Exhibit 10.2

RETENTION AGREEMENT

This Retention Agreement (this “Agreement”), effective as of October 26, 2017,
is made between Hercules Capital, Incorporated, a Maryland corporation (the
“Company”) and the individual executing this Agreement as the Executive on the
signature page (the “Executive”).

RECITALS

The Company recognizes that the possibility of a Change in Control, as
hereinafter defined, exists and that such possibility, and the uncertainty it
may create among management, may result in the distraction or departure of
management personnel, to the detriment of the Company and its stockholders, and
the Company desires to provide additional inducement for the Executive to
continue to remain in the employ of the Company. Accordingly, the Company and
the Executive agree as follows:

1. Certain Defined Terms. In addition to terms defined elsewhere herein, the
following terms have the following meanings when used in this Agreement with
initial capital letters:

(a) “Base Pay” means the Executive’s annual base salary rate as in effect at the
time a determination is required to be made under Section 4.

(b) “Board” means the Board of Directors of the Company.

(c) “Cause” shall mean, with respect to the Executive: (i) the willful and
continued failure to substantially perform the Executive’s primary duties and
responsibilities for reasons other than death or disability, after a written
demand for substantial performance is delivered to him by the Company, which
specifically identifies the manner in which the Company believes that the
Executive has not substantially performed the Executive’s primary duties, and
Executive fails to promptly and substantially cure his performance consistent
with the written demand, and damage caused to the Company as a result of
Executive’s conduct; (ii) the Executive’s conviction (or entry of a plea bargain
admitting criminal guilt) of any felony or a misdemeanor involving moral
turpitude or (iii) intentional and knowing breach by the Executive of his
fiduciary obligations to the Company or any securities laws applicable to the
Company for which Executive has direct responsibility. For purposes of this
Agreement, no act or failure to act on the part of the Executive will be deemed
“intentional” if it was due primarily to an error in judgment or negligence, but
will be deemed “intentional” only if done or omitted to be done by the Executive
not in good faith and without reasonable belief that the Executive’s action or
omission was in the best interest of the Company.

(d) “Change in Control” means that during the Term any of the following events
occurs:

(i) a majority of the Board ceases to be comprised of Incumbent Directors; or

(ii) any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange

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Act”)) (a “Person”) is or becomes the beneficial owner (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than 50% of the combined
voting power of the then-outstanding Voting Stock of the Company; or

(iii) the consummation of a consolidation, merger, stock sale or similar
transaction or series of related transactions (or a sale or transfer of all or
substantially all of the Company’s assets) (each, a “Business Transaction”),
unless, in any such case, (A) no Person (other than the Company, any entity
resulting from such Business Transaction or any employee benefit plan (or
related trust) sponsored or maintained by the Company, any Subsidiary or such
entity resulting from such Business Transaction) beneficially owns, directly or
indirectly, 50% or more of the combined voting power of the then-outstanding
shares of Voting Stock of the entity resulting from such Business Transaction
or, if it is such entity, the Company and (B) at least one-half of the members
of the Board of Directors of the entity resulting from such Business Transaction
were Incumbent Directors at the time of the execution of the initial agreement
providing for such Business Transaction; or

(iv) the dissolution or liquidation of the Company.

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

(f) “Externalization” means that during the Term, the Company changes its
management structure from an internally managed business development company to
an externally managed business development company by entering into an
investment advisory agreement with a third-party adviser (the “New Advisor”).

(g) “Good Reason” means the occurrence of one or more of the following events:

(i) Following a Change in Control, there is a material diminution in the
Executive’s authority and/or responsibilities or the Company fails to offer the
Executive base salary, annual bonus opportunity, and long term incentive
opportunity that are substantially comparable in the aggregate to the
Executive’s base salary, annual bonus opportunity, and long-term incentive
opportunity prior to such Change in Control;

(ii) A relocation of the Executive’s location of employment by the Company that
increases the Executive’s commute by more than 45 miles; or

(iii) The Company’s breach of this Agreement.

A termination of employment by the Executive for one of the reasons set forth in
clauses (i) - (iii), above, will not constitute “Good Reason” unless, within the
90-day period immediately following the occurrence of such Good Reason event,
the Executive has given written notice to the Company specifying in reasonable
detail the event or events relied upon for such termination and the Company has
not remedied such event or events within 30 days of the receipt of such notice.
The Company and the Executive may mutually waive in writing any of the foregoing
provisions with respect to an event or events that otherwise would constitute
Good Reason.

 

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(h) “Incumbent Directors” means the individuals who, as of the date hereof, are
directors of the Company and any individual becoming a director subsequent to
the date hereof whose election, nomination for election by the Company’s
shareholders or appointment was approved by a vote of at least two-thirds of the
then Incumbent Directors (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for
director, without objection to such nomination); provided, however, that an
individual shall not be an Incumbent Director if such individual’s election or
appointment to the Board occurs as a result of an actual or threatened election
contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the
election or removal of Directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board.

(i) “Severance Period” means the period of time commencing on the date of the
first occurrence of a Change in Control and continuing until the earlier of
(i) the eighteen (18) month anniversary of the occurrence of the Change in
Control and (ii) the Executive’s death.

(j) “Subsidiary” means an entity in which the Company directly or indirectly
beneficially owns 50% or more of the outstanding voting interests.

(k) “Term” means the period commencing as of the date hereof and expiring when
this Agreement is terminated by the Board; provided, however, that (i) if a
Change in Control occurs during the Term, the Term will expire on the last day
of the Severance Period (unless renewed by the Board or any successor to the
Company); (ii) if an Externalization occurs during the Term, the Term will
expire on the effective date of the Externalization and (iii) subject to
Section 3(c), if, prior to a Change in Control or an Externalization, the
Executive ceases for any reason to be a full-time employee of the Company,
thereupon without further action the Term shall be deemed to have expired and
this Agreement will immediately terminate and be of no further effect.

(l) “Termination Date” means the date on which the Executive’s employment is
terminated (the effective date of which will be the date of termination, or such
other date that may be specified by the Executive if the termination is pursuant
to Section 3(b)); provided such date constitutes the date of the Executive’s
“separation from service” as defined in Section 409A of the Code
(“Section 409A”).

(m) “Voting Stock” means securities entitled to vote generally in the election
of directors.

2. Operation of Agreement. This Agreement will be effective and binding
immediately upon its execution.

3. Involuntary Termination without Cause or Termination for Good Reason;
Termination Following a Change in Control; Externalization.

(a) The Executive’s employment may be terminated by the Company prior to the
occurrence of a Change in Control at any time and the Executive will be entitled
to the benefits provided by Section 4, provided the Executive has incurred a
“separation from service” as defined in Section 409A, unless such termination is
the result of the occurrence of one or more of the following events:

 

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(i) the Executive’s death;

(ii) the Executive becomes permanently disabled within the meaning of, and
begins actually to receive disability benefits pursuant to, the long-term
disability plan in effect for, or applicable to, the Executive; or

(iii) Cause.

(b) The Executive may terminate employment with the Company prior to the
occurrence of a Change in Control at any time for Good Reason with the right to
severance compensation as provided in Section 4, provided the Executive has
incurred a “separation from service” as defined in Section 409A, regardless of
whether any other reason, other than Cause, for such termination exists or has
occurred, including without limitation other employment or permanent disability.

(c) In the event of the occurrence of a Change in Control, the Executive’s
employment may be terminated by the Company during the Severance Period and the
Executive will be entitled to the benefits provided by Section 4, provided the
Executive has incurred a “separation from service” as defined in Section 409A,
unless such termination is the result of the occurrence of one or more of the
following events:

(i) the Executive’s death;

(ii) the Executive becomes permanently disabled within the meaning of, and
begins actually to receive disability benefits pursuant to, the long-term
disability plan in effect for, or applicable to, the Executive immediately prior
to the Change in Control; or

(iii) Cause.

(d) In the event of the occurrence of a Change in Control, the Executive may
terminate employment with the Company during the Severance Period for Good
Reason with the right to severance compensation as provided in Section 4,
provided the Executive has incurred a “separation from service” as defined in
Section 409A, regardless of whether any other reason, other than Cause, for such
termination exists or has occurred, including without limitation other
employment or permanent disability.

(e) In the event of an Externalization, (i) if the New Advisor makes a written
offer of employment to the Executive with similar authority and responsibilities
to the authority and responsibilities the Executive had in respect of the
Company prior to such Externalization and with base salary, annual bonus
opportunity, long term incentive opportunity and retention benefits for eighteen
(18) months following such Externalization that are substantially comparable in
the aggregate to the Executive’s base salary, annual bonus opportunity, long
term incentive opportunity and retention benefits with the Company prior to such
Externalization (including, without limitation, a written retention agreement
with terms comparable to this

 

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Agreement for eighteen (18) months following such Externalization), and the
Executive’s location of employment shall not move by more than 45 miles from its
current location at 400 Hamilton Avenue, Suite 310, Palo Alto, CA 94301, the
Executive shall have no right to the benefits provided by Section 4; and (ii) if
(x) the New Advisor fails to offer employment on any terms to the Executive, or
(y) the New Advisor offers employment to the Executive on terms that do not meet
the requirements set forth in the immediately preceding sentence, and the
Executive does not accept such offer, then, as of the effective date of such
Externalization, the Executive will be entitled to the benefits provided by
Section 4, provided that the Executive has incurred a “separation from service”
as defined in Section 409A. For the avoidance of doubt, if the Executive accepts
employment with the New Advisor on any terms, the Executive shall not be
entitled to the benefits provided by Section 4.

(f) Nothing in this Agreement will (i) be construed as creating an express or
implied contract of employment, changing the status of Executive as an employee
at will, giving the Executive any right to be retained in the employ of the
Company or giving the Executive the right to any particular level of
compensation or benefits or (ii) interfere in any way with the right of the
Company to terminate the employment of the Executive at any time with or without
Cause, subject in either case to the obligations of the Company under this
Agreement.

4. Severance Compensation.

(a) If the Company terminates the Executive’s employment prior to the occurrence
of a Change in Control, other than pursuant to Section 3(a)(i), 3(a)(ii) or
3(a)(iii), or if the Executive terminates Executive’s employment pursuant to
Section 3(b) (in either case, any such termination, a “Triggering Termination”),
and provided that such Triggering Termination constitutes a “separation from
service” as defined in Section 409A, the Company will pay to the Executive the
amounts described in Annex A on the 53rd day after the Termination Date (or, if
such date is not a business day, the next following business day) or as
otherwise set forth in Annex A (subject to the provisions of Sections 4(c) and
(d) of this Agreement) and will continue to provide to the Executive the
benefits described in Annex A for the periods described therein.

(b) If, following the occurrence of a Change in Control, the Company terminates
the Executive’s employment during the Severance Period other than pursuant to
Section 3(c)(i), 3(c)(ii) or 3(c)(iii), or if the Executive terminates
Executive’s employment pursuant to Section 3(d) (in either case, any such
termination, a “Triggering Termination”), and provided that such Triggering
Termination constitutes a “separation from service” as defined in Section 409A,
the Company will pay to the Executive the amounts described in Annex A on the
53rd day after the Termination Date (or, if such date is not a business day, the
next following business day) or as otherwise set forth in Annex A (subject to
the provisions of Sections 4(c) and (d) of this Agreement) and will continue to
provide to the Executive the benefits described in Annex A for the periods
described therein.

(c) If, upon an Externalization, the Executive has a right under
Section 3(e)(ii) to receive benefits under this Section 4, the Company will pay
to the Executive the amounts described in Annex A on the first payroll date
following the 53rd day after the Termination Date (or, if such date is not a
business day, the next following business day) or as otherwise set forth in
Annex A (subject to the provisions of Sections 4(c) and (d) of this Agreement)
and will

 

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continue to provide to the Executive the benefits described in Annex A for the
periods described therein. Notwithstanding anything to the contrary in this
Agreement, if the Executive receives all or any portion of the benefits provided
by Section 4 and, within one (1) year of the effective date of the
Externalization, accepts employment with the New Advisor, the Executive shall be
required to repay to the Company all benefits paid to the Company under Sections
1, 3, 4 and 5 of Annex A attached hereto within thirty (30) days of the
Executive’s commencement of employment with the New Advisor, shall forfeit the
equity described in Section 3 of such Annex and shall forfeit the Executive’s
right to receive any further benefits under Section 4.

(d) For the avoidance of doubt, the Executive shall be eligible to receive the
payments and benefits described in Annex A pursuant to Section 4(a) only,
Section 4(b) only, or Section 4(c) only. The Executive shall not be eligible to
receive the payments and benefits described in Annex A pursuant to more than one
subsection of this Section 4.

(e) To the extent required in order to avoid accelerated taxation and/or tax
penalties under Section 409A, amounts that would otherwise be payable and
benefits that would otherwise be provided pursuant to this Agreement during the
six-month period immediately following the Executive’s termination of employment
shall instead be paid on the first business day after the date that is six
months following the Executive’s termination of employment (or upon the
Executive’s death, if earlier). In addition, for purposes of this Agreement,
each amount to be paid or benefit to be provided shall be construed as a
separate identified payment for purposes of Section 409A, and any payments
described in Annex A that are due within the “short term deferral period” as
defined in Section 409A shall not be treated as deferred compensation unless
applicable law requires otherwise.

(f) Payment of the benefits set forth in Annex A is subject to the Executive’s
execution of a general release of claims and covenant not to sue substantially
in the form attached hereto as Exhibit I (the “Release”), such that the Release
becomes effective, with all revocation periods having expired unexercised, as
set forth in the Release and prior to the payment date. The Executive shall
forfeit the benefits set forth in Annex A if the Release is not executed and
effective in the time period set forth in the immediately preceding sentence.

5. Limitations on Payments and Benefits. Notwithstanding any provision of this
Agreement or any agreement, contract or understanding (including any option or
equity plan or agreement) other than this Agreement, heretofore or hereafter
entered into by the Executive with the Company or any Subsidiary (each, an
“Other Agreement”) to the contrary, if any amount or benefit to be paid or
provided under this Agreement or any Other Agreement would be an “excess
parachute payment” within the meaning of Section 280G of the Code (including
after taking into account the value, to the maximum extent permitted by
Section 280G of the Code, of the covenants in Section 7 hereof), but for the
application of this sentence, then the payments and benefits to be paid or
provided under this Agreement and any Other Agreement will be reduced to the
minimum extent necessary (but in no event to less than zero) so that no portion
of any such payment or benefit, as so reduced, constitutes an excess parachute
payment. Whether requested by the Executive or the Company the determination of
whether any reduction in such payments or benefits to be provided under this
Agreement or otherwise is required pursuant to the preceding sentence, and the
value to be assigned to the Executive’s covenants in Section 7 hereof for
purposes of determining the amount, if any, of the excess parachute payment will
be made at the expense of the Company, by the Company’s independent accountants
or benefits consultant.

 

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6. No Mitigation Obligation; Other Agreements.

(a) The Company hereby acknowledges that it will be difficult and may be
impossible for the Executive to find reasonably comparable employment following
the Termination Date. Accordingly, the payment of the severance compensation in
accordance with the terms of this Agreement is hereby acknowledged by the
Company to be reasonable, and the Executive will not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor will any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Executive hereunder or otherwise, except as
expressly provided in Paragraph 5 of Annex A.

(b) To the extent that the Executive receives payments by reason of his or her
termination of employment pursuant to any other employment or severance
agreement or employee plan (collectively, “Other Employment Agreements”), the
amounts otherwise receivable under Section 4 will be reduced by the amounts
actually paid pursuant to the Other Employment Agreements, but not below zero,
to avoid duplication of payments so that the total amount payable or value of
benefits receivable hereunder and under the Other Employment Agreements is not
less than the amounts so payable or value so receivable had such benefits been
paid in full hereunder.

7. Confidentiality; Return of Property; Nonsolicitation; Cooperation.

(a) The Executive hereby covenants and agrees that the Executive will not,
without the prior written consent of the Company, disclose to any person not
employed by the Company, or use in connection with engaging in competition with
the Company, any confidential or proprietary information of the Company and any
idea, concept, know-how, expertise or other unique ability discovered through
the Executive’s performance under this Agreement. For purposes of this
Agreement, the term “confidential or proprietary information” will include all
information of any nature and in any form that is owned by the Company
(including any such information the Executive may develop during the Executive’s
employment), and that is not publicly available (other than by the Executive’s
breach of this Section 7(a)) or generally known to persons engaged in businesses
similar or related to those of the Company). Confidential or proprietary
information will include, without limitation, the Company’s financial matters,
customers, employees, industry contracts, strategic business plans, product
development (or other proprietary product data), marketing plans, proprietary
technology or software (including features and functionality of software) used
in the management of the business of the Company and all other secrets and all
other information of a confidential or proprietary nature (“Confidential
Information”). For purposes of the preceding two sentences, the term “Company”
will also include any Subsidiary (collectively, the “Restricted Group”). The
obligations imposed by this Section 7(a) will not apply (i) during the Term, in
the course of the business of and for the benefit of the Company, (ii) if such
confidential or proprietary information has become, through no fault of the
Executive, generally known to the public or (iii) if the Executive is required
by law to make disclosure (after giving the Company notice and

 

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an opportunity to contest such requirement). Notwithstanding the foregoing or
anything to the contrary herein, nothing in this Agreement shall prohibit the
Executive from reporting possible violations of federal law or regulation to any
governmental agency or entity or self-regulatory organization (including but not
limited to the Department of Justice, the Securities and Exchange Commission,
Congress, and any agency Inspector General), or making other disclosures that
are protected under the whistleblower provisions of any applicable law or
regulation (it being understood that the Executive does not need the prior
authorization of the Company to make any such reports or disclosures or to
notify the Company that the Executive has made such reports or disclosures).
Further, in accordance with the Defend Trade Secrets Act of 2016, the Executive
shall not be held criminally or civilly liable under any federal or state trade
secret law for the disclosure of a trade secret that: (A) is made (i) in
confidence to a federal, state, or local government official, either directly or
indirectly, or to an attorney; and (ii) solely for the purpose of reporting or
investigating a suspected violation of law; or (B) is made in a complaint or
other document filed in a lawsuit or other proceeding, if such filing is made
under seal.

(b) To the extent an invention or work is not deemed to be a “work for hire” by
operation of law, the Executive agrees that the Company shall own and the
Executive hereby assigns all right title and interest in and to all inventions
and works (including all intellectual property rights therein or related
thereto) that (i) are collected, made, conceived, reduced to practice or set out
in any tangible medium of expression by the Executive during the term of the
Executive’s employment or (ii) (A) arise out of any use of the Company’s
facilities or assets or any research or other activity conducted by, for or
under the direction of the Company (whether or not conducted (x) at the
Company’s facilities, (y) during working hours or (z) using Company assets) or
(B) are useful with or relate to the Company’s business. For the avoidance of
doubt, an “invention or work” includes without limitation all data patterns and
models, data sets, data transformations, algorithms, calculations, code,
formulae, analytics, indices, systems, computer media, computer programs, user
manuals, drawings, plans, prototypes, notes, writings, reports, compositions,
devices, samples, mock-ups, visualizations and other similar works. The
Executive waives any and all moral rights to all inventions and works.
Notwithstanding anything to the contrary, the inventions and works covered by
this Section 7(b) shall not include any invention or work the assignment of
which to the Company is prohibited by California Labor Code Section 2870 (a copy
of which is attached as Annex B).

(c) The Executive shall proffer to the Board’s designee, no later than the
Termination Date (or upon the earlier request of the Company), and without
retaining any copies, notes or excerpts thereof, all property of the Company and
its affiliates in whatever form, including, without limitation, memoranda,
computer disks or other media, computer programs, diaries, notes, records, data,
customer or client lists, marketing plans and strategies, and any other
documents consisting of or containing Confidential Information, that are in the
Executive’s actual or constructive possession or which are subject to the
Executive’s control at such time. To the extent the Executive has retained any
such property or Confidential Information on any electronic or computer
equipment belonging to the Executive or under the Executive’s control, the
Executive agrees to so advise the Company and to follow the Company’s
instructions in permanently deleting all such property or Confidential
Information and all copies.

(d) The Executive hereby covenants and agrees that for eighteen (18) months
after the Termination Date the Executive will not, without the prior written
consent of the

 

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Company, which consent will not unreasonably be withheld as to the Executive’s
personal assistant, on behalf of the Executive or on behalf of any person, firm
or company, directly or indirectly, attempt to influence, persuade or induce, or
assist any other person in so persuading or inducing, any employee of the
Restricted Group to give up, or to not commence, employment or a business
relationship with the Restricted Group.

(e) During and after the term of the Executive’s employment with the Company,
the Executive agrees to cooperate with the Company in any internal
investigation, any administrative, regulatory, or judicial proceeding or any
dispute with a third party concerning issues about which the Executive has
knowledge or that may relate to the Executive or the Executive’s employment with
the Company. The Executive’s obligation to cooperate hereunder includes, without
limitation, being available to the Company upon reasonable notice for interviews
and factual investigations, appearing in any forum at the request of the Company
to give testimony (without requiring service of a subpoena or other legal
process), volunteering to the Company pertinent information, and turning over to
the Company all relevant documents which are or may come into the Executive’s
possession. The Company shall promptly reimburse the Executive for the
reasonable out-of-pocket expenses incurred by the Executive in connection with
such cooperation.

(f) The Executive will not, during the term of the Executive’s employment with
the Company and thereafter, directly (or through any other Person) make any
public or private statements (whether orally or in writing) that disparage,
denigrate or malign the Company or any of its affiliates, their respective
businesses, activities, operations, affairs, reputations or prospects or any of
their respective affiliates, officers, employees, directors, partners (general
and limited), agents, investors, members or shareholders (the “Protected
Persons”). The Company will not direct or authorize any of its officers and
directors to, during the term of the Executive’s employment with the Company and
for a period of one year thereafter, directly (or through any other Person) make
any public or private statements (whether orally or in writing) that disparage,
denigrate or malign the Executive. For purposes of clarification, and not
limitation, a statement shall be deemed to disparage, denigrate or malign a
Protected Person or the Executive if such statement could be reasonably
construed to adversely affect the opinion any other Person may have or form of
any such Protected Person or the Executive. The foregoing restrictions shall not
be violated by truthful statements made to any government authority or in
response to legal process, required governmental testimony or filings,
administrative or arbitral proceedings (including, without limitation,
depositions in connection with such proceedings) or statements made in good
faith in performance reviews.

(g) The Executive and the Company agree that the covenants contained in this
Section 7 are reasonable under the circumstances and subject to the provisions
of Section 13 of this Agreement. The Executive acknowledges and agrees that the
remedy at law available to the Company for breach of any of the Executive’s
obligations under this Section 7 would be inadequate and that damages flowing
from such a breach may not readily be susceptible to being measured in monetary
terms. Accordingly, the Executive acknowledges, consents and agrees that, in
addition to any other rights or remedies that the Company may have at law, in
equity or under this Agreement, upon adequate proof of the Executive’s violation
of any such provision of this Agreement, the Company will be entitled to
immediate injunctive relief and may obtain a temporary order restraining any
threatened or further breach, without the necessity of proof of actual damage.

 

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8. Employment Rights. Nothing expressed or implied in this Agreement will create
any right or duty on the part of the Company to have the Executive remain in the
employment of the Company or any Subsidiary prior to or following any Change in
Control.

9. Withholding of Taxes. The Company may withhold from any amounts payable under
this Agreement all federal, state, city or other taxes as the Company is
required to withhold pursuant to any applicable law, regulation or ruling.

10. Successors and Binding Agreement.

(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, by agreement in form
and substance reasonably satisfactory to the Executive, expressly to assume and
agree to perform this Agreement. This Agreement will be binding upon the Company
and any successor to the Company, including without limitation any persons
acquiring directly or indirectly all or substantially all of the business or
assets of the Company, whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor will thereafter be deemed the
“Company” for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.

(b) This Agreement will inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators, heirs
and legatees and the Company’s successors and assigns.

11. Notices. For all purposes of this Agreement, all communications, including
without limitation notices, consents, requests or approvals, required or
permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered, delivered by email or dispatched by pdf or
electronic facsimile transmission (with receipt thereof orally confirmed), or
five business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three business
days after having been sent by a nationally recognized overnight courier service
such as FedEx or UPS, addressed to the Company at its principal executive office
and to the Executive at the Executive’s principal residence, or to such other
address as any party may have furnished to the other in writing and in
accordance herewith, except that notices of changes of address will be effective
only upon receipt.

12. Governing Law. The validity, interpretation, construction and performance of
this Agreement will be governed by and construed in accordance with the
substantive laws of the State of California and federal law, without giving
effect to the principles of conflict of laws of such State.

13. Validity. If any provision of this Agreement or the application of any
provision hereof to any person or circumstance is held invalid, unenforceable or
otherwise illegal, including without limitation Section 7 hereof, the remainder
of this Agreement and the application of such provision to any other person or
circumstance will not be affected, and the

 

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provision so held to be invalid, unenforceable or otherwise illegal will be
reformed to the extent (and only to the extent) necessary to make it
enforceable, valid or legal. If any covenant in Section 7 should be deemed
invalid, illegal or unenforceable because its time or scope of restricted
activity, is considered excessive, such covenant will be modified to the minimum
extent necessary to render the modified covenant valid, legal and enforceable.

14. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
signed by the Executive and the Company. No waiver by either party hereto at any
time of any breach by the other party hereto or compliance with any condition or
provision of this Agreement to be performed by such other party will be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
expressed or implied with respect to the subject matter hereof have been made by
either party that are not set forth expressly in this Agreement. The headings
used in this Agreement are intended for convenience or reference only and will
not in any manner amplify, limit, modify or otherwise be used in the
construction or interpretation of any provision of this Agreement. References to
Sections are to Sections of this Agreement. References to Paragraphs are to
Paragraphs of an Annex to this Agreement. Any reference in this Agreement to a
provision of a statute, rule or regulation will also include any successor
provision thereto.

15. Survival. Notwithstanding any provision of this Agreement to the contrary,
the parties’ respective rights and obligations under Sections 3(b), 3(c), 4, 5,
7, 8, 9, 10(b), 15 and 16 will survive any termination or expiration of this
Agreement or the termination of the Executive’s employment following a Change in
Control for any reason whatsoever.

16. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original but all of which together will
constitute one and the same agreement.

17. Section 409A. To the extent applicable, it is intended that this Agreement
comply with the provisions of Section 409A. Any provision that would cause the
Agreement to fail to satisfy Section 409A will have no force and effect until
amended to comply with Section 409A (which amendment may be retroactive to the
extent permitted by Section 409A and may be made by the Company, without the
consent of the Executive). Prior to any Change in Control or Externalization,
the Company and the Executive will agree to any amendment of this Agreement
approved by the Board based on the advice of a nationally recognized law firm
designated by the Board that such amendment, if implemented, is or is reasonably
likely to reduce any adverse effect on the Company or the Executive of any rule,
regulation or IRS interpretation of Section 409A and that such firm is
recommending similar changes or provisions to its other clients that have
change-in-control, severance or employment agreements or plans. The Executive’s
right to receive any installment payments under this Agreement shall be treated
as a right to receive a series of separate payments and, accordingly, each such
installment payment shall at all times be considered a separate and distinct
payment as permitted under Section 409A. If the Executive is entitled to any
reimbursement of expenses that are includable in the Executive’s federal gross
taxable income, the amount of such expenses reimbursable in any one calendar
year shall not affect the expenses eligible for reimbursement in any other
calendar year, and the reimbursement of an eligible expense must be made no
later than December 31 of the year after the year in which the expense was
incurred. The Executive’s right to reimbursement of expenses under this
Agreement shall not be subject to liquidation or exchange for another benefit.

 

11

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date last written below.

 

EXECUTIVE: MARK R. HARRIS

Signature:   /s/ Mark R. Harris

Date:   10-26-17

 

 

HERCULES CAPITAL, INCORPORATED

By:   Melanie Grace

Title:   General Counsel Signature:   /s/ Melanie Grace

Date:   10-26-17

 

12

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ANNEX A

SEVERANCE COMPENSATION, ETC.

1. A lump sum payment in an amount equal to (i) 1.5 times the sum of (A) Base
Pay (at the rate in effect for the year in which the Termination Date occurs),
plus (B) an amount equal to the three-year average annual bonus actually earned
by and paid to the Executive for the three full performance periods (such
average annual bonus amount, the “Average Bonus Amount” and each such
performance period, a “Completed Performance Period”) immediately prior to the
Termination Date.

2. Any unpaid annual bonus that has been earned, accrued, allocated or awarded
to the Executive for any Completed Performance Period (regardless of whether
payment of such compensation would otherwise be contingent on the continuing
performance of services by the Executive), with such earned annual bonus to be
paid at the same time as if no such termination had occurred, but in no event
later than March 15 of the year following the year in which the last day of the
relevant Completed Performance Period occurred.

3. An amount equal to the Pro Rata Portion of the Average Bonus Amount for the
performance period in which the Triggering Termination occurs. For this purpose,
“Pro Rata Portion” means (x) the number of days from and including the first day
immediately following the last day of the immediately preceding Completed
Performance Period to and including the Termination Date, divided by (y) the
total number of days in such subsequent performance period. Such payments will
be made at the earlier of (x) the date prescribed for payment pursuant to the
applicable plan, program or agreement and (y) March 15 of the year following the
year in which the Termination Date occurs, and will be payable and calculated
disregarding any otherwise applicable vesting requirements.

4. (i) If the Executive is entitled to severance compensation under
Section 4(a), continued vesting of any outstanding awards granted by the Company
for eighteen (18) months following the Termination Date, subject to the
Executive’s continued compliance with Article 7 hereof; and (ii) if the
Executive is entitled to severance compensation under Section 4(b), full vesting
acceleration of any outstanding awards granted by the Company (or any substitute
or replacement award in respect thereof).

5. If the Executive and his or her eligible dependents are eligible for, and
timely elect, continuation coverage pursuant to Section 4980B of the Code or
similar state law (“COBRA”), the Company shall reimburse the Executive for the
full amount of the COBRA premiums for Executive and his or her eligible
dependents for eighteen (18) months following a Triggering Termination (the
“COBRA Benefit”); provided, however, that notwithstanding the foregoing, the
COBRA Benefit shall not be provided to the extent that it would result in any
fines, penalties or taxes on the Company or its Subsidiaries or affiliates;
provided, further, that the COBRA Benefit shall cease if Executive (or his or
her dependents) become eligible for health coverage under the plan of another
employer.

 

Annex A-1

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EXHIBIT I

GENERAL RELEASE OF CLAIMS

IN CONSIDERATION of the payments to be made to the undersigned individual (the
“Employee”) pursuant to the retention agreement between Hercules Capital,
Incorporated (the “Company”) and Employee, dated ___________ (the “Retention
Agreement”) and for other good and valuable consideration, the receipt of which
is hereby acknowledged and to which Employee acknowledges he/she would not be
entitled in the event that Employee did not execute this General Release of
Claims (the “Release”), Employee agrees as follows:

● 1. General Release. Employee (on behalf of Employee, his/her heirs, executors
and personal representatives) hereby releases the Company and all other
“Released Parties” (as defined below) from any and all manner of actions and
causes of action, suits, debts, dues, accounts, bonds, covenants, contracts,
agreements, judgments, charges, claims, attorney’s fees, costs, expenses, and
demands whatsoever (“Claims”), whether known or unknown, accrued or unaccrued,
which Employee may have or could claim to have against any of the Released
Parties arising at any time up through and including the date that Employee
signs this Release. These released Claims include, but are not limited to, all
Claims arising from or during Employee’s employment with the Company, or arising
from or relating to the terms and conditions of such employment (including all
wages, benefits, and other compensation), and/or relating to Employee’s
separation from such employment. Among the specific Claims released by this
Agreement are (without limitation): (i) all Claims of employment discrimination
or retaliation based upon any protected characteristic (such as age, race,
color, sex, national origin, religion, and disability), and all Claims arising
under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, 42 U.S.C. § 1981, the Age Discrimination in Employment Act of 1967,
the Older Workers Benefit Protection Act, the Family and Medical Leave Act of
1993, the Worker Adjustment and Retraining Notification Act of 1988, the New
York State Executive Law (including its Human Rights Law); the New York City
Administrative Code (including its Human Rights Law); the New York State Labor
Law; the New York wage and wage–hour laws; the California Fair Employment and
Housing Act, Cal. Gov’t. Code § 12900 et seq., the California Equal Pay Act,
Cal. Lab. Code § 1197.5 et seq., the California Family Rights Act, Cal. Gov’t.
Code § 12945.1 et seq. and § 19702.3, the Cal-WARN Act, Cal. Lab. Code §§
1400-1408, Cal. Lab. Code § 233 (California’s kin care law), Cal. Code Regs.
tit. 2, §§ 7291.2– 7291.16 (California’s pregnancy leave law), California Unruh
Civil Rights Act, Cal. Civ. Code § 51 et seq., and Cal. Lab. Code §§ 98.6 and
1102.5 (California whistleblower protection laws), the Massachusetts
Anti-Discrimination Laws (chapters 151B & 272), the City of Boston Municipal
Code Section 12-9 on Human Rights, all as amended; and/or any similar federal,
state or local laws; (ii) all Claims arising under the Employee Retirement
Income Security Act of 1974, as amended; (iii) all Claims arising under the
common law of any jurisdiction, including, but not limited to, all Claims for
breach of contract, defamation, interference with contractual/prospective
economic advantage, invasion of privacy, promissory estoppel, negligence, breach
of the covenant of good faith and fair dealing, fraud, emotional distress, and
wrongful discharge/termination; and (iv) all Claims in any jurisdiction growing
out of any legal restrictions, expressed or implied, on the Company’s right to
terminate or control the employment of its employees. Notwithstanding the
foregoing, this Release does not include any

 

Exhibit I-1

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Claims (i) that Employee may have for unemployment or workers’ compensation
benefits or (ii) that may not be released or waived as a matter of law.

2. Promise Not to Sue. Employee acknowledges and agrees that he/she will not
file (or join, or accept any relief in) a lawsuit against any of the Released
Parties pleading or asserting any Claims released in the above Release. If
Employee breaches this promise, and the action is found to be barred in whole or
in part by this Release, Employee agrees to pay the reasonable attorneys’ fees
and costs, or the proportions thereof, incurred by the applicable Released Party
in defending against those Claims that are found to be barred by this Release.
Notwithstanding the foregoing, nothing in this Section precludes Employee from
challenging the validity of the release above under the requirements of the Age
Discrimination in Employment Act (“ADEA”), and Employee shall not be responsible
for reimbursing the attorneys’ fees and costs of the Released Parties in
connection with such a challenge to the validity of the Release. However,
Employee acknowledges that this Release applies to all Claims the Employee has
under the ADEA, and that, unless the Release is held to be invalid, all of
Employee’s Claims under the ADEA shall be extinguished. In addition, nothing in
this Release shall preclude or prevent Employee from filing a charge with,
participating in an investigation by or proceeding before, or providing truthful
information to the United States Equal Employment Opportunity Commission or a
similar state or local agency, but Employee acknowledges and agrees that
Employee shall not accept any relief obtained on his/her behalf in any
proceeding by any government agency, private party, class, or otherwise with
respect to any Claims covered by this Release.

3. Definition of Released Parties. As used in this Release, the term, “Released
Parties” means (i) the Company; (ii) any and all parent companies, subsidiaries
(direct and indirect), affiliates, successors and assigns of the Company;
(iii) all of the foregoing entities’ directors, officers, employees, agents,
attorneys, advisors, insurers, representatives, and benefit plans (including all
such plans’ insurers, fiduciaries, administrators, and the like); and (iv) all
persons/entities claimed to be jointly and/or severally liable with any of the
foregoing persons or entities described in clauses (i) through (iii) or
through/by which the foregoing persons or entities described in clauses
(i) through (iii) have acted.

4. For Employees in California: Section 1542 Acknowledgement. Employee
acknowledges that she is aware of the provisions of Section 1542 of the
California Civil Code regarding the effectiveness of this Agreement on unknown
or unsuspected claims and she expressly waives any and all protections under
Section 1542 or any analogous state law or federal law or regulation.
Section 1542 of the California Civil Code reads as follows:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.

5. No Admission. It is understood that nothing in this Release is to be
construed as an admission on behalf of any of the Released Parties of any
wrongdoing with respect to Employee, any such wrongdoing being expressly denied.
Each Released Party is an express third party beneficiary of this Release.

 

Exhibit I-2

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6. Acknowledgements. Employee hereby acknowledges and agrees that:

A. This is an important legal document and he/she is hereby advised to consult
with an attorney before signing it;

B. Employee may take up to twenty-one (21)1 days to consider whether to sign
this Release;

C. Employee may revoke this Release at any time within seven (7) days of the
date on which he/she signs it by providing written notice to the Company, and
this Release shall not be effective until after the revocation period has
expired without revocation;

D. Changes made to this Release, whether material or nonmaterial, do not restart
the aforementioned twenty-one (21) day2 period; and

E. Employee has carefully read this Release, understands all the terms of this
Release, and enters into this Release freely, knowingly, and voluntarily.

INTENDING TO BE LEGALLY BOUND, EMPLOYEE SIGNS BELOW:

 

 

 

Signature  

 

Name  

 

Date

 

1  45 days for employees who are age 40 or over in the case of a group
separation that requires 45 days’ notice under the ADEA.

2  45 days for employees who are age 40 or over in the case of a group
separation that requires 45 days’ notice under the ADEA.

 

Exhibit I-3