Exhibit 10.2

 

  

 

 

AMENDED AND RESTATED SALE AND SERVICING AGREEMENT

Among

HERCULES FUNDING II LLC,

as Borrower

And

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.,

as Originator and Servicer

And

WELLS FARGO CAPITAL FINANCE, LLC,

as Agent

Dated as of June 29, 2015

 

 

 

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TABLE OF CONTENTS

 

              Page   ARTICLE I    DEFINITIONS      1      1.01    Definitions   
  1      1.02    Other Definitional Provisions      16    ARTICLE II   
CONVEYANCE OF THE PURCHASED ASSETS; BORROWINGS UNDER LOAN AGREEMENT      17     
2.01    Conveyance of the Purchased Assets; Borrowings      17      2.02   
Ownership and Possession of Loan Files      18      2.03    Books and Records;
Intention of the Parties      18      2.04    Delivery of Loan Files      18   
  2.05    Acceptance by the Agent of the Loan Files; Certification by the
Collateral Custodian      19      2.06    Conditions Precedent to Closing     
20      2.07    Conditions to Borrowings      20      2.08    Conditions to
Transfers of Loans      21    ARTICLE III    REPRESENTATIONS AND WARRANTIES     
22      3.01    Representations and Warranties of the Borrower      22      3.02
   Representations and Warranties of the Originator      24      3.03   
Representations and Warranties Regarding the Loans      26      3.04    Notice
of Breach of Representations and Warranties      29      3.05    Repurchase of
Ineligible Loans      29    ARTICLE IV    ADMINISTRATION AND SERVICING OF LOANS
     31      4.01    Appointment of the Servicer      31      4.02    Duties and
Responsibilities of the Servicer      31      4.03    Authorization of the
Servicer      33      4.04    Collection of Payments      33      4.05   
[Intentionally Omitted]      34      4.06    Realization Upon Defaulted Loans or
Charged-Off Loans      34      4.07    Maintenance of Insurance Policies      35
     4.08    Representations and Warranties of the Servicer      35      4.09   
Covenants of the Servicer      36      4.10    The Collateral Custodian; The
Agent      39      4.11    [Intentionally Omitted]      40      4.12   
[Intentionally Omitted]      40      4.13    [Intentionally Omitted]      41   
  4.14    [Intentionally Omitted]      41      4.15    [Intentionally Omitted]
     41      4.16    Payment of Certain Expenses by the Servicer and the
Borrower      41      4.17    Reports      41      4.18    Annual Statement as
to Compliance      42   

 

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TABLE OF CONTENTS

(continued)

 

              Page     4.19    [Intentionally Omitted]      42      4.20   
Limitation on Liability      42      4.21    The Servicer Not to Resign      43
     4.22    Access to Certain Documentation and Information Regarding the
Transferred Loans      43      4.23    Identification of Records      43   
ARTICLE V    ESTABLISHMENT OF CASH MANAGEMENT ACCOUNT      44      5.01    Cash
Management Account      44    ARTICLE VI    [RESERVED]      44    ARTICLE VII   
COVENANTS      44      7.01    Financial and Serviced Portfolio Covenants of
Hercules      44      7.02    Covenants Regarding Purchased Assets      45   
ARTICLE VIII    THE SERVICER AND THE COLLATERAL CUSTODIAN      46      8.01   
Indemnification; Third Party Claims      46      8.02    Relationship of
Servicer to the Borrower and the Agent      48      8.03    Servicer May Be a
Lender      48      8.04    Indemnification of the Agent and other Persons Under
the Loan Agreement      49    ARTICLE IX    SERVICER DEFAULT      49      9.01
   Servicer Default      49      9.02    Appointment of Successor      51     
9.03    Waiver of Defaults      53      9.04    Accounting Upon Termination of
Servicer      54    ARTICLE X    TERMINATION      54      10.01    Termination
     54    ARTICLE XI    MISCELLANEOUS PROVISIONS      54      11.01   
Amendment      54      11.02    Duration of Agreement      55      11.03   
GOVERNING LAW; JURISDICTION      55      11.04    Notices      55      11.05   
Severability of Provisions      56      11.06    No Partnership      56     
11.07    Counterparts      56      11.08    Successors and Assigns      56   

 

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TABLE OF CONTENTS

(continued)

 

              Page     11.09    Headings      56      11.10    Non-Petition
Agreement      56      11.11    Due Diligence      57      11.12    No Reliance
     57      11.13    Conflicts      58      11.14    No Agency      58   

 

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EXHIBIT A Form of Servicer Report EXHIBIT B Form of S&SA Assignment EXHIBIT C
Form of Loan Schedule EXHIBIT D-1 Form of Initial Collateral Certification
EXHIBIT D-2 Form of Final Collateral Certification EXHIBIT E Form of Assignment
of Mortgage EXHIBIT F Form of Request for Release of Documents and Receipt
EXHIBIT G Form of Servicer’s Certificate EXHIBIT H Credit and Collection Policy

 

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AMENDED AND RESTATED SALE AND SERVICING AGREEMENT

This Amended and Restated Sale and Servicing Agreement is entered into as of
June 29, 2015, among Hercules Funding II LLC, a Delaware limited liability
company, as Borrower (in such capacity, the “Borrower”), Hercules Technology
Growth Capital, Inc., a Maryland corporation (“Hercules”), as Originator (in
such capacity, the “Originator”) and as Servicer (in such capacity, the
“Servicer”), and Wells Fargo Capital Finance, LLC, a Delaware limited liability
company, as Agent for Lenders under the Loan Agreement (as hereinafter defined)
(in such capacity, the “Agent”).

RECITALS:

A. The Borrower, the Originator, the Servicer, the Agent, and Lyon Financial
Services, Inc., a Minnesota corporation doing business as U.S. Bank Portfolio
Services, as “Backup Servicer” (in such capacity, the “Backup Servicer”),
entered into a Sale and Servicing Agreement dated as of August 25, 2008 (as
heretofore modified and supplemented and in effect on the date hereof
immediately before giving effect to the amendment and restatement contemplated
hereby, the “Existing Sale and Servicing Agreement”).

B. Subsequent to the “Closing Date” under the Existing Sale and Servicing
Agreement, the Backup Servicer resigned and has not and will not be replaced.

C. The parties wish to enter into this Amended and Restated Sale and Servicing
Agreement, which shall amend, restate, replace and supersede (but not cause a
novation of) the Existing Sale and Servicing Agreement.

W I T N E S S E T H:

In consideration of the mutual agreements herein contained, the parties hereto
hereby agree as follows for the benefit of each of them and for the benefit of
the Agent and Lenders:

ARTICLE I

DEFINITIONS

1.01 Definitions.

Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the meanings specified in this Article.
Unless otherwise specified, all calculations of interest with respect to the
Notes described herein shall be made on the basis of a 360-day year and the
actual number of days elapsed in each Accrual Period.

“1940 Act”: The Investment Company Act of 1940, as amended, and the rules and
regulations promulgated thereunder.

“Accepted Servicing Practices”: The servicing practices and collection
procedures of the Servicer that are in accordance with the applicable Obligor
Loan Documents and Applicable Law and which are consistent with the higher
standard of (i) customary servicing practices of

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prudent institutions which service loans or other financial assets similar to
the Transferred Loans for their own account or for the account of others and
(ii) the same care, skill, prudence and diligence with which the Servicer
services and administers loans or other financial assets which are similar to
the Transferred Loans serviced or administered pursuant to this Agreement, for
its own account or for the account of others.

“Accreted Interest”: The accrued interest on a PIK Loan that is added to the
principal amount of such PIK Loan instead of being paid as it accrues.

“Advance Rate: On any date a percentage equal to 50%.

“Advances Outstanding: As of any date of determination, the aggregate principal
amount of Borrowings outstanding on such date, after giving effect to all
repayments of Borrowings and makings of new Borrowings on such date.

“Affiliate”: With respect to any specified Person, any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms “controlling” and “controlled” have
meanings correlative to the foregoing; provided, that in the case of the
Servicer or any Subsidiary, “Affiliate” shall not include any Person that is a
Portfolio Investment.

“Agent”: Wells Fargo Foothill, LLC, a Delaware limited liability company, as
Agent for the Lenders under the Loan Agreement, or any successor Agent under the
Loan Agreement.

“Agent’s Account”: Has the meaning set forth in the Loan Agreement.

“Aggregate Outstanding Loan Balance”: As of any date of determination, the sum
of the Outstanding Loan Balances of all Eligible Loans included as part of the
Collateral on such date minus the Outstanding Loan Balance of all Charged-Off
Loans included as part of the Collateral (and specifically excluding all
Ineligible Loans) on such date.

“Aggregate Unpaids”: At any time, an amount equal to the sum of all unpaid
Advances Outstanding, Interest Payment Amounts and Interest Carry-Forward
Amounts, and all other amounts owed to the Agent and the Lender Group, the
Servicer, and the Originator hereunder and under the Loan Agreement (including,
without limitation, all amounts in respect of indemnities hereunder or under the
Loan Agreement, other amounts payable under Section 8.01, Section 8.04, and
amounts required to be paid by the Borrower or any other Person under the Fee
Letter or any other fee letter delivered in connection with the transactions
contemplated by this Agreement or the Loan Agreement, in each case whether due
or accrued.

“Agreement”: This Sale and Servicing Agreement, as it may be amended and
supplemented from time to time.

“Applicable Law”: For any Person or property of such Person, all existing and
future applicable laws, rules, regulations (including proposed, temporary and
final income tax

 

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regulations), statutes, treaties, codes ordinances, permits, certificates,
orders and licenses of and interpretations by any Governmental Authority
(including, without limitation, usury laws, predatory lending laws, the Federal
Truth in Lending Act, and Regulation Z and Regulation B of the Federal Reserve
Board), and applicable judgments, decrees, injunctions, writs, orders, or line
action of any court, arbitrator or other administrative, judicial, or
quasi-judicial tribunal or agency of competent jurisdiction.

“Assignment of Mortgage”: As to each Loan secured by an interest in real
property, one or more collateral assignments, notices of transfer or equivalent
instruments, each in recordable form and sufficient under the laws of the
relevant jurisdiction to reflect the transfer as collateral of the related
mortgage, deed of trust, security deed, immovable hypothec, deed of hypothec or
similar security instrument and all other documents related to such Loan to the
Borrower and to grant a perfected Lien thereon by the Borrower in favor of the
Agent, on behalf of the Lender Group, each such Assignment of Mortgage to be
substantially in the form of Exhibit E hereto.

“Availability”: Has the meaning set forth in the Loan Agreement.

“Bankruptcy Code”: Title 11 of the United States Code.

“Bankruptcy Event”: With respect to a Person, shall be deemed to have occurred
if either:

(a) a case or other proceeding shall be commenced, without the application or
consent of such Person, in any court seeking the liquidation, reorganization,
debt arrangement, dissolution, winding up, or composition or readjustment of
debts of such Person, the appointment of a trustee, receiver, custodian,
liquidator, assignee, sequestrator or the like for such Person or for all or
substantially all of its assets, or any similar action with respect to such
Person under any law relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts, and such case or proceeding shall
continue undismissed or unstayed, and in effect, for a period of 60 consecutive
days; or an order for relief in respect of such Person shall be entered in an
involuntary case or proceeding under any such law now or hereafter in effect; or

(b) such Person shall commence a voluntary case or other proceeding under any
applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution
or other similar law now or hereafter in effect, or shall consent to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) for such Person or
for any substantial part of its assets, or shall make any general assignment for
the benefit of creditors, or shall fail to, or admit in writing its inability
to, pay its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the foregoing.

“Bankruptcy Laws”: The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, composition or adjustment of
debts or similar debtor relief laws from time to time in effect affecting the
rights of creditors generally.

 

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“Bankruptcy Proceeding”: Any case, action or proceeding before any Governmental
Authority relating to a Bankruptcy Event.

“Borrower”: Hercules Funding II LLC, a Delaware limited liability company.

“Borrowing”: Has the meaning set forth in Section 2.01(b) hereof.

“Borrowing Base”: Has the meaning set forth in the Loan Agreement.

“Borrowing Base Certificate”: Has the meaning set forth in the Loan Agreement.

“Business Day”: Any day other than (i) a Saturday or Sunday or (ii) a day on
which banking institutions in New York City, Palo Alto, California, Madison,
Minnesota, or Dallas, Texas, or in the city in which the Servicer’s servicing
operations are located, are authorized or obligated by law or executive order to
be closed.

“Cash Management Account”: Has the meaning set forth in the Loan Agreement.

“Charged-Off Loan”: Any Transferred Loan (i) that is 180 days or more past due
with respect to any interest or principal payment, (ii) as to which a Bankruptcy
Event has occurred with respect to the related Obligor, (iii) as to which the
related Obligor has suffered any Material Adverse Change, (iv) that is or should
be written off as uncollectible by the Servicer in accordance with the Credit
and Collection Policy, (v) that has been placed on non-accrual status by the
Servicer in accordance with the Credit and Collection Policy, (vi) all or any
portion of which has been converted into or exchanged for an Equity Security
(other than conversions that have resulted in a fair market value of the Equity
Security that is in excess of such converted amount) or (vii) has been sold for
less than its Outstanding Loan Balance upon foreclosure or upon exercise of
remedies, provided, that only the portion of the Transferred Loan not recouped
in such sale shall be deemed to be “charged-off” for purposes of clause (vii).

“Closing Date”: the date of this Agreement.

“Code”: The Internal Revenue Code of 1986, as amended from time to time, and the
regulations promulgated by the United States Treasury thereunder.

“Collateral”: Has the meaning provided in the Loan Agreement.

“Collateral Custodian”: Means a Person acceptable to both Borrower and Agent
that is appointed pursuant to a Collateral Custodian Agreement acceptable to
such Person, Borrower and Agent to hold the original Obligor Loan Documents to
be delivered under this Agreement or the Loan Agreement for Agent’s benefit. As
of the Closing Date, there is no Collateral Custodian, and the original Obligor
Loan Documents required to be delivered under this Agreement or the Loan
Agreement will be delivered directly to and held by Agent. Borrower and Agent
shall notify Originator, and Servicer of the appointment of any Collateral
Custodian.

“Collateral Custodian Agreement” means a written agreement pursuant to which
Borrower and Agent appoint a Collateral Custodian with respect to this Agreement
and the Loan Agreement and specify the duties and compensation of such
Collateral Custodian.

 

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“Collateral Custodian Fee”: Means any fees payable to a Collateral Custodian in
accordance with its Collateral Custodian Agreement.

“Collection Period”: With respect to any Payment Date, the period from and
including the day following the Record Date for the preceding Payment Date (or,
in the case of the initial Payment Date, from and including the Closing Date) to
and including the Record Date with respect to the current Payment Date.

“Collections”: (a) All cash collections or other cash proceeds received by the
Borrower or by the Servicer or the Originator on behalf of the Borrower from any
source in payment of any amounts owed in respect of a Transferred Loan,
including, without limitation, Interest Collections, Principal Collections,
Insurance Proceeds, and all Recoveries, (b) all amounts received by the Borrower
in connection with the removal of a Transferred Loan from the Collateral
pursuant to Section 3.05 and (c) any other funds received by or on behalf of the
Borrower with respect to any Transferred Loan or Related Property, but
excluding, in the case of (a), (b) or (c), as applicable, amounts in respect of
any Retained Interest and Excluded Amounts.

“Commission”: The Securities and Exchange Commission.

“Continued Errors”: Has the meaning set forth in Section 9.02(d) hereof.

“Credit and Collection Policy”: Means, with respect to the initial Servicer, the
written credit and collection policies and procedures of the Originator and
Servicer in effect for any Loans to be transferred to Borrower as of the Closing
Date and attached hereto as Exhibit H, as such policies and procedures may be
amended or supplemented from time to time in compliance with Section 4.09(f) and
with respect to a Successor Servicer, the customary written credit and
collection policies and procedures of such Successor Servicer.

“Debt to Worth Ratio” means, with respect to any Person as of any date of
determination, a ratio of (a) the sum of (i) the outstanding amount of all
Indebtedness of such Person as of such date, minus (ii) the outstanding amount
of the Subordinated Debt of such Person as of such date, to (b) the sum of
(i) Tangible Net Worth of such Person as of such date, plus (ii) the outstanding
amount of the Subordinated Debt of such Person as of such date.

“Default”: Any occurrence that is, or with notice or the lapse of time or both
would become, an Event of Default.

“Defaulted Loan”: Has the meaning provided in the Loan Agreement.

“Delinquent Loan”: Has the meaning provided in the Loan Agreement.

“Distribution Account”: The account established and maintained pursuant to
Section 5.01(a)(2) hereof.

“Dollars” or “$” refers to lawful money of the United States of America.

 

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“Eligible Loan”: On any date of determination, any Transferred Loan which both
(a) complies with the representations and warranties set forth in Section 3.03
and (b) is an Eligible Note Receivable under the Loan Agreement.

“Eligible Note Receivable”: Has the meaning set forth in the Loan Agreement.

“Eligible Servicer”: (x) Hercules or (y) any other Person to which the Agent may
consent in writing.

“Equity Security”: Any equity security or other obligation or security that does
not entitle the holder thereof to receive periodic payments of interest and one
or more installments of principal.

“Errors”: Has the meaning set forth in Section 9.02(d) hereof.

“Event of Default”: Either a Servicer Default or an “Event of Default” under the
Loan Agreement.

“Exchange Act”: The Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.

“Excluded Amounts”: Any Collections received with respect to Loans which have
been removed from the Collateral pursuant to Section 3.05 to the extent such
Collections are attributable to a time after the effective date of the
applicable substitution, repurchase or release.

“Fair Market Value”: With respect to a Transferred Loan included in the
Collateral if such Transferred Loan has been reduced in value on such date of
determination below the original principal amount (other than as a result of the
allocation of a portion of the original principal amount to warrants or other
equity entitlements), the fair market value of such Transferred Loan as required
by, and in accordance with, the 1940 Act and any orders of the Commission issued
to the Originator, to be determined by the Board of Directors of the Originator
and reviewed by its auditors and communicated to the Servicer.

“Fee Letter”: Has the meaning provided in the Loan Agreement.

“Final Collateral Certification”: The certification in the form of Exhibit D-2
hereto prepared by the Agent or, if a Collateral Custodian has been appointed,
the Collateral Custodian.

“GAAP”: Generally Accepted Accounting Principles as in effect in the United
States.

“Governmental Authority”: With respect to any Person, any national, government,
state, province or other political division thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to any government, and any court or arbitrator having jurisdiction
over such Person.

“Indemnified Parties”: Has the meaning set forth in Section 8.01(c) hereof.

 

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“Independent”: When used with respect to any specified Person, such Person
(i) is in fact independent of the Originator, the Servicer, the Borrower or any
of their respective Affiliates, (ii) does not have any direct financial interest
in, or any material indirect financial interest in, the Originator, the
Servicer, the Borrower or any of their respective Affiliates and (iii) is not
connected with the Originator, the Borrower, the Servicer or any of their
respective Affiliates, as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions; provided, however,
that a Person shall not fail to be Independent of the Originator, the Borrower,
the Servicer or any of their respective Affiliates merely because such Person is
the beneficial owner of 1% or less of any class of securities issued by the
Originator, the Borrower, the Servicer or any of their respective Affiliates, as
the case may be.

“Ineligible Loan”: Shall have the meaning given such term in Section 3.05(b)(i).

“Initial Collateral Certification”: The certification in the form of Exhibit D-1
hereto prepared by Agent or, if a Collateral Custodian has been appointed, the
Collateral Custodian.

“Insurance Policy”: With respect to any Transferred Loan included in the
Collateral, an insurance policy covering physical damage to or loss to any
assets or Related Property of the Obligor securing such Transferred Loan.

“Insurance Proceeds”: Any amounts payable or any payments made to the Borrower
or to the Servicer on its behalf under any Insurance Policy.

“Intangible Assets”: With respect to any Person, that portion of the book value
of all of such Person’s assets that would be treated as intangibles under GAAP.

“Interest Collections”: Any and all amounts received with respect to a
Transferred Loan from or on behalf of the related Obligor that are deposited
into the Cash Management Account, or received by the Borrower or by the Servicer
or Originator on behalf of the Borrower in respect of Transferred Loans, not
constituting Principal Collections, and, solely for the purposes of calculating
the Portfolio Yield, any and all amounts accrued in respect of any fees (but
only to the extent such fees are not part of the Retained Interest or were not
received during such Collection Period) owed by any Obligor in respect of any
Transferred Loan.

“Interest Coverage Ratio” means, with respect to any Person for any period, the
ratio of (i) Net Investment Income for such period, to (ii) total interest
expense (including unused line fees) to the extent paid or required to be paid
during such period, in each case determined for such Person.

“Lender”: Has the meaning set forth in the Loan Agreement.

“Lien”: With respect to any asset, (a) any mortgage, lien, pledge, charge,
security interest, hypothecation, option or encumbrance of any kind in respect
of such asset or (b) the interest of a vendor or lessor under any conditional
sale agreement, financing lease or other title retention agreement relating to
such asset.

“Loan”: Any senior loan arising from the extension of credit to an Obligor in
the ordinary course of the Originator’s business including, without limitation,
all Revolving Loans and PIK

 

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Loans, and including monies due and owing and all Interest Collections,
Principal Collections and other amounts received from time to time with respect
to such loan or note receivable and all Proceeds thereof.

“Loan Agreement”: The Amended and Restated Loan and Security Agreement among the
Agent, the Lenders, and the Borrower, dated as of June 29, 2015, as it may be
amended or supplemented from time to time.

“Loan Documents”: This Agreement, the Loan Agreement, the Omnibus Amendment and
Reaffirmation, each S&SA Assignment, the Fee Letter, any UCC financing
statements filed pursuant to the terms of this Agreement or the Loan Agreement,
and any additional document, letter, fee letter, certificate, opinion, agreement
or writing the execution of which is necessary or incidental to carrying out the
terms of the foregoing documents.

“Loan Checklist” means the list delivered to the Agent and, if a Collateral
Custodian has been appointed, the Collateral Custodian, pursuant to Section 2.04
that identifies the documents contained in the related Loan File.

“Loan File”: With respect to any Loan, each of the Obligor Loan Documents
related thereto as reflected on the Loan Checklist accompanying such File.

“Loan Rate”: For each Transferred Loan in a Collection Period, the current cash
pay interest rate for such Transferred Loan in such period, as specified in the
related Obligor Loan Documents.

“Loan Schedule”: The schedule of Loans conveyed to the Borrower on each Transfer
Date and delivered to the Agent (and, if a Collateral Custodian has been
appointed, with a copy to the Collateral Custodian) in connection with each
Borrowing or as new Loans are contributed to the Borrower, initially as set
forth in Exhibit C hereto.

“Loan Tape”: Has the meaning set forth in the Section 4.13(b)(ii).

“Material Adverse Change”: With respect to any Person, any material adverse
change in the business, financial condition, operations, performance, properties
or prospects of such Person.

“Material Adverse Effect”: With respect to any event or circumstance, means a
material adverse effect on, as applicable, (a) the business, financial
condition, operations, performance, properties or prospects of the Servicer, the
Borrower, or, if a Collateral Custodian has been appointed, the Collateral
Custodian, (b) the validity, enforceability or collectibility of this Agreement,
any other Loan Document or the Purchased Assets, (c) the rights and remedies of
the Agent or any member of the Lender Group under this Agreement or any Loan
Document or (d) the ability of any of the Servicer, the Borrower, or, if a
Collateral Custodian has been appointed, the Collateral Custodian, to perform
its obligations under this Agreement or any other Loan Document, or (e) the
status, existence, perfection, priority, or enforceability of the interest of
the Borrower in the Purchased Assets or of the Agent on behalf of the Lender
Group in the Collateral.

 

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“Maturity Date”: Has the meaning set forth in the Loan Agreement.

“Obligations”: Has the meaning set forth in the Loan Agreement.

“Obligor”: With respect to any Loan, the Person or Persons obligated to make
payments pursuant to such Loan, including any guarantor thereof.

“Obligor Loan Documents”: With respect to any Loan, each related promissory note
(if any) and any related loan agreement, security agreement, mortgage, moveable
or immoveable hypothec, deed of hypothec, assignments, guarantees, note purchase
agreement, intercreditor and/or subordination agreement, and UCC financing
statements and continuation statements (including amendments or modifications
thereof) executed by the Obligor thereof or by another Person on the Obligor’s
behalf in respect of such Loan and each related promissory note (if any),
including, without limitation, general or limited guaranties and, for each Loan
secured by real property an Assignment of Mortgage, and for each promissory note
(if any), an assignment (which may be by allonge), in blank, signed by an
officer of the Originator.

“Officer’s Certificate”: A certificate signed by a Responsible Officer of the
Person delivering such certificate, in each case as required by this Agreement.

“Omnibus Amendment and Reaffirmation” shall mean the Omnibus Amendment and
Reaffirmation of Loan Documents effective as of June 29, 2015, executed by
Agent, Borrower and HTGC.

“Opinion of Counsel”: A written opinion of counsel who may be employed by the
Servicer, the Borrower, the Originator or any of their respective Affiliates, in
form and substance satisfactory to the Agent.

“Originator”: Hercules and its permitted successors and assigns.

“Originator Indemnified Party”: Has the meaning set forth in Section 8.01(c)
hereof.

“Outstanding Loan Balance”: With respect to any Loan, as of any date of
determination, the lesser of (i) the Fair Market Value of such Loan and (ii) the
total remaining amounts of principal payable by the Obligor thereof, excluding
principal payments in respect of Accreted Interest.

“Payment Date”: The 15th day of each calendar month, or if any such day is not a
Business Day, the first Business Day following such day, commencing on July 15,
2015.

“Permitted Liens”: (a) With respect to the Transferred Loans, Liens in favor of
the Borrower created pursuant to this Agreement and Liens in favor of the Agent,
on behalf of the Lender Group, created pursuant to the Loan Agreement; and

(b) with respect to the Borrower’s interest in the Related Property, any of the
following as to which no enforcement, collection, execution, levy, foreclosure
or realization proceedings shall have been commenced:

 

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(i) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings; provided, that such Liens do not have priority over any of the
Originator’s Liens and the related Obligor maintains adequate reserves therefor
in accordance with GAAP;

(ii) Liens securing claims or demands of materialmen, artisans, mechanics,
carriers, warehousemen, landlords and other like Persons arising in the ordinary
course of the related Obligor’s business and imposed without action of such
parties; provided, that the payment thereof is not yet required;

(iii) Liens arising from judgments, decrees or attachments in circumstances
which do not constitute an “event of default” under the related Obligor Loan
Documents;

(iv) the following deposits, to the extent made in the ordinary course of
business: deposits under worker’s compensation, unemployment insurance, social
security and other similar laws, or to secure the performance of bids, tenders
or contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than liens arising under ERISA or
environmental liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;

(v) purchase money liens on equipment (to the extent permitted under the related
Obligor Loan Documents) which has been acquired or held by the related Obligor
and such Liens are incurred for financing the acquisition of the equipment, if,
the Liens are confined to the equipment and proceeds of the equipment; and

(vi) Liens incurred in connection with the extension, renewal or refinancing of
the indebtedness secured by Liens of the type described in clauses (i) through
(iv) above; provided, that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness being extended, renewed or refinanced (as may have been
reduced by any payment thereon) does not increase.

“Person”: Any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, national banking
association, unincorporated organization or government or any agency or
political subdivision thereof.

“PIK Loan”: A Loan which provides for a portion of the interest that accrues
thereon to be added to the principal amount of such Loan for some period of time
prior to such Loan requiring the current cash payment of such interest on a
monthly or quarterly basis, which cash payment shall be treated as Interest
Collections at the time it is received.

 

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“Portfolio Investment”: Any investment made by the Originator in the ordinary
course of business in a Person that is accounted for under GAAP as a portfolio
investment of the Originator.

“Prepaid Loan”: Any Transferred Loan (other than a Charged-Off Loan) that was
terminated or has been prepaid in full or in part prior to its scheduled
maturity date.

“Predecessor Servicer Work Product”: Has the meaning set forth in
Section 9.02(d) hereof.

“Proceeding”: Any suit in equity, action at law or other judicial or
administrative proceeding.

“Proceeds”: With respect to any Collateral, whatever is receivable or received
when such Collateral is sold, collected, liquidated, foreclosed, exchanged, or
otherwise disposed of, whether such disposition is voluntary or involuntary, and
includes all rights to payment with respect to any Insurance Policy relating to
such Collateral.

“Purchased Assets”: All right, title and interest, whether now owned or
hereafter received, acquired or arising, and wherever located, of the Originator
in and to the property described in clauses (i) through (ix) below and all
accounts, cash and currency, chattel paper, tangible chattel paper, electronic
chattel paper, copyrights, copyright licenses, other intellectual property
rights, equipment, fixtures, contract rights, general intangibles, instruments,
certificates of deposit, certificated securities, uncertificated securities,
financial assets, securities entitlements, commercial tort claims, deposit
accounts, inventory, investment property, letter-of-credit rights, software,
supporting obligations, accessions, and other property consisting of, arising
out of, or related to any of the following (in each case excluding the Retained
Interest and the Excluded Amounts):

(i) the Transferred Loans, and all monies due or to become due in payment of
such Transferred Loans on and after the related Transfer Date, including but not
limited to all Collections and all obligations owed to the Originator in
connection with the Transferred Loans;

(ii) any Related Property securing or purporting to secure the Transferred Loans
(to the extent the Originator has been granted a Lien thereon) including the
related security interest granted by the Obligor under the Transferred Loans,
all proceeds from any sale or other disposition of such Related Property;

(iii) all security interests, Liens, guaranties, warranties, letters of credit,
accounts, bank accounts, mortgages or other encumbrances and property subject
thereto from time to time purporting to secure payment of any Transferred Loan,
together with all UCC financing statements or similar filings relating thereto;

(iv) all claims (including “claims” as defined in Bankruptcy Code § 101(5)),
suits, causes of action, and any other right of the Originator, whether

 

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known or unknown, against the related Obligors, if any, or any of their
respective Affiliates, agents, representatives, contractors, advisors, or any
other Person that in any way is based upon, arises out of or is related to any
of the foregoing, including, to the extent permitted to be assigned under
applicable law, all claims (including contract claims, tort claims, malpractice
claims, and claims under any law governing the purchase and sale of, or
indentures for, securities), suits, causes of action, and any other right of the
Originator against any attorney, accountant, financial advisor, or other Person
arising under or in connection with the related Obligor Loan Documents;

(v) all cash, securities, or other property, and all setoffs and recoupments,
received or effected by or for the account of the Originator under such
Transferred Loans (whether for principal, interest, fees, reimbursement
obligations, or otherwise) after the related Transfer Date, including all
distributions obtained by or through redemption, consummation of a plan of
reorganization, restructuring, liquidation, or otherwise of any related Obligor
or the related Obligor Loan Documents, and all cash, securities, interest,
dividends, and other property that may be exchanged for, or distributed or
collected with respect to, any of the foregoing;

(vi) all Insurance Policies;

(vii) the Obligor Loan Documents with respect to such Transferred Loans;

(viii) all Warrant Assets with respect to Transferred Loans; and

(ix) the proceeds of each of the foregoing.

“Record Date”: With respect to each Payment Date, the 10th day of each calendar
month occurring during the calendar month of such Payment Date, or if any such
day is not a Business Day, the first Business Day following such day, commencing
July 10, 2015.

“Recoveries”: With respect to any Defaulted Loan or Charged-Off Loan, proceeds
of the sale of any Related Property, proceeds of any related Insurance Policy,
and any other recoveries with respect to such Transferred Loan and Related
Property, and amounts representing late fees and penalties, net of Liquidation
Expenses and amounts, if any, received that are required to be refunded to the
Obligor on such Transferred Loan.

“Related Property”: With respect to any Loan, any property or other assets of
the Obligor thereunder pledged or purported to be pledged as collateral or in
which a Lien has been granted or purported to be granted to secure the repayment
of such Loan and including, without limitation, intellectual property rights.

“Released Amounts”: With respect to any payment or Collection received with
respect to any Transferred Loan on any Business Day (whether such payment or
Collection is received by the Servicer, the Originator or the Borrower), an
amount equal to that portion of such payment or collection constituting Excluded
Amounts or Retained Interest.

 

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“Replaced Loan”: Defined in Section 3.05(a).

“Responsible Officer”: When used with respect to:

(a) the Collateral Custodian (if one has been appointed), any officer within the
Corporate Trust Office of such Person, including any Vice President, Assistant
Vice President, Secretary, Assistant Secretary or any other officer of such
Person customarily performing functions similar to those performed by any of the
above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer’s
knowledge of and familiarity with the particular subject;

(b) the Agent, or any Affiliate of the Agent, any Vice President of such Person;
and

(c) the Borrower, the Servicer, the Originator or any Affiliate of any of them,
the Controller, the President, the Chief Financial Officer, the Chief Credit
Officer, the Chief Legal Officer, any Associate General Counsel, any Vice
President or the Treasurer of such Person.

“Retained Interest”: With respect to each Transferred Loan, any origination or
underwriting fee paid to the Originator in connection with the origination or
acquisition of such Transferred Loan under the associated Obligor Loan
Documents, which are being retained by the Originator.

“Retransfer Price”: Defined in Section 3.05(b).

“Review Criteria”: Defined in Section 2.05(b)(ii).

“Revolving Loan”: Any Loan that is a line of credit or other similar extension
of credit by the Originator where the Originator’s commitment under such Loan is
not fully funded and/or the proceeds of such Loan may be repaid and reborrowed.

“S&SA Assignment”: An assignment of Purchased Assets from the Originator to the
Borrower pursuant to this Agreement, in the form of Exhibit B hereto.

“Sales Price”: With respect to any Transferred Loan and all Related Property and
other Collateral constituting part of the Purchased Assets with respect to such
Transferred Loan, an amount determined by multiplying the Advance Rate times the
Outstanding Loan Balance of such Transferred Loan.

“Scheduled Payment”: On any Record Date, with respect to any Transferred Loan,
each monthly or quarterly payment (whether principal, interest or principal and
interest) scheduled to be made by the related Obligor after such Record Date
under the terms of such Transferred Loan.

 

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“Securities Act”: The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Servicer”: Hercules, in its capacity as the servicer hereunder, or any
successor appointed as herein provided.

“Servicer Default”: Has the meaning set forth in Section 9.01 hereof.

“Servicer Indemnified Party”: Has the meaning set forth in Section 8.01(a)
hereof.

“Servicer Report”: A report substantially in the form of Exhibit A hereto, to be
delivered as contemplated by Section 4.17(a).

“Servicing Fee”: For each Payment Date, an amount equal to the sum of the
products, for each day during the related Collection Period, of (a) a fraction,
the numerator of which is the sum of (i) the Aggregate Outstanding Loan Balance
as of the first day of such Collection Period plus (ii) the Aggregate
Outstanding Loan Balance as of the last day of such Collection Period, and the
denominator of which is two, (b) the Servicing Fee Rate, and (c) a fraction, the
numerator of which is 1 and the denominator of which is 360.

“Servicing Fee Rate”: A rate equal to 1.0% per annum.

“Servicing Records”: All documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, data processing
software and related property rights) prepared and maintained by the Servicer
with respect to the Loans, any item of Related Property and the related
Obligors, other than the Obligor Loan Documents.

“Servicing Officer”: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Loans whose name and specimen
signature appears on a list of servicing officers annexed to an Officer’s
Certificate furnished by the Servicer on the date hereof to the Borrower and the
Agent, on behalf of the Lender Group, as such list may from time to time be
amended.

“Solvent”: As to any Person at any time, having a state of affairs such that all
of the following conditions are met: (a) the fair value of the property owned by
such Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy
Code; (b) the present fair salable value of the property owned by such Person in
an orderly liquidation of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in a business or a transaction, for
which such Person’s property would constitute unreasonably small capital.

 

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“State”: Any one of the states of the United States of America or the District
of Columbia.

“Subordinated Debt” means any unsecured Indebtedness specifically subordinated
to the prior payment in full in cash of the Obligations and which shall
otherwise be on terms and conditions reasonably satisfactory to Agent and
subject to a Subordination Agreement.

“Subordination Agreement” means a subordination agreement executed and delivered
by Borrower and each of the holders of Subordinated Debt and Agent, the form and
substance of which is satisfactory to Agent.

“Subsidiary”: With respect to any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.

“Successor Servicer”: Defined in Section 9.02(a).

“Tangible Net Worth”: With respect to any Person, as of any date of
determination, determined on a consolidated basis and in accordance with GAAP,
the result of (a) such Person’s total members’ or shareholder’s equity, minus
(b) all Intangible Assets of such Person, minus (c) all of such Person’s prepaid
expenses, minus (d) all amounts due to such Person from Affiliates of such
Person.

“Termination Date”: The earliest of (i) the date designated as such by the Agent
in its sole discretion by written notice to the Servicer following the
occurrence of an Event of Default, (ii) the date upon which this Agreement
terminates pursuant to Section 10.01 or (iii) the date of the occurrence of a
Bankruptcy Event with respect to the Servicer or the Borrower.

“Third Party Claim”: Has the meaning set forth in Section 8.01(d) hereof.

“Transfer”: Has the meaning set forth in Section 2.08 hereof.

“Transfer Date”: With respect to each Transferred Loan, the date specified as
the “Transfer Date” in the related S&SA Assignment, on and after which
Collections on such Transferred Loan shall be included as part of the
Collateral.

“Transferred Loans”: Each Loan that is sold or contributed to the Borrower
hereunder; provided, that the term Transferred Loan shall not include any
Retained Interests.

“Transition Costs”: Has the meaning set forth in Section 9.02(a) hereof.

“UCC”: The Uniform Commercial Code as in effect in the State of New York.

 

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“UCC Assignment”: A financing statement meeting the requirements of the UCC of
the relevant jurisdiction to reflect an assignment of a secured party’s interest
in collateral.

“UCC Financing Statement”: A financing statement meeting the requirements of the
UCC of the relevant jurisdiction.

“Underlying Note”: Each promissory note (if any) of an Obligor evidencing a
Loan.

“Warrant Asset”: Means any equity purchase warrants or similar rights
convertible into or exchangeable or exercisable for any equity interests
received by Hercules as an “equity kicker” from the Obligor in connection with
such Transferred Loan; provided that the term Warrant shall in no event include
the right of Hercules to participate as an investor in future equity financings
by an Obligor.

1.02 Other Definitional Provisions.

(a) Any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns.

(b) All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

(c) As used in this Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
GAAP. To the extent that the definitions of accounting terms in this Agreement
or in any such certificate or other document are inconsistent with the meanings
of such terms under GAAP, the definitions contained in this Agreement or in any
such certificate or other document shall control.

(d) The words “hereof,” “herein,” “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; Article, Section, Schedule and Exhibit
references contained in this Agreement are references to Articles, Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified; and
the term “including” shall mean “including without limitation.”

(e) The definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.

 

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ARTICLE II

CONVEYANCE OF THE PURCHASED ASSETS;

BORROWINGS UNDER LOAN AGREEMENT

2.01 Conveyance of the Purchased Assets; Borrowings.

(a) Conveyance of the Purchased Assets. (i) On each Transfer Date, in
consideration of the payment of the Sales Price therefor and subject to the
satisfaction of the conditions to each Transfer set forth in Section 2.08
hereof, the Originator hereby sells and assigns to the Borrower, without
recourse, but subject to the other terms and provisions of this Agreement, all
of the right, title and interest of the Originator in and to the Purchased
Assets identified in the applicable S&SA Assignment and the related Loan
Schedule, and all proceeds of the foregoing.

(ii) On each Transfer Date, the Borrower hereby purchases, and acknowledges the
conveyance to it, of the Purchased Assets identified in the applicable S&SA
Assignment and the related Loan Schedule, receipt of which is hereby
acknowledged by the Borrower. Concurrently with such delivery, as of the
applicable Transfer Date, the Borrower automatically grants a security interest
in the Purchased Assets identified in the applicable S&SA Assignment and the
related Loan Schedule (a copy of which has or will concurrently therewith be
delivered to the Agent) to the Agent pursuant to the Loan Agreement as security
for the Borrower’s Obligations under the Loan Agreement and the other Loan
Documents.

(iii) Notwithstanding anything to the contrary herein, in no event shall the
Borrower be required to purchase the Purchased Assets identified in any S&SA
Assignment and the related Loan Schedule on any Transfer Date if the conditions
precedent to the applicable Transfer set forth in Section 2.08 have not been
fulfilled.

(iv) The Servicer shall, at its own expense, within one Business Day following
each Transfer Date, indicate in its computer files that the Purchased Assets
identified in the applicable S&SA Assignment and the related Loan Schedule have
been sold to the Borrower pursuant to this Agreement.

(v) The parties hereto intend that the conveyances contemplated hereby be sales
from the Originator to the Borrower of the Purchased Assets identified in each
S&SA Assignment and related Loan Schedule. In the event the transactions with
respect to the Purchased Assets set forth herein are deemed not to be a sale,
the Originator hereby grants to the Borrower a security interest in all of the
Originator’s right, title and interest in, to and under such Purchased Assets,
to secure all of the Originator’s obligations hereunder, and this Agreement
shall constitute a security agreement under Applicable Law.

(b) Borrowings. (i) Pursuant to the Loan Agreement, the Borrower may, at its
sole option, from time to time request that the Agent or the Lenders make
advance of funds to the Borrower under the Loan Agreement (each, a “Borrowing”).
Notwithstanding anything to the contrary herein, in no event shall the Agent or
Lenders be required to advance Borrowings if the conditions precedent to the
making of Borrowings set forth Section 2.07 hereof and in Section 3.01, 3.02,
and 3.03 of the Loan Agreement have not been fulfilled.

 

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2.02 Ownership and Possession of Loan Files.

With respect to each Loan, as of the related Transfer Date, the ownership of the
related Obligor Loan Documents shall be vested in the Borrower as part of the
Collateral to secure the Obligations, and a security interest in the related
Obligor Loan Documents shall be granted and pledged to the Agent pursuant to the
loan Agreement, and the Agent or, if a Collateral Custodian has been appointed,
the Collateral Custodian, shall take possession of the Loan Files as
contemplated in Section 2.04 hereof.

2.03 Books and Records; Intention of the Parties.

On or prior to the Closing Date, the Originator shall, at such party’s sole
expense, cause to be filed UCC Financing Statements naming the Borrower (or an
agent acting on behalf of the Borrower) as “secured party” and describing the
Purchased Assets being sold by the Originator to the Borrower with the office of
the Secretary of State of the state in which the Originator is “located” for
purpose of the applicable UCC and in any other jurisdictions as shall be
necessary to perfect a security interest in the Purchased Assets.

2.04 Delivery of Loan Files.

(a) The Originator shall, with respect to each Loan subject to a Transfer, as of
the related Transfer Date, (i) no later than 12:00 p.m. New York City time on
the related Transfer Date, deliver or cause to be delivered to the Agent or, if
a Collateral Custodian has been appointed, the Collateral Custodian, as the
designated agent of the Agent, by facsimile transmission or in an electronic
format mutually agreed to by the Originator and the Agent, the Loan Schedule and
a copy of each executed Underlying Note (if any) endorsed in blank and
(ii) within two Business Days after such Transfer Date, deliver (or caused to be
delivered) to the Agent or, if a Collateral Custodian has been appointed, the
Collateral Custodian, each original and duly executed Underlying Note (if any)
and Assignment of Mortgage (if any), in each case endorsed in blank, any
security agreement related to each such Loan, and all other Obligor Loan
Documents for each such Loan, including a Loan Checklist for such Loan being
transferred (on which List the Agent or, if a Collateral Custodian has been
appointed, the Collateral Custodian, shall rely).

(b) The Agent or, if a Collateral Custodian has been appointed, the Collateral
Custodian, shall take and maintain continuous physical possession of the Loan
Files delivered to it by the Originator and, in connection therewith, shall act
solely as Agent or, in the case of the Collateral Custodian, as the agent for
the Agent, on behalf of the Lender Group in accordance with the terms hereof and
not as agent for the Originator, the Servicer or any other party.

 

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2.05 Acceptance by the Agent of the Loan Files; Certification by the Collateral
Custodian.

(a) Based on the Final Collateral Certification prepared by the Agent or, if a
Collateral Custodian has been appointed, the Final Collateral Certification
received by the Agent from the Collateral Custodian and as of the date of
delivery thereof, the Agent will acknowledge receipt of the Loan Files delivered
to the Agent or, if a Collateral Custodian has been appointed, the Collateral
Custodian on behalf of the Agent, pursuant to Section 2.04 and declares that it
holds and will continue to hold directly the Obligor Loan Documents and any
amendments, replacements or supplements thereto and all other assets
constituting the Collateral delivered to it for the use and benefit of the
Lender Group.

(b) (i) On or before 3:00 p.m. New York City time on the related Transfer Date,
the Agent will prepare and provide a copy to the Collateral Custodian (if one
has been appointed) and the Originator, or, if a Collateral Custodian has been
appointed, the Collateral Custodian will deliver to the Agent, with a copy to
the Originator, an Initial Collateral Certification, confirming whether or not
it has received a copy of each executed Underlying Note (if any ) endorsed in
blank, for each Loan identified on the Loan Schedule to the S&SA Assignment with
respect to such Transfer Date.

(ii) Within five Business Days after its receipt of the remaining Obligor Loan
Documents for each such Transferred Loan, the Agent or, if a Collateral
Custodian has been appointed, the Collateral Custodian, shall review the related
Obligor Loan Documents to confirm that: (A) each related Underlying Note (if
any) has been properly executed and has no missing or mutilated pages, (B) UCC
Financing Statements and other filings required by the related Obligor Loan
Documents have been made, (C) other than in the case of a Transferred Loan
secured by receivables only (as identified on the Loan Checklist), an Insurance
Policy is contained in such Obligor Loan Documents with respect to any real or
personal property constituting the Related Property for such Transferred Loan,
(D) the related Outstanding Loan Balance, and Obligor name with respect to such
Transferred Loan is accurately reflected on the related Loan Schedule and
(E) based on the Obligor Loan Documents received, such Transferred Loan is not
already included in the Collateral (collectively, the “Review Criteria”). Upon
completion of such review, the Agent will prepare and provide a copy to the
Collateral Custodian and the Originator or, if a Collateral Custodian has been
appointed, the Collateral Custodian will deliver a Final Collateral
Certification to the Agent, with a copy to the Originator, confirming its
receipt of the Obligor Loan Documents. Such certification will also contain an
exception report attached as Attachment A thereto which will identify any
Transferred Loans for which (i) the Agent or, if a Collateral Custodian has been
appointed, the Collateral Custodian, has not received an Obligor Loan Document
or (ii) any Review Criteria is not satisfied.

(iii) The Originator shall have five Business Days to deliver any missing
Obligor Loan Documents or correct any non-compliance with any Review Criteria.
If after the conclusion of such time period the Originator has not delivered
such missing Obligor Loan Document or cured any non-compliance by a Transferred
Loan with any Review Criteria and such failure has a material adverse effect on
the value or

 

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enforceability of any Transferred Loan or the interests of the Lender Group in
any Transferred Loan, such Transferred Loan shall be deemed to be an Ineligible
Loan and the Originator shall repurchase such Transferred Loan pursuant to
Section 3.05(b) within one Business Day after notice thereof at the Retransfer
Price thereof by depositing such Retransfer Price directly in the Agent’s
Account or the Cash Management Account; provided that the Originator shall not
be required to pay the Retransfer Price with respect to any such Transferred
Loan to the extent that, after giving effect to the removal of such Loan from
the Collateral, the Availability shall exceed $0. On or prior to the date of
such repurchase, the Originator shall deliver to the Agent, with a copy to the
Collateral Custodian (if one has been appointed), a certification of a
Responsible Officer indicating that the Originator intends to repurchase such
Transferred Loan.

(iv) It is understood and agreed that the obligation of the Originator to
repurchase any such Transferred Loan pursuant to this Section 2.05(b) and
Section 3.05 shall constitute the sole remedy with respect to such failure to
comply with the foregoing delivery requirements.

(c) In performing its reviews of the Obligor Loan Documents, neither the Agent
nor, if a Collateral Custodian has been appointed, the Collateral Custodian,
shall have any responsibility to determine the genuineness of any document
contained therein and any signature thereon. Neither the Agent nor, if a
Collateral Custodian has been appointed, the Collateral Custodian, shall have
any responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form, whether any document has been recorded in accordance with the requirements
of any applicable jurisdiction or whether a blanket assignment is permitted in
any applicable jurisdiction.

2.06 Conditions Precedent to Closing. The effectiveness of this Agreement shall
be subject to the satisfaction of the following conditions precedent as of the
Closing Date:

(a) all conditions precedent to closing under Section 3.01 of the Loan Agreement
shall have been fulfilled;

(b) the Originator shall have delivered to the Agent evidence of a UCC-1 filing
filed with the Maryland Department of Assessments and Taxation naming Originator
as seller and Borrower as buyer, to evidence the transfer of the Transferred
Loans and other Purchased Assets pursuant to this Agreement, in form and
substance reasonably satisfactory to the Agent; and

(c) the Originator shall have taken any action reasonably requested by the Agent
or the Borrower required to maintain or evidence the ownership interest of the
Borrower in the Purchased Assets and the security interest of the Agent in the
Collateral.

2.07 Conditions to Borrowings. On the Closing Date and on any Business Day prior
to the Maturity Date, the Borrower may request a Borrowing from the Lender Group
in accordance with the Loan Agreement. Any Borrowing (including any Borrowing
made on the Closing Date) shall be subject to the following conditions:

 

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(a) the Servicer shall have delivered to the Agent (with a copy to the
Collateral Custodian, if one has been appointed) on behalf of the Borrower a
Borrowing Base Certificate;

(b) all applicable conditions precedent to the Lender Group’s advance of the
Borrowing under Section 3.03 of the Loan Agreement shall have been fulfilled as
of such Borrowing Date.

(c) as of such date, neither the Originator nor the Borrower shall have reason
to believe that its insolvency is imminent;

(d) on and as of such date, after giving effect to such Borrowing, the
Availability shall exceed zero;

(e) the Originator shall have taken any action reasonably requested by the Agent
or the Borrower required to maintain or evidence the ownership interest of the
Borrower in the Purchased Assets and the security interest of the Agent in the
Collateral;

(f) the Originator shall have deposited, or caused to be deposited, in the Cash
Management Account all Collections received with respect to each of the Loans
Transferred on and after its applicable Transfer Date;

(g) each of the representations and warranties made by the Originator contained
in Section 3.03 with respect to the Loans on the Closing Date shall be true and
correct as of the applicable Borrowing Date (in the case of a Borrowing other
than on the Closing Date, with the same effect as if then made) and each of the
Borrower and the Originator shall have performed all obligations to be performed
by it under the Loan Documents on or prior to such Borrowing Date; and

(h) it shall be a condition to the initial Borrowing that the Servicer shall
have delivered the form of Servicer Report, to be attached hereto as Exhibit A,
to the Agent.

2.08 Conditions to Transfers of Loans. On the Closing Date and on any Business
Day prior to the Maturity Date, the Originator may convey Loans to the Borrower
(each such conveyance, a “Transfer”). Any Transfer (including any Transfer made
on the Closing Date) shall be subject to the following conditions:

(a) At least two Business Days prior to the proposed Transfer Date, the Servicer
shall give notice to the Agent (with a copy to the Collateral Custodian, if one
has been appointed) of such proposed Transfer Date and provide an estimate of
the number of Loans and aggregate Outstanding Loan Balance of such Loans
proposed to be conveyed to the Borrower on such Transfer Date.

(b) On the Business Day prior to the proposed Transfer Date, the Borrower shall
deliver to the Agent (with a copy to the Collateral Custodian, if one has been
appointed) a final Loan Schedule setting forth the Loans proposed to be
transferred on such Transfer Date.

 

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(c) On the applicable Transfer Date, the Borrower shall deliver to the Agent
(with a copy to the Collateral Custodian, if one has been appointed) a
fully-executed S&SA Assignment and a final Loan Schedule setting forth the Loans
Transferred on such Transfer Date.

(d) If the Borrower will consummate a Borrowing on such Transfer Date in
connection with the applicable Transfer, the conditions precedent to such
Borrowing set forth in Section 2.07 hereof and Section 3.03 of the Loan
Agreement shall be satisfied.

(e) As of the applicable Transfer Date, neither the Originator nor the Borrower
shall have reason to believe that its insolvency is imminent.

(f) The Originator shall have taken any action reasonably requested by the Agent
or the Borrower required to maintain or evidence the ownership interest of the
Borrower in the Purchased Assets and the security interest of the Agent in the
Collateral.

(g) Each of the representations and warranties made by the Originator contained
in Section 3.03 with respect to the Loans made on the Closing Date shall be true
and correct as of the applicable Transfer Date, with the same effect as if then
made, and each of the Borrower and the Originator shall have performed all
obligations to be performed by it under the Loan Documents on or prior to such
Transfer Date; provided that, if any representation or warranty made by the
Originator pursuant to Section 3.03 shall be incorrect as of any Transfer Date
with respect to any Loan to be purchased on such date, the Borrower shall only
be relieved of its obligation to purchase such Loan affected by such breach and,
assuming satisfaction or waiver of the other conditions set forth in this clause
(g), the Borrower shall nonetheless be obligated to purchase all Loans to be
purchased on such date that are unaffected by such breach.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.01 Representations and Warranties of the Borrower.

The Borrower hereby represents, warrants and covenants to the other parties
hereto and the Lenders that as of each Transfer Date on or after the Closing
Date:

(a) The Borrower is a limited liability company duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization and
has, and had at all relevant times, full power to own its property, to carry on
its business as currently conducted and to enter into and perform its
obligations under each Loan Document to which it is a party;

(b) The execution and delivery by the Borrower of each Loan Document to which
the Borrower is a party and its performance of and compliance with all of the
terms thereof will not violate the Borrower’s organizational documents or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach or acceleration of,
any material contract, agreement or other instrument to which the Borrower is a
party or which are applicable to the Borrower or any of its assets;

 

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(c) The Borrower has the full power and authority to enter into and consummate
the transactions contemplated by each Loan Document to which the Borrower is a
party, has duly authorized the execution, delivery and performance of each Loan
Document to which it is a party and has duly executed and delivered each Loan
Document to which it is a party; each Loan Document to which it is a party,
assuming due authorization, execution and delivery by the other party or parties
thereto, constitutes a valid, legal and binding obligation of the Borrower,
enforceable against it in accordance with the terms thereof, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

(d) The Borrower is not in violation of, and the execution and delivery by the
Borrower of each Loan Document to which the Borrower is a party and its
performance and compliance with the terms of each Loan Document to which the
Borrower is a party will not constitute a violation with respect to any order or
decree of any court or any order or regulation of any federal, state, municipal
or governmental agency having jurisdiction over it or its business, which
violation would materially and adversely affect the financial condition or
operations of the Borrower or any of its properties or materially and adversely
affect the performance of any of its duties hereunder;

(e) There are no actions or proceedings against, or investigations of, the
Borrower currently pending with regard to which the Borrower has received
service of process, and no action or proceeding against, or investigation of,
the Borrower is, to the knowledge of the Borrower, threatened or otherwise
pending before any court, administrative agency or other tribunal that (A) would
prohibit its entering into any of the Loan Documents to which it is a party or
render its obligations thereunder invalid, (B) seeks to prevent the consummation
of any of the transactions contemplated by any of the Loan Documents to which it
is a party or (C) would prohibit or materially and adversely affect the
performance by the Borrower of its obligations under, or the validity or
enforceability of, any of the Loan Documents to which it is a party;

(f) No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by the
Borrower of, or compliance by the Borrower with, any of the Loan Documents to
which the Borrower is a party, or for the consummation of the transactions
contemplated by any of the Loan Documents to which the Borrower is a party,
except for such consents, approvals, authorizations and orders, if any, that
have been obtained prior to such date;

(g) The Borrower is solvent, is able to pay its debts as they become due and has
capital sufficient to carry on its business and its obligations hereunder; it
will not be rendered insolvent by the execution and delivery of any of the Loan
Documents to which it is a party or the assumption of any of its obligations
thereunder; no petition of bankruptcy (or similar Bankruptcy Proceeding) has
been filed by or against the Borrower;

 

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(h) The Borrower will be the sole owner of, each item in the Purchased Assets
transferred by the Originator, free and clear of any Lien other than Permitted
Liens, and, subject to the Loan Agreement, the Agent will have a first priority
perfected security interest in each item of Collateral, in each case free and
clear of any Lien other than Permitted Liens;

(i) The Borrower acquired title to the Purchased Assets in good faith, without
notice of any adverse claim;

(j) None of the Loan Documents to which the Borrower is a party, nor any
Officer’s Certificate, statement, report or other document prepared by the
Borrower and furnished or to be furnished by it pursuant to any of the Loan
Documents to which it is a party or in connection with the transactions
contemplated thereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading;

(k) The Borrower is not required to be registered as an “investment company,”
under the 1940 Act;

(l) The Borrower’s principal place of business and chief executive offices are
located at 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301, or at
such other address as shall be designated by such party in a written notice to
the other parties hereto; and

(m) The Borrower covenants that during the continuance of this Agreement it will
comply in all respects with the provisions of its organizational documents in
effect from time to time.

3.02 Representations and Warranties of the Originator.

The Originator hereby represents and warrants to the other parties hereto and
the Lenders that as of the Closing Date and as of each Transfer Date after the
Closing Date:

(a) The Originator is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, is duly
qualified, in good standing and licensed to carry on its business in each state
where the conduct of its business requires it to be so qualified and licensed
and has full corporate power and authority to own its property, to carry on its
business as currently conducted and to enter into and perform its obligations
under each Loan Document to which it is a party;

(b) The execution and delivery by the Originator of each Loan Document to which
it is a party and its performance of and compliance with the terms thereof will
not violate the Originator’s organizational documents or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach or acceleration of, any material
contract, agreement or other instrument to which the Originator is a party or
which may be applicable to the Originator or any of its assets in each case that
is likely to affect materially and adversely its ability to carry out the
transactions contemplated hereby;

(c) The Originator has the full power and authority to enter into and consummate
all transactions contemplated by the Loan Documents to be consummated by it, has

 

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duly authorized the execution, delivery and performance of each Loan Document to
which it is a party and has duly executed and delivered each Loan Document to
which it is a party; each Loan Document to which it is a party, assuming due
authorization, execution and delivery by each of the other parties thereto,
constitutes a valid, legal and binding obligation of the Originator, enforceable
against it in accordance with the terms hereof, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);

(d) The Originator is not in violation of, and the execution and delivery of
each Loan Document to which it is a party by the Originator and its performance
and compliance with the terms of each Loan Document to which it is a party will
not constitute a violation with respect to, any order or decree of any court or
any order or regulation of any federal, state, municipal or governmental agency
having jurisdiction over it or its business, which violation would materially
and adversely affect the financial condition, business or operations of the
Originator or its properties or materially and adversely affect the performance
of its duties under any Loan Document to which it is a party;

(e) There are no actions or proceedings against, or investigations of, the
Originator currently pending with regard to which the Originator has received
service of process, and no action or proceeding against, or investigation of,
the Originator is, to the Originator’s knowledge, threatened or otherwise
pending before any court, administrative agency or other tribunal that (A) would
prohibit its entering into any Loan Document to which it is a party or render
its obligations thereunder invalid, (B) seeks to prevent the consummation of any
of the transactions contemplated by any Loan Document to which it is a party or
(C) would prohibit or materially and adversely affect the sale and contribution
of the Purchased Assets to the Borrower, the performance by the Originator of
its obligations under, or the validity or enforceability of, any Loan Document
to which it is a party;

(f) No consent, approval, authorization or order of any court or governmental
agency or body is required for: (1) the execution, delivery and performance by
the Originator of, or compliance by the Originator with, any Loan Document to
which it is a party, (2) the sale and contribution of the Purchased Assets to
the Borrower, or (3) the consummation of the transactions required of it by any
Loan Document to which it is a party, except such as shall have been obtained
before such date, other than: (A) the filing or recording of financing
statements, instruments of assignment and other similar documents necessary in
connection with the sale of the Purchased Assets to the Borrower, (B) such
consents, approvals, authorizations, qualifications, registrations, filings or
notices as have been obtained or made and (C) where the lack of such consent,
approval, authorization, qualification, registration, filing or notice is
unlikely to have a material adverse effect on its performance hereunder;

(g) Immediately prior to the sale of the Purchased Assets to the Borrower, the
Originator had good and valid title to the Purchased Assets sold by it on such
date free and clear of all Liens other than Permitted Liens;

(h) The Originator is solvent, is able to pay its debts as they become due and
has capital sufficient to carry on its business and its obligations under each
Loan Document to

 

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which it is a party; it will not be rendered insolvent by the execution and
delivery of this Agreement or by the performance of its obligations under each
Loan Document to which it is a party; no petition of bankruptcy (or similar
Bankruptcy Proceeding) has been filed by or against the Originator prior to the
date hereof;

(i) The Originator has transferred the Purchased Assets transferred by it on
each Transfer Date without any intent to hinder, delay or defraud any of its
creditors;

(j) The Originator has received fair consideration and reasonably equivalent
value in exchange for the Purchased Assets sold and contributed by it on each
Transfer Date to the Borrower;

(k) The Originator has not dealt with any broker or agent or other Person who
might be entitled to a fee, commission or compensation in connection with the
transaction contemplated by this Agreement;

(l) The Originator’s principal place of business and chief executive offices are
located at 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301 or at
such other address as shall be designated by such party in a written notice to
the other parties hereto;

(m) The Originator and the Servicer acknowledge and agree that the Servicing Fee
represents reasonable compensation for the performance of the servicing duties
hereunder and that the entire Servicing Fee shall be treated by the Servicer and
the Originator, for accounting purposes, as compensation for the servicing and
administration of the Transferred Loans pursuant to this Agreement; and

(n) The Originator is in compliance with the financial covenants set forth in
Section 7.01.

It is understood and agreed that the representations and warranties set forth in
this Section 3.02 shall survive delivery of the respective Loan Files to Agent
or, if a Collateral Custodian has been appointed, the Collateral Custodian as
the agent of the Agent, and shall inure to the benefit of the Agent, the
Lenders, the Servicer, and the Borrower. Upon discovery by the Originator, the
Servicer, the Borrower, or the Agent of a breach of any of the foregoing
representations and warranties that materially and adversely affects the value
of any item of Collateral or the interests of the Lender Group in any item of
Collateral, the party discovering such breach shall give prompt written notice
to the other parties. The fact that Agent or any Lender has conducted or has
failed to conduct any partial or complete due diligence investigation of the
Loan Files shall not affect any rights of the Lender Group under this Agreement.

3.03 Representations and Warranties Regarding the Loans.

The Originator hereby represents and warrants, to the Agent, for the benefit of
the Lender Group, that as of the Closing Date with respect to each Loan sold or
contributed to the Borrower on the Closing Date, if any, and as of each Transfer
Date with respect to each Loan sold or contributed to the Borrower on each
Transfer Date after the Closing Date:

 

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(a) the Loan is evidenced by a promissory note (if any) that has been duly
authorized and that, together with the related Obligor Loan Documents, is in
full force and effect and constitutes the legal, valid and binding obligation of
the Obligor of such Loan to pay the stated amount of the Loan and interest
thereon, and the related Obligor Loan Documents are enforceable against such
Obligor in accordance with their respective terms; provided, that if no original
promissory note has been delivered to the Agent or, if a Collateral Custodian
has been appointed, the Collateral Custodian, with respect to any Loan sold or
contributed to Borrower after the Closing Date, then such failure shall be
deemed to constitute a representation and warranty by Originator that there are
no promissory notes evidencing such Loan;

(b) the Loan was originated in accordance with the terms of the Credit and
Collection Policy and arose in the ordinary course of the Originator’s business
from the lending of money to the related Obligor;

(c) the Loan is not a Defaulted Loan or a Charged-Off Loan, and no payment or
portion thereof is more than 30 days delinquent;

(d) the Obligor of such Loan has executed all appropriate documentation required
by the Originator, as required by, and in accordance with, the Credit and
Collection Policy;

(e) the Loan, together with the Obligor Loan Documents related thereto, is a
“general intangible,” an “instrument,” a “payment intangible,” an “account,” or
“chattel paper” within the meaning of the UCC of all jurisdictions that govern
the perfection of the security interest granted therein;

(f) all material consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority required to be
obtained, effected or given in connection with the making of such Loan have been
duly obtained, effected or given and are in full force and effect;

(g) any applicable taxes in connection with the transfer of such Loan have been
paid and the Obligor has been given any assurances (including with respect to
the payment of transfer taxes and compliance with securities laws) required by
the Obligor Loan Documents in connection with the transfer of the Loan;

(h) the Loan is denominated and payable only in Dollars in the United States;

(i) the Loan bears some current cash interest, which is due and payable monthly
or quarterly;

(j) the Loan, together with the related Obligor Loan Documents, was originated
in accordance with, and does not contravene in any material respect any
Applicable Laws (including, without limitation, laws, rules and regulations
relating to usury, predatory lending, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices
and privacy);

 

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(k) the Loan, together with the related Obligor Loan Documents, is fully
assignable without consent of the applicable Obligor or any agent with respect
to the Loan (except for such consents which have been obtained prior to the
related Transfer Date), (and, if such Loan is secured by an interest in real
property, an Assignment of Mortgage, in a form reasonably approved by the Agent
and attached hereto as Exhibit E prior to the first Borrowing pursuant to which
a Loan secured by an interest in real property shall become part of the
Collateral, has been delivered to the Agent or, if a Collateral Custodian has
been appointed, the Collateral Custodian);

(l) the Loan was documented and closed in accordance with the Credit and
Collection Policy, and there is only one current original of each promissory
note (if any) representing all or a portion of the Outstanding Loan Balance of
any Loan that is included in the Collateral, and each such note (if any) has
been delivered to the Agent or, if a Collateral Custodian has been appointed,
the Collateral Custodian on behalf of the Agent, duly endorsed as Collateral;
provided, that if no original promissory note has been delivered to the Agent
or, if a Collateral Custodian has been appointed, the Collateral Custodian, with
respect to any Loan sold or contributed to Borrower after the Closing Date, then
such failure shall be deemed to constitute a representation and warranty by
Originator that there are no promissory notes evidencing such Loan;

(m) the Loan and the Borrower’s interest in all related Collateral and Related
Property are free of any Liens, except for Permitted Liens, and all filings and
other actions required to perfect the security interest of the Agent, on behalf
of the Lender Group, in the Collateral have been made or taken;

(n) the Loan has an original term to maturity of no more than 60 months, and is
either fully amortizing in installments (which installments need not be in
identical amounts) over such term or the principal amount thereof is due in a
single installment at the end of such term;

(o) no right of rescission, set off, counterclaim, defense or other material
dispute has been asserted with respect to such Loan;

(p) any Related Property with respect to such Loan is insured to the extent
consistent with the Credit and Collection Policy;

(q) the Obligor Loan Documents with respect to such Loan are complete in
accordance with the Credit and Collection Policy;

(r) the Obligor with respect to such Loan is not a Person who would cause such
Loan to not be an Eligible Note Receivable under the Loan Agreement;

(s) such Loan does not contain any confidentiality provision which would purport
to restrict disclosure of data or other information related to such Loan or the
related Obligor if such disclosure is subject to confidentiality restrictions
that reasonably protect against the disclosure of such data or other
information;

 

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(t) the Loan does not by its terms permit the payment obligation of the Obligor
thereunder to be converted into or exchanged for equity capital of such Obligor
(unless such conversion results in a return that is in excess of such converted
principal amount);

(u) the Obligor of such Loan has waived all rights of set-off and/or
counterclaim against the Originator of the Loan and all assignees thereof; and

(v) all information on the Loan Schedule delivered to the Agent or, if a
Collateral Custodian has been appointed, the Collateral Custodian on behalf of
the Agent with respect to such Loan is true and correct.

It is understood and agreed that the representations and warranties set forth
herein shall survive delivery of the respective Loan Files to the Borrower
and/or the Agent or, if a Collateral Custodian has been appointed, the
Collateral Custodian, and shall inure to the benefit of the Borrower, Agent and
Lender Group, as applicable, and their successors and assigns, notwithstanding
any restrictive or qualified endorsement or assignment.

3.04 Notice of Breach of Representations and Warranties. It is understood and
agreed that the representations and warranties set forth in Section 3.03 shall
survive the conveyance of the Purchased Assets to the Borrower and the grant by
the Borrower of a security interest in the Collateral to the Agent, as
applicable. Upon discovery by the Servicer, the Originator, the Collateral
Custodian (if one has been appointed), the Borrower, or the Agent of a breach of
any of such representations and warranties or the representations and warranties
of the Originator set forth in Section 3.02 or 3.03, which breach materially and
adversely affects the value or enforceability of all or any portion of the
Purchased Assets or the interests of the Lender Group in all or any portion of
the Collateral, any party discovering such breach shall give prompt written
notice to the others.

3.05 Repurchase of Ineligible Loans.

(a) [Intentionally Omitted].

(b) Repurchase of Ineligible Loans.

(i) Subject to Section 3.05(b)(ii), in the event of a breach of (A) any
representation or warranty set forth in Section 3.03 with respect to a
Transferred Loan (or the Related Property and other related collateral
constituting part of the Purchased Assets related to such Transferred Loan)
(each such Transferred Loan, an “Ineligible Loan”), no later than 30 days after
the earlier of (x) knowledge of such breach on the part of the Originator or the
Servicer and (y) receipt by the Originator or the Servicer of written notice
thereof given by the Borrower or the Agent, or (B) the applicable Transferred
Loan is identified for repurchase pursuant to Section 2.05(b)(ii), the Borrower
shall repay Advances Outstanding in an amount equal to the aggregate Retransfer
Price of such Ineligible Loan(s) to which such breach relates on the terms and
conditions set forth below; provided, that no such repayment shall be required
to be made with respect to any Ineligible Loan (and such Transferred Loan shall
cease to be an Ineligible Loan) if, on or before the expiration of such 30 day
period, the representations and warranties in Section

 

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3.03 with respect to such Ineligible Loan shall be made true and correct in all
material respects with respect to such Ineligible Loan as if such Ineligible
Loan had become part of the Collateral on such day. If the Borrower is required
to repay Advances Outstanding pursuant to this Section 3.05(b)(i), the
Originator shall make a contemporaneous deposit to the Cash Management Account
of the related Retransfer Price, as contemplated by Section 3.05(b)(iii).

(ii) Notwithstanding anything contained in this Section 3.05(b) to the contrary,
in the event that a Transferred Loan is determined to be an Ineligible Loan by
reason of a breach of any representation and warranty set forth in Section 3.03
with respect to each Transferred Loan, the Related Property and other related
collateral constituting part of the Purchased Assets related to such Transferred
Loan having been (A) conveyed to the Borrower or granted as Collateral to the
Agent, on behalf of the Lenders, free and clear of any Lien of any Person
claiming through or under the Originator or its Affiliates and (B) in
compliance, in all material respects, with all Applicable Law, immediately upon
the earlier to occur of the discovery of such breach by the Borrower or receipt
by the Borrower of written notice of such breach given by the Agent, the
Originator shall make a contemporaneous deposit to the Cash Management Account
as contemplated by Section 3.05(b)(iii) to enable the Borrower to repay, and the
Borrower shall repay, Advances Outstanding in an amount equal to the sum of
(I) the aggregate Outstanding Loan Balance of such Ineligible Loan(s), and (II)
any accrued and unpaid interest thereon (collectively, the “Retransfer Price”),
and the Agent shall release to the Borrower (for release to the Originator) any
such Ineligible Loan(s) and relinquish any Lien created thereon pursuant to the
Loan Agreement or otherwise. On and after the date of payment of the Retransfer
Price, the applicable Ineligible Loan and the Related Property and other related
collateral constituting part of the Purchased Assets with respect to such
Ineligible Loan shall not be included in the Collateral.

(iii) In consideration of any such release by the Borrower (and by the Agent on
behalf of the Lenders), the Originator shall, on the date of such repayment,
deposit to the Cash Management Account, in immediately available funds, an
amount equal to the Retransfer Price therefor. Upon each such repayment, the
Agent, on behalf of the Lenders, shall automatically and without further action
be deemed to release to the Borrower (which shall release to the Originator) all
the right, title and interest of the Agent on behalf of the Lenders (and all
right, title and interest of the Borrower) in, to and under such Ineligible
Loan(s) and all monies due or to become due with respect thereto, all proceeds
thereof and all rights to security for any such Ineligible Loan, and all
proceeds and products of the foregoing. The Borrower and the Agent shall, at the
sole expense of the Borrower, execute such documents and instruments of transfer
as may be prepared by the Borrower and the Originator (or the Servicer on their
behalf) and take such other actions as shall reasonably be requested by the
Borrower to effect the transfer of such Ineligible Loan pursuant to this
Section 3.05.

(iv) The Borrower hereby agrees that if any real property collateral securing
any Transferred Loan becomes the subject of any claims, proceedings, Liens or
encumbrances with respect to any material violation or claimed material
violation of any Environmental Law, such Transferred Loan shall for all purposes
hereunder be deemed

 

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an Ineligible Loan at and following the time of discovery of such fact by the
Servicer, the Borrower, any Lender, the Agent, or the Collateral Custodian (if
one has been appointed), and the Originator shall deposit to the Cash Management
Account an amount equal to the Retransfer Price of such Ineligible Loan. Such
Ineligible Loan shall otherwise be treated in accordance with this Section 3.05.

ARTICLE IV

ADMINISTRATION AND SERVICING OF LOANS

4.01 Appointment of the Servicer.

The Borrower hereby appoints Hercules Technology Growth Capital, Inc. as the
Servicer hereunder to service the Transferred Loans and enforce its respective
rights and interests in and under each Transferred Loan in accordance with the
terms and conditions of this Article IV and to serve in such capacity until the
termination of its responsibilities pursuant to Section 9.01. Hercules
Technology Growth Capital, Inc. hereby accepts such appointment and agrees to
perform the duties and obligations with respect thereto set forth herein. The
Servicer and the Borrower hereby acknowledge that the Agent and the Lender Group
are third party beneficiaries of the obligations undertaken by the Servicer
hereunder.

4.02 Duties and Responsibilities of the Servicer.

(a) The Servicer shall conduct the servicing, administration and collection of
the Transferred Loans and shall take, or cause to be taken, all such actions as
may be necessary or advisable to service, administer and collect Transferred
Loans from time to time on behalf of the Borrower and as the Borrower’s agent.
The Servicer will service, administer and make collections on the Transferred
Loans with reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to all comparable loans that it services for
itself or others and in accordance with the Accepted Servicing Practices.

(b) The duties of the Servicer, as the Borrower’s agent, shall include, without
limitation:

(i) preparing and submitting of claims to, and post-billing liaison with,
Obligors on Transferred Loans;

(ii) maintaining all necessary Servicing Records with respect to the Transferred
Loans and providing such reports to the Borrower, the Agent and the Lender Group
in respect of the servicing of the Transferred Loans (including information
relating to its performance under this Agreement) as may be required hereunder,
under the Loan Agreement, or as the Borrower or the Agent may reasonably
request;

(iii) maintaining and implementing administrative and operating procedures
(including, without limitation, an ability to re-create Servicing Records
evidencing the Transferred Loans in the event of the destruction of the
originals thereof) and keeping and maintaining all documents, books, records and
other information

 

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reasonably necessary or advisable for the collection of the Transferred Loans
(including, without limitation, records adequate to permit the identification of
each new Transferred Loan and all Collections of and adjustments to each
existing Transferred Loan); provided, that any successor Servicer shall only be
required to re-create the Servicing Records of each prior Servicer to the extent
such records have been delivered to it in a format reasonably acceptable to such
successor Servicer;

(iv) promptly delivering to the Borrower, the Agent, the Lender Group and the
Collateral Custodian (if one has been appointed), from time to time, such
information and Servicing Records (including information relating to its
performance under this Agreement) as the Borrower, the Agent, or the Collateral
Custodian (if one has been appointed) may from time to time reasonably request;

(v) identifying each Transferred Loan clearly and unambiguously in its Servicing
Records to reflect that such Transferred Loan is owned by the Borrower and
pledged to the Agent, for the benefit of the Lender Group;

(vi) complying in all material respects with the Credit and Collection Policy in
regard to each Transferred Loan;

(vii) complying in all material respects with all Applicable Laws with respect
to it, its business, and its properties and all Transferred Loans and
Collections, except to the extent that the failure to so comply would not
reasonably be expected to have a Material Adverse Effect;

(viii) preserving and maintaining its existence, rights, licenses, franchises
and privileges as a corporation in the jurisdiction of its organization, and
qualifying and remaining qualified in good standing as a foreign corporation and
qualifying to and remaining authorized and licensed to perform obligations as
Servicer (including enforcement of collection of Transferred Loans on behalf of
the Borrower and the Agent,) in each jurisdiction where the failure to preserve
and maintain such existence, rights, franchises, privileges and qualification
would materially adversely affect (A) the rights or interests of the Borrower,
the Agent, and the Lender Group in the Transferred Loans, (B) the collectibility
of any Transferred Loan, or (C) the ability of the Servicer to perform its
obligations hereunder;

(ix) notifying the Borrower and the Agent of any material action, suit,
proceeding, dispute, offset deduction, defense or counterclaim that (1) is or is
threatened to be asserted by an Obligor with respect to any Transferred Loan; or
(2) would reasonably be expected to have a Material Adverse Effect; and

(c) The Borrower and Servicer hereby acknowledge that none of the Agent or the
Lender Group, nor the Collateral Custodian (if one has been appointed), shall
have any obligation or liability with respect to any Transferred Loans, nor
shall any of them be obligated to perform any of the obligations of the Servicer
hereunder.

 

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4.03 Authorization of the Servicer.

(a) Each of the Borrower and the Agent, on behalf of the Lender Group, hereby
authorizes the Servicer (including any successor thereto) to take any and all
reasonable steps in its name and on its behalf necessary or desirable and not
inconsistent with the pledge of the Transferred Loans pursuant to the Loan
Agreement, in the determination of the Servicer, to collect all amounts due
under any and all Transferred Loans, including, without limitation, endorsing
any of their names on checks and other instruments representing Collections,
executing and delivering any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Transferred Loans and, after the
delinquency of any Transferred Loan and to the extent permitted under and in
compliance with Applicable Law, to commence proceedings with respect to
enforcing payment thereof, to the same extent as the Originator could have done
if it had continued to own such Loan. The Borrower shall furnish the Servicer
(and any successors thereto) with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder, and shall cooperate with the Servicer to the
fullest extent in order to ensure the collectibility of the Transferred Loans.
In no event shall the Servicer be entitled to make the Borrower, the Collateral
Custodian (if one has been appointed), the Agent or any member of the Lender
Group a party to any litigation without such party’s express prior written
consent, or to make the Borrower a party to any litigation (other than any
routine foreclosure or similar collection procedure) without the Agent’s
consent.

(b) After an Event of Default has occurred and is continuing, at the Agent’s
direction, the Servicer shall take such action as the Agent may deem necessary
or advisable to enforce collection of the Transferred Loans; provided, that the
Agent may, at any time after an Event of Default has occurred and is continuing,
notify any Obligor with respect to any Transferred Loans of the pledge of such
Transferred Loans to the Agent and direct that payments of all amounts due or to
become due to the Borrower thereunder be made directly to the Agent or any
servicer, collection agent or lock-box or other account designated by the Agent
and, upon such notification and at the expense of the Borrower, the Agent may
enforce collection of any such Transferred Loans and adjust, settle or
compromise the amount or payment thereof. The Agent shall give written notice to
any successor Servicer of the Agent’s actions or directions pursuant to this
Section 4.3(b).

4.04 Collection of Payments.

(a) Collection Efforts, Modification of Loans. The Servicer will make reasonable
efforts to collect all payments called for under the terms and provisions of the
Transferred Loans as and when the same become due, and will follow those
collection procedures as are consistent with Accepted Servicing Practices. The
Servicer may not waive, modify or otherwise vary any provision of a Transferred
Loan, except as may be in accordance with the Credit and Collection Policy.
Notwithstanding anything to the contrary contained herein, the Servicer will not
take any action with respect to any Transferred Loans that is prohibited under
the Loan Agreement.

(b) Taxes and other Amounts. To the extent provided for in any Transferred Loan,
the Servicer will use its best efforts to collect all payments with respect to
amounts due for

 

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taxes, assessments and insurance premiums relating to such Transferred Loans or
the Related Property and remit such amounts to the appropriate Governmental
Authority or insurer on or prior to the date such payments are due.

(c) Payments to Cash Management Account. On or before the Transfer Date with
respect to each Transferred Loan, the Servicer shall have instructed all
Obligors to make all payments in respect of all Transferred Loans included in
the Collateral directly to a Cash Management Account established pursuant to the
Loan Agreement. Servicer shall also be responsible for compliance with the all
other requirements of the cash management provisions in Section 2.6 of the Loan
Agreement.

(d) Adjustments. If (i) the Servicer makes a deposit into the Cash Management
Account in respect of a Collection of a Transferred Loan included in the
Collateral and such Collection was received by the Servicer in the form of a
check that is not honored for any reason or (ii) the Servicer makes a mistake
with respect to the amount of any Collection and deposits an amount that is less
than or more than the actual amount of such Collection, the Servicer shall
appropriately adjust the amount subsequently deposited into the Cash Management
Account to reflect such dishonored check or mistake. Any Scheduled Payment in
respect of which a dishonored check is received shall be deemed not to have been
paid.

(e) Released Amounts. The Agent hereby agrees that it shall release to the
Borrower from the Collateral, and the Borrower hereby agrees to release to the
Originator, an amount equal to the Released Amounts promptly upon receipt of an
Officer’s Certificate of the initial Servicer (or the Originator if the initial
Servicer is no longer the Servicer) setting forth the calculation thereof, which
release shall be automatic and shall require no further act by the Agent;
provided, that, the Agent and the Borrower, as applicable, shall execute and
deliver such instruments of release and assignment, or otherwise confirm the
foregoing release, as may reasonably be requested by the Servicer on behalf of
the Borrower or the Originator, as applicable, in writing. Upon such release,
such Released Amounts shall not constitute and shall not be included in the
Collateral. Immediately upon the release to the Borrower by the Agent of the
Released Amounts, the Borrower hereby irrevocably agrees to release to the
Originator such Released Amounts, which release shall be automatic and shall
require no further act by the Borrower; provided, that the Borrower shall
execute and deliver such instruments of release and assignment, or otherwise
confirming the foregoing release of any Released Amounts, as may be reasonably
requested by the Originator.

4.05 [Intentionally Omitted].

4.06 Realization Upon Defaulted Loans or Charged-Off Loans.

The Servicer will use its reasonable efforts to repossess or otherwise
comparably convert the ownership of any Related Property with respect to a
Defaulted Loan or Charged-Off Loan and will act as sales and processing agent
for Related Property that it repossesses. The Servicer will follow the practices
and procedures set forth in the Credit and Collection Policy in order to realize
upon such Related Property. Without limiting the foregoing, the Servicer may
sell any such Related Property with respect to any Defaulted Loan or Charged-Off
Loan to the Servicer or its Affiliates for a purchase price equal to the then
fair market value thereof (including, if

 

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applicable, the fair market value of any Warrant Assets included in such sale) ;
any such sale to be evidenced by a certificate of a Responsible Officer of the
Servicer delivered to the Agent identifying the Defaulted Loan or Charged-Off
Loan and the Related Property, setting forth the sale price of the Related
Property and certifying that such sale price is the fair market value of such
Related Property; provided, that if after giving effect to such sale (a) the
Availability would not be greater than or equal to zero or (b) a Default or an
Event of Default would exist, then the Servicer prior to selling any Related
Property with respect to a Defaulted Loan or Charged-Off Loan shall obtain the
prior written consent of the Agent. In any case in which any such Related
Property has suffered damage, the Servicer will not expend funds in connection
with any repair or toward the repossession of such Related Property unless it
reasonably determines that such repair and/or repossession will increase the
Recoveries by an amount greater than the amount of such expenses. The Servicer
will remit to the Cash Management Account the Recoveries received in connection
with the sale or disposition of Related Property with respect to a Defaulted
Loan or Charged-Off Loan.

4.07 Maintenance of Insurance Policies.

The Servicer will require that each Obligor with respect to a Transferred Loan
maintain an Insurance Policy with respect to each Transferred Loan and the
Related Property, to the extent consistent with the Credit and Collection
Policy. In connection with its activities as Servicer, the Servicer agrees to
present, on behalf of the Borrower and the Agent, on behalf of the Lender Group,
with respect to the respective interests, claims to the insurer under each
Insurance Policy and any such liability policy, and to settle, adjust and
compromise such claims, in each case, consistent with the terms of each related
Transferred Loan.

4.08 Representations and Warranties of the Servicer.

The Servicer hereby represents and warrants, as of the Closing Date, as follows:

(a) Organization and Good Standing; Power and Authority. The Servicer is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation with all requisite corporate power and
authority to own its properties and to conduct its business as presently
conducted and to enter into and perform its obligations pursuant to this
Agreement and each other Loan Document to which it is a party.

(b) Due Qualification. The Servicer is qualified to do business as a
corporation, is in good standing, and has obtained all licenses and approvals as
required under the laws of all jurisdictions in which the ownership or lease of
its property and or the conduct of its business (other than the performance of
its obligations hereunder) requires such qualification, standing, license or
approval, except to the extent that the failure to so qualify, maintain such
standing or be so licensed or approved would not have an adverse effect on the
interests of the Borrower or of the Lender Group. The initial Servicer is
qualified to do business as a corporation, is in good standing, and has obtained
all licenses and approvals as required under the laws of all states in which the
performance of its obligations pursuant to this Agreement requires such
qualification, standing, license or approval, except where the failure to
qualify or obtain such license or approval would not reasonably be expected to
have a Material Adverse Effect on its ability to perform hereunder.

 

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(c) Due Authorization. The Servicer has duly authorized the execution, delivery
and performance of this Agreement by all requisite corporate action.

(d) No Violation. The consummation of the transactions contemplated by, and the
fulfillment of the terms of, this Agreement by the Servicer (with or without
notice or lapse of time) will not (i) conflict with, result in any breach of any
of the terms or provisions of, or constitute a default under, the articles of
incorporation or by-laws of the Servicer, or any material contractual obligation
to which the Servicer is a party or by which it or any of its property is bound,
(ii) result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such contractual obligation (other than this
Agreement), or (iii) violate in any material respect any Applicable Law.

(e) No Consent. No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any Governmental Authority
having jurisdiction over the Servicer or any of its properties is required to be
obtained by or with respect to the Servicer in order for the Servicer to enter
into this Agreement or perform its obligations hereunder.

(f) Binding Obligation. This Agreement constitutes a legal, valid and binding
obligation of the Servicer, enforceable against the Servicer in accordance with
its terms, except as such enforceability may be limited by (i) applicable
Bankruptcy Laws and (ii) general principles of equity (whether considered in a
suit at law or in equity).

(g) No Proceedings. Except as previously disclosed to the Agent and Lender Group
in writing, there are no proceedings or investigations (formal or informal)
pending or threatened against the Servicer, before any Governmental Authority
(i) asserting the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
(iii) seeking any determination or ruling that would (in the reasonable judgment
of the Servicer) be expected to have a Material Adverse Effect.

(h) Reports Accurate. All Servicer Certificates, information, exhibits,
financial statements, documents, books, Servicing Records or reports furnished
or to be furnished by the Servicer to the Agent, any member of the Lender Group
or any other party in connection with this Agreement are and will be accurate,
true and correct in all material respects.

(i) No Servicer Default. No event has occurred and is continuing and no
condition exists, or would result from a Borrowing or from the application of
the proceeds therefrom, which constitutes or may reasonably be expected to
constitute a Servicer Default.

(j) Material Adverse Change. Since December 31, 2014, there has been no Material
Adverse Change with respect to the initial Servicer.

(k) Credit and Collection Policy. It has at all times, since the Closing Date,
complied with the Credit and Collection Policy with respect to each Transferred
Loan.

4.09 Covenants of the Servicer.

The Servicer hereby covenants that, from and after the Closing Date:

 

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(a) Compliance with Law. The Servicer will comply in all material respects with
all Applicable Laws, including those with respect to the Transferred Loans, the
Related Property and Obligor Loan Documents or any part thereof, except to the
extent that the failure to so comply would not reasonably be expected to have a
Material Adverse Effect.

(b) Preservation of Corporate Existence. The Servicer will preserve and maintain
its corporate existence, rights, franchises and privileges in the jurisdiction
of its formation, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to maintain such existence,
rights, franchises, privileges and qualification could reasonably be expected to
have, a Material Adverse Effect.

(c) Obligations with Respect to Transferred Loans. The Servicer will duly
fulfill and comply with all obligations on the part of the Borrower to be
fulfilled or complied with under or in connection with each Transferred Loan
under this Agreement, the Loan Agreement or any other Loan Document and will do
nothing to impair the rights of the Borrower or the Agent, on behalf of Lender
Group, in, to and under the Collateral.

(d) Preservation of Security Interest. The Borrower or the initial Servicer on
behalf of the Borrower will authorize, execute and file (or cause filing of)
such financing and continuation statements and any other documents and take such
other actions that may be required by any law or regulation of any Governmental
Authority to preserve and protect fully the interest of the Agent, on behalf of
Lender Group, in, to and under the Collateral.

(e) Change of Name or Location; Records. The initial Servicer (i) shall not
change its name, move the location of its principal executive office or change
its jurisdiction of incorporation, without 30 days’ prior written notice to the
Borrower and the Agent, and (ii) shall not move, or, if a Collateral Custodian
has been appointed, consent to the Collateral Custodian moving the Obligor Loan
Documents, without 45 days’ prior written notice to the Borrower and the Agent,
and (iii) will promptly take all actions required of each relevant jurisdiction
in order to continue the first priority perfected security interest of the
Agent, on behalf of Lender Group, in all Collateral, including delivery of an
Opinion of Counsel.

(f) Credit and Collection Policy. The initial Servicer will (i) comply in all
material respects with the Credit and Collection Policy in regard to each
Transferred Loan and the Related Property included in the Collateral, including,
without limitation, performing the loan grading and asset valuation functions
specified in the Credit and Collection Policy on a quarterly basis, and
(ii) furnish to the Agent, at least ten Business Days prior to its proposed
effective date, notice of any proposed change in the Credit and Collection
Policy. The initial Servicer will not agree or otherwise permit any change in
the Credit and Collection Policy without the prior written consent of the Agent
(which consent shall not unreasonably be withheld), and Agent shall be deemed to
have consented to any such proposed change unless Agent has notified Servicer to
the contrary no later than ten Business Days after Agent’s receipt of such
notice from Servicer.

(g) Notice of Certain Events. The Servicer will furnish to the Agent, as soon as
possible and in any event within one Business Day after the Servicer shall have
knowledge of the occurrence of any Default or Event of Default, a written
statement setting forth the details of such event and the action that the
Servicer proposes to take with respect thereto.

 

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(h) Extension or Amendment of Transferred Loans. The Servicer will not, except
as otherwise permitted in Section 4.04(a), extend, amend or otherwise modify the
terms of any Transferred Loan.

(i) Other. The Servicer will furnish to the Agent and the Lender Group such
other information, documents records or reports respecting the Transferred Loans
or the condition or operations, financial or otherwise of the Servicer as the
Borrower, the Agent or the Lender Group may from time to time reasonably request
in order to protect the respective interests of the Borrower, the Agent or the
Lender Group under or as contemplated by this Agreement, the Loan Agreement or
any other Loan Document.

(j) [Intentionally Omitted].

(k) Inspection of Records. The Servicer will, at any time and from time to time
during regular business hours, as requested by the Agent (in the case of a
Successor Servicer, with at least with five Business Days’ notice), permit the
Agent and the Lender Group, or their respective agents or representatives,
(i) to examine and make copies of and take abstracts from all books, records and
documents (including computer tapes and disks) relating to the Transferred Loans
and the related Obligor Loan Documents and (ii) to visit the offices and
properties of the Borrower, the Originator or the Servicer, as applicable, for
the purpose of examining such materials described in clause (i), and to discuss
matters relating to the Transferred Loans or the Borrower’s, the Originator’s or
the Servicer’s performance hereunder, under the Obligor Loan Documents and under
the other Loan Documents to which such Person is a party with such officers,
directors, employees or independent public accountants of the Borrower, the
Originator or the Servicer, as applicable, as might reasonably be determined to
have knowledge of such matters. Prior to the occurrence of an Event of Default
or a Trigger Event, the Servicer (or, if a Successor Servicer has been
appointed, the Borrower) shall bear the expense of up to three such inspections
in any 12-month period. Upon and after the occurrence of an Event of Default,
the initial Servicer shall be required to bear the expense of all such
inspections.

(l) Keeping of Records. The Servicer will maintain and implement administrative
and operating procedures (including, in the case of the initial Servicer, an
ability to recreate records evidencing Transferred Loans and the related Obligor
Loan Documents in the event of the destruction of the originals thereof), and
keep and maintain, all documents, books, computer tapes, disks, records and
other information reasonably necessary or advisable for the collection of all
Transferred Loans (including records adequate to permit the daily identification
of each new Transferred Loan and all Collections of and adjustments to each
existing Transferred Loan). The Servicer shall give the Agent (with a copy to
the Collateral Custodian, if one has been appointed) prompt notice of any
material change in its administrative and operating procedures referred to in
the previous sentence.

(m) Compliance with Transferred Loans. The Servicer will (i) at its own expense,
timely and fully perform and comply with all material provisions, covenants and
other

 

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promises required to be observed by it under the Transferred Loans and the
related Obligor Loan Documents; and (ii) timely and fully comply in all material
respects with the Credit and Collection Policy with respect to each Transferred
Loan and the related Obligor Loan Documents.

(n) Consolidation or Merger of the Servicer. The initial Servicer shall not
consolidate or merge with or into, or sell, lease or transfer all or
substantially all of its assets to, any other Person, unless, in the case of any
such action (i) no Event of Default or Material Adverse Effect would occur or be
reasonably likely to occur as a result of such transaction, (ii) Agent provides
its prior written consent to such transaction and (iii) such Person executes and
delivers to the Agent an agreement by which such Person assumes the obligations
of the Servicer hereunder and under the other Loan Documents to which it is a
party, or confirms that such obligations remain enforceable against it, together
with such certificates and opinions of counsel as the Agent may reasonably
request.

4.10 The Collateral Custodian; The Agent.

(a) Appointment; Custodial Duties. The appointment, duties and compensation of
the Collateral Custodian, if one is appointed, shall be provided for in its
Collateral Custodian Agreement.

(b) Concerning the Agent.

(i) Except for its willful misconduct, gross negligence or bad faith, the Agent
may conclusively rely on and shall be fully protected in acting upon any
certificate, instrument, opinion, notice, letter, telegram or other document
delivered to it and that in good faith it reasonably believes to be genuine and
that has been signed by the proper party or parties. In no event shall the Agent
be liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits).

(ii) The Agent may consult counsel satisfactory to it and the advice or opinion
of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.

(iii) The Agent shall not be liable for any error of judgment, or for any act
done or step taken or omitted by it, in good faith, or for any mistakes of fact
or law, or for anything that it may do or refrain from doing in connection
herewith except in the case of its willful misconduct, gross negligence or bad
faith.

(iv) The Agent makes no warranty or representation and shall have no
responsibility (except as expressly set forth in this Agreement) as to the
content, enforceability, completeness, validity, sufficiency, value,
genuineness, ownership or transferability of the Loans or the Obligor Loan
Documents, and will not be required to and will not make any representations as
to the validity or value of any of the Loans. The Agent shall not be obligated
to take any legal action hereunder that might in its judgment involve any
expense or liability unless it has been furnished with an indemnity reasonably
satisfactory to it.

 

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(v) The Agent shall have no duties or responsibilities under this Agreement
except such duties and responsibilities as are specifically set forth in this
Agreement and no covenants or obligations shall be implied in this Agreement
against the Agent.

(vi) The Agent shall not be required to expend or risk its own funds in the
performance of its duties hereunder.

(vii) It is expressly agreed and acknowledged that the Agent is not guaranteeing
performance of or assuming any liability for the obligations of the other
parties hereto or any parties to the Transferred Loans.

(c) Release for Servicing. From time to time and as appropriate for the
enforcement or servicing of any of the Transferred Loans, the Agent is hereby
authorized, upon receipt from the Servicer on behalf of the Borrower, of a
written request for release of documents and receipt in the form annexed hereto
as Exhibit F to release to the Servicer the related Loan File or the documents
set forth in such request and receipt to the Servicer. All documents so released
to the Servicer on behalf of the Borrower shall be held by the Servicer in trust
for the benefit of the Borrower, the Agent and the Lender Group, with respect to
their respective interests, in accordance with the terms of this Agreement. The
Servicer, on behalf of the Borrower, shall return to the Agent the Loan File or
other such documents when the Servicer’s need therefor in connection with such
foreclosure or servicing no longer exists, unless the Transferred Loan shall be
liquidated, in which case, upon receipt of an additional request for release of
documents and receipt certifying such liquidation from the Servicer to the Agent
in the form annexed hereto as Exhibit F, the Servicer’s request and receipt
submitted pursuant to the first sentence of this Section 4.10(c) shall be
released by the Agent to the Servicer. Notwithstanding anything in this
Section 4.10(c) to the contrary, in no event shall the Agent be required to
release any Loan File or part thereof to the Servicer.

(d) Release for Payment. Upon receipt by the Agent of the Servicer’s request for
release of documents and receipt in the form annexed hereto as Exhibit F (which
certification shall include a statement to the effect that all amounts received
in connection with such payment or repurchase have been credited to the Cash
Management Account as provided in this Agreement and the Loan Agreement), the
Agent shall promptly release the related Loan File to the Servicer, on behalf of
the Borrower.

4.11 [Intentionally Omitted].

4.12 [Intentionally Omitted].

 

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4.13 [Intentionally Omitted].

4.14 [Intentionally Omitted].

4.15 [Intentionally Omitted].

4.16 Payment of Certain Expenses by the Servicer and the Borrower.

(a) The Servicer will be required to pay all fees and expenses incurred by it in
connection with the transactions and activities contemplated by this Agreement,
including fees and disbursements of legal counsel and independent accountants,
taxes imposed on the Servicer, expenses incurred in connection with payments and
reports pursuant to this Agreement, and all other fees and expenses not
expressly stated under this Agreement for the account of the Borrower. In
consideration for the payment by the Borrower of the Servicing Fee, the Servicer
(so long as it is the Originator or an Affiliate thereof) will be required to
pay all reasonable fees and expenses owing to any bank or trust company in
connection with the maintenance of the Cash Management Accounts, and any
Collateral Custodian Fee pursuant to any Collateral Custodian Agreement. The
Servicer shall be required to pay such expenses for its own account and shall
not be entitled to any payment therefor other than the Servicing Fee.

(b) The Borrower will be required to pay all fees and expenses incurred by the
Agent, Lender Group or any Successor Servicer in connection with the
transactions and activities contemplated by this Agreement, including reasonable
fees and disbursements of legal counsel and independent accountants.

4.17 Reports.

(a) Servicer Report. With respect to each Record Date and the related Collection
Period, the Servicer will provide to the Borrower and the Agent (and if so
requested by Agent, with copies for each Lender), on the related Record Date, a
monthly statement (a “Servicer Report”), signed by a Responsible Officer of the
Servicer and substantially in the form of Exhibit A.

(b) Servicer’s Certificate. Together with each Servicer Report, the Servicer
shall submit to the Borrower and the Agent (and if so requested by Agent, with
copies for each Lender) a certificate substantially in the form of Exhibit G (a
“Servicer’s Certificate”), signed by a Responsible Officer of the Servicer,
which shall include a certification by such Responsible Officer that no Default
or Event of Default has occurred and is continuing.

(c) Financial Statements. The initial Servicer will submit to the Borrower and
the Agent (and if so requested by Agent, with copies for each Lender), within 45
days following the end of each of the Servicer’s fiscal quarters (other than the
final fiscal quarter), commencing for the fiscal quarter ending on June 30,
2015, unaudited financial statements of the Servicer (including an analysis of
delinquencies and losses for each fiscal quarter) as of the end of each such
fiscal quarter; provided, that the availability via EDGAR, or any successor
system of the Commission, of the financial statements in Servicer’s applicable
quarterly report on Form 10-Q shall be deemed delivery to the Borrower, the
Agent, and, if applicable, each Lender of the

 

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financial statements required to be delivered pursuant to this sentence, on the
date such documents are made so available. The Servicer shall submit to the
Borrower and the Agent (and if so requested by Agent, with copies for each
Lender), within 90 days following the end of the Servicer’s fiscal year,
commencing with the fiscal year ending on December 31, 2015, annual audited
financial statements as of the end of such fiscal year; provided, that the
availability via EDGAR, or any successor system of the Commission, of the
financial statements in Servicer’s annual report on Form 10-K shall be deemed
delivery to the Borrower, the Agent, and, if applicable, each Lender of the
financial statements required to be delivered pursuant to this sentence, on the
date such documents are made so available.

4.18 Annual Statement as to Compliance.

The Servicer will provide to the Borrower, the Agent (and if so requested by
Agent, with copies for each Lender), and the Collateral Custodian (if one has
been appointed), within 90 days following the end of each fiscal year of the
Servicer, commencing with the fiscal year ending on December 31, 2015, an annual
report signed by a Responsible Officer of the Servicer certifying that (a) a
review of the activities of the Servicer, and the Servicer’s performance
pursuant to this Agreement, for the period ending on the last day of such fiscal
year has been made under such Responsible Officer’s supervision and (b) the
Servicer has performed or has caused to be performed in all material respects
all of its obligations under this Agreement throughout such year and no Servicer
Default has occurred and is continuing (or if a Servicer Default has occurred
and is continuing, specifying each such event, the nature and status thereof and
the steps necessary to remedy such event, and, if a Servicer Default occurred
during such year and no notice thereof has been given to the Agent, specifying
such Servicer Default and the steps taken to remedy such event).

4.19 [Intentionally Omitted].

4.20 Limitation on Liability.

Except as provided herein, none of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Borrower, the Agent,
the other members of the Lender Group or any other Person for any action taken
or for refraining from the taking of any action as expressly provided for in
this Agreement; provided, that this provision shall not protect any such Person
against any liability that would otherwise be imposed by reason of its willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of its failure to perform materially in accordance with this Agreement.

The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its duties to service the Transferred
Loans in accordance with this Agreement that in its reasonable opinion may
involve it in any expense or liability. The Servicer may, in its sole
discretion, undertake any legal action relating to the servicing, collection or
administration of Transferred Loans and the Related Property that it may
reasonably deem necessary or appropriate for the benefit of the Borrower and the
Lender Group with respect to this Agreement and the rights and duties of the
parties hereto and the respective interests of the Borrower and the Lender Group
hereunder.

 

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4.21 The Servicer Not to Resign.

The Servicer shall not resign from the obligations and duties hereby imposed on
such Person except upon such Person’s determination that (i) the performance of
its duties hereunder is or becomes impermissible under Applicable Law and
(ii) there is no reasonable action that such Person could take to make the
performance of its duties hereunder permissible under Applicable Law. Any such
determination permitting the resignation of the Servicer shall be evidenced as
to clause (i) above by an Opinion of Counsel to such effect delivered to the
Borrower and the Agent. No such resignation shall become effective until a
successor shall have assumed the responsibilities and obligations of such Person
in accordance with the terms of this Agreement.

4.22 Access to Certain Documentation and Information Regarding the Transferred
Loans.

The Borrower, the Servicer or, the Collateral Custodian (if one has been
appointed), as applicable, shall provide to the Agent and the Lender Group
access to the Obligor Loan Documents and all other documentation regarding the
Transferred Loans included as part of the Collateral and the Related Property in
such cases where the Agent is required in connection with the enforcement of the
rights or interests of the Agent or the Lender Group, or by applicable statutes
or regulations, to review such documentation, such access being afforded without
charge but only (i) upon two Business Days’ prior written request, (ii) during
normal business hours and (iii) subject to the Servicer’s and the Collateral
Custodian’s normal security and confidentiality procedures. From and after the
Closing Date and periodically thereafter at the discretion of the Agent or the
applicable member of the Lender Group, the Agent, such member of the Lender
Group or its agents may review the Borrower’s and the Servicer’s collection and
administration of the Transferred Loans in order to assess compliance by the
Servicer with the Servicer’s written policies and procedures, as well as with
this Agreement and may conduct an audit of the Transferred Loans, Obligor Loan
Documents and Records in conjunction with such a review. Such review shall be
reasonable in scope and shall be completed in a reasonable period of time. A
Successor Servicer shall be entitled to at least five Business Days notice prior
to such review. The Borrower shall bear the cost of such audits.

4.23 Identification of Records.

The Servicer shall clearly and unambiguously identify each Transferred Loan that
is part of the Collateral and the Related Property in its computer or other
records to reflect that the interest in such Transferred Loans and Related
Property have been transferred to and are owned by the Borrower and that the
Agent, on behalf of the Lender Group, has the security interest and Lien therein
granted by Borrower pursuant to the Loan Agreement.

 

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ARTICLE V

ESTABLISHMENT OF CASH MANAGEMENT ACCOUNT

5.01 Cash Management Account.

(a) Establishment of Cash Management Account. The Servicer, for the benefit of
the Agent and the Lender Group, shall cause to be established and maintained a
Cash Management Account in accordance with the requirements of Section 2.6 of
the Loan Agreement.

(b) Deposits to Cash Management Account. The Servicer shall deposit or cause to
be deposited all Collections on or in respect of each Transferred Loan collected
on or after the related Transfer Date (to the extent received by the Servicer)
within one Business Day after receipt thereof. The Servicer agrees that it will
cause the Originator or other appropriate Person paying such amounts, as the
case may be, to remit directly to the Cash Management Account, within one
Business Day after receipt thereof, all such amounts to the extent such amounts
are received by such Person.

ARTICLE VI

[RESERVED]

ARTICLE VII

COVENANTS

7.01 Financial and Serviced Portfolio Covenants of Hercules.

Hercules hereby covenants that, from and after the Closing Date:

(a) Minimum Tangible Net Worth.     Hercules, on a consolidated basis with its
Subsidiaries, shall maintain as of the end of each of its fiscal quarters a sum
of (i) Tangible Net Worth, plus (ii) Subordinated Debt, that is greater than or
equal to the sum of (A) $500,000,000, plus (B) ninety percent (90%) of the
cumulative amount of equity raised by Hercules from and after June 30, 2014.

(b) Maximum Debt to Worth Ratio.     Hercules, on a consolidated basis with its
Subsidiaries, shall maintain as of the end of each of its fiscal quarters a Debt
to Worth Ratio that is less than or equal to 1.25 to 1.00.

(c) Minimum Interest Coverage Ratio.     Hercules, on a consolidated basis with
its Subsidiaries, shall maintain, as measured on the last day of each of its
fiscal quarters, an Interest Coverage Ratio for the three (3) fiscal month
period then ended that is greater than or equal to 2.00 to 1.00.

(d) Minimum Portfolio Funding Liquidity Covenant.     Hercules, on a
consolidated basis with its Subsidiaries, shall maintain, as measured on the
last day of each of its

 

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fiscal months, an aggregate amount of unrestricted cash balances and borrowing
availability under committed lines of credit that is greater than or equal to
seventy-five percent (75%) of the aggregate amount of unfunded commitments of
Borrower to Obligors under the Transferred Loans.

(e) Maximum Delinquent Notes Receivable Percentage of Hercules’ Serviced
Portfolios.     Hercules shall not permit the aggregate unpaid principal balance
of all loans that are serviced by Hercules for its Subsidiaries and Affiliates
with respect to which any payment thereunder remains outstanding and unpaid, in
whole or in part, for more than sixty (60) days past the date it became due and
payable as of the last day of any fiscal month, to be in excess of ten percent
(10%) of the aggregate unpaid principal balance of all such loans serviced by
Hercules as of such day.

(f) Maximum Defaulted Notes Receivable Percentage of Hercules’ Serviced
Portfolios.     Hercules shall not permit the aggregate unpaid principal balance
of all loans that are serviced by Hercules for its Subsidiaries and Affiliates
with respect to which (a) any payment thereunder remains outstanding and unpaid,
in whole or in part, for more than ninety (90) days past the date it became due
and payable according to the original face and tenor of such loan, (b) with
respect to which foreclosure proceedings have been initiated against any
property securing such loan, or (c) that Hercules deems to be non-collectible as
of the last day of any fiscal month, to be in excess of ten percent (10%)of the
aggregate unpaid principal balance of all such loans serviced by Hercules as of
such day.

7.02 Covenants Regarding Purchased Assets.

The Originator hereby covenants that, from and after the Closing Date:

(a) Protect Collateral.     The Originator agrees that it shall not sell,
assign, transfer, pledge or encumber in any other manner the Purchased Assets
(except for the assignment and pledge to the Borrower hereunder and the
Borrower’s grant of a security interest in the Collateral to the Agent under the
Loan Agreement). The Originator shall warrant and defend the right and title
herein granted unto the Borrower in and to the Purchased Assets (and all right,
title and interest represented by the Collateral) against the claims and demands
of all Persons whomsoever.

(b) Further Assurances.     The Originator shall, at its own expense, promptly
execute and deliver all further instruments (including financing statements,
stock powers, other powers and other instruments of transfer or control)
requested by the Agent to perfect and protect the transfer of the Purchased
Assets to the Borrower or any security interest granted or purported to be
granted hereby or under the Loan Agreement, or to enable the Borrower and/or the
Agent, as applicable, to exercise and enforce its rights and remedies hereunder
with respect to the Purchased Assets or under the Loan Agreement with respect to
any Collateral, including the rights and remedies under Section 9 of the Loan
Agreement. In addition, the Originator shall, at its own expense, promptly take
all further action that Agent may request in order to perfect and protect the
transfer of the Purchased Assets to the Borrower or any security interest
granted or purported to be granted hereby or under the Loan Agreement, or to
enable the Borrower and/or the Agent, as applicable, to exercise and enforce its
rights and remedies hereunder with respect to the Purchased Assets or under the
Loan Agreement with respect to any Collateral, including the rights and remedies
under Section 9 of the Loan Agreement.

 

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(c) Collections Held in Trust.     If the Originator receives any Collections,
the Originator shall hold such Collections separate and apart from its other
property in trust for the Borrower and shall, within two Business Days after
receipt thereof, deposit such Collections to the Cash Management Account.

(d) Consents.     The Originator shall execute and deliver to the Borrower
and/or the Agent, as applicable, upon request and at the time the Borrower
and/or the Agent, as applicable, exercises its remedies, any document deemed
necessary by the Borrower and/or the Agent, as applicable, in order to evidence
the Originator’s consent to the Borrower and/or the Agent exercising their
respective remedies hereunder with respect to the Purchased Assets or under the
Loan Agreement with respect to any Collateral, including the rights and remedies
under Section 9 of the Loan Agreement.

ARTICLE VIII

THE SERVICER AND THE COLLATERAL CUSTODIAN

8.01 Indemnification; Third Party Claims.

(a) The Servicer (so long as it is the Originator or an Affiliate thereof) shall
indemnify the Originator, the Borrower, the Agent and each other member of the
Lender Group, the Collateral Custodian (if one has been appointed), and any
Successor Servicer, their respective officers, directors, employees, agents and
“control persons,” as such term is used under the Securities Act and under the
Exchange Act (each a “Servicer Indemnified Party”) and hold harmless each of
them against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments, and other costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of any of the Servicer’s representations and
warranties and covenants contained in this Agreement or in any way relating to
the failure of the Servicer to perform its duties and service the Transferred
Loans in compliance with the terms of this Agreement except to the extent such
loss arises out of such Servicer Indemnified Party’s fraud, gross negligence or
willful misconduct; provided, however, that if the Servicer is not liable
pursuant to the provisions of Section 8.01(b) hereof for its failure to perform
its duties and service the Transferred Loans in compliance with the terms of
this Agreement, then the provisions of this Section 8.01 shall have no force and
effect with respect to such failure; provided, further that (i) no successor
Servicer shall be liable for the breaches of representations or warranties or
covenants, or actions or omissions, of a predecessor Servicer; and (ii) the
Servicer shall not be so required to indemnify a Servicer Indemnified Party or
to otherwise be liable to an Servicer Indemnified Party for any losses in
respect of the non-performance of the Transferred Loans, the creditworthiness of
the Obligors with respect to the Transferred Loans, changes in the market value
of the Transferred Loans or other similar investment risks associated with the
Transferred Loans arising from a breach of any representation or warranty set
forth in Section 3.03 hereto if the effect of such indemnity would be to provide
credit recourse to the Originator for the performance of the Transferred Loans.

 

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(b) None of the Originator or the Servicer or any of their respective
Affiliates, directors, officers, employees or agents shall be under any
liability to the Borrower, the Agent or any member of the Lender Group for any
action taken, or for refraining from the taking of any action, in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Originator, the Servicer or any of their
respective Affiliates, directors, officers, employees, agents against the
remedies provided herein for the breach of any warranties, representations or
covenants made herein, or against any expense or liability specifically required
to be borne by such party without right of reimbursement pursuant to the terms
hereof, or against any expense or liability which would otherwise be imposed by
reason of misfeasance, bad faith or gross negligence in the performance of the
respective duties of the Servicer or the Originator, as the case may be. The
Originator, the Servicer and any of their respective Affiliates, directors,
officers, employees, agents may rely in good faith on any document of any kind
which, prima facie, is properly executed and submitted by any Person respecting
any matters arising hereunder.

(c) The Originator agrees to indemnify and hold harmless the Borrower, the
Agent, any Successor Servicer, and the Lender Group, as the ultimate assignees
from the Originator (each an “Originator Indemnified Party,” together with the
Servicer Indemnified Parties, the “Indemnified Parties”), from and against any
loss, liability, expense, damage, claim or injury arising out of or based on
(i) any breach of any representation, warranty or covenant of the Originator,
the Servicer or their Affiliates, in any Loan Document, including, without
limitation, by reason of any acts, omissions, or alleged acts or omissions
arising out of activities of the Originator, the Servicer or their Affiliates,
and (ii) any untrue statement by the Originator, the Servicer or its Affiliates
of any material fact, including, without limitation, any Officer’s Certificate,
statement, report or other document or information prepared by any such Person
and furnished or to be furnished by it pursuant to or in connection with the
transactions contemplated thereby and not corrected prior to completion of the
relevant transaction including, without limitation, such written information as
may have been and may be furnished in connection with any due diligence
investigation with respect to the Transferred Loans or any such Person’s
business, operations or financial condition, including reasonable attorneys’
fees and other costs or expenses incurred in connection with the defense of any
actual or threatened action, proceeding or claim; provided that the Originator
shall not indemnify an Originator Indemnified Party to the extent such loss,
liability, expense, damage or injury is due to either an Originator Indemnified
Party’s willful misfeasance, bad faith or gross negligence or by reason of an
Originator Indemnified Party’s reckless disregard of its obligations hereunder;
provided, further, that the Originator shall not be so required to indemnify an
Originator Indemnified Party or to otherwise be liable to an Originator
Indemnified Party for any losses in respect of the non-performance of the
Transferred Loans, the creditworthiness of the Obligors with respect to the
Transferred Loans, changes in the market value of the Transferred Loans or other
similar investment risks associated with the Transferred Loans arising from a
breach of any representation or warranty set forth in Section 3.03 hereto if the
effect of such indemnity would be to provide credit recourse to the Originator
for the performance of the Transferred Loans. The provisions of this indemnity
shall run directly to and be enforceable by an Originator Indemnified Party
subject to the limitations hereof.

 

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(d) With respect to a claim subject to indemnity hereunder made by any Person
against an Indemnified Party (a “Third Party Claim”), such Indemnified Party
shall notify the related indemnifying parties (each an “Indemnifying Party”) in
writing of the Third Party Claim within a reasonable time after receipt by such
Indemnified Party of written notice of the Third Party Claim unless the
Indemnifying Parties shall have previously obtained actual knowledge thereof.
Thereafter, the Indemnified Party shall deliver to the Indemnifying Parties,
within a reasonable time after the Indemnified Party’s receipt thereof, copies
of all notices and documents (including court papers) received by the
Indemnified Party relating to the Third Party Claim. No failure to give such
notice or deliver such documents shall affect the rights to indemnity hereunder.
Each Indemnifying Party shall promptly notify the Agent and the Indemnified
Party (if other than the Agent) of any claim of which it has been notified and
shall promptly notify the Agent and the Indemnified Party (if applicable) of its
intended course of action with respect to any claim.

(e) If a Third Party Claim is made against an Indemnified Party, while
maintaining control over its own defense, the Indemnified Party shall cooperate
and consult fully with the Indemnifying Party in preparing such defense, and the
Indemnified Party may defend the same in such manner as it may deem appropriate,
including settling such claim or litigation after giving notice to the
Indemnifying Party of such terms and the Indemnifying Party will promptly
reimburse the Indemnified Party upon written request; provided, however, that
the Indemnified Party may not settle any claim or litigation without the consent
of the Indemnifying Party; provided, further, that the Indemnifying Party shall
have the right to reject the selection of counsel by the Indemnified Party if
the Indemnifying Party reasonably determines that such counsel is inappropriate
in light of the nature of the claim or litigation and shall have the right to
assume the defense of such claim or litigation if the Indemnifying Party
determines that the manner of defense of such claim or litigation is
unreasonable.

8.02 Relationship of Servicer to the Borrower and the Agent.

The relationship of the Servicer (and of any successor to the Servicer as
servicer under this Agreement) to the Borrower and the Agent under this
Agreement is intended by the parties hereto to be that of an independent
contractor and not of a joint venturer, agent or partner of the Borrower or the
Agent.

8.03 Servicer May Be a Lender.

Each of the Servicer and any Affiliate of the Servicer may in its individual or
any other capacity become a Lender under the Loan Agreement with the same rights
as it would have if it were not the Servicer or an Affiliate thereof except as
otherwise specifically provided herein; provided, however, that at any time that
Hercules or any of its Affiliates is the Servicer, neither the Servicer nor any
of its Affiliates (other than an Affiliate which is a corporation whose purpose
is limited to holding securities and related activities and which cannot incur
recourse debt) may be a Lender. In its capacity as a Lender, the Servicer or
such Affiliate shall have an equal and proportionate benefit under the
provisions of this Agreement and the Loan Agreement, without preference,
priority, or distinction as among all of the Lenders; provided, during the time
that the Servicer or any Affiliate thereof is a Lender it shall be without
voting rights as a Lender for any purpose set forth in this Agreement or the
Loan Agreement unless the Servicer or such Affiliate is the only Lender at such
time. The Servicer shall notify the Agent promptly after it or any of its
Affiliates proposes to become a Lender.

 

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8.04 Indemnification of the Agent and other Persons Under the Loan Agreement.

Hercules agrees to indemnify each of the Agent and each member of the Lender
Group, the Collateral Custodian (if one is appointed), any Successor Servicer,
their respective employees, officers, directors and agents and each other Person
indemnified by Borrower under Section 11.3 of the Loan Agreement, and to
reimburse each such Person’s reasonable out-of-pocket expenses under
Section 11.3 of the Loan Agreement, as if Hercules were a signatory thereto.
This Section 8.04 shall survive the termination of this Agreement.

ARTICLE IX

SERVICER DEFAULT

9.01 Servicer Default.

(a) The occurrence of any of the following events shall constitute a “Servicer
Default”:

(1) any failure by the Servicer to make any payment, transfer or deposit or to
give instructions or notice to the Borrower, the Agent or any member of the
Lender Group as required by this Agreement, or to deliver any Servicer Report or
other report required hereunder on or before the date such payment, transfer,
deposit, instruction of notice or report is required to be made or given, as the
case may be, under the terms of this Agreement;

(2) any failure on the part of the Servicer duly to observe or perform in any
material respect any of the other covenants or agreements on the part of the
Servicer contained in any Loan Document to which it is a party and such failure
continues for a period of ten (10) days after the date on which such failure
first occurs;

(3) any breach on the part of the Servicer of any representation or warranty
contained in any Loan Document to which it is a party that has a material
adverse effect on the interests of any of the parties hereto or thereto or any
member of the Lender Group;

(4) a Bankruptcy Event shall occur with respect to the Servicer;

(5) so long as the Servicer or the Originator is an Affiliate of the Borrower,
any “event of default” by the Servicer or the Originator occurs under any of the
Loan Documents;

 

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(6) so long as Originator or any Affiliate is the Servicer, if Hercules fails to
comply with any of the financial or portfolio covenants set forth in
Section 7.01;

(7) the Servicer shall fail in any material respect to service the Transferred
Loans in accordance with the Credit and Collection Policy;

(8) the Servicer agrees to or otherwise permits any change in the Credit and
Collection Policy without the prior written consent of the Agent (which will not
unreasonably be withheld);

(9) any financial or asset information reasonably requested by the Agent as
provided herein is not provided as requested within five Business Days of the
receipt by the Servicer of such request;

(10) the rendering against the Servicer of a final judgment, decree or order for
the payment of money in excess of $1,000,000 (individually or in the aggregate)
and the continuance of such judgment, decree or order unsatisfied and in effect
for any period of 61 or more consecutive days without a stay of execution;

(11) the failure of the Servicer to make any payment due with respect to
aggregate recourse debt or other obligations with an aggregate principal amount
exceeding $1,000,000 or the occurrence of any event or condition that would
permit acceleration of such recourse debt or other obligations if such event or
condition has not been waived;

(12) so long as Originator or any Affiliate is the Servicer, if any Change of
Control (as defined in the Loan Agreement) with respect to Servicer is made
without the prior written consent of the Borrower and the Agent;

(13) so long as Originator or any Affiliate is the Servicer, if the Servicer
shall fail to maintain its status as a business development company or as a
registered investment company under the 1940 Act; or

(14) so long as Originator or any Affiliate is the Servicer, if any of the
individuals serving as of the Closing Date (or serving thereafter as a
replacement satisfactory to Agent in accordance with this Section 9.01(14)) as
the Chief Executive Officer, Chief Financial Officer, or Chief Credit Officer of
Servicer shall cease to be actively involved in the business of the Servicer in
such capacity and, within 90 days after the occurrence of any event specified
above, (x) an individual satisfactory to the Agent is not hired by the Servicer
to replace the Person who ceases to be actively involved in the business of the
Servicer or (y) such event is not waived in writing by the Agent; provided, that
the replacement of Andrew Olson by Mark Harris as Chief Financial Officer shall
be deemed a replacement by an individual satisfactory to Agent in accordance
with this Section 9.01(14).

 

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(b) Upon the occurrence of an Event of Default, the Agent, by notice in writing
to the Servicer (with a copy to the Collateral Custodian, if one has been
appointed) may, in addition to whatever rights such Person may have at law or in
equity to damages, including injunctive relief and specific performance, on
thirty days’ notice, terminate all the rights and obligations of the Servicer
under this Agreement and in and to the Transferred Loans and the proceeds
thereof, as servicer under this Agreement. Within a commercially reasonable time
following receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the
Transferred Loans or otherwise, shall, subject to Section 9.02, pass to and be
vested in a successor servicer, and the successor servicer is hereby authorized
and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited
to, the transfer and endorsement or assignment of the Transferred Loans and
related documents. The Servicer agrees to cooperate with the successor servicer
in effecting the termination of the Servicer’s responsibilities and rights
hereunder, including, without limitation, the transfer to the successor servicer
for administration by it of all amounts which shall at the time have been or are
thereafter received with respect to the Purchased Assets.

9.02 Appointment of Successor.

(a) On and after the date the Servicer receives a notice of termination pursuant
to Section 9.01 hereof, or the Agent receives the resignation of the Servicer
evidenced by an Opinion of Counsel, the Agent shall submit to Hercules the name
of a proposed successor servicer (the “Successor Servicer”). As compensation
therefor, the Successor Servicer shall be entitled to the Servicing Fee in
addition to reimbursement of expenses incurred by such Successor Servicer in
connection with the transition of the servicing obligations (“Transition
Costs”); provided, however, in no event shall such Transition Costs exceed
$50,000.00 in the aggregate. Hercules shall have the right to reject one
proposed Successor Servicer within two (2) Business Days of the Agent’s
submission and, upon such rejection Hercules shall have no further consent
rights with respect to the appointment of any Successor Servicer. If Hercules
shall not have rejected such proposed Successor Servicer within such two
(2) Business Day period, the Agent shall, as promptly as possible, appoint such
Successor Servicer as servicer hereunder so long as such proposed Successor
Servicer is acceptable to the Lender Group. The Successor Servicer shall accept
its appointment by a written assumption in a form acceptable to the Agent. In
the event that a Successor Servicer has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Agent shall petition a court of
competent jurisdiction to appoint any established financial institution, having
a net worth of not less than United States $50,000,000 and whose regular
business includes the servicing of assets similar to the Transferred Loans, as
the Successor Servicer hereunder.

(b) Upon its appointment, the Successor Servicer shall be the successor in all
respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Successor Servicer; provided, however, that the Successor Servicer
shall have (i) no liability with respect to any action performed by the
terminated Servicer prior to the date that the Successor Servicer becomes the
successor to the Servicer or any claim of a third

 

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party based on any alleged action or inaction of the terminated Servicer,
(ii) no obligation to perform any advancing obligations, if any, of the Servicer
unless it elects to in its sole discretion, (iii) no obligation to pay any taxes
required to be paid by the Servicer (provided that the Successor Servicer shall
pay any income taxes for which it is liable), (iv) no obligation to pay any of
the fees and expenses of any other party to the transactions contemplated
hereby, and (v) no liability or obligation with respect to any indemnification
obligations of any prior Servicer, including the original Servicer. The
indemnification obligations of the Successor Servicer upon becoming a successor
servicer, are expressly limited to those instances of gross negligence or
willful misconduct of the Successor Servicer.

(c) All authority and power granted to the Servicer under this Agreement shall
automatically cease and terminate upon termination of this Agreement and shall
pass to and be vested in the Borrower and, without limitation, the Borrower is
hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents and other instruments,
and to do and accomplish all other acts or things necessary or appropriate to
effect the purposes of such transfer of servicing rights. The Servicer agrees to
cooperate with the Borrower in effecting the termination of the responsibilities
and rights of the Servicer to conduct servicing of the Transferred Loans.

(d) Upon any Person being appointed as the Successor Servicer pursuant to the
foregoing provisions of this Section 9.02, such Successor Servicer will promptly
begin the transition to its role as Servicer. Notwithstanding the foregoing, the
Agent may, in its discretion, appoint, or petition a court of competent
jurisdiction to appoint, any established servicing institution as the successor
to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. As
compensation, any Successor Servicer so appointed shall be entitled to receive
the Servicing Fee, as well as Transition Costs. In the event the Agent is
required to solicit bids as provided herein, the Agent shall solicit, by public
announcement, bids from banks meeting the qualifications set forth in this
Section 9.02. Such public announcement shall specify that the Successor Servicer
shall be entitled to the full amount of the Servicing Fee as servicing
compensation, in addition to Transition Costs. Within 30 days after any such
public announcement, the Agent shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest qualifying bid. The Agent shall deduct
from any sum received by the Agent from the successor to the Servicer in respect
of such sale, transfer and assignment all costs and expenses of any public
announcement and of any sale, transfer and assignment of the servicing rights
and responsibilities hereunder. After such deductions, the remainder of such sum
shall be paid by the Agent to the Servicer at the time of such sale, transfer
and assignment to the Servicer’s successor. The Agent and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. No appointment of a successor to the Servicer
hereunder shall be effective until the Agent shall have consented thereto. No
Successor Servicer shall resign as servicer until a subsequent Successor
Servicer has been appointed and accepted such appointment. Notwithstanding
anything to the contrary contained herein, in no event shall the Agent, in any
capacity, be liable for any Servicing Fee or for any differential in the amount
of the Servicing Fee paid hereunder and the amount necessary to induce any
Person to become the Successor Servicer under this Agreement and the
transactions set forth or provided for by this Agreement.

 

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Notwithstanding anything contained in this Agreement to the contrary, any
Successor Servicer is authorized to accept and rely on all of the accounting,
records (including computer records) and work of the prior Servicer relating to
the Transferred Loans (collectively, the “Predecessor Servicer Work Product”)
without any audit or other examination thereof, except where, in the exercise of
reasonable care, such audit or examination would be advisable, and such
Successor Servicer shall have no duty, responsibility, obligation or liability
for the acts and omissions of the prior Servicer. If any error, inaccuracy,
omission or incorrect or non-standard practice or procedure (collectively,
“Errors”) exist in any Predecessor Servicer Work Product and such Errors make it
materially more difficult to service or should cause or materially contribute to
such Successor Servicer making or continuing any Errors (collectively,
“Continued Errors”), such Successor Servicer shall have no duty, responsibility,
obligation or liability to perform servicing or for such Continued Errors;
provided, however, that such Successor Servicer agrees to use commercially
reasonable efforts to prevent further Continued Errors. In the event that such
Successor Servicer becomes aware of Errors or Continued Errors, such Successor
Servicer shall, with the prior consent of the Agent, use its best efforts to
reconstruct and reconcile such data as is commercially reasonable to correct
such Errors and Continued Errors and to prevent future Continued Errors. Any
such Successor Servicer shall be entitled to recover its costs thereby expended
to the extent of funds available therefor pursuant to the provision of
Section 2.3(b) of the Loan Agreement.

The Servicer agrees to cooperate and use its best efforts in effecting the
transition of the responsibilities and rights of servicing of the Obligor Loan
Documents, including, without limitation, the transfer to any Successor Servicer
for the administration by it of all cash amounts that shall at the time be held
by Servicer for deposit, or have been deposited by the Servicer, or thereafter
received with respect to the Obligor Loan Documents and the delivery to such
Successor Servicer in an orderly and timely fashion of all files and records
with respect to the Obligor Loan Documents and a computer tape in readable form
(consistent with the Loan Tape) containing all information necessary to enable
the Successor Servicer to service the Contracts. In addition, the Servicer
agrees to cooperate and use its best efforts in providing at the Servicer’s
expense the Successor Servicer with reasonable access (including at the premises
of the Servicer) to Servicer’s employees, and any and all of the books, records
(in electronic or other form) or other information reasonably requested by it to
enable the Successor Servicer to assume the servicing functions hereunder and to
maintain a list of key servicing personnel and contact information.

Any Successor Servicer is authorized and empowered to execute and deliver, on
behalf of Servicer as Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do so or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination or to perform the duties of the Servicer as Servicer. Servicer will
provide any Successor Servicer with a Power of Attorney stating such.

9.03 Waiver of Defaults.

The Agent may waive any events permitting removal of the Servicer as servicer
pursuant to Section 9.01. Upon any waiver of a past default, such default shall
cease to exist and any Servicer Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereto
except to the extent expressly so waived.

 

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9.04 Accounting Upon Termination of Servicer.

Upon termination of the Servicer under this Article IX, the Servicer shall, at
its own expense:

(a) deliver to its successor or, if none shall yet have been appointed, to the
Agent, any Collections received and not yet deposited in the Cash Management
Account;

(b) deliver to its successor or, if none shall yet have been appointed, to the
Agent or, if a Collateral Custodian has been appointed, the Collateral
Custodian, all Loan Files and related documents and statements held by it
hereunder and a copy of the Loan Tape;

(c) deliver to its successor, the Agent, and the Borrower a full accounting of
all funds, including a statement showing the Scheduled Payments with respect to
the Transferred Loans collected by it and a statement of monies held in trust by
it for payments or charges with respect to the Transferred Loans; and

(d) execute and deliver such instruments and perform all acts reasonably
requested in order to effect the orderly and efficient transfer of servicing of
the Transferred Loans to its successor and to more fully and definitively vest
in such successor all rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer under this Agreement.

ARTICLE X

TERMINATION

10.01 Termination. This Agreement shall terminate upon either: (A) the later of
(i) the termination of the Loan Agreement and the satisfaction and discharge of
all Obligations due and owing in accordance with the provisions thereof, or
(ii) the disposition of all funds with respect to the last Transferred Loan and
the remittance of all funds due hereunder and the payment of all amounts due and
payable, including, in both cases, without limitation, indemnification payments
payable pursuant to any Loan Document to the Agent, the Lender Group, the
Borrower, the Servicer, the Collateral Custodian (if one has been appointed) and
any Successor Servicer, written notice of the occurrence of either of which
shall be provided to the Agent by the Servicer; or (B) the mutual written
consent of the Servicer, the Borrower and the Agent.

ARTICLE XI

MISCELLANEOUS PROVISIONS

11.01 Amendment.

This Agreement may be amended from time to time by the written agreement of the
Servicer, the Originator, the Collateral Custodian (if one has been appointed),
the Agent and the Borrower.

 

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11.02 Duration of Agreement.

This Agreement shall continue in existence and effect until terminated as herein
provided.

11.03 GOVERNING LAW; JURISDICTION.

THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND ANY APPELLATE COURT HAVING JURISDICTION TO REVIEW THE JUDGMENTS
THEREOF. EACH OF THE PARTIES HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY
OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.

11.04 Notices.

All demands, notices and communications hereunder shall be in writing and shall
be deemed to have been duly given if (i) delivered personally, mailed by
overnight mail, certified mail or registered mail, postage prepaid, or
(ii) transmitted by telecopy, upon telephone confirmation of receipt thereof, as
follows: (A) in the case of the Borrower, to Hercules Funding II LLC, 400
Hamilton Avenue, Suite 310, Palo Alto, California 94301, Attention: Chief
Executive Officer and Chief Financial Officer, telecopy number 650-473-9194,
with a copy to Hercules Funding II LLC, 400 Hamilton Avenue, Suite 310, Palo
Alto, California 94301, Attention: Chief Legal Officer, telecopy number:
650-473-9194 or such other addresses or telecopy or telephone numbers as may
hereafter be furnished to the Agent and the other parties hereto in writing by
the Borrower; (B) in the case of the Originator, to Hercules Technology Growth
Capital, Inc., 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301,
Attention: Chief Executive Officer and Chief Financial Officer, telecopy number
650-473-9194, with a copy to Hercules Technology Growth Capital, Inc., 400
Hamilton Avenue, Suite 310, Palo Alto, California 94301, Attention: Chief Legal
Officer, telecopy number 650-473-9194, or such other addresses or telecopy or
telephone numbers as may hereafter be furnished to the Agent and the other
parties hereto in writing by the Originator, (C) in the case of the Servicer, to
Hercules Technology Growth Capital, Inc., 400 Hamilton Avenue, Suite 310, Palo
Alto, California 94301, Attention: Chief Executive Officer and Chief Financial
Officer, telecopy number 650-473-9194, with a copy to Hercules Technology Growth
Capital, Inc., 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301,
Attention: Chief Legal Officer, telecopy number 650-473-9194, or such other
addresses or telecopy or telephone numbers as may hereafter be furnished to the
Agent and the other parties hereto in writing by the Servicer; (D) in the case
of the Collateral Custodian (if one has been appointed), to such address as may
be specified in its Collateral Custodian Agreement or such other addresses or
telecopy or telephone numbers as may hereafter be furnished to the Agent and the
other parties hereto in writing by the Collateral Custodian; (E) in the case of
any Successor Servicer, to such addresses or telecopy or telephone numbers as
may hereafter be furnished to the Agent and the other parties hereto in writing
by such Successor

 

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Servicer; (F) in the case of the Agent, to Wells Fargo Foothill, LLC, 14241
Dallas Parkway, Suite 1300, Dallas, Texas 75244, Attention: Loan Portfolio
Manager – Hercules Technology, phone: (972) 851-9111, fax: (866) 532-5561
(provided, that in the case of delivery of any Underlying Notes or other Obligor
Loan Documents to Agent, copies shall be sent to such addressee and all
originals shall be sent to Wells Fargo Foothill, LLC, 14241 Dallas Parkway,
Suite 1300, Dallas, Texas 75244, Attention: Loan Documentation - Hercules
Technology, phone: (972) 851-9111, fax: (866) 532-5561), with a copy to
McDermott Will & Emery LLP, 275 Middlefield Road, Suite 100, Menlo Park,
California 94025, Attention: Dick M. Okada, Esq., phone: (650) 815-7475, fax:
(650) 469-1420, or such other addresses or telecopy or telephone numbers as may
hereafter be furnished to the other parties hereto in writing by the Agent; any
such notices shall be deemed to be effective with respect to any party hereto
upon the receipt of such notice or telephone confirmation thereof by such party.

11.05 Severability of Provisions.

If any one or more of the covenants, agreements, provisions or terms of this
Agreement shall be held invalid for any reason whatsoever, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other covenants, agreements,
provisions or terms of this Agreement.

11.06 No Partnership.

Nothing herein contained shall be deemed or construed to create any partnership
or joint venture between the parties hereto.

11.07 Counterparts.

This Agreement may be executed in one or more counterparts and by the different
parties hereto on separate counterparts (including by fax or other electronic
means), each of which, when so executed, shall be deemed to be an original and
such counterparts, together, shall constitute one and the same Agreement.

11.08 Successors and Assigns.

This Agreement shall inure to the benefit of and be binding upon the Servicer,
the Originator, the Borrower, the Agent, the Borrower, and their respective
successors and permitted assigns.

11.09 Headings.

The headings of the various Sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.

11.10 Non-Petition Agreement.

Notwithstanding any prior termination of any Loan Document, the Originator, the
Servicer, the Collateral Custodian (if one has been appointed), and any
Successor Servicer each

 

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severally and not jointly covenants that it shall not, prior to the date which
is one year and one day, or, if longer, the applicable preference period then in
effect, after the termination of this Agreement pursuant to Section 10.01,
acquiesce, petition or otherwise, directly or indirectly, invoke or cause the
Borrower to invoke the process of any governmental authority for the purpose of
commencing or sustaining a case against the Borrower under any Bankruptcy Law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Borrower or any substantial part of their
respective property or ordering the winding up or liquidation of the affairs of
the Borrower.

11.11 Due Diligence.

The Originator acknowledges that the Agent and the Lender Group may advance
Borrowings and may enter into transactions based solely upon the information
provided by the Originator to the Agent and the Lender Group in the Loan
Schedule and the representations, warranties and covenants contained herein, and
that the Agent, at its option, has the right prior to such advance of any
Borrowing therein to conduct a partial or complete due diligence review on some
or all of the Transferred Loans securing such Borrowing, including, without
limitation, re-generating the information used to originate each such
Transferred Loan. The Agent may underwrite such Transferred Loans itself or
engage a mutually agreed upon third party underwriter to perform such
underwriting. The Originator agrees to cooperate with the Agent and any third
party underwriter in connection with such underwriting, including, but not
limited to, providing the Agent and any third party underwriter with access to
any and all documents, records, agreements, instruments or information relating
to such Transferred Loans in the possession, or under the control, of the
Servicer. The Originator also shall make available to the Agent a knowledgeable
financial or accounting officer for the purpose of answering questions
respecting the Loan Files and the Transferred Loans. The Agent agrees (on behalf
of itself and its Affiliates, directors, officers, employees and
representatives) to use reasonable precaution to keep confidential, in
accordance with its customary procedures for handling confidential information
and in accordance with safe and sound practices, and not to disclose to any
third party, any non-public information supplied to it or otherwise obtained by
it hereunder with respect to the Originator or any of its Affiliates; provided,
however, that nothing herein shall prohibit the disclosure of any such
information to the extent required by statute, rule, regulation or judicial
process; provided, further that, unless specifically prohibited by applicable
law or court order, the Agent shall, prior to disclosure thereof, notify the
Originator of any request for disclosure of any such non-public information. The
Agent further agrees not to use any such non-public information for any purpose
unrelated to this Agreement and that the Agent shall not disclose such nonpublic
information to any third party underwriter without obtaining a written agreement
from such third party underwriter to comply with the confidentiality provisions
of this Section 11.11.

11.12 No Reliance.

Each of the Originator and the Borrower hereby acknowledges that it has not
relied on the Agent or any member of the Lender Group or any of their officers,
directors, employees, agents and “control persons” as such term is used under
the Securities Act and under the Exchange Act, for any tax, accounting, legal or
other professional advice in connection with the transactions contemplated by
the Loan Documents, that each of the Originator and the Borrower

 

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has retained and been advised by such tax, accounting, legal and other
professionals as it has deemed necessary in connection with the transactions
contemplated by the Loan Documents and that neither the Agent nor any member of
the Lender Group makes any representation or warranty, and that neither the
Agent nor any member of the Lender Group shall have any liability with respect
to, the tax, accounting or legal treatment or implications relating to the
transactions contemplated by the Loan Documents.

11.13 Conflicts.

Notwithstanding anything contained in the Loan Documents to the contrary, (a) in
the event of the conflict between the terms of this Agreement and the Loan
Agreement, the terms of the Loan Agreement shall control, and (b) in the event
of the conflict between the terms of this Agreement and any other Loan Document
(other than the Loan Agreement), the terms of this Agreement shall control.

11.14 No Agency.

Nothing contained herein or in the Loan Documents shall be construed to create
an agency or fiduciary relationship between the Agent, any member of the Lender
Group or any of their Affiliates and the Borrower, the Originator or the
Servicer. None of the Agent, any member of the Lender Group, or any of their
Affiliates shall be liable for any acts or actions affected in connection with
any sale of the Loans by the Borrower, the Originator or the Servicer.

[Remainder of Page Intentionally Left Blank]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused their names to be signed by
their respective officers thereunto duly authorized, as of the day and year
first above written, to this Agreement.

 

HERCULES FUNDING II LLC, as Borrower By:

/s/ Manuel A. Henriquez

Name: Manuel A. Henriquez Title: President HERCULES TECHNOLOGY GROWTH CAPITAL,
INC., as Originator and Servicer By:

/s/ Manuel A. Henriquez

Name: Manuel A. Henriquez Title: President WELLS FARGO CAPITAL FINANCE, LLC,
as Agent By:

/s/ Aharon Tarnavsky

Name: Aharon Tarnavsky Title: Vice President

[SIGNATURE PAGE TO AMENDED AND RESTATED SALE AND SERVICING AGREEMENT]