or any successor thereto);

 

(d)     any settlement in respect of a conversion feature in any convertible
security that may be issued by such Obligor to the extent made through the
delivery of common stock (except in the case of interest (which may be payable
in cash));

 

(e)     Restricted Payments to pay general administrative costs and expenses
(including corporate overhead, legal or similar expenses and salary, bonus and
other benefits payable to directors, officers, employees, members of management,
managers and/or consultants of any Obligor or any of its subsidiaries) and
franchise fees and taxes and similar fees, taxes and expenses required to enable
the recipient of such Restricted Payment to maintain its organizational
existence or qualification to do business, in each case, which are reasonable
and customary and incurred in the ordinary course of business, plus any
reasonable and customary indemnification claims made by directors, officers,
members of management, managers, employees or consultants of any such recipient,
in each case, to the extent attributable to the ownership or operations of the
Company and its subsidiaries;

 

(f)     Restricted Payments to finance or acquire any Investment permitted
hereunder;

 

-36-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(g)     Restricted Payments to pay salary, bonus, severance and other benefits
payable to current or former directors, officers, members of management,
managers, employees or consultants of any Obligor or any of its subsidiaries;

 

(h)     Restricted Payments for the repurchase, redemption, retirement or other
acquisition or retirement for value of Equity Interests of the Company or any
subsidiary held by any future, present or former employee, director, member of
management, officer, manager or consultant (or any Affiliate thereof) of the
Company or any subsidiary;

 

(i)     Restricted Payments (i) to enable the recipient of such Restricted
Payment to make cash payments in lieu of the issuance of fractional shares in
connection with the exercise of warrants, options or other securities
convertible into or exchangeable for Equity Interests of such recipient and (ii)
consisting of (A) payments made or expected to be made in respect of withholding
or similar taxes payable by any future, present or former officers, directors,
employees, members of management, managers or consultants of the Company or any
of its subsidiaries and/or (B) repurchases of stock, units or interests in
consideration of the payments described in sub-clause (A) above, including
demand repurchases in connection with the exercise of stock options;

 

(j)     Restricted Payments for the repurchase of Equity Interests upon the
exercise of warrants, options or other securities convertible into or
exchangeable for Equity Interests if such Equity Interests represents all or a
portion of the exercise price of, or tax withholdings with respect to, such
warrants, options or other securities convertible into or exchangeable for
Equity Interests as part of a “cashless” exercise;

 

(k)     to the extent constituting a Restricted Payment, any other transaction
permitted under Section 10;

 

(l)     any dividend or consummation of any redemption within 60 days after the
date of the declaration thereof or the provision of a redemption notice with
respect thereto, as the case may be, if at the date of such declaration or
notice, the dividend or redemption notice would have complied with the
provisions hereof;

 

(m)     Restricted Payments solely in the form of Qualified Equity Interests;
and

 

(n)     any Restricted Payments, so long as (i) as of the date of such
Restricted Payment, no Event of Default has occurred and is continuing and (ii)
after giving pro forma effect to such Restricted Payment, the Company is in
compliance with Section 10.8.

 

Section 10.7.     Investments. The Company will not, nor will it permit any of
its Subsidiaries to, acquire, make or enter into, or hold, any Investments
except:

 

(a)     operating deposit accounts with banks;

 

(b)     Investments by the Company and its Subsidiaries in the Company and its
subsidiaries;

 

-37-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(c)     Swap Contracts entered into in the ordinary course of the Company’s or
any of its subsidiaries’ business for financial planning and not for speculative
purposes;

 

(d)     Investments (including, without limitation, any Portfolio Investments)
by the Company and its Subsidiaries to the extent such Investments are permitted
under the Investment Company Act (to the extent such applicable Person is
subject to the Investment Company Act) and the Company’s Investment Policies;

 

(e)     Equity Interests in (or capital contributions to) Financing Subsidiaries
and Foreign Subsidiaries;

 

(f)     Investments in cash and Cash Equivalents;

 

(g)     Investments in Financing Subsidiaries;

 

(h)     Investments described on Schedule 10.7 hereto and any modification,
replacement, renewal or extension of any such Investment so long as no such
modification, renewal or extension thereof increases the amount of such
Investment except by the terms thereof or as otherwise permitted by this
Section 10.7;

 

(i)     Investments (i) constituting deposits, prepayments and/or other credits
to suppliers, (ii) made in connection with obtaining, maintaining or renewing
client and customer contracts and/or (iii) in the form of advances made to
distributors, suppliers, licensors and licensees, in each case, in the ordinary
course of business or, in the case of clause (iii), to the extent necessary to
maintain the ordinary course of supplies to the Company or any of its
subsidiaries;

 

(j)     (i) Permitted Acquisitions and (ii) Investments in subsidiaries of the
Company that are not Subsidiaries in amounts required to permit such
subsidiaries to consummate Permitted Acquisitions;

 

(k)     Investments received in lieu of cash in connection with any disposition
of assets;

 

(l)     Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business;

 

(m)     Investments in the ordinary course of business consisting of
endorsements for collection or deposit;

 

(n)     Investments (including debt obligations and Equity Interests) received
(i) in connection with the bankruptcy or reorganization of any Person, (ii) in
settlement of delinquent obligations of, or other disputes, (iii) upon
foreclosure with respect to any secured Investment or other transfer of title
with respect to any secured Investment and/or (iv) as a result of the
settlement, compromise, resolution of litigation, arbitration or other disputes;

 

-38-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(o)     Investments to the extent that payment therefor is made solely with
Equity Interests of the Company or Equity Interests (other than Disqualified
Equity Interests) of any of its subsidiaries;

 

(p)     (i) Investments acquired after the date of this Agreement, or of any
Person acquired by, or merged into or consolidated or amalgamated with, the
Company or any of its subsidiaries after the date of this Agreement, in each
case as part of an Investment otherwise permitted by this Section 10.7 to the
extent that such Investments were not made in contemplation of or in connection
with such acquisition, merger, amalgamation or consolidation and were in
existence on the date of the relevant acquisition, merger, amalgamation or
consolidation and (ii) any modification, replacement, renewal or extension of
any Investment permitted under clause (i) so long as no such modification,
replacement, renewal or extension thereof increases the amount of such
Investment except as otherwise permitted by this Section 10.7;

 

(q)     (i) Guarantees of leases (other than Capital Leases) or of other
obligations not constituting Indebtedness and (ii) Guarantees of obligations of
the Company and/or its subsidiaries or any Portfolio Investments;

 

(r)     Investments in subsidiaries and joint ventures;

 

(s)     unfunded pension fund and other employee benefit plan obligations and
liabilities to the extent that they are permitted to remain unfunded under
applicable law;

 

(t)     Investments in the Company, any subsidiary and/or any joint venture in
connection with intercompany cash management arrangements and related activities
in the ordinary course of business;

 

(u)     to the extent constituting an Investment, any other transaction
permitted under Section 10;

 

(v)     loans and advances of payroll payments or other compensation to present
or former employees, directors, members of management, officers, managers or
consultants of the Company or any of its subsidiaries;

 

(w)     loans or advances to present or former employees, directors, members of
management, officers, managers or consultants or independent contractors of the
Company or any of its subsidiaries and/or any joint venture;

 

(x)     additional Investments up to but not exceeding $10,000,000 in the
aggregate (for purposes of this clause (i), the aggregate amount of an
Investment at any time shall be deemed to be equal to (A) the aggregate amount
of cash, together with the aggregate fair market value of property loaned,
advanced, contributed, transferred or otherwise invested that gives rise to such
Investment, minus (B) the aggregate amount of dividends, distributions or other
payments received in cash in respect of such Investment; provided that in no
event shall the aggregate amount of any Investment be less than zero, and
provided further that the amount of any Investment shall not in any event be
reduced by reason of any write-off of such Investment, nor increased by way of
any increase in the amount of earnings retained in the Person in which such
Investment is made that have not been dividended, distributed or otherwise paid
out); and

 

-39-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(y)     any Investment, so long as, as of the date of such Investment, no Event
of Default has occurred and is continuing.

 

Section 10.8.     Certain Financial Covenants.

 

(a)     Minimum Shareholders’ Equity. The Company will not permit Shareholders’
Equity at the last day of any fiscal quarter of the Company to be less than
$705,692,650 plus 65% of the net proceeds of the sale of Equity Interests by the
Company (excluding issuances pursuant to any equity or compensation plan or on
account of any convertible debt) after the date of the First Closing.

 

(b)     Net Debt to Equity Ratio. The Company will not permit the Net Debt to
Equity Ratio as of the last day of any fiscal quarter of the Company to be
greater than 2.00 to 1.00.

 

(c)     Unencumbered Asset Coverage Ratio. The Company will not permit the
Unencumbered Asset Coverage Ratio as of the last Business Day of any fiscal
quarter to be less than 1.25:1.00.

 

(d)     Cure Right. If, within thirty (30) calendar days after delivery of an
officer’s certificate delivered pursuant to Section 7.2(a), which certificate
demonstrates a Financial Covenant Default, the Company may present the Required
Holders with a reasonably feasible plan for the Company to offer or sell Equity
Interests or raise Indebtedness of the Company or any of its subsidiaries (the
“Cure Right”), the proceeds of which shall be deemed received immediately prior
to such default and used immediately prior to such default as specified in such
plan (for the avoidance of doubt, if any principal of the Notes is paid down in
accordance with such plan, no prepayment penalty, Prepayment Settlement Amount
or Make-Whole Amount shall be due or owing) to enable such Financial Covenant
Default to be cured within one hundred twenty (120) calendar days after the
expiration of the 30-day period above, then, once such plan is submitted, the
Company shall be deemed to have complied with the relevant covenant under
Section 10.8 that gave rise to such Financial Covenant Default as of the
relevant date of determination with the same effect as though there had been no
failure to comply therewith at such date, and the applicable Financial Covenant
Default that had occurred shall be deemed cured for the purposes of this
Agreement; provided, that if the transaction specified in such plan is not
consummated within such 120-day period, it shall constitute an immediate Event
of Default. Notwithstanding anything herein to the contrary, (i) no more than
three (3) Cure Rights may be exercised during the term of this Agreement, and
(ii) the Cure Right shall not be exercised in any two (2) consecutive fiscal
quarters.

 

-40-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 11.

Events of Default.

 

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

 

(a)     the Company defaults in the payment of any principal or Prepayment
Settlement Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or

 

(b)     the Company defaults in the payment of any interest on any Note for more
than five Business Days after the same becomes due and payable; or

 

(c)     (i) subject to Section 10.8(d), the Company defaults in the performance
of or compliance with any term contained in Section 10.8(a), (b) or (c) or
(ii) any covenant in a Supplement which specifically provides that it shall have
the benefit of this paragraph (c); or

 

(d)     the Company or any Subsidiary Guarantor defaults in the performance of
or compliance with any term contained herein (other than those referred to in
Sections 11(a), (b) and (c)), in any Supplement or in any Subsidiary Guaranty
and such default is not remedied within 30 days after the earlier of (i) a
Responsible Officer obtaining actual knowledge of such default and (ii) the
Company receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a “notice of default” and to refer
specifically to this Section 11(d)); or

 

(e)     (i) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or any Supplement
or in any writing furnished in connection with the transactions contemplated
hereby proves to have been false or incorrect in any material respect on the
date as of which made, or (ii) any representation or warranty made in writing by
or on behalf of any Subsidiary Guarantor or by any officer of such Subsidiary
Guarantor in any Subsidiary Guaranty or in any writing furnished in connection
with such Subsidiary Guaranty proves to have been false or incorrect in any
material respect on the date as of which made; or

 

-41-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(f)     (i) the Company or any Subsidiary Guarantor is in default (as principal
or as guarantor or other surety) in the payment of any principal of or premium
or make-whole amount or interest on any Indebtedness for borrowed money that is
outstanding in an aggregate principal amount of at least $100,000,000 (or its
equivalent in the relevant currency of payment) beyond any period of grace
provided with respect thereto, or (ii) the Company or any Subsidiary Guarantor
is in default in the performance of or compliance with any financial or negative
covenant (other than (1) any default set forth in clause (i) above, or (2) any
default that is immaterial to the operations or performance of the Company or
such Subsidiary Guarantor and that is not reasonably likely to have a material
impact on the operations or performance of the Company or such Subsidiary
Guarantor) of any evidence of any Indebtedness for borrowed money in an
aggregate outstanding principal amount of at least $100,000,000 (or its
equivalent in the relevant currency of payment) or of any mortgage, indenture or
other agreement relating thereto, and, in each case, as a consequence of such
default such Indebtedness has become, or has been declared (or one or more
Persons are entitled to declare such Indebtedness to be), due and payable before
its stated maturity or before its regularly scheduled dates of payment, or
(iii) the Company or any Subsidiary Guarantor is in default in the performance
of or compliance with any other term of any evidence of any Indebtedness for
borrowed money (including any indenture or mortgage) in an aggregate outstanding
principal amount of at least $100,000,000 (or its equivalent in the relevant
currency of payment) or any other condition exists, and as a consequence of such
default or condition such Indebtedness has become, or has been declared, due and
payable before its stated maturity or before its regularly scheduled dates of
payment, or (iv) as a consequence of the occurrence or continuation of any event
or condition (other than the passage of time or the right of the holder of such
Indebtedness to convert such Indebtedness into equity interests), the Company or
any Subsidiary Guarantor has become obligated to purchase or repay Indebtedness
for borrowed money before its regular maturity or before its regularly scheduled
dates of payment in an aggregate outstanding principal amount of at least
$100,000,000 (or its equivalent in the relevant currency of payment); provided
that this clause (f) shall not apply to (1) secured Indebtedness that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness, the net cash proceeds of which are used to repay
such Indebtedness within thirty (30) days after such sale or transfer; or (2)
convertible debt that becomes due as a result of a conversion or redemption
event, other than as a result of an “event of default” (as defined in the
documents governing such convertible debt); or

 

(g)     the Company or any Significant Subsidiary (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or

 

(h)     a court or other Governmental Authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its Significant
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or any of its
Subsidiaries, or any such petition shall be filed against the Company or any of
its Significant Subsidiaries and such petition shall not be dismissed within 60
days; or

 

-42-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(i)     any event occurs with respect to the Company or any Subsidiary which
under the laws of any jurisdiction is analogous to any of the events described
in Section 11(g) or Section 11(h), provided that the applicable grace period, if
any, which shall apply shall be the one applicable to the relevant proceeding
which most closely corresponds to the proceeding described in Section 11(g) or
Section 11(h); or

 

(j)     one or more final judgments or orders for the payment of money
aggregating in excess of $150,000,000 (or its equivalent in the relevant
currency of payment) (to the extent not covered by independent third-party
insurance or by an enforceable indemnity) are rendered against one or more of
the Company and its Significant Subsidiaries and which judgments are not, within
60 days after entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within 60 days after the expiration of such stay; or

 

(k)     if (i) any Pension Plan shall fail to satisfy the minimum funding
standards of section 303 of ERISA or section 430 of the Code for any plan year
or part thereof or a waiver of such standards or extension of any amortization
period is sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Pension Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings under
ERISA section 4042 to terminate or appoint a trustee to administer any Pension
Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a
Pension Plan may become a subject of any such proceedings, (iii) there is any
“amount of unfunded benefit liabilities” (within the meaning of section
4001(a)(18) of ERISA) under one or more Pension Plans, determined in accordance
with Title IV of ERISA, (iv) the aggregate present value of accrued benefit
liabilities under all funded Non-U.S. Plans exceeds the aggregate current value
of the assets of such Non-U.S. Plans allocable to such liabilities, (v) the
Company or any ERISA Affiliate shall have incurred or is reasonably expected to
incur any liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, (vi) the Company
or any ERISA Affiliate withdraws from any Multiemployer Plan, (vii) the Company
or any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder, (viii) the Company or any
Subsidiary fails to administer or maintain a Non-U.S. Plan in compliance with
the requirements of any and all applicable laws, statutes, rules, regulations or
court orders or any Non-U.S. Plan is involuntarily terminated or wound up, or
(ix) the Company or any Subsidiary becomes subject to the imposition of a
financial penalty (which for this purpose shall mean any tax, penalty or other
liability, whether by way of indemnity or otherwise) with respect to one or more
Non-U.S. Plans; and any such event or events described in clauses (i) through
(ix) above, either individually or together with any other such event or events,
would reasonably be expected to have a Material Adverse Effect. As used in this
Section 11(k), the terms “employee benefit plan” and “employee welfare benefit
plan” shall have the respective meanings assigned to such terms in section 3 of
ERISA; or

 

(l)     (i) any Subsidiary Guaranty shall cease to be in full force and effect
in any material respect, (ii) any Subsidiary Guarantor or any Person acting on
behalf of any Subsidiary Guarantor shall contest in any manner the validity,
binding nature or enforceability of any Subsidiary Guaranty, or (iii) the
obligations of any Subsidiary Guarantor under any Subsidiary Guaranty are not or
cease to be legal, valid, binding and enforceable in accordance with the terms
of such Subsidiary Guaranty, except in the cases of clauses (i) and (ii) above
pursuant to a transaction permitted hereunder.

 

-43-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 12.

Remedies on Default, Etc.

 

Section 12.1.     Acceleration. (a) If an Event of Default with respect to the
Company described in Section 11(g), (h) or (i) (other than an Event of Default
described in clause (i) of Section 11(g) or described in clause (vi) of
Section 11(g) by virtue of the fact that such clause encompasses clause (i) of
Section 11(g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.

 

(b)     If any other Event of Default has occurred and is continuing, the
Super-Majority Holders may at any time at their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.

 

(c)     If any Event of Default described in Section 11(a) or (b) has occurred
and is continuing, any holder or holders of Notes at the time outstanding
affected by such Event of Default may at any time, at its or their option, by
notice or notices to the Company, declare all the Notes held by it or them to be
immediately due and payable.

 

Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon (including interest accrued thereon at the Default Rate) and (y) the
Prepayment Settlement Amount determined in respect of such principal amount,
shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby waived.
The Company acknowledges, and the parties hereto agree, that each holder of a
Note has the right to maintain its investment in the Notes free from repayment
by the Company (except as herein specifically provided for) and that the
provision for payment of a Prepayment Settlement Amount by the Company in the
event that the Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.

 

Section 12.2.     Holder Action. Each Purchaser and each holder of a Note agrees
that it shall not take or institute any actions or proceedings, judicial or
otherwise, for any right or remedy against the Company or any Subsidiary
Guarantor or any other obligor under this Agreement or any of the Notes
(including the exercise of any right of setoff, rights on account of any
banker’s lien or similar claim or other rights of self-help), or institute any
actions or proceedings, or otherwise commence any remedial procedures, with
respect to any property of any Obligor, except as provided in Section 12.1(c),
without the prior written consent of the Super-Majority Holders. The provisions
of this Section 12.2 are for the sole benefit of the holders of the Notes and
shall not afford any right to, or constitute a defense available to, the
Obligors.

 

-44-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 12.3.     Rescission. At any time after any Notes have been declared due
and payable pursuant to Section 12.1(b) or (c), the Required Holders, by written
notice to the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Prepayment Settlement Amount, if any, on any Notes that are due
and payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Prepayment Settlement Amount, if any, and
(to the extent permitted by applicable law) any overdue interest in respect of
the Notes, at the Default Rate, (b) neither the Company nor any other Person
shall have paid any amounts which have become due solely by reason of such
declaration, (c) all Events of Default and Defaults, other than non-payment of
amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 17, and (d) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to the
Notes. No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right consequent
thereon.

 

Section 12.4.     No Waivers or Election of Remedies, Expenses, Etc. No course
of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder’s rights, powers or remedies. Without limiting the obligations of
the Company under Section 15, the Company will pay to on demand such further
amount as shall be sufficient to cover all reasonable and documented
out-of-pocket costs and expenses of up to one firm of outside counsel for all of
the holders of the Notes collectively incurred in any enforcement or collection
under this Section 12.

 

Section 13.

Registration; Exchange; Substitution of Notes.

 

Section 13.1.     Registration of Notes. The Company shall keep at its principal
executive office a register for the registration and registration of transfers
of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. If any holder of one or more Notes
is a nominee, then (a) the name and address of the beneficial owner of such Note
or Notes shall also be registered in such register as an owner and holder
thereof and (b) at any such beneficial owner’s option, either such beneficial
owner or its nominee may execute any amendment, waiver or consent pursuant to
this Agreement. Prior to due presentment for registration of transfer, the
Person in whose name any Note shall be registered shall be deemed and treated as
the owner and holder thereof for all purposes hereof, and the Company shall not
be affected by any notice or knowledge to the contrary. The Company shall give
to any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

 

Section 13.2.     Transfer and Exchange of Notes.

 

(a)     Subject to clause (b) below, any registered holder of a Note or a
Purchaser (an “Assigning Party”) may assign to one or more assignees (other than
a Competitor) (an “Assignee”) all or a portion of its rights and obligations
under its Note and/or under this Agreement.

 

-45-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(b)     Any such assignment or transfer shall be subject to the following
conditions: (i) the Assigning Party shall deliver to the Company a written
instrument of transfer duly executed by the Assigning Party or such Assigning
Party’s attorney duly authorized in writing and accompanied by the relevant
name, address and other information for notices of each transferee of such Note
or part thereof; (ii) the Assignee shall have made the representations set forth
in Section 6 to the Company; (iii) an exemption from registration of the Notes
under the Securities Act is available; and (iv) if requested by the Company, the
Assigning Party shall have delivered to the Company such legal opinions,
certifications or other evidence to determine that such assignment or transfer
is being made in compliance with the Securities Act and applicable state
securities laws, in each case at the sole expense of the Assigning Party.

 

(c)     Upon satisfaction of the conditions set forth in clause (b) above and
surrender of any Note to the Company at the address and to the attention of the
designated officer (all as specified in Section 18(iii)), for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or such holder’s attorney duly authorized in
writing and accompanied by the relevant name, address and other information for
notices of each transferee of such Note or part thereof), within 10 Business
Days thereafter, the Company shall execute and deliver, at the Company’s expense
(except as provided below), one or more new Notes of the same Series (and of the
same tranche if such Series has separate tranches) (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Schedule 1(a) or Schedule 1(b), as applicable, or attached to the
applicable Supplement with respect to any Additional Notes. Each such new Note
shall be dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes. Notes shall not be transferred in denominations of
less than $100,000, provided that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes of a tranche, one Note of
such tranche may be in a denomination of less than $100,000. Any transferee, by
its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representations set forth in Section 6.

 

Section 13.3.     Replacement of Notes. Upon receipt by the Company at the
address and to the attention of the designated officer (all as specified in
Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of
and the loss, theft, destruction or mutilation of any Note (which evidence shall
be, in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation in
the form of a lost note affidavit), and

 

(a)     in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or Additional Purchaser or another holder of a Note
with a minimum net worth of at least $50,000,000 or a Qualified Institutional
Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to be
satisfactory), or

 

-46-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(b)     in the case of mutilation, upon surrender and cancellation thereof,

 

within 10 Business Days thereafter, the Company at its own expense shall execute
and deliver, in lieu thereof, a new Note of the same Series (and of the same
tranche if such Series has separate tranches), dated and bearing interest from
the date to which interest shall have been paid on such lost, stolen, destroyed
or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.

 

Section 14.

Payments on Notes.

 

Section 14.1.     Place of Payment. Subject to Section 14.2, payments of
principal, Prepayment Settlement Amount, if any, and interest becoming due and
payable on the Notes shall be made in New York, New York at the principal office
of the Company in such jurisdiction. The Company (or its agent or sub-agent) may
at any time, by notice to each holder of a Note, change the place of payment of
the Notes so long as such place of payment shall be either the principal office
of the Company, the principal office of the Company’s agent or sub-agent in such
jurisdiction or the principal office of a bank or trust company in such
jurisdiction.

 

Section 14.2.     Payment by Wire Transfer. So long as any Purchaser or
Additional Purchaser or its nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company (or its agent or sub-agent) will pay all sums becoming due
on such Note for principal, Prepayment Settlement Amount, if any, interest and
all other amounts becoming due hereunder by the method and at the address
specified for such purpose below such Purchaser’s name in the Purchaser Schedule
or, in the case of any Additional Purchaser, Schedule A attached to any
Supplement to which such Additional Purchaser is a party or by such other method
or at such other address as such Purchaser or Additional Purchaser shall have
from time to time specified to the Company in writing for such purpose, without
the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, such
Purchaser or Additional Purchaser shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company at its principal
executive office or at the place of payment most recently designated by the
Company pursuant to Section 14.1. Prior to any sale or other disposition of any
Note held by a Purchaser or Additional Purchaser or its nominee, such Person
will, at its election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes of the same tranche
pursuant to Section 13.2. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by a Purchaser or Additional Purchaser under
this Agreement or any Supplement and that has made the same agreement relating
to such Note as the Purchasers have made in this Section 14.2.

 

-47-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 14.3.     Tax Forms. Any holder that is entitled to an exemption from or
reduction of withholding Tax with respect to payments made under any Note shall
deliver to the Company, at the time or times reasonably requested by the
Company, such properly completed and executed documentation reasonably requested
by the Company as will permit such payments to be made without withholding or at
a reduced rate of withholding. In addition, any holder, if reasonably requested
by the Company, shall deliver such other documentation prescribed by applicable
law or reasonably requested by the Company as will enable the Company whether or
not such holder is subject to backup withholding or information reporting
requirements (including FATCA). Without limiting the generality of the
foregoing, any holder that is a United States person shall deliver to the
Company on or before the date on which such holder obtains a Note (and from time
to time thereafter upon the reasonable request of the Company), executed copies
of IRS Form W-9 certifying that such holder is exempt from U.S. federal backup
withholding tax. Any holder that is a not United States person shall deliver to
the Company on or before the date on which such holder obtains a Note (and from
time to time thereafter upon the reasonable request of the Company), executed
copies of the applicable IRS Form W-8 and any documentation prescribed by
applicable law as a basis for claiming exemption (if any) from or a reduction
(if any) in U.S. federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by applicable law to permit the
Company to determine the withholding or deduction required to be made. If a
payment made to a holder under any Note would be subject to U.S. federal
withholding Tax imposed by FATCA if such holder were to fail to comply with the
applicable reporting requirements of FATCA (including those contained in Section
1471(b) or 1472(b) of the Code, as applicable), such holder shall deliver to the
Company at the time or times prescribed by law and at such time or times
reasonably requested by the Company such documentation prescribed by applicable
law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Company as may be necessary
for the Company to comply with its obligations under FATCA and to determine that
such holder has complied with such holder’s obligations under FATCA or to
determine the amount, if any, to deduct and withhold from such payment. For
purposes of this Section 14.3, “FATCA” shall include any amendments made to
FATCA after the date of this Agreement.

 

Section 15.

Expenses, Etc.

 

Section 15.1.     Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all reasonable and
documented out-of-pocket costs and expenses (but limited, in the case of
attorneys’ fees and expenses, to the reasonable and documented out-of-pocket
attorneys’ fees of one special counsel for, collectively, the Purchasers (and
Additional Purchasers under any Supplement) and each other holder of a Note,
taken as a whole, and, if reasonably required by the Required Holders, one local
counsel in each relevant jurisdiction) incurred by the Purchasers, the
Additional Purchasers, if any, and each other holder of a Note in connection
with such transactions and in connection with any amendments, waivers or
consents under or in respect of this Agreement (including any Supplement), any
Subsidiary Guaranty or the Notes (whether or not such amendment, waiver or
consent becomes effective), including: (a) the costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend) any
rights under this Agreement, any Subsidiary Guaranty or the Notes or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement (including any Supplement), any
Subsidiary Guaranty or the Notes, or by reason of being a holder of any Note,
(b) the costs and expenses, including financial advisors’ fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary or
in connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes and any Subsidiary Guaranty and (c) the
costs and expenses incurred in connection with the initial filing of this
Agreement and all related documents and financial information with the SVO
provided, that such costs and expenses under this clause (c) shall not exceed
$3,500. If required by the NAIC, the Company shall obtain and maintain at its
own cost and expense a Legal Entity Identifier (LEI).

 

-48-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

The Company will pay, and will save each Purchaser, Additional Purchaser and
each other holder of a Note harmless from, (i) all claims in respect of any
fees, costs or expenses, if any, of brokers and finders (other than those, if
any, retained by a Purchaser and an Additional Purchaser, or other holder in
connection with its purchase of the Notes), and (ii) any judgment, liability,
claim, order, decree, fine, penalty, cost, fee, expense (but limited, in the
case of attorneys’ fees and expenses, to the reasonable and documented
out-of-pocket attorneys’ fees of one special counsel for, collectively, the
Purchasers, the Additional Purchasers, if any, and each other holder of a Note,
taken as a whole) or obligation resulting from the consummation of the
transactions contemplated hereby, including the use of the proceeds of the Notes
by the Company, in each case, other than any such judgment, liability, claim,
order, decree, fine, penalty, cost, fee, expense (including reasonable
attorneys’ fees and expenses) or obligation that resulted from (x) the bad
faith, gross negligence or willful misconduct or breach of this Agreement or any
Note by such Purchaser or such holder of a Note or (y) a claim between a
Purchaser and an Additional Purchaser, or holder of a Note, on the one hand, and
any other Purchaser or holder of a Note, on the other hand (other than claims
arising out of any act or omission by the Company and/or its Affiliates).
Notwithstanding anything to the contrary, the Company shall not be liable to a
Purchaser and an Additional Purchaser, or holder of a Note for any special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of the transactions
contemplated hereunder or under any Note asserted by a Purchaser and an
Additional Purchaser, or a holder of a Note against the Company or any of its
Affiliates.

 

Section 15.2.     Certain Taxes. The Company agrees to pay all stamp,
documentary or similar taxes or fees which may be payable in respect of the
execution and delivery or the enforcement of this Agreement (including any
Supplement), or any Subsidiary Guaranty or the execution and delivery (but not
the transfer) or the enforcement of any of the Notes in the United States or any
other jurisdiction where the Company or any Subsidiary Guarantor has assets or
of any amendment of, or waiver or consent under or with respect to, this
Agreement (including any Supplement), or any Subsidiary Guaranty or of any of
the Notes, and to pay any value added tax due and payable in respect of
reimbursement of costs and expenses by the Company pursuant to this Section 15,
and will save each holder of a Note to the extent permitted by applicable law
harmless against any loss or liability resulting from nonpayment or delay in
payment of any such tax or fee required to be paid by the Company hereunder.

 

Section 15.3.     Survival. The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement any Supplement, any Subsidiary
Guaranty or the Notes, and the termination of this Agreement.

 

-49-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 16.

Survival of Representations and Warranties; Entire Agreement.

 

All representations and warranties contained herein or in any Supplement shall
survive the execution and delivery of this Agreement, such Supplement and the
Notes, the purchase or transfer by any Purchaser or any Additional Purchaser of
any Note or portion thereof or interest therein and the payment of any Note, and
may be relied upon by any subsequent holder of a Note, regardless of any
investigation made at any time by or on behalf of such Purchaser or any
Additional Purchaser or any other holder of a Note. All statements contained in
any certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement or any Supplement shall be deemed representations and
warranties of the Company under this Agreement. Subject to the preceding
sentence, this Agreement, the Notes and any Subsidiary Guaranties embody the
entire agreement and understanding between each Purchaser and Additional
Purchaser and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.

 

Section 17.

Amendment and Waiver.

 

Section 17.1.     Requirements.

 

(a)     Amendments. Subject to Section 17.1(c), this Agreement (including any
Supplement) and the Notes may be amended, and the observance of any term hereof
or of the Notes may be waived (either retroactively or prospectively), only with
the written consent of the Company and the Required Holders, except that:

 

(1)     no amendment or waiver of any of Sections 1, 2, 3, 4, 5, 6 or 21 hereof
or the corresponding provision of any Supplement, or any defined term (as it is
used in any such Section or such corresponding provision of any Supplement),
will be effective as to any Purchaser or Additional Purchaser unless consented
to by such Purchaser or Additional Purchaser in writing; and

 

(2)     no amendment or waiver may, without the written consent of each
Purchaser directly and adversely affected thereby, Additional Purchaser directly
and adversely affected thereby and the holder of each Note directly and
adversely affected thereby at the time outstanding, (i) subject to Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of (x) interest on the Notes or (y) the
Prepayment Settlement Amount, in each case, with respect to such Series of
Notes; (ii) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any amendment or waiver, or (iii)
amend any of Sections 8 (except as set forth in the second sentence of Section
8.2 (or such corresponding provision of any Supplement and Section 17.1(a)(3)),
11(a), 11(b), 12, 17 or 20; and

 

(3)     Section 8.5 may be amended or waived to permit offers to purchase made
by the Company or an Affiliate pro rata to the holders of all Notes at the time
outstanding upon the same terms and conditions only with the written consent of
the Company and the Super-Majority Holders.

 

(b)     Supplements. Notwithstanding anything to the contrary contained herein,
the Company may enter into any Supplement providing for the issuance of one or
more Series of Additional Notes consistent with, and in compliance with,
Sections 2.2 and 4.13 hereof without obtaining the consent of any holder of any
other Series of Notes.

 

-50-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(c)     Non Consenting Holders. In the event that an Event of Default shall have
occurred and be continuing and except as provided in Section 17.1(a)(1), (2),
and (3), if holders of greater than 50.00% in principal amount of the Notes at
the time outstanding (exclusive of Notes then owned by the Company or any of its
Affiliates) consent to a requested amendment or waiver (the “Consenting
Holders”), the Company may, pursuant to Section 8.9, prepay the Notes held by
holders who have not consented to such requested amendment or waiver (the
“Non-Consenting Holders”). For the avoidance of doubt, if after the prepayment
of all or a portion of the Notes held by Non-Consenting Holders the aggregate
principal amount of the Notes held by Consenting Holders is greater than 50.00%
in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by the Company or any of its Affiliates) such requested amendment or
waiver shall become effective.

 

Section 17.2.     Solicitation of Holders of Notes.

 

(a)     Solicitation. The Company will provide each Purchaser and holder of a
Note with sufficient information, sufficiently far in advance of the date a
decision is required, to enable such Purchaser or such holder to make an
informed and considered decision with respect to any proposed amendment, waiver
or consent in respect of any of the provisions hereof, any Supplement or of the
Notes or any Subsidiary Guaranty. The Company will deliver executed or true and
correct copies of each amendment, waiver or consent effected pursuant to this
Section 17 or any Subsidiary Guaranty to each Purchaser and holder of a Note
promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the requisite Purchasers or holders of
Notes.

 

(b)     Payment. The Company will not directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security or provide other credit support, to any
Purchaser or holder of a Note as consideration for or as an inducement to the
entering into by such Purchaser or holder of any waiver or amendment of any of
the terms and provisions hereof, any Supplement or of any Subsidiary Guaranty or
any Note unless such remuneration is concurrently paid, or security is
concurrently granted or other credit support concurrently provided, on the same
terms, ratably to each Purchaser or holder of a Note even if such Purchaser or
holder did not consent to such waiver or amendment.

 

(c)     Consent in Contemplation of Transfer. Any consent given pursuant to this
Section 17 or any Subsidiary Guaranty by a holder of a Note that has transferred
or has agreed to transfer its Note to (i) the Company, (ii) any Subsidiary or
any other Affiliate or (iii) any other Person in connection with, or in
anticipation of, such other Person acquiring, making a tender offer for or
merging with the Company and/or any of its Affiliates (either pursuant to a
waiver under Section 17.1(a)(3) or subsequent to Section 8.5 having been amended
pursuant to Section 17.1(a)(3)), in each case in connection with such consent,
shall be void and of no force or effect except solely as to such holder, and any
amendments effected or waivers granted or to be effected or granted that would
not have been or would not be so effected or granted but for such consent (and
the consents of all other holders of Notes that were acquired under the same or
similar conditions) shall be void and of no force or effect except solely as to
such holder.

 

-51-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 17.3.     Binding Effect, Etc. Any amendment or waiver consented to as
provided in this Section 17 or any Subsidiary Guaranty applies equally to all
Purchasers or holders of Notes and is binding upon them and upon each future
Purchaser or holder of any Note and upon the Company without regard to whether
such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and any
Purchaser or any holder of a Note and no delay in exercising any rights
hereunder or under any Note or Subsidiary Guaranty shall operate as a waiver of
any rights of any Purchaser or any holder of such Note.

 

Section 17.4.     Notes Held by Company, Etc. Solely for the purpose of
determining whether the holders of the requisite percentage of the aggregate
principal amount of Notes then outstanding approved or consented to any
amendment, waiver or consent to be given under this Agreement, any Subsidiary
Guaranty or the Notes, or have directed the taking of any action provided herein
or in any Subsidiary Guaranty or the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of
its Affiliates shall be deemed not to be outstanding.

 

Section 18.

Notices.

 

Except to the extent otherwise provided in Section 7.4, all notices and
communications provided for hereunder shall be in writing and sent (a) by
telecopy if the sender on the same day sends a confirming copy of such notice by
an internationally recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), (c) by an internationally recognized overnight delivery service
(charges prepaid). Any such notice must be sent, or (d) by e-mail, provided,
that, in the case of this clause (d), upon written request of any holder to
receive paper copies of such notices or communications, the Company will
promptly deliver such paper copies to such holder:

 

(i)     if to any Purchaser or its nominee, to such Purchaser or nominee at the
address specified for such communications in the Purchaser Schedule, or at such
other address as such Purchaser or nominee shall have specified to the Company
in writing,

 

(ii)     if to any other holder of any Note, to such holder at such address as
such other holder shall have specified to the Company in writing,

 

(iii)     if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of the Chief Executive Officer, Chief
Financial Officer and Chief Legal Officer (Fax: 650-473-9194), or at such other
address as the Company shall have specified to the holder of each Note in
writing, in each case, with a copy (which shall not constitute notice) to:
Dechert LLP, 1095 Avenue of the Americas, New York, New York 10036, Attn: Jay
Alicandri, Fax: (212) 698-3599, Email: jay.alicandri@dechert.com, or

 

-52-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(iv)     if to an Additional Purchaser or such Additional Purchaser’s nominee,
to such Additional Purchaser or such Additional Purchaser’s nominee at the
address specified for such communications in Schedule A to any Supplement, or at
such other address as such Additional Purchaser or such Additional Purchaser’s
nominee shall have specified to the Company in writing.

 

Notices under this Section 18 will be deemed given only when actually received.
Notwithstanding anything to the contrary contained herein, any notice to be
given by the Company (other than an officer’s certificate) may be delivered by
an agent or sub-agent of the Company.

 

Section 19.

Reproduction of Documents.

 

This Agreement and all documents relating thereto, including (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by any Purchaser or Additional Purchaser at the applicable Closing (except the
Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to any Purchaser or Additional
Purchaser, may be reproduced by such Purchaser or Additional Purchaser by any
photographic, photostatic, electronic, digital, or other similar process and
such Purchaser or Additional Purchaser may destroy any original document so
reproduced. The Company agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
Purchaser or Additional Purchaser in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.

 

Section 20.

Confidential Information.

 

For the purposes of this Section 20, “Confidential Information” means
information delivered to any Purchaser or Additional Purchaser by or on behalf
of the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement or any Supplement that
is proprietary in nature and that was clearly marked or labeled or otherwise
adequately identified when received by such Purchaser or Additional Purchaser as
being confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to such Purchaser or Additional Purchaser prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission
by such Purchaser or Additional Purchaser or any Person acting on such
Purchaser’s or Additional Purchaser’s behalf, (c) otherwise becomes known to
such Purchaser or Additional Purchaser other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to
such Purchaser or Additional Purchaser under Section 7.1 that are otherwise
publicly available. Each Purchaser or Additional Purchaser will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by such Purchaser or Additional Purchaser in good faith to protect
confidential information of third parties delivered to such Purchaser and
Additional Purchaser, provided that such Purchaser or Additional Purchaser may
deliver or disclose Confidential Information to (i) its directors, officers,
employees, agents, attorneys, trustees and affiliates (to the extent such
disclosure reasonably relates to the administration of the investment
represented by its Notes), (ii) its auditors, financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which it sells or offers
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by this Section 20), (v) any Person from which it offers
to purchase any Security of the Company (if such Person has agreed in writing
prior to its receipt of such Confidential Information to be bound by this
Section 20), (vi) any federal or state regulatory authority having jurisdiction
over such Purchaser or Additional Purchaser, (vii) the NAIC or the SVO or, in
each case, any similar organization, or any nationally recognized rating agency
that requires access to information about such Purchaser’s or Additional
Purchaser’s investment portfolio, or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser or
Additional Purchaser, (x) in response to any subpoena or other legal process,
(y) in connection with any litigation to which such Purchaser or Additional
Purchaser is a party or (z) if an Event of Default has occurred and is
continuing, to the extent such Purchaser or Additional Purchaser may reasonably
determine such delivery and disclosure to be necessary in the enforcement or for
the protection of the rights and remedies under such Purchaser’s or Additional
Purchaser’s Notes, this Agreement or any Subsidiary Guaranty. Each holder of a
Note, by its acceptance of a Note, will be deemed to have agreed to be bound by
and to be entitled to the benefits of this Section 20 as though it were a party
to this Agreement. On reasonable request by the Company in connection with the
delivery to any holder of a Note of information required to be delivered to such
holder under this Agreement or requested by such holder (other than a holder
that is a party to this Agreement or its nominee), such holder will enter into
an agreement with the Company embodying this Section 20.

 

-53-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

In the event that as a condition to receiving access to information relating to
the Company or its Subsidiaries in connection with the transactions contemplated
by or otherwise pursuant to this Agreement, any Purchaser or Additional
Purchaser or holder of a Note is required to agree to a confidentiality
undertaking (whether through IntraLinks, another secure website, a secure
virtual workspace or otherwise) which is different from this Section 20, this
Section 20 shall not be amended thereby and, as between such Purchaser or
Additional Purchaser or such holder and the Company, this Section 20 shall
supersede any such other confidentiality undertaking.

 

Section 21.

Substitution of Purchaser.

 

Each Purchaser or Additional Purchaser shall have the right to substitute any
one of its Affiliates or another Purchaser or Additional Purchaser or any one of
such other Purchaser’s or Additional Purchaser’s Affiliates (other than an
Ineligible Institution) (a “Substitute Purchaser”) as the purchaser of the Notes
that it has agreed to purchase hereunder, by written notice to the Company,
which notice shall be signed by both such Purchaser or Additional Purchaser and
such Substitute Purchaser, shall contain such Substitute Purchaser’s agreement
to be bound by this Agreement and shall contain a confirmation by such
Substitute Purchaser of the accuracy with respect to it of the representations
set forth in Section 6. Upon receipt of such notice, any reference to such
Purchaser in this Agreement (other than in this Section 21) or any Additional
Purchaser in any Supplement, shall be deemed to refer to such Substitute
Purchaser in lieu of such original Purchaser or Additional Purchaser, as the
case may be. In the event that such Substitute Purchaser is so substituted as a
Purchaser hereunder or any Additional Purchaser in any Supplement and such
Substitute Purchaser thereafter transfers to such original Purchaser or
Additional Purchaser all of the Notes then held by such Substitute Purchaser,
upon receipt by the Company of notice of such transfer, any reference to such
Substitute Purchaser as a “Purchaser” in this Agreement (other than in this
Section 21), shall no longer be deemed to refer to such Substitute Purchaser,
but shall refer to such original Purchaser or Additional Purchaser, as the case
may be, and such original Purchaser or Additional Purchaser shall again have all
the rights of an original holder of the Notes under this Agreement.

 

-54-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 22.

Miscellaneous.

 

Section 22.1.     Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including
any subsequent holder of a Note) permitted hereby, whether so expressed or not,
except that, subject to Section 10.2, the Company may not assign or otherwise
transfer any of its rights or obligations hereunder or under the Notes without
the prior written consent of each holder. Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other than the parties
hereto and their respective successors and assigns permitted hereby) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

 

Section 22.2.     Accounting Terms. (a) All accounting terms used herein which
are not expressly defined in this Agreement have the meanings respectively given
to them in accordance with GAAP. Except as otherwise specifically provided
herein, (i) all computations made pursuant to this Agreement shall be made in
accordance with GAAP, and (ii) all financial statements shall be prepared in
accordance with GAAP. For purposes of determining compliance with this Agreement
(including Section 9, Section 10 and the definition of “Indebtedness”), any
election by the Company to measure any financial liability using fair value (as
permitted by Financial Accounting Standards Board Accounting Standards
Codification Topic No. 825-10-25 – Fair Value Option, International Accounting
Standard 39 – Financial Instruments: Recognition and Measurement or any similar
accounting standard) shall be disregarded and such determination shall be made
as if such election had not been made.

 

(b)     If the Company notifies the holders of the Notes that the Company
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if a holder of the Notes notifies the
Company that the Required Holders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

 

-55-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

Section 22.3.     Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 22.4.     Construction, Etc. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

 

Defined terms herein shall apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning and
effect as the word “shall.” Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein)
and, for purposes of the Notes, shall also include any such notes issued in
substitution therefor pursuant to Section 13, (b) subject to Section 22.1, any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and
words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein
to Sections and Schedules shall be construed to refer to Sections of, and
Schedules to, this Agreement, and (e) any reference to any law or regulation
herein shall, unless otherwise specified, refer to such law or regulation as
amended, modified or supplemented from time to time.

 

Section 22.5.     Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

 

Section 22.6.     Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York excluding choice-of-law principles of the law of such
State that would permit the application of the laws of a jurisdiction other than
such State.

 

Section 22.7.     Jurisdiction and Process; Waiver of Jury Trial. (a) The
Company and each Purchaser irrevocably submits to the non-exclusive jurisdiction
of any New York State or federal court sitting in the Borough of Manhattan, The
City of New York, over any suit, action or proceeding arising out of or relating
to this Agreement or the Notes. To the fullest extent permitted by applicable
law, the Company and each Purchaser and Additional Purchaser irrevocably waives
and agrees not to assert, by way of motion, as a defense or otherwise, any claim
that it is not subject to the jurisdiction of any such court, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action
or proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum.

 

-56-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

(b)     The Company and each Purchaser and Additional Purchaser agrees, to the
fullest extent permitted by applicable law, that a final judgment in any suit,
action or proceeding of the nature referred to in Section 22.7(a) brought in any
such court shall be conclusive and binding upon it subject to rights of appeal,
as the case may be, and may be enforced in the courts of the United States of
America or the State of New York (or any other courts to the jurisdiction of
which it or any of its assets is or may be subject) by a suit upon such
judgment.

 

(c)     The Company and each Purchaser and Additional Purchaser consents to
process being served by or on behalf of any holder of Notes in any suit, action
or proceeding of the nature referred to in Section 22.7(a) by mailing a copy
thereof by registered, certified, priority or express mail (or any substantially
similar form of mail), postage prepaid, return receipt or delivery confirmation
requested, to it at its address specified in Section 18 or at such other address
of which such holder shall then have been notified pursuant to said Section. The
Company and each Purchaser and Additional Purchaser agrees that such service
upon receipt (i) shall be deemed in every respect effective service of process
upon it in any such suit, action or proceeding and (ii) shall, to the fullest
extent permitted by applicable law, be taken and held to be valid personal
service upon and personal delivery to it. Notices hereunder shall be
conclusively presumed received as evidenced by a delivery receipt furnished by
the United States Postal Service or any reputable commercial delivery service.

 

(d)     Nothing in this Section 22.7 shall affect the right of any holder of a
Note to serve process in any manner permitted by law, or limit any right that
the holders of any of the Notes may have to bring proceedings against the
Company in the courts of any appropriate jurisdiction or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

(e)     The parties hereto hereby waive trial by jury in any action brought on
or with respect to this Agreement, the Notes or any other document executed in
connection herewith or therewith.

 

 

* * * * *

 

-57-

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

If you are in agreement with the foregoing, please sign the form of agreement on
a counterpart of this Agreement and return it to the Company, whereupon this
Agreement shall become a binding agreement between you and the Company.

 

 

 

Very truly yours,

 

Hercules Capital, Inc.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Seth H. Meyer

 

 

Name: Seth H. Meyer

Title: Chief Financial Officer

 

 

 

 

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

This Agreement is hereby

accepted and agreed to as

of the date hereof.

 

 

Teachers Insurance and Annuity Association of America,

a New York domiciled life insurance company

            By: Nuveen Alternatives Advisors LLC,       a Delaware limited
liability company,       its investment manager                             By:
/s/ Ho-Young Lee       Name: Ho-Young Lee       Title:   Managing Director      
      Pacific Life Insurance Company             By: Nuveen Alternatives
Advisors LLC,      

a Delaware limited liability company,

its investment adviser

                            By: /s/ Ho-Young Lee      

Name: Ho-Young Lee

Title:   Managing Director

         

 

 

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

This Agreement is hereby

accepted and agreed to as

of the date hereof.

 

 

Sun Life Assurance Company of Canada

 

 

 

 

 

 

 

 

 

 

By:

/s/ David Fletcher

 

 

 

Name:

David Fletcher

 

    Title:

Managing Director

Private Fixed Income

              By: /s/ Paul C. Sinclair       Name: Paul C. Sinclair       Title:

Senior Managing Director

Head of Private Debt

Private Fixed Income

             

Sun Life Assurance Company of Canada,

acting through its US branch

              By: /s/ David Belanger       Name: David Belanger       Title:
Managing Director                         By: /s/ Art Baril       Name: Art
Baril       Title: Managing Director              

Sun Life Assurance Company of Canada,

acting through its Bermuda branch

                        By: /s/ David Fletcher       Name: David Fletcher      
Title:

Managing Director

Private Fixed Income

              By: /s/ Paul C. Sinclair       Name: Paul C. Sinclair       Title:

Senior Managing Director

Head of Private Debt

Private Fixed Income

 

 

 

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

This Agreement is hereby

accepted and agreed to as

of the date hereof.

 

 

SLC Management U.S. Investment Grade

Private Credit Fund, L.P.

 

 

 

 

 

 

By:

Sun Life Capital Management (U.S.) LLC

 

 

Its:

Investment Adviser

 

 

 

 

 

          By: /s/ David Belanger      

Name: David Belanger

Title:   Managing Director

                    By: /s/ Art Baril      

Name: Art Baril

Title:   Senior Director

 

 

 

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

This Agreement is hereby

accepted and agreed to as

of the date hereof.

 

 

EquiTrust Life Insurance Company

 

 

 

 

 

       

 

 

 

 

 

By:

/s/ Kenyatta K. Matheny

 

 

 

Name: Kenyatta K. Matheny

Title:   Chief Investment Officer

 

 

 

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

This Agreement is hereby

accepted and agreed to as

of the date hereof.

 

 

The Guardian Life Insurance Company of

America

 

 

 

 

 

 

 

 

 

       

 

By:

/s/ Trinh Nguyen

 

 

 

Name: Trinh Nguyen

Title:   Managing Director

 

 

 

--------------------------------------------------------------------------------

 

Hercules Capital, Inc.

Note Purchase Agreement

 

This Agreement is hereby

accepted and agreed to as

of the date hereof.

 

 

Southern Farm Bureau Life Insurance

Company

 

 

 

 

 

       

 

 

 

 

 

By:

/s/ David Divine

 

 

 

Name: David Divine

Title:   Senior Portfolio Manager

 

 

 

 

--------------------------------------------------------------------------------

 

 

Defined Terms

 

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

 

“2022 Notes” means the Company’s 4.625% Notes due 2022 in an initial aggregate
principal amount of $150,000,000.

 

“2024 Notes” means the Company’s 4.77% Notes due 2024 in an initial aggregate
principal amount of $105,000,000.

 

“2025 Notes” means the Company’s 5.25% Notes due 2025 in an initial aggregate
principal amount of $75,000,000.

 

“2033 Notes” means the Company’s 6.25% Notes due 2033 in an initial aggregate
principal amount of $40,000,000.

 

“Additional Notes” is defined in Section 2.2.

 

“Additional Purchasers” means purchasers of Additional Notes.

 

“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person. Unless the context otherwise clearly requires, any reference to an
“Affiliate” is a reference to an Affiliate of the Company. Anything herein to
the contrary notwithstanding, the term “Affiliate” shall not include any Person
that constitutes a Portfolio Investment held by any Obligor or any of its or
their subsidiaries in the ordinary course of business.

 

“Agreement” means this Note Purchase Agreement, including all Supplements,
Schedules and Exhibits attached to this Agreement (including all Schedules and
Exhibits attached to any Supplement), as each may be amended, restated,
supplemented or otherwise modified from time to time.

 

“Anti-Corruption Laws” means any law or regulation in a U.S. or any non-U.S.
jurisdiction regarding bribery or any other corrupt activity, including the U.S.
Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.

 

“Anti-Money Laundering Laws” means any law or regulation in a U.S. or any
non-U.S. jurisdiction regarding money laundering, drug trafficking,
terrorist-related activities or other money laundering predicate crimes,
including the Currency and Foreign Transactions Reporting Act of 1970 (otherwise
known as the Bank Secrecy Act) and the USA PATRIOT Act.

 

“Assignee” is defined in Section 13.2(a).

 

Schedule A
(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

 

“Assigning Party” is defined in Section 13.2(a).

 

“Blocked Person” means (a) a Person whose name appears on the list of Specially
Designated Nationals and Blocked Persons published by OFAC, (b) a Person,
entity, organization, country or regime that is blocked or a target of
comprehensive sanctions that have been imposed under U.S. Economic Sanctions
Laws or (c) a Person that is an agent, department or instrumentality of, or is
otherwise beneficially owned by, controlled by or acting on behalf of, directly
or indirectly, any Person, entity, organization, country or regime described in
clause (a) or (b).

 

“Business Day” means (a) for the purposes of Section 8.6 only, any day other
than a Saturday, a Sunday or a day on which commercial banks in New York City
are required or authorized to be closed, and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York are required or authorized to be
closed.

 

“Canada Blocked Person” means (i) a “terrorist group” as defined for the
purposes of Part II.1 of the Criminal Code (Canada), as amended or (ii) a Person
identified in or pursuant to (w) Part II.1 of the Criminal Code (Canada), as
amended or (x) the Proceeds of Crime (Money Laundering) and Terrorist Finance
Act, as amended or (y) the Justice for Victims of Corrupt Foreign Officials Act
(Sergei Magnitsky Law), as amended or (z) regulations or orders promulgated
pursuant to the Special Economic Measures Act (Canada), as amended, the United
Nations Act (Canada), as amended, or the Freezing Assets of Corrupt Foreign
Officials Act (Canada), as amended, in any case pursuant to this clause (ii) as
a Person in respect of whose property or benefit a holder of Notes would be
prohibited from entering into or facilitating a related financial transaction.

 

“Canadian Economic Sanctions Laws” means those laws, including enabling
legislation, orders-in-council or other regulations administered and enforced by
Canada or a political subdivision of Canada pursuant to which economic sanctions
have been imposed on any Person, entity, organization, country or regime,
including Part II.1 of the Criminal Code (Canada), as amended, the Special
Economic Measures Act (Canada), as amended, the Proceeds of Crime (Money
Laundering) and Terrorist Finance Act, as amended, the Justice for Victims of
Corrupt Foreign Officials Act (Sergei Magnitsky Law), as amended, the United
Nations Act (Canada), as amended, the Export and Import Permits Act (Canada), as
amended, and the Freezing Assets of Corrupt Foreign Officials Act (Canada), as
amended, and including all regulations promulgated under any of the foregoing,
or any other similar sanctions program or action.

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

 

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP.

 

A-2

--------------------------------------------------------------------------------

 

 

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either S&P or
Moody’s, (c) commercial paper maturing no more than 270 days from the date of
creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit or
bankers’ acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) demand deposit accounts maintained with any
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any individual bank is less than or equal to
$250,000 and is insured by the Federal Deposit Insurance Corporation, and (f)
Investments in money market funds or mutual funds substantially all of whose
assets are invested in the types of assets described in clauses (a) through (e)
above.

 

“Change in Control” means the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect
on the date hereof) of shares representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding shares of
capital stock, membership interest or partnership interest, as applicable, in
the Company.

 

“Closing” is defined in Section 3.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Company” is defined in the first paragraph of this Agreement.

 

“Competitor” means (a) any entity that has elected to be regulated as a
“business development company” under the Investment Company Act; (b) any Person
who is not an Affiliate of the Company or any of its subsidiaries and who
engages (or whose Affiliate engages), as its primary business, in (i) the same
or similar business as a material business of the Company or any of its
subsidiaries or (ii) the business of providing loans in the middle market or to
venture companies and such Person is not a bank or an insurance company; or
(c) any Affiliate of any of the foregoing; provided that:

 

(i)     the provision of investment advisory services by a Person to a Plan
which is owned or controlled by a Person which would otherwise be a Competitor
shall not in any event cause the Person providing such services to be deemed to
be a Competitor, provided that such Person providing such services has
established and maintains procedures which will prevent Confidential Information
supplied to such Person from being transmitted or otherwise made available to
such Plan;

 

A-3

--------------------------------------------------------------------------------

 

 

(ii)     in no event shall an Institutional Investor be deemed a Competitor if
such Institutional Investor is a pension plan sponsored by a Person which would
otherwise be a Competitor but which is a regular investor in privately placed
Securities and such pension plan has established and maintains procedures which
will prevent Confidential Information supplied to such pension plan by the
Company from being transmitted or otherwise made available to such plan sponsor;
and

 

(iii)     in any event that any Private Placement Agent that would otherwise be
deemed to be a Competitor pursuant to the foregoing provisions of this
definition, such Private Placement Agent shall not be deemed to be a Competitor
if such Private Placement Agent holds the Notes only in connection with its role
as an intermediary in the prompt and expeditious sale in accordance with
customary financial market conditions of the Note or Notes owned by one
Institutional Investor who is not a Competitor to another purchasing
Institutional Investor who is a Permitted Transferee that is not a Competitor
and such Private Placement Agent has established procedures which will prevent
confidential information supplied to either the selling or buying Institutional
Investor by the Company from being transmitted or otherwise made available to
such Private Placement Agent or any of its Affiliates in any capacity other than
as the agent and intermediary in connection with such sale of any such Note or
Notes.

 

“Confidential Information” is defined in Section 20.

 

“Consenting Holders” is defined in Section 17.1(c).

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms “Controlled” and “Controlling” shall have meanings correlative to the
foregoing.

 

“Controlled Entity” means (a) any of the Subsidiaries of the Company and any of
their or the Company’s respective Controlled Affiliates and (b) if the Company
has a parent company, such parent company and its Controlled Affiliates.

 

“Controlled Foreign Corporation” means any Subsidiary which is (i) a “controlled
foreign corporation” (within the meaning of Section 957 of the Code), (ii) a
Subsidiary substantially all the assets of which consist (directly or indirectly
through one or more flow-through entities) of Equity Interests and/or
indebtedness of one or more Subsidiaries described in clause (i) of this
definition, or (iii) an entity treated as disregarded for U.S. federal income
tax purposes and substantially all of the assets of which consist (directly or
indirectly through one or more flow-through entities) of the Equity Interests
and/or indebtedness of one or more Subsidiaries described in clause (i) or (ii)
of this definition.

 

“Cure Right” is defined in Section 10.8(d).

 

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

 

A-4

--------------------------------------------------------------------------------

 

 

“Default Rate” means that rate of interest per annum that is 2.0% above the rate
of interest stated in clause (a) of the first paragraph of the applicable Notes.

 

“Disclosure Documents” is defined in Section 5.3.

 

“Disqualified Equity Interests” means any Equity Interests which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (a) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable (other than for Qualified Equity Interests), pursuant to
a sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof (other than for Qualified Equity Interests), in whole or in part,
on or prior to 91 days following the Maturity Date at the time such Equity
Interests is issued (it being understood that if any such redemption is in part,
only such part coming into effect prior to 91 days following the Maturity Date
shall constitute Disqualified Equity Interests), (b) is or becomes convertible
into or exchangeable (unless at the sole option of the issuer thereof) for (i)
debt securities or (ii) any Equity Interests that would constitute Disqualified
Equity Interests, in each case at any time on or prior to 91 days following the
Maturity Date at the time such Equity Interests is issued, (c) contains any
mandatory repurchase obligation or any other repurchase obligation at the option
of the holder thereof (other than for Qualified Equity Interests), in whole or
in part, which may come into effect prior to 91 days following the Maturity Date
at the time such Equity Interests is issued (it being understood that if any
such repurchase obligation is in part, only such part coming into effect prior
to 91 days following the Maturity Date shall constitute Disqualified Equity
Interests) or (d) requires scheduled payments of dividends in cash on or prior
to 91 days following the Maturity Date at the time such Equity Interests is
issued; provided that any Equity Interests that would not constitute
Disqualified Equity Interests but for provisions thereof giving holders thereof
(or the holders of any security into or for which such Equity Interests is
convertible, exchangeable or exercisable) the right to require the issuer
thereof to redeem such Equity Interests upon the occurrence of any Change in
Control occurring prior to 91 days following the Maturity Date at the time such
Equity Interests is issued shall not constitute Disqualified Equity Interests if
(x) such Equity Interests provides that the issuer thereof will not redeem any
such Equity Interests pursuant to such provisions prior to the date that the
Notes have been repaid in full (other than continent indemnification
obligations) (the “Termination Date”) or (y) such redemption is subject to
events that would cause the Termination Date to occur.

 

“EDGAR” means the SEC’s Electronic Data Gathering, Analysis and Retrieval System
or any successor SEC electronic filing system for such purposes.

 

“Environmental Laws” means any applicable federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, or settlement or consent
agreements relating to pollution and the protection of the environment or the
release of any Hazardous Materials into the environment.

 

“Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest. As used in this Agreement, “Equity Interests” shall not include
convertible debt unless and until such debt has been converted to capital stock.

 

A-5

--------------------------------------------------------------------------------

 

 

“ERISA” means the Employee Retirement Income Security Act of 1974 and the rules
and regulations promulgated thereunder from time to time in effect.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414(b),
(c), (m) or (o) of the Code.

 

“Event of Default” is defined in Section 11.

 

“Excluded Subsidiaries” means, collectively, (a) any Financing Subsidiary,
(b) any bankruptcy remote special purpose vehicle, (c) any Person that
constitutes an Investment held by the Company that is not, under generally
accepted accounting principles in the United States, consolidated on the
financial statements of the Company and its Subsidiaries, or (d) any Subsidiary
of any of the foregoing.

 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any agreements entered into
pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory
legislation, rules or practices adopted pursuant to any intergovernmental
agreement, treaty or convention among Governmental Authorities and implementing
such Sections of the Code.

 

“Financial Covenant Default” means an Event of Default under Section 10.8(a),
(b) or (c).

 

“Financing Subsidiary” means (a) any Structured Subsidiary or (b) any SBIC
Subsidiary.

 

“First Closing” is defined in Section 3.

 

“Foreign Subsidiary” means any Subsidiary of the Company that is a Controlled
Foreign Corporation or a Subsidiary of a Controlled Foreign Corporation.

 

“Form 10-K” is defined in Section 7.1(b).

 

“Form 10-Q” is defined in Section 7.1(a).

 

“GAAP” means (a) generally accepted accounting principles as in effect from time
to time in the United States of America and (b) for purposes of Section 9.6,
with respect to any Subsidiary, generally accepted accounting principles
(including International Financial Reporting Standards, as applicable) as in
effect from time to time in the jurisdiction of organization of such Subsidiary.

 

“Goldman Sachs” means Goldman Sachs & Co. LLC.

 

A-6

--------------------------------------------------------------------------------

 

 

“Governmental Authority” means

 

(a)     the government of

 

(i)     the United States of America or any state or other political subdivision
thereof, or

 

(ii)     any other jurisdiction in which the Company or any Subsidiary conducts
all or any part of its business, or which asserts jurisdiction over any
properties of the Company or any Subsidiary, or

 

(b)     any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.

 

“Governmental Official” means any governmental official or employee, employee of
any government-owned or government-controlled entity, political party, any
official of a political party, candidate for political office, official of any
public international organization or anyone else acting in an official capacity.

 

“Guaranty” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guaranty shall not include endorsements for
collection or deposit in the ordinary course of business or customary
indemnification agreements entered into in the ordinary course of business in
connection with obligations that do not constitute Indebtedness. The amount of
any Guaranty at any time shall be deemed to be an amount equal to the maximum
stated or determinable amount of the primary obligation in respect of which such
Guaranty is incurred, unless the terms of such Guaranty expressly provide that
the maximum amount for which such Person may be liable thereunder is a lesser
amount (in which case the amount of such Guaranty shall be deemed to be an
amount equal to such lesser amount).

 

“Hazardous Materials” means any and all pollutants, contaminants, or toxic or
hazardous wastes, substances or which are regulated by by Environmental Law,
including asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum, or petroleum products.

 

“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1,
provided, however, that if such Person is a nominee, then for the purposes of
Sections 7, 12 and 18 and any related definitions in this Schedule A, “holder”
shall mean the beneficial owner of such Note whose name and address appears in
such register.

 

A-7

--------------------------------------------------------------------------------

 

 

“Indebtedness” with respect to any Person means, at any time, without
duplication,

 

(a)     its liabilities for borrowed money and its redemption obligations in
respect of mandatorily redeemable Preferred Stock;

 

(b)     its liabilities for the deferred purchase price of property acquired by
such Person (excluding accounts payable arising in the ordinary course of
business but including all liabilities created or arising under any conditional
sale or other title retention agreement with respect to any such property);

 

(c)     (i) all liabilities appearing on its balance sheet in accordance with
GAAP in respect of Capital Leases and (ii) all liabilities which would appear on
its balance sheet in accordance with GAAP in respect of Synthetic Leases
assuming such Synthetic Leases were accounted for as Capital Leases;

 

(d)     all liabilities for borrowed money secured by any Lien with respect to
any property owned by such Person (whether or not it has assumed or otherwise
become liable for such liabilities);

 

(e)     all its liabilities in respect of letters of credit or instruments
serving a similar function issued or accepted for its account by banks and other
financial institutions (whether or not representing obligations for borrowed
money);

 

(f)     the aggregate Swap Termination Value of all Swap Contracts of such
Person; and

 

(g)     any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (f) hereof.

 

Indebtedness of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person remains
legally liable in respect thereof notwithstanding that any such obligation is
deemed to be extinguished under GAAP. Notwithstanding the foregoing,
“Indebtedness” shall not include (x) purchase price holdbacks arising in the
ordinary course of business in respect of a portion of the purchase price of an
asset or Investment to satisfy unperformed obligations of the seller of such
asset or Investment, (y) a commitment arising in the ordinary course of business
to make a future Portfolio Investment or fund the delayed draw or unfunded
portion of any existing Portfolio Investment or (z) indebtedness of an Obligor
on account of the sale by an Obligor of the first out tranche of any debt
Portfolio Investment that is entitled to the benefit of a first lien that arises
solely as an accounting matter under ASC 860, provided that such indebtedness
(i) is non-recourse to the Company and its Subsidiaries and (ii) would not
represent a claim against the Company or any of its Subsidiaries in a
bankruptcy, insolvency or liquidation proceeding of the Company or its
Subsidiaries, in each case in excess of the amount sold or purportedly sold.

 

A-8

--------------------------------------------------------------------------------

 

 

“INHAM Exemption” is defined in Section 6.2(e).

 

“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a
Note holding (together with one or more of its affiliates) more than 10% of the
aggregate principal amount of the Notes then outstanding, (c) any bank, trust
company, savings and loan association or other financial institution, any
pension plan, any investment company, any insurance company, any broker or
dealer, or any other similar financial institution or entity, regardless of
legal form, and (d) any Related Fund of any holder of any Note.

 

“Investment” means, for any Person: (a) Equity Interests, bonds, notes,
debentures or other securities of any other Person (including convertible
securities) or any agreement to acquire any Equity Interests, bonds, notes,
debentures or other securities of any other Person (including any “short sale”
or any sale of any securities at a time when such securities are not owned by
the Person entering into such sale); (b) deposits, advances, loans or other
extensions of credit made to any other Person (including purchases of property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such Person); or (c) Swap Contracts.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended
from time to time.

 

“Investment Policies” means, with respect to the Company, the investment
objectives, policies, restrictions and limitations as the same may be changed,
altered, expanded, amended, modified, terminated or restated from time to time.

 

“Kroll” means Kroll Bond Rating Agency, Inc., or if applicable, its successor.

 

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements
but, in the case of Portfolio Investments that are equity securities, excluding
customary drag-along, tag-along, right of first refusal and other similar rights
in favor of other equity holders of the same issuer). For the avoidance of
doubt, in the case of Investments that are loans or other debt obligations,
customary restrictions on assignments or transfers thereof on customary and
market based terms pursuant to the underlying documentation relating to such
Investment shall not be deemed to be a “Lien”.

 

“Make-Whole Amount” is defined in Section 8.6.

 

“Material” means material in relation to the business, operations, affairs,
financial condition, assets, or properties of the Company and its Subsidiaries
taken as a whole.

 

A-9

--------------------------------------------------------------------------------

 

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, financial condition, assets or properties of the Company and its
Subsidiaries (other than Excluded Subsidiaries) taken as a whole, (b) the
ability of the Company to perform its obligations under this Agreement and the
Notes, (c) the ability of any Subsidiary Guarantor to perform its obligations
under its Subsidiary Guaranty, or (d) the validity or enforceability of this
Agreement, the Notes or any Subsidiary Guaranty.

 

“Material Credit Facility” means, as to the Company and its Subsidiaries,
(a) the 2022 Notes; (b) the 2025 Notes; (c) the 2033 Notes; (d) the 2024 Notes;
and (e) any agreement(s) creating or evidencing indebtedness for borrowed money
(other than bonds, converts or public offerings of debt investments) entered
into on or after the date of the First Closing by the Company or any Subsidiary
(other than an Excluded Subsidiary or a Foreign Subsidiary), or in respect of
which the Company or any Subsidiary (other than an Excluded Subsidiary or a
Foreign Subsidiary) is an obligor or otherwise provides a guarantee or other
credit support (“Credit Facility”), in a principal amount outstanding or
available for borrowing equal to or greater than $100,000,000 (or the equivalent
of such amount in the relevant currency of payment, determined as of the date of
the closing of such facility based on the exchange rate of such other currency).

 

“Maturity Date” is defined in the first paragraph of each Note.

 

“Memorandum” is defined in Section 5.3.

 

“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto.

 

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in section 4001(a)(3) of ERISA).

 

“NAIC” means the National Association of Insurance Commissioners.

 

“Net Debt to Equity Ratio” means, as of any date of determination, the ratio of
(a) the aggregate amount of senior securities representing Indebtedness for
borrowed money of the Company and its consolidated Subsidiaries (including under
the Notes) as of such date, in each case as determined pursuant to the
Investment Company Act, and any orders of the SEC issued to or with respect to
Company thereunder, including any exemptive relief granted by the SEC with
respect to the indebtedness of any SBIC Subsidiary, less all cash and Cash
Equivalents of the Company and its consolidated Subsidiaries to
(b) Shareholders’ Equity at the last day of the immediately preceding fiscal
quarter of the Company.

 

“Non-Consenting Holders” is defined in Section 17.1(c).

 

“Non-U.S. Plan” means any plan, fund or other similar program that (a) is
established or maintained outside the United States of America by the Company or
any Subsidiary primarily for the benefit of employees of the Company or one or
more Subsidiaries residing outside the United States of America, which plan,
fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and (b) is not subject to ERISA or the Code.

 

A-10

--------------------------------------------------------------------------------

 

 

“Notes” is defined in Section 1.

 

“Obligors” means, collectively, the Company and the Subsidiary Guarantors.

 

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

 

“OFAC Sanctions Program” means any economic or trade sanction that OFAC is
responsible for administering and enforcing. A list of OFAC Sanctions Programs
may be found at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

 

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA.

 

“Pension Plan” means any Plan that is subject to Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA.

 

“Permitted Acquisition” means any acquisition by the Company or any of its
subsidiaries, whether by purchase, merger, amalgamation or otherwise, of all or
substantially all of the assets of, or any business line, unit or division or
product line of, any Person or of a majority of the outstanding Equity Interests
of any Person; provided, that the total consideration paid by the Obligors for,
in the case of an asset acquisition, assets that are not acquired by the Company
or any Subsidiary Guarantor, when taken together with the total consideration
for all such assets so acquired after the date of the First Closing, shall not
exceed an amount outstanding equal to 50% of the value of the total net assets
of the Company and its subsidiaries on a consolidated basis, without
duplication, in accordance with GAAP, as of the date of such acquisition;
provided, further, that the limitation described in the foregoing proviso shall
not apply (A) to any acquisition to the extent such acquisition is made with the
proceeds of sales of the Qualified Equity Interests of, or common equity capital
contributions to, the Company or any of its subsidiaries (but excluding any
amounts received from the Company or any of its subsidiaries), (B) the assets
acquired are primarily Portfolio Investments and/or (C) to the portion of such
consideration provided by subsidiaries of the Company that are not Subsidiary
Guarantors, including through cash flow, asset sale proceeds or Indebtedness
proceeds of such subsidiaries (provided such Indebtedness is not incurred or
Guaranteed by any Obligor). In the event the amount available under the first
proviso above is reduced as a result of any acquisition of any subsidiary of the
Company that does not become a Subsidiary Guarantor (or any assets that are not
transferred to an Obligor) and such subsidiary subsequently becomes a Subsidiary
Guarantor (or such assets are subsequently transferred to an Obligor (including
by way of cash)), the amount available under such limit shall be proportionately
increased as a result thereof.

 

“Permitted Equity Interests” means common stock of the Company that after its
issuance is not subject to any agreement between the holder of such common stock
and the Company where the Company is required to purchase, redeem, retire,
acquire, cancel or terminate any such common stock.

 

A-11

--------------------------------------------------------------------------------

 

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or
Governmental Authority.

 

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA)
subject to Title IV of ERISA (other than a Multiemployer Plan) that is or,
within the preceding five years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been made or
required to be made, by the Company or any ERISA Affiliate or with respect to
which the Company or any ERISA Affiliate has any liability.

 

“Portfolio Investment” means any Investment held by the Company and its
subsidiaries in their asset portfolio (and, for the avoidance of doubt, shall
not include any Subsidiary of the Company).

 

“Preferred Stock” means any class of capital stock of a Person that is preferred
over any other class of capital stock (or similar equity interests) of such
Person as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such Person.

 

“Prepayment Settlement Amount” (i) is defined in Section 8.6 with respect to any
Series 2020 Note and (ii) is set forth in the applicable Supplement with respect
to any other Series or tranche of Notes.

 

“Private Placement Agent” means any company organized as a “broker” or “dealer”
(as each such term is defined in Section 3(a) (4) and (5), respectively, of the
Exchange Act) of recognized national standing regularly engaged as an
intermediary in the placement or sale to and among Institutional Investors of
Indebtedness Securities exempt from registration under the Securities Act.

 

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

 

“PTE” is defined in Section 6.2(a).

 

“Purchaser” or “Purchasers” means each of the purchasers that has executed and
delivered this Agreement to the Company and such Purchaser’s successors and
assigns (so long as any such assignment complies with Section 13.2) and any
Substitute Purchaser (so long as any such substitution complies with Section
21), provided, however, that any Purchaser of a Note that ceases to be the
registered holder or a beneficial owner (through a nominee) of such Note as the
result of a transfer thereof pursuant to Section 13.2 or as the result of a
substitution pursuant to Section 21 shall cease to be included within the
meaning of “Purchaser” of such Note for the purposes of this Agreement upon such
transfer.

 

“Purchaser Schedule” means the Purchaser Schedule to this Agreement listing the
Purchasers of the Notes and including their notice and payment information.

 

A-12

--------------------------------------------------------------------------------

 

 

“QPAM Exemption” is defined in Section 6.2(d).

 

“Qualified Equity Interests” of any Person means any Equity Interests of such
Person that is not Disqualified Equity Interests.

 

“Qualified Institutional Buyer” means any Person who is a “qualified
institutional buyer” within the meaning of such term as set forth in Rule
144A(a)(1) under the Securities Act.

 

“Rating” means a rating of a Series of Notes, which rating shall specifically
describe the Notes, including their interest rate, maturity and Private
Placement Number, issued by a NRSRO.

 

“Related Fund” means, with respect to any holder of any Note, any fund or entity
that (a) invests in Securities or bank loans, (b) is advised or managed by such
holder, the same investment advisor as such holder or by an affiliate of such
holder or such investment advisor, and (c) is not an Ineligible Institution.

 

“Required Holders” means, at any time, subject to Section 17.1(c):

 

(a)     after the First Closing and before the Second Closing Date, (i) the
holders of greater than 50.00% in principal amount of each Series of the Notes
at the time outstanding (exclusive of Notes then owned by the Company or any of
its Affiliates) and (ii) the Purchasers of the Notes scheduled to be issued at
the Second Closing, and

 

(b)     on or after the Second Closing Date, the holders of greater than 50.00%
in principal amount of each Series of the Notes at the time outstanding
(exclusive of Notes then owned by the Company or any of its Affiliates), it
being understood that, for purposes of this definition, the Series 2020 Notes
shall constitute one Series.

 

“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this Agreement.

 

“Restricted Payment” means any dividend or other distribution in cash with
respect to any shares of any class of capital stock of the Company, or any
payment in cash, including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any such shares of capital stock of the Company or any option, warrant or
other right to acquire any such shares of capital stock of the Company (other
than any purchase, redemption, retirement, acquisition, cancellation or
termination of shares or other awards of any employee, officer or director
(current or former or any of their respective transferees) in connection with
any compensation, separation, severance, award, employment or other plan,
agreement or arrangement), provided, for clarity, neither the conversion of
convertible debt into Permitted Equity Interests nor the purchase, redemption,
retirement, acquisition, cancellation or termination of convertible debt made
solely with Permitted Equity Interests shall be a Restricted Payment hereunder.

 

“RIC” means a person qualifying for treatment as a “regulated investment
company” under the Code.

 

A-13

--------------------------------------------------------------------------------

 

 

“S&P” means S&P Global Ratings, a division of S&P Global, Inc., a New York
corporation, or any successor thereto.

 

“SBA” means the United States Small Business Administration or any Governmental
Authority succeeding to any or all of the functions thereof.

 

“SBIC Subsidiary” means any subsidiary of the Company (or such subsidiary’s
general partner or manager entity) that is (x) a “small business investment
company” licensed by the SBA (or that has applied for such a license and is
actively pursuing the granting thereof by appropriate proceedings promptly
instituted and diligently conducted) under the Small Business Investment Act of
1958, as amended, and (y) designated in writing by the Company (as provided
below) as an SBIC Subsidiary, so long as:

 

(a)     other than pursuant to a Permitted SBIC Guarantee or the requirement by
the SBA that the Company make an equity or capital contribution to the SBIC
Subsidiary in connection with its incurrence of SBA Indebtedness (provided that
such contribution is permitted by Section 6.03(e) and is made substantially
contemporaneously with such incurrence), no portion of the Indebtedness or any
other obligations (contingent or otherwise) of such Person (i) is Guaranteed by
the Company or any of its subsidiaries (other than any SBIC Subsidiary), (ii) is
recourse to or obligates the Company or any of its subsidiaries (other than any
SBIC Subsidiary) in any way, or (iii) subjects any property of the Company or
any of its subsidiaries (other than any SBIC Subsidiary) to the satisfaction
thereof;

 

(b)     neither the Company nor any of its subsidiaries (other than any SBIC
Subsidiary) has any obligation to such Person to maintain or preserve its
financial condition or cause it to achieve certain levels of operating results;
and

 

(c)     such Person has not Guaranteed or become a co-borrower under, and has
not granted a security interest in any of its properties to secure, and the
Equity Interests it has issued are not pledged to secure, in each case, any
indebtedness, liabilities or obligations of any one or more of the Obligors.

 

Any designation by the Company under clause (y) above shall be effected pursuant
to a certificate of a Senior Financial Officer delivered to the Purchasers,
which certificate shall include a statement to the effect that, to the best of
such Senior Financial Officer’s knowledge, such designation complied with the
foregoing conditions.

 

“SEC” means the Securities and Exchange Commission of the United States of
America.

 

“Second Closing” is defined in Section 3.

 

“Second Closing Date” is defined in Section 3

 

“Section 8.8 Proposed Prepayment Date” is defined in Section 8.8(b).

 

A-14

--------------------------------------------------------------------------------

 

 

“Securities” or “Security” shall have the meaning specified in section 2(1) of
the Securities Act.

 

“Securities Act” means the Securities Act of 1933 and the rules and regulations
promulgated thereunder from time to time in effect.

 

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

 

“Senior Securities” means senior securities (as such term is defined and
determined pursuant to the Investment Company Act and any orders of the SEC
issued to the Company thereunder).

 

“Series” means any series of Notes issued pursuant to this Agreement or any
Supplement hereto.

 

“Series 2020 Notes” is defined in Section 1.1 of this Agreement.

 

“Shareholders’ Equity” means, at any date, the amount determined on a
consolidated basis, without duplication, in accordance with GAAP, of
shareholders’ equity or net assets, as applicable, for the Company and its
consolidated Subsidiaries at such date.

 

“Significant Subsidiary” means any Subsidiary which is a “significant
subsidiary” (within the meaning specified in Rule 1-02(w) of Regulation S-X,
promulgated under the Securities Act) of the Company, excluding any Subsidiary
of the Company (a) which is a nonrecourse or limited recourse subsidiary,
(b) which is a bankruptcy remote special purpose vehicle, (c) that is not
consolidated with the Company for purposes of GAAP, or (d) which is an Excluded
Subsidiary; provided that each Subsidiary Guarantor shall be deemed to be a
“Significant Subsidiary.

 

“Source” is defined in Section 6.2.

 

“Special Equity Interest” means any Equity Interest that is subject to a Lien in
favor of creditors of the issuer of such Equity Interest provided that such Lien
was created to secure Indebtedness owing by such issuer to such creditors.

 

“Standard Securitization Undertakings” means, collectively, (a) customary
arms-length servicing obligations (together with any related performance
guarantees), (b) obligations (together with any related performance
guarantees) to refund the purchase price or grant purchase price credits for
breach of representations and warranties referred to in clause (c),
and (c) representations, warranties, covenants and indemnities (together with
any related performance guarantees) of a type that are reasonably customary in
commercial loan securitizations (in each case in clauses (a), (b) and (c)
excluding obligations related to the collectability of the assets sold or the
creditworthiness of the underlying obligors and excluding obligations that
constitute credit recourse).

 

A-15

--------------------------------------------------------------------------------

 

 

“State Sanctions List” means a list that is adopted by any state Governmental
Authority within the United States of America pertaining to Persons that engage
in investment or other commercial activities in Iran or any other country that
is a target of economic sanctions imposed under U.S. Economic Sanctions Laws.

 

“Structured Subsidiary” means:

 

(a)     a direct or indirect subsidiary of the Company to which any Obligor
sells, conveys or otherwise transfers (whether directly or indirectly) portfolio
investments or which makes or purchases portfolio investments, which is formed
in connection with such Subsidiary obtaining and maintaining third-party
financing from unaffiliated third parties, and which engages in no material
activities other than in connection with the purchase and financing of such
assets, and which is designated by the Company (as provided below) as a
Structured Subsidiary; and, so long as:

 

(i)     no portion of the Indebtedness or any other obligations (contingent or
otherwise) of such Subsidiary (i) is Guaranteed by any Obligor (other than
Guarantees in respect of Standard Securitization Undertakings), (ii) is recourse
to or obligates any Obligor in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property of any Obligor,
directly or indirectly, contingently or otherwise, to the satisfaction thereof,
other than pursuant to Standard Securitization Undertakings or any Guarantee
thereof; and

 

(ii)     no Obligor has any obligation to maintain or preserve such entity’s
financial condition or cause such entity to achieve certain levels of operating
results; and

 

(b)     any passive holding company that is designated by the Company (as
provided below) as a Structured Subsidiary, so long as:

 

(i)     such passive holding company is the direct parent of a Structured
Subsidiary referred to in clause (a);

 

(ii)     such passive holding company engages in no activities and has no assets
(other than in connection with the transfer of assets to and from a Structured
Subsidiary referred to in clause (a), and its ownership of all of the Equity
Interests of a Structured Subsidiary referred to in clause (a)) or liabilities;

 

(iii)     all of the Equity Interests of such passive holding company are owned
directly by an Obligor;

 

(iv)     no Obligor has any contract, agreement, arrangement or understanding
with such passive holding company; and

 

(v)     no Obligor has any obligation to maintain or preserve such passive
holding company’s financial condition or cause such entity to achieve certain
levels of operating results.

 

A-16

--------------------------------------------------------------------------------

 

 

Any such designation by the Company shall be effected pursuant to a certificate
of a Senior Financial Officer delivered to the Purchasers, which certificate
shall include a statement to the effect that, to the best of such Senior
Financial Officer’s knowledge, such designation complied with the applicable
foregoing conditions. Each Subsidiary of a Structured Subsidiary shall be deemed
to be a Structured Subsidiary and shall comply with the foregoing requirements
of this definition.

 

“Subsidiary” means, as to any Person, any other Person in which such first
Person or one or more of its Subsidiaries or such first Person and one or more
of its Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
second Person, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such first Person or one or more
of its Subsidiaries or such first Person and one or more of its Subsidiaries
(unless such partnership or joint venture can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Anything herein to the contrary notwithstanding, the term
“Subsidiary” shall not include any Excluded Subsidiary. Unless the context
otherwise clearly requires, any reference to a “Subsidiary” is a reference to a
Subsidiary of the Company.

 

“Subsidiary Guarantor” means each Subsidiary that has executed and delivered a
Subsidiary Guaranty or a joinder thereto.

 

“Subsidiary Guaranty” is defined in Section 9.7(a).

 

“Substitute Purchaser” is defined in Section 21.

 

“Super-Majority Holders” means

 

(a)     after the First Closing and before the Second Closing Date, (i) the
holders of at least 66-2/3% in principal amount of the Notes at the time
outstanding (exclusive of Notes then owned by the Company or any of its
Affiliates) and (ii) the Purchasers of the Notes scheduled to be issued at the
Second Closing, and

 

(b)     on or after the Second Closing Date, the holders of at least 66-2/3% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).

 

“Supplement” is defined in Section 2.2.

 

“SVO” means the Securities Valuation Office of the NAIC.

 

“Swap Contract” means (a) any and all interest rate swap transactions, basis
swap transactions, basis swaps, credit derivative transactions, forward rate
transactions, commodity swaps, commodity options, forward commodity contracts,
equity or equity index swaps or options, bond or bond price or bond index swaps
or options or forward foreign exchange transactions, cap transactions, floor
transactions, currency options, spot contracts or any other similar transactions
or any of the foregoing (including any options to enter into any of the
foregoing), and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Association, Inc. or any International Foreign Exchange Master
Agreement.

 

A-17

--------------------------------------------------------------------------------

 

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amounts(s) determined as the
mark-to-market values(s) for such Swap Contracts, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts.

 

“Synthetic Lease” means, at any time, any lease (including leases that may be
terminated by the lessee at any time) of any property (a) that is accounted for
as an operating lease under GAAP and (b) in respect of which the lessee retains
or obtains ownership of the property so leased for U.S. federal income tax
purposes, other than any such lease under which such Person is the lessor.

 

“tranche” means all Notes of a Series having the same maturity, interest rate,
currency and schedule for mandatory prepayments.

 

“Tranche A Notes” is defined in Section 1.

 

“Tranche B Notes” is defined in Section 1.

 

“Unencumbered Asset Coverage Ratio” means, on a consolidated basis for the
Company and its consolidated subsidiaries, the ratio of (a) Unencumbered Assets
to (b) Unsecured Debt. For clarity, the calculation of the Unencumbered Asset
Coverage Ratio (and any defined term used in this definition) with respect to
the Company shall be made in accordance with any exemptive order issued by, or
exemptive relief granted by, the SEC with respect to the indebtedness of any
SBIC Subsidiary. For the avoidance of doubt, for purposes of this definition and
any defined term used in this definition, (x) in no event shall liabilities or
indebtedness include any unfunded commitment and (b) the outstanding utilized
notional amount of any total return swap, in each case less the value of the
margin posted by the Company or any of its consolidated subsidiaries thereunder
at such time shall be treated as a Senior Security of the Company for the
purposes of calculating the Unencumbered Asset Coverage Ratio.

 

“Unencumbered Assets” means (a) the value of total assets of the Company that
are not secured by a Lien (other than Liens not prohibited by Section 10.5),
including, without duplication, the value of any Equity Interests owned by the
Company, directly or indirectly, in a consolidated subsidiary, less (b) all
unsecured liabilities and unsecured indebtedness not represented by Senior
Securities of the Company.

 

A-18

--------------------------------------------------------------------------------

 

 

“Unsecured Debt” means the aggregate amount of Senior Securities representing
unsecured indebtedness of the Company (all as determined pursuant to the
Investment Company Act and any orders of the SEC issued to the Company
thereunder).

 

“United States Person” has the meaning set forth in Section 7701(a)(30) of the
Code.

 

“USA PATRIOT Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 and the rules and regulations
promulgated thereunder from time to time in effect.

 

“U.S. Economic Sanctions Laws” means those laws, executive orders, enabling
legislation or regulations administered and enforced by the United States
pursuant to which economic sanctions have been imposed on any Person, entity,
organization, country or regime, including the Trading with the Enemy Act, the
International Emergency Economic Powers Act, the Iran Sanctions Act, the Sudan
Accountability and Divestment Act and any other OFAC Sanctions Program.

 

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at
any date, the number of years (and/or portion thereof) obtained by dividing:
(a) the sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments
of principal, including payment at final maturity, in respect thereof, by
(ii) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment; by (b) the then
outstanding principal amount of such Indebtedness.

 

“Wholly-Owned Subsidiary” means, at any time, any subsidiary all of the equity
interests (except directors’ qualifying shares) and voting interests of which
are owned by any one or more of the Company and the Company’s other Wholly-Owned
Subsidiaries at such time.

 

 

A-19

--------------------------------------------------------------------------------

 

 

[Form of Series 2020, Tranche A Note]

 

Hercules Capital, Inc.

 

4.28% Series 2020 Senior Note, Tranche A, Due February 5, 2025

 

No. [_____]

Date____________

$[_______]

PPN 427096 A@1

 

 

For Value Received, the undersigned, Hercules Capital, Inc. (herein called the
“Company”), a corporation organized and existing under the laws of the State of
Maryland, hereby promises to pay to [____________], or registered assigns, the
principal sum of [_____________________] Dollars (or so much thereof as shall
not have been prepaid) on February 5, 2025 (the “Maturity Date”), with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance hereof at the rate of 4.28% per annum from the date hereof,
payable semiannually, on the 5th day of February and August in each year,
commencing with the August or February next succeeding the date hereof, and on
the Maturity Date, until the principal hereof shall have become due and payable,
and (b) to the extent permitted by law, (x) on any overdue payment of interest
and (y) during the continuance of an Event of Default, on such unpaid balance
and on any overdue payment of any Prepayment Settlement Amount (if any), at a
rate per annum from time to time equal to 6.28%, payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand).

 

Payments of principal of, interest on and any Prepayment Settlement Amount with
respect to this Note are to be made in lawful money of the United States of
America at the Company in New York, New York or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.

 

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement, dated February 5, 2020 (as from time to
time amended, the “Note Purchase Agreement”), between the Company and the
respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, to have
(i) agreed to the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreement and (ii) made the representations set forth in Section 6 of
the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used
in this Note shall have the respective meanings ascribed to such terms in the
Note Purchase Agreement.

 

This Note is a registered Note and, as provided in (and subject to the terms and
conditions of) the Note Purchase Agreement, upon surrender of this Note for
registration of transfer accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder’s attorney duly
authorized in writing, a new Note for a like principal amount will be issued to,
and registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

 

Schedule 1(a)
(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

 

This Note is subject to optional prepayment, in whole or from time to time in
part, on the terms specified in the Note Purchase Agreement.

 

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Prepayment Settlement Amount) and with the effect
provided in the Note Purchase Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

 

 

Hercules Capital, Inc.

 

 

 

 

 

 

 

 

 

 

By

 

 

 

 

[Title]

 

 

1(a)-2

--------------------------------------------------------------------------------

 

 

[Form of Series 2020, Tranche B Note]

 

Hercules Capital, Inc.

 

4.31% Series 2020 Senior Note, Tranche B, Due June 3, 2025

 

No. [_____]

Date____________

$[_______]

PPN 427096 A#9

 

 

For Value Received, the undersigned, Hercules Capital, Inc. (herein called the
“Company”), a corporation organized and existing under the laws of the State of
Maryland, hereby promises to pay to [____________], or registered assigns, the
principal sum of [_____________________] Dollars (or so much thereof as shall
not have been prepaid) on June 3, 2025 (the “Maturity Date”), with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance hereof at the rate of 4.31% per annum from the date hereof,
payable semiannually, on the 3rd day of June and December in each year,
commencing with the December or June next succeeding the date hereof, and on the
Maturity Date, until the principal hereof shall have become due and payable, and
(b) to the extent permitted by law, (x) on any overdue payment of interest and
(y) during the continuance of an Event of Default, on such unpaid balance and on
any overdue payment of any Prepayment Settlement Amount (if any), at a rate per
annum from time to time equal to 6.31%, payable semiannually as aforesaid (or,
at the option of the registered holder hereof, on demand).

 

Payments of principal of, interest on and any Prepayment Settlement Amount with
respect to this Note are to be made in lawful money of the United States of
America at the Company in New York, New York or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.

 

This Note is one of a series of Senior Notes (herein called the “Notes”) issued
pursuant to the Note Purchase Agreement, dated February 5, 2020 (as from time to
time amended, the “Note Purchase Agreement”), between the Company and the
respective Purchasers named therein and is entitled to the benefits thereof.
Each holder of this Note will be deemed, by its acceptance hereof, to have
(i) agreed to the confidentiality provisions set forth in Section 20 of the Note
Purchase Agreement and (ii) made the representations set forth in Section 6 of
the Note Purchase Agreement. Unless otherwise indicated, capitalized terms used
in this Note shall have the respective meanings ascribed to such terms in the
Note Purchase Agreement.

 

This Note is a registered Note and, as provided in (and subject to the terms and
conditions of) the Note Purchase Agreement, upon surrender of this Note for
registration of transfer accompanied by a written instrument of transfer duly
executed, by the registered holder hereof or such holder’s attorney duly
authorized in writing, a new Note for a like principal amount will be issued to,
and registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

 

Schedule 1(b)
(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

 

This Note is subject to optional prepayment, in whole or from time to time in
part, on the terms specified in the Note Purchase Agreement.

 

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Prepayment Settlement Amount) and with the effect
provided in the Note Purchase Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

 

 

Hercules Capital, Inc.

 

 

 

 

 

 

 

 

 

 

By

 

 

 

 

[Title]

 

 

1(b)-2

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

 

 

 

 

Hercules Capital, Inc.

 

 

 

 

 

 

[Number] Supplement to Note Purchase Agreement

 

 

Dated as of ______________________

 

 

 

 

 

Re: $____________ _____% Series _______ Senior Notes     Due
_____________________  

 

 

       

 

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

 

 

 

Exhibit S

(to Note Purchase Agreement)

--------------------------------------------------------------------------------

 

 

 

Hercules Capital, Inc.

 

 

Dated as of

____________________, 20__

 

To the Additional Purchaser(s) named in

Schedule A hereto

 

 

Ladies and Gentlemen:

 

This [Number] Supplement to Note Purchase Agreement (the “Supplement”) is
between Hercules Capital, Inc., a Maryland corporation (the “Company”), and the
institutional investors named on Schedule A attached hereto (the “Additional
Purchasers”).

 

Reference is hereby made to that certain Note Purchase Agreement dated as of
February 5, 2020 (the “Note Purchase Agreement”) among the Company and the
Purchasers listed on the Purchaser Schedule thereto. All capitalized terms not
otherwise defined herein shall have the same meaning as specified in the Note
Purchase Agreement. Reference is further made to Section 4.13 of the Note
Purchase Agreement which requires that, prior to the delivery of any Additional
Notes, the Company and each Additional Purchaser shall execute and deliver a
Supplement.

 

The Company hereby agrees with the Additional Purchaser(s) as follows:

 

1.     The Company has authorized the issue and sale of $__________ aggregate
principal amount of its _____% Series ______ Senior Notes due _________, ____
(the “Series ______ Notes”). The Series ____ Notes, together with the
Series 2020 Notes [and the Series ____ Notes] issued pursuant to the Note
Purchase Agreement and each series of Additional Notes which may from time to
time hereafter be issued pursuant to the provisions of Section 2.2 of the Note
Purchase Agreement, are collectively referred to as the “Notes” (such term shall
also include any such notes issued in substitution therefor pursuant to
Section 13 of the Note Purchase Agreement). The Series _____ Notes shall be
substantially in the form set out in Exhibit 1 hereto with such changes
therefrom, if any, as may be approved by the Additional Purchaser(s) and the
Company.

 

2.     Subject to the terms and conditions hereof and as set forth in the Note
Purchase Agreement and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to each Additional
Purchaser, and each Additional Purchaser agrees to purchase from the Company,
Series _____ Notes in the principal amount set forth opposite such Additional
Purchaser’s name on Schedule A hereto at a price of 100% of the principal amount
thereof on the closing date hereinafter mentioned.

 

 

--------------------------------------------------------------------------------

 

 

3.     The sale and purchase of the Series ______ Notes to be purchased by each
Additional Purchaser shall occur at the offices of [Chapman and Cutler LLP, 111
West Monroe Street, Chicago, Illinois 60603,] at 10:00 a.m. [Chicago time], at a
closing (the “Series ______ Closing”) on ______, ____ or on such other Business
Day thereafter on or prior to _______, ____ as may be agreed upon by the Company
and the Additional Purchasers. At the Series ___ Closing, the Company will
deliver to each Additional Purchaser the Series ______ Notes to be purchased by
such Additional Purchaser in the form of a single Series ______ Note (or such
greater number of Series ______ Notes in denominations of at least $100,000 as
such Additional Purchaser may request) dated the date of the Series _____
Closing and registered in such Additional Purchaser’s name (or in the name of
such Additional Purchaser’s nominee), against delivery by such Additional
Purchaser to the Company or its order of immediately available funds in the
amount of the purchase price therefor by wire transfer of immediately available
funds for the account of the Company to account number
[__________________________] at ____________ Bank, [Insert Bank address, ABA
number for wire transfers, and any other relevant wire transfer information].
If, at the Series ___ Closing, the Company shall fail to tender such
Series ______ Notes to any Additional Purchaser as provided above in this
Section 3, or any of the conditions specified in Section 4 shall not have been
fulfilled to any Additional Purchaser’s satisfaction, such Additional Purchaser
shall, at such Additional Purchaser’s election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights such
Additional Purchaser may have by reason of such failure by the Company to tender
such Series ______ Notes or any of the conditions specified in Section 4 not
having been fulfilled to such Additional Purchaser’s satisfaction.

 

4.     The obligation of each Additional Purchaser to purchase and pay for the
Series ______ Notes to be sold to such Additional Purchaser at the Series _____
Closing is subject to the fulfillment to such Additional Purchaser’s
satisfaction, prior to the Series ___ Closing, of the conditions set forth in
Section 4 of the Note Purchase Agreement with respect to the Series ______ Notes
to be purchased at the Series _____ Closing as if each reference to “Notes,”
“Closing” and “Additional Purchaser” set forth therein was modified to refer the
“Series ______ Notes,” the “Series ___ Closing” and the “Additional Purchaser”
(each as defined in this Supplement) and to the following additional conditions:

 

(a)     Except as supplemented, amended or superceded by the representations and
warranties set forth in Exhibit A hereto, each of the representations and
warranties of the Company set forth in Section 5 of the Note Purchase Agreement
shall be correct as of the date of the Series ___ Closing (except for
representations and warranties which apply to a specific earlier date which
shall be true as of such earlier date or as of the date specified in Exhibit A
to the extent such provision is superceded in Exhibit A) and the Company shall
have delivered to each Additional Purchaser an Officer’s Certificate, dated the
date of the Series _____ Closing certifying that such condition has been
fulfilled.

 

(b)     Contemporaneously with the Series ___ Closing, the Company shall sell to
each Additional Purchaser, and each Additional Purchaser shall purchase, the
Series ______ Notes to be purchased by such Additional Purchaser at the Series
_____ Closing as specified in Schedule A.

 

5.     [Here insert special provisions for Series ______ Notes including
Prepayment Settlement Amount calculations and mandatory prepayment provisions
applicable to Series ______ Notes and any series-specific closing conditions
applicable to Series ______ Notes].

 

 

--------------------------------------------------------------------------------

 

 

6.     Each Additional Purchaser represents and warrants that the
representations and warranties set forth in Section 6 of the Note Purchase
Agreement are true and correct on the date hereof with respect to the purchase
of the Series ______ Notes by such Additional Purchaser as if each reference to
“Notes,” “Closing” and “Purchaser” set forth therein was modified to refer the
“Series ______ Notes,” the “Series ___ Closing” and the “Additional Purchaser”
and each reference to “this Agreement” therein was modified to refer to the Note
Purchase Agreement as supplemented by this Supplement.

 

7.     The Company and each Additional Purchaser agree to be bound by and comply
with the terms and provisions of the Note Purchase Agreement as fully and
completely as if such Additional Purchaser were an original signatory to the
Note Purchase Agreement.

 

The execution hereof shall constitute a contract between the Company and the
Additional Purchaser(s) for the uses and purposes hereinabove set forth, and
this agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement.

 

 

 

Hercules Capital, Inc.

 

 

 

 

 

       

 

 

 

 

 

By

 

 

 

 

 

 

 

 

Name:

 

 

    Title:               Accepted as of __________, _____                    
[Additional Purchaser]                                   By                    
Name:          Title:     

 

 

--------------------------------------------------------------------------------

 

 

Supplemental Representations

 

The Company represents and warrants to each Additional Purchaser that except as
hereinafter set forth in this Exhibit A, each of the representations and
warranties set forth in Section 5 of the Note Purchase Agreement (other than
representations and warranties that apply solely to a specific earlier date
which shall be true as of such earlier date and other than the Section
references hereinafter set forth) is true and correct in all material respects
as of the date hereof with respect to the Series ______ Notes with the same
force and effect as if each reference to “the Notes” set forth therein was
modified to refer to the “Series ______ Notes” and each reference to “this
Agreement” therein was modified to refer to the Note Purchase Agreement as
supplemented by the _______ Supplement. The Section references hereinafter set
forth correspond to the similar sections of the Note Purchase Agreement which
are supplemented hereby:

 

Section 5.3.     Disclosure. (a) The Company, through its agent, ______________,
has delivered to each Additional Purchaser a copy of a [Private Placement
Memorandum], dated _________ (the “Memorandum”), relating to the transactions
contemplated hereby in connection with the Series ____ Notes. The Memorandum
fairly describes, in all material respects, the general nature of the business
and principal properties of the Company and its Subsidiaries. This Agreement,
the Memorandum, the financial statements listed in Schedule 5.5 and the
documents, certificates or other writings delivered to the Additional Purchasers
by or on behalf of the Company (other than financial projections, pro forma
financial information and other forward-looking information referenced in
Section 5.3(b), information relating to third parties and general economic
information) prior to __________ in connection with the transactions
contemplated hereby and identified in Schedule 5.3 (this Agreement, the
Memorandum and such documents, certificates or other writings and such financial
statements delivered to each Additional Purchaser being referred to,
collectively, as the “Disclosure Documents”), taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Disclosure
Documents, since ____________, there has been no change in the financial
condition, operations, business or properties of the Company or any Subsidiary
except changes that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. There is no fact known to the
Company that would reasonably be expected to have a Material Adverse Effect that
has not been set forth herein or in the Disclosure Documents.

 

(b)     All financial projections, pro forma financial information and other
forward-looking information which has been delivered to each Additional
Purchaser by or on behalf of the Company in connection with the transactions
contemplated by this Agreement are based upon good faith assumptions and, in the
case of financial projections and pro forma financial information, good faith
estimates, in each case, believed to be reasonable at the time made, it being
recognized that (i) such financial information as it relates to future events is
subject to significant uncertainty and contingencies (many of which are beyond
the control of the Company) and are therefore not to be viewed as fact, and (ii)
actual results during the period or periods covered by such financial
information may materially differ from the results set forth therein.

 

Exhibit A

(to Supplement)

 

--------------------------------------------------------------------------------

 

 

Section 5.4.     Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists as of the date of the Series ___ Closing of (i) the Company’s
Subsidiaries, showing, as to each Subsidiary, the name thereof, the jurisdiction
of its organization, the percentage of shares of each class of its capital stock
or similar equity interests outstanding owned by the Company and each other
Subsidiary and whether such Subsidiary is a Subsidiary Guarantor, and (ii) the
Company’s directors and senior officers.

 

Section 5.5.     Financial Statements; Material Liabilities. The Company has
delivered to each Additional Purchaser copies of the financial statements of the
Company and its Subsidiaries listed on Schedule 5.5. All of such financial
statements (including in each case the related schedules and notes, but
excluding all financial projections, pro forma financial information and other
forward-looking information) fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as of the
respective dates specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied throughout the
periods involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments and lack of
footnotes).

 

Section 5.13.     Private Offering by the Company. Neither the Company nor
anyone acting on its behalf has offered the Notes or any substantially similar
debt Securities for sale to, or solicited any offer to buy the Notes or any
substantially similar debt Securities from, or otherwise approached or
negotiated in respect thereof with, any Person other than the Additional
Purchasers and not more than ______ other Institutional Investors, each of which
has been offered the Notes at a private sale for investment. Neither the Company
nor anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
section 5 of the Securities Act or to the registration requirements of any
Securities or blue sky laws of any applicable jurisdiction.

 

Section 5.14.     Use of Proceeds; Margin Regulations The Company will apply the
proceeds of the sale of the Notes hereunder for the general corporate purposes
of the Company and its Subsidiaries and as otherwise set forth in the section of
the _______ entitled “__________”. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any Securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than ___% of the value of the
consolidated assets of the Company and its subsidiaries and the Company does not
have any present intention that margin stock will constitute more than ___% of
the value of such assets. As used in this Section, the terms “margin stock” and
“purpose of buying or carrying” shall have the meanings assigned to them in said
Regulation U.

 

-2-

--------------------------------------------------------------------------------

 

 

Section 5.15.     Existing Indebtedness; Future Liens. (a) Except as described
therein, Schedule 5.15 sets forth a complete and correct list of all outstanding
Indebtedness of the Company and its Subsidiaries as of ________, since which
date there has been no Material change in the amounts, interest rates, sinking
funds, installment payments or maturities of the Indebtedness of the Company or
its Subsidiaries. As of ___________, neither the Company nor any Subsidiary is
in default and no waiver of default is currently in effect, in the payment of
any principal or interest on any Indebtedness of the Company or such Subsidiary
and, to the knowledge of the Company, no event or condition exists with respect
to any Indebtedness of the Company or any Subsidiary that would permit (or that
with notice or the lapse of time, or both, would permit) one or more Persons to
cause such Indebtedness to become due and payable before its stated maturity or
before its regularly scheduled dates of payment.

 

[Add any additional Sections as appropriate at the time the Series ______ Notes
are issued]

 

-3-

--------------------------------------------------------------------------------

 

 

[Form of Series ______ Note]

 

Hercules Capital, Inc.

 

___% Series ______ Senior Note due ______________

 

No. [_________] [Date] $[____________] PPN 427096 [___]

 

For Value Received, the undersigned, Hercules Capital, Inc. (herein called the
“Company”), a corporation organized and existing under the laws of the State of
Maryland, hereby promises to pay to [____________], or registered assigns, the
principal sum of [_____________________] Dollars (or so much thereof as shall
not have been prepaid) on [____________] (the “Maturity Date”), with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance hereof at the rate of (a) [____]% per annum from the date hereof,
payable semiannually, on the [____] day of [____] and [____] in each year,
commencing with the [____] next succeeding the date hereof, and on the Maturity
Date, until the principal hereof shall have become due and payable, and (b) to
the extent permitted by law, (x) on any overdue payment of interest and
(y) during the continuance of an Event of Default, on such unpaid balance and on
any overdue payment of any Prepayment Settlement Amount (if any), at a rate per
annum from time to time equal to the Default Rate (as defined in the hereinafter
defined Note Purchase Agreement).

 

Payments of principal of, interest on and any Prepayment Settlement Amount with
respect to this Note are to be made in lawful money of the United States of
America at the Company in New York, New York or at such other place as the
Company shall have designated by written notice to the holder of this Note as
provided in the Note Purchase Agreement referred to below.

 

This Note is one of a series of Senior Notes (the “Notes”) issued pursuant to a
Supplement to the Note Purchase Agreement, dated February 5, 2020 (as from time
to time amended, supplemented or modified, the “Note Purchase Agreement”), among
the Company, the Additional Purchasers named therein and Additional Purchasers
of Notes from time to time issued pursuant to any Supplement to the Note
Purchase Agreement. This Note and the holder hereof are entitled with the
holders of all other Notes of all series from time to time outstanding under the
Note Purchase Agreement to all the benefits provided for thereby or referred to
therein. Each holder of this Note will be deemed, by its acceptance hereof,
(i) to have agreed to the confidentiality provisions set forth in Section 20 of
the Note Purchase Agreement and (ii) to have made the representation set forth
in Section 6 of the Note Purchase Agreement. Unless otherwise indicated,
capitalized terms used in this Note shall have the respective meanings ascribed
to such terms in the Note Purchase Agreement.

 

This Note is a registered Note with the Company and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of transfer
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
of the same series for a like principal amount will be issued to, and registered
in the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the Person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all other
purposes, and the Company will not be affected by any notice to the contrary.

 

 

--------------------------------------------------------------------------------

 

 

[The Company will make required prepayments of principal on the dates and in the
amounts specified in the Note Purchase Agreement.] [This Note is not subject to
regularly scheduled prepayments of principal.] This Note is [also] subject to
optional prepayment, in whole or from time to time in part, at the times and on
the terms specified in the Note Purchase Agreement, but not otherwise.

 

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Prepayment Settlement Amount) and with the effect
provided in the Note Purchase Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such State
that would permit the application of the laws of a jurisdiction other than such
State.

 

 

Hercules Capital, Inc.

 

       

 

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

    Title: