Exhibit 10.2


 Exhibit 10.2 

Execution 
  

 
  

SALE AND SERVICING AGREEMENT 

Among 
 HERCULES FUNDING III, LLC,

 as Borrower 
 And 

HERCULES CAPITAL, INC., 
 as
Originator and Servicer 
 and 

MUFG UNION BANK, N.A., 
 as Agent

 Dated as of May 5, 2016 
  

 
  






 TABLE OF CONTENTS 

 

					
	 	  	Page	 
	 ARTICLE I DEFINITIONS
	  	 	1	  
		
	 1.01 Definitions
	  	 	1	  
	 1.02 Other Definitional Provisions
	  	 	10	  
		
	 ARTICLE II CONVEYANCE OF THE PURCHASED ASSETS; BORROWINGS UNDER LOAN AGREEMENT
	  	 	11	  
		
	 2.01 Conveyance of the Purchased Assets; Borrowings
	  	 	11	  
	 2.02 Ownership and Possession of Loan Files
	  	 	12	  
	 2.03 Books and Records; Intention of the Parties
	  	 	12	  
	 2.04 Delivery of Loan Files
	  	 	13	  
	 2.05 Acceptance by the Agent of the Loan Files; Certification by the Collateral Custodian
	  	 	13	  
		
	 ARTICLE III REPRESENTATIONS AND WARRANTIES
	  	 	13	  
		
	 3.01 Representations and Warranties of the Borrower
	  	 	13	  
	 3.02 Representations and Warranties of the Originator
	  	 	15	  
	 3.03 Representations and Warranties Regarding the Loans
	  	 	17	  
	 3.04 Notice of Breach of Representations and Warranties
	  	 	17	  
	 3.05 Repurchase of Ineligible Loans
	  	 	17	  
		
	 ARTICLE IV ADMINISTRATION AND SERVICING OF LOANS
	  	 	18	  
		
	 4.01 Appointment of the Servicer
	  	 	18	  
	 4.02 Duties and Responsibilities of the Servicer
	  	 	19	  
	 4.03 Authorization of the Servicer
	  	 	20	  
	 4.04 Collection of Payments
	  	 	21	  
	 4.05 [Intentionally Omitted]
	  	 	22	  
	 4.06 Realization Upon Defaulted Loans or Charged-Off Loans
	  	 	22	  
	 4.07 Maintenance of Insurance Policies
	  	 	22	  
	 4.08 Representations and Warranties of the Servicer
	  	 	23	  
	 4.09 Covenants of the Servicer
	  	 	24	  
	 4.10 The Agent
	  	 	26	  
	 4.11 [Intentionally Omitted]
	  	 	26	  
	 4.12 [Intentionally Omitted]
	  	 	26	  
	 4.13 [Intentionally Omitted]
	  	 	27	  
	 4.14 [Intentionally Omitted]
	  	 	27	  
	 4.15 [Intentionally Omitted]
	  	 	27	  
	 4.16 Payment of Certain Expenses by the Servicer and the Borrower
	  	 	27	  
	 4.17 Reports
	  	 	27	  
	 4.18 Annual Statement as to Compliance
	  	 	28	  
	 4.19 [Intentionally Omitted]
	  	 	28	  
	 4.20 Limitation on Liability
	  	 	28	  
	 4.21 The Servicer Not to Resign
	  	 	28	  


  
 -i- 








 TABLE OF CONTENTS 

(continued) 
  


					
	 	  	Page	 
	 4.22 Access to Certain Documentation and Information Regarding the Transferred Loans
	  	 	29	  
	 4.23 Identification of Records
	  	 	29	  
		
	 ARTICLE V DEPOSITS INTO ACCOUNTS
	  	 	29	  
		
	 5.01 Collection Account
	  	 	29	  
		
	 ARTICLE VI [RESERVED]
	  	 	30	  
		
	 ARTICLE VII COVENANTS
	  	 	30	  
		
	 7.01 Financial and Serviced Portfolio Covenants of Hercules
	  	 	30	  
	 7.02 Covenants Regarding Purchased Assets
	  	 	31	  
		
	 ARTICLE VIII INDEMNIFICATION
	  	 	32	  
		
	 8.01 Indemnification; Third Party Claims
	  	 	32	  
	 8.02 Relationship of Servicer to the Borrower
	  	 	34	  
		
	 ARTICLE IX SERVICER DEFAULT
	  	 	34	  
		
	 9.01 Servicer Default
	  	 	34	  
	 9.02 Appointment of Successor Servicer
	  	 	36	  
	 9.03 Waiver of Defaults
	  	 	38	  
	 9.04 Accounting Upon Termination of Servicer
	  	 	39	  
		
	 ARTICLE X TERMINATION
	  	 	39	  
		
	 10.01 Termination
	  	 	39	  
		
	 ARTICLE XI MISCELLANEOUS PROVISIONS
	  	 	39	  
		
	 11.01 Amendment
	  	 	39	  
	 11.02 Duration of Agreement
	  	 	40	  
	 11.03 GOVERNING LAW; JURISDICTION
	  	 	40	  
	 11.04 Notices
	  	 	40	  
	 11.05 Severability of Provisions
	  	 	41	  
	 11.06 No Partnership
	  	 	41	  
	 11.07 Counterparts
	  	 	41	  
	 11.08 Successors and Assigns
	  	 	41	  
	 11.09 Headings
	  	 	41	  
	 11.10 Non-Petition Agreement
	  	 	41	  
	 11.11 Due Diligence
	  	 	42	  
	 11.12 No Reliance
	  	 	42	  
	 11.13 Conflicts
	  	 	42	  
	 11.14 No Agency
	  	 	43	  
	 11.15 Collateral Assignment
	  	 	43	  


  
 -ii- 








			
	EXHIBIT A	 	Form of Servicer Report
		
	EXHIBIT B	 	Form of S&SA Assignment
		
	EXHIBIT C	 	Form of Loan Schedule
		
	EXHIBIT D-1	 	[RESERVED]
		
	EXHIBIT D-2	 	Form of Final Collateral Certification
		
	EXHIBIT E	 	Form of Assignment of Mortgage
		
	EXHIBIT F	 	[RESERVED]
		
	EXHIBIT G	 	Form of Servicer’s Certificate
		
	EXHIBIT H	 	Credit and Collection Policy


  
 -iii- 







 SALE AND SERVICING AGREEMENT 

This Sale and Servicing Agreement is entered into as of May 5, 2016, among Hercules Funding III, LLC, a Delaware limited liability
company, as Borrower (in such capacity, the “Borrower”), Hercules Capital, Inc., a Maryland corporation (“Hercules”), as Originator (in such capacity, the “Originator”) and as Servicer (in such
capacity, the “Servicer”), and MUFG Union Bank, N.A., formerly known as Union Bank, N.A., as Agent for Lenders under the Loan Agreement (as hereinafter defined) (in such capacity, the “Agent”).  

RECITALS: 
 A. On the date
hereof, the Borrower, the Agent and the Lenders party thereto have entered into the Loan Agreement, pursuant to which the Lenders have agreed to make certain loans to the Borrower from time to time on the terms and conditions set forth therein. 

B. In connection with the transaction contemplated by the Loan Agreement, the parties hereto have agreed to enter into this 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.  
 All
capitalized terms used but not defined in this Agreement shall have the meanings assigned thereto in the Loan Agreement. Whenever used in this Agreement, the following words and phrases shall have the following meanings: 

“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 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%. 

“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”: MUFG Union Bank, N.A., as
Agent for the Lenders under the Loan Agreement, or any successor Agent under 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. 
 “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 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 
  

  
 2 







 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. 

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

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

“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). 

“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. 

  
 3 







 “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 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 written credit and collection policies and procedures of such Successor Servicer as shall be approved by the Agent from time to time. 

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

“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
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. 

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

  
 4 







 “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 Collection 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 Interest Period) owed by any Obligor in respect of any Transferred Loan. 
 “Loan”: Any Note
Receivable, including monies due and owing thereon and all Interest Collections, Principal Collections and other amounts received from time to time with respect to such Note Receivable and all proceeds thereof. 

“Loan Agreement”: The Loan and Security Agreement among the Agent, the Lenders, and the Borrower, dated as of May 5,
2016, as it may be amended or supplemented from time to time. 
 “Loan File”: With respect to any Loan, each of the Obligor
Loan Documents related thereto as reflected on the Collateral Loan Checklist accompanying such File. 
 “Loan Schedule”:
The schedule of Loans conveyed to the Borrower on each Transfer Date and delivered to the Agent and the Collateral Custodian in connection with each sale and assignment of Purchased Assets under Section 2.01 from time to time or as new
Loans are contributed to the Borrower, in substantially the form as set forth in Exhibit C hereto. 
 “Loan Tape”:
Has the meaning set forth in the Section 4.13(b)(ii). 
 “Material Credit and Collection Policy Change”: Any
change or modification to, or waiver of any term or condition of, the Credit and Collection Policy, if such change, modification or waiver could reasonably be expected to be adverse in any material respect to the Lenders or the Collateral. 

“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 

  
 5 







 
(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. 
 “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 total remaining amounts of
principal payable by the Obligor thereof, excluding principal payments in respect of Accreted Interest. 
 “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. 
 “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. 

“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. 

“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, 

  
 6 







 
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 by the applicable Obligor 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, and 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 Code 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 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. 

  
 7 







 “Record Date”: With respect to each Payment Date, the 10th day occurring after
such Payment Date, commencing June, 2016. 
 “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 transferred to Borrower pursuant to this Agreement, all of the Originator’s and/or Borrower’s rights, title, interests, remedies, powers and privileges (i) under the related Obligor Loan Documents and each
document contained in the Loan File related to such Loan, (ii) in and to all security interests or Liens and property subject thereto from time to time purporting to secure payment of such Loan and all contract rights, rights to payment of
money and insurance claims related to such Loan, (iii) in other agreements or arrangements of whatever character (including, without limitation, guaranties, letters of credit, letter-of-credit rights, supporting obligations or other credit
support) from time to time supporting or securing payment of such Loan under any agreement related to such Loan or otherwise and all rights under warranties or indemnities thereunder, (iv) any Code financing statements filed against the related
Obligor securing repayment of such Loan, (vi) all Code financing statements filed by the Borrower against the Loan, (v) all Records and all other instruments and rights relating to such Loan and all Collections relating thereto,
(vi) all payments by the related Obligor and any guarantor of such Loan in respect of such Loan, (vii) all proceeds of such Loan and (viii) all proceeds of any of the foregoing items (i) through (vii). 

“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. 

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

“Responsible Officer”: When used with respect to: 

(a) the Collateral Custodian, 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. 

  
 8 







 “Retransfer Price”: With respect to any Ineligible Loan, as of any date of
determination, the sum of the Outstanding Loan Balance of such Ineligible Loan as of such date and all accrued but unpaid interest thereon as of such date. 

“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”: In respect of any particular Purchased Asset as of any date, a
dollar amount equal to the fair market value of such Purchased as determined by the Originator and the Borrower as of such date. 

“Scheduled Payment”: On any 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 date under the terms of such Transferred Loan. 

“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 Interest 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 Interest Period plus (ii) the Aggregate Outstanding
Loan Balance as of the last day of such Interest 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. 

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

  
 9 







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

“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 such Transferred Loan, all Related Property related thereto, and 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 by the Originator hereunder; provided, that
the term Transferred Loan shall not include any Retained Interests or Excluded Amounts. 
 “Transition Costs”: Has the
meaning set forth in Section 9.02(a) hereof. 
 “UCC Assignment”: A financing statement meeting the
requirements of the Code 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 Code 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 (a) the term Warrant Asset shall in no event include the right of Hercules to participate as
an investor in future equity financings by an Obligor, and (b) in no case may Warrant Assets include any mandatory funding or purchase requirement of any sort or type. 

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. 
  

  
 10 







 (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. 
 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, upon the mutual agreement of the Originator and the Borrower and
in consideration of the payment of the Sales Price therefor 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. Substantially contemporaneously with such sale and assignment, the Borrower shall pay or
cause to be paid to the Originator (or to such other Person as may be specified by the Originator) the Sales Price in respect of such Purchased Assets in a combination of (i) immediately available funds and (ii) if the Borrower does not
have sufficient funds to pay the full amount of the purchase price, by means of a capital contribution by the Originator to the Borrower. 

(i) 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. 

  
 11 







 (ii) 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. 

(iii) The Originator 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. 

(iv) The parties intend that each of the conveyances contemplated hereby shall be sales from the Originator to the Borrower or,
to the extent set forth in Section 2.01(a) hereof, capital contributions, of all of the Originator’s right, title and interest in and to the related Purchased Assets. Notwithstanding the foregoing, if and to the extent the transfer of any
Purchased Asset is for any purpose characterized as a collateral transfer for security or the transaction is characterized as a financing transaction or a loan, the Originator hereby grants to the Borrower a first priority security interest in all
of the Originator’s right, title and interest in, to and under all of the Purchased Assets, whether now existing or hereafter created or arising, to secure a loan in an amount equal to all obligations owed to the Borrower by the Originator
under this Agreement. Upon the occurrence of an event following which the Borrower shall be permitted to sell the Purchased Assets, the Borrower shall have all of the rights and remedies of a secured party under the Code. Upon the occurrence of any
such event, the Originator shall have all the rights of a debtor granting a lien under the Code. This Agreement shall constitute a security agreement under Applicable Law and the Borrower shall have all the rights and remedies of a secured party
under the Code and other Applicable Law. 
 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 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 Code Financing Statements in form
and substance satisfactory to the Borrower and Agent 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 Code and in any other jurisdictions as shall be necessary to perfect a security interest in the Purchased Assets. The Originator hereby
authorizes the Borrower (or its designee), on the Originator’s behalf, to file any additional financing statement or continuation statements, and amendments to financing statements, in any jurisdictions and with any filing office as the
Borrower may determine, in its sole discretion, are necessary or advisable to perfect (or maintain) the security interest granted to the Borrower in connection herewith. Such financing 

  
 12 







 
statements may describe the collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the
Borrower may determine, in its sole discretion, is necessary, advisable or prudent to ensure the perfection of the security interest in the collateral granted to the Borrower in connection herewith. 

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, no less than two (2) Business
Days preceding the related Transfer Date, deliver or cause to be delivered to the Collateral Custodian, as the designated agent of the Agent, a Collateral Loan Checklist for each Loan and a Loan File for each Loan containing each Required Asset
Document for such Loan. 
 2.05 Acceptance by the Agent of the Loan Files; Certification by the Collateral Custodian. 

(a) Based on 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 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) In performing its reviews of the Obligor Loan Documents, neither the Agent nor the Collateral Custodian shall have any responsibility to
determine the genuineness of any document contained therein and any signature thereon. Neither the Agent nor 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. 

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 the Closing Date and as of each
Transfer Date: 
 (a) The Borrower is duly organized and existing and in good standing under the laws of the jurisdiction of its
organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to have a Material Adverse Change. The Borrower has all requisite power and authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, and to enter into the Loan Documents to which it is a party; 

  
 13 







 (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 conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under
any material contractual obligation of the Borrower; 
 (c) The execution, delivery, and performance by Borrower of this Agreement and the
other Loan Documents to which it is a party have been duly authorized by all necessary action on the part of the Borrower; 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 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 violate any provision of federal, state, or local law or regulation applicable to the Borrower, the Governing Documents of Borrower, or any order, judgment, or decree of any
court or other Governmental Authority binding on the Borrower to the extent such violation would reasonably be expected to result in a Material Adverse Change; 

(e) There are no actions, suits, or proceedings pending or, to the best knowledge of Borrower, threatened, against Borrower, that could
reasonably be expected to result in a Material Adverse Change; 
 (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; 

(h) The Borrower will have good and indefeasible title to each item in the Purchased Assets, free and clear of Liens except for Permitted
Liens; 
 (i) [reserved]; 

(j) All factual information (taken as a whole) furnished by or on behalf of Borrower, in writing to Agent or any Lender (including all
information contained in the Schedules hereto or in the other Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents, or any transaction contemplated herein or therein is true and accurate, in all material
respects, on the date as of which such information is dated or 

  
 14 







 
certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances
under which such information was provided; 
 (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 

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 and existing and in good standing under the laws of the
jurisdiction of its organization and qualified to do business in any state where the failure to be so qualified reasonably could be expected to have a Material Adverse Change. The Borrower has all requisite power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents 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 Governing Documents, conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material contractual obligation of the Originator; 

(c) The execution, delivery, and performance by the Originator of this Agreement and the other Loan Documents to which it is a party have been
duly authorized by all necessary action on the part of the Originator; 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 Originator, 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 execution and delivery by the Originator of each Loan Document to which the Originator is a party and its performance and compliance
with the terms of each Loan Document to which the Originator is a party will not violate any provision of federal, state, or local law or regulation applicable to the Originator, the Governing Documents of Originator, or any order, judgment, or
decree of any court or other Governmental Authority binding on the Originator to the extent such violation would reasonably be expected to result in a Material Adverse Change; 

  
 15 







 (e) There are no actions, suits, or proceedings pending or, to the best knowledge of Originator,
threatened, against Originator, that could reasonably be expected to result in a Material Adverse Change; 
 (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 would not reasonably be expected to result in 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 any Lien released contemporaneously with such sale; 

(h) The Originator is Solvent; 

(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 each Transfer
Date and the delivery of the respective Loan Files to the 

  
 16 







 
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 Borrower and 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, that: 

(a) such Loan qualified as an Eligible Note Receivable in all respects; and 

(b) 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. 

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 Collateral Custodian and the sale of the applicable Note Receivable to Borrower, 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 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) In the event of a breach of any representation or warranty set forth in Section 3.03 with respect to a
Transferred Loan (or the Related Property and other 

  
 17 







 
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, the Originator shall repurchase such
Ineligible Loan(s) at a purchase price 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 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. 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. 

(ii) [Intentionally Omitted]. 

(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 Collection 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 Originator , 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. 
 ARTICLE IV 

ADMINISTRATION AND SERVICING OF LOANS 

4.01 Appointment of the Servicer. 

The Borrower hereby appoints Hercules 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
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. 

  
 18 







 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 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, 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 may from time to time reasonably request, so long as such information is in the
possession of the Servicer or can be obtained with neither undue burden nor expense; 
 (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; 

  
 19 







 (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; 
 (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 pending or is, to the knowledge of the Servicer, threatened to be asserted by an Obligor with respect to any Transferred Loan; or (2) would reasonably be expected to have a
Material Adverse Change; and 
 (c) The Borrower and Servicer hereby acknowledge that none of the Agent or the Lender Group, nor the
Collateral Custodian, 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. 

4.03 Authorization of the Servicer. 

(a) The Borrower, 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 its name 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 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. 

  
 20 







 (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 4.03(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 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 Collection
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 the Collection Account
established pursuant to the Loan Agreement. Servicer shall also be responsible for compliance with 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 Collection 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 Collection 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. 

  
 21 







 (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 in connection with any Permitted Disposition. 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 Collection 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.


  
 22 







 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 a material 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
Change on its ability to perform hereunder. 
 (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 violate any provision of federal, state, or local law or regulation applicable to the Servicer, the Governing
Documents of Servicer, or any order, judgment, or decree of any court or other Governmental Authority binding on the Borrower to the extent such violation would reasonably be expected to result in a Material Adverse Change. 

(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
except where the failure to do so could not reasonably be expected to result in a Material Adverse Change. 
 (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 actions, suits, or proceedings pending or, to the best knowledge of Servicer, threatened, against Servicer, that could reasonably be expected to result in a Material Adverse
Change. 

  
 23 







 (h) Reports Accurate. All Servicer Reports, information, exhibits, financial
statements, documents, books, Servicing Records or reports furnished or to be furnished by the Servicer in writing to the Agent, any member of the Lender Group or any other party in connection with this Agreement are true and accurate, in all
material respects, on the date as of which such information is dated or certified. 
 (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 would reasonably be expected to constitute a Servicer Default. 

(j) Material Adverse Change. Since December 31, 2015, 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 in all material respects
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: 

(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. 
 (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 Change. 

(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, consent to the Collateral Custodian moving the Obligor Loan Documents, without 30 days’ prior written notice to the Borrower and the Agent, and (iii) will promptly take all


  
 24 







 
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 Material Credit and Collection Policy Change in the Credit and Collection Policy without the prior written consent of the Agent. 

(g) Notice of Certain Events. The Servicer will furnish to the Agent, as soon as possible and in any event within five
(5) Business Days 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.

 (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, so long as such information
is within the possession of the Servicer or may be obtained with neither undue burden nor expense. 
 (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 the Servicer (or, if a Successor Servicer has been appointed, the Borrower) shall bear the expense of up to three (3) 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. 

  
 25 







 (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 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 Change 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 reasonably satisfactory to Agent 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 Agent. 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. 
 4.11
[Intentionally Omitted].  
 4.12 [Intentionally Omitted]. 

	


  
 26 







 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. 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 reasonable 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 Payment Date and the related Interest 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, 2016, 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 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, 2016, annual 

  
 27 







 
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,
within 90 days following the end of each fiscal year of the Servicer, commencing with the fiscal year ending on December 31, 2016, 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. 

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. 

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 with respect to this Agreement and the rights and duties of the parties hereto and the respective
interests of the Borrower hereunder. 
 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. 

  
 28 







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

The Borrower, the Servicer or the Collateral Custodian 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. 
 ARTICLE V 

DEPOSITS INTO ACCOUNTS 
 5.01
Collection Account. 
 (a) Deposits to Collection Account. The Servicer shall deposit or cause to be deposited in the
Collection Account 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 two Business Days 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 Collection Account, within two Business Days after receipt thereof, all such amounts to the extent such amounts are received by such
Person. 

  
 29 







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

(b) Maximum Debt to Worth Ratio. On a consolidated basis with its Subsidiaries, it 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. On a consolidated
basis with its Subsidiaries, it 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. On a consolidated basis with its Subsidiaries, it shall maintain, as measured on the
last day of each of its 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 Hercules and its Subsidiaries to the makers of Note Receivables. 
 (e) Maximum Delinquent Note Receivables
Percentage. As of the last day of any fiscal month, it shall not permit the aggregate unpaid principal balance of all Note Receivables that are serviced by Hercules for its Subsidiaries and Affiliates or owned by Hercules and 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, to be in excess of ten percent (10%) of the aggregate unpaid principal balance of all
such Note Receivables serviced or owned by Hercules as of such day. 
 (f) Maximum Defaulted Note Receivables Percentage. As of the
last day of any fiscal month, it shall not permit the aggregate unpaid principal balance of all Note Receivables that are serviced by Hercules for its Subsidiaries and Affiliates or owned by Hercules with respect to which (a) with respect to
which 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 Note Receivable, (b)


  
 30 







 
with respect to which foreclosure proceedings have been initiated against any property securing such Note Receivable, or (c) that Hercules deems to be non-collectible as of the last day of
any fiscal month, to be in the aggregate in excess of ten percent (10%) of the aggregate unpaid principal balance of all such Note Receivables serviced or owned 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) reasonably 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 reasonably 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. 

(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 Collection Account. 

(d) Consents. The Originator shall execute and deliver to the Borrower and/or the Agent, as applicable, upon request and upon
the occurrence and during the continuance of an Event of Default, any document reasonably requested 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. 

  
 31 







 ARTICLE VIII 

INDEMNIFICATION 
 8.01
Indemnification; Third Party Claims. 
 (a) The Servicer (so long as it is the Originator or an Affiliate thereof) shall indemnify the
Borrower, the Collateral Custodian, 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. 

(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, 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 willful misconduct, 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. 

  
 32 







 (c) The Originator agrees to indemnify and hold harmless the Borrower, the Collateral Custodian,
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 an “Originator Indemnified Party,”
and together with the Servicer Indemnified Parties, the “Indemnified Parties”), from and against any loss, liability, expense, damage, claim or injury arising out of 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,
including reasonable and documented 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 misconduct, bad faith, fraud 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 to the extent such losses have the effect of recourse for non-payment of a Transferred Loan due to any Obligor’s bankruptcy, insolvency, lack of creditworthiness or financial inability to pay. The provisions of this indemnity shall run
directly to and be enforceable by an Originator Indemnified Party subject to the limitations hereof. 
 (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. 

  
 33 







 8.02 Relationship of Servicer to the Borrower. 

The relationship of the Servicer (and of any successor to the Servicer as servicer under this Agreement) to the Borrower 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. 

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) Business Days after the
earlier to occur of (i) the date on which written notice of such incorrectness requiring the same to be remedied shall have been given to the Servicer by the Borrower, the Agent, any Lender or the Custodian and (ii) the date on which an
Authorized Person of the Servicer acquires knowledge thereof; 
 (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, and such failure continues for a period
of ten (10) Business Days after the earlier to occur of (i) the date on which written notice of such incorrectness requiring the same to be remedied shall have been given to the Servicer by the Borrower, the Agent, any Lender or the
Custodian and (ii) the date on which an Authorized Person of the Servicer acquires knowledge thereof; 
 (4) a
Bankruptcy Event shall occur with respect to the Servicer; 

  
 34 







 (5) so long as the Servicer or the Originator is an Affiliate of the Borrower,
any Event of Default occurs under the Loan Agreement; 
 (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 except as permitted under this
Agreement; 
 (9) 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; 

(10) 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; 

(11) 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; 
 (12) 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 

(13) 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(a)(13)) 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 reasonably 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. 
 (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 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 

  
 35 







 
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 Servicer. 

(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”); provided, that such proposed Successor Servicer may not be a
Competitor. 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 or under another agreement reasonably acceptable to the Agent and such Successor Servicer. 
 (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 or such other 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 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 

  
 36 







 
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. 
 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 

  
 37 







 
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. 

  
 38 







 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
Collection Account; 
 (b) deliver to its successor or, if none shall yet have been appointed, to the Agent or 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 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. 

  
 39 







 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 III, 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 III, 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 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 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 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 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, 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 Servicer; (F) in the
case of the Agent, to MUFG Union Bank, N.A., as Agent, 601 East Potrero 

  
 40 







 
Grande Drive, Monterey Park, California 91754, Attn: Commercial Loan Operations, Facsimile No.: (323) 720-2252 (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 MUFG Union Bank, N.A., Attention: Special Asset Unit/Nicole Tubbs, 520 B Street S-290, San Diego, CA 92101, Telephone: (619) 230-3689,
Facsimile: (619) 230-3458, with a copy to MUFG Union Bank, N.A., as Agent, Northern California Commercial Banking Group, 99 Almaden Boulevard, Suite 200, San Jose, California 95113, Attention: J. William Bloore and James B. Goudy, Facsimile:
(408) 280-7163, 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 and any Successor Servicer
each severally and not jointly covenants that it shall not, prior to the date which is one year and one day, or, if longer, the 

  
 41 







 
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, regenerating 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) that the provisions of
Section 17.7 of the Loan Agreement shall apply to all material, non-public information received by it hereunder. 
 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 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 

  
 42 







 
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. 
 11.15 Collateral Assignment.  

As an inducement to the Borrower to purchase the Purchased Assets and to the Agent and the Lender Group to enter into the Loan Agreement with
the Borrower, Hercules (in each of its capacities herein) acknowledges and consents to the assignment by the Borrower to the Agent, for the benefit of the Lender Group of all of the Borrower’s rights against Hercules (in such capacities)
pursuant to this Agreement (including, without limitation the rights of the Purchaser under Article VIII hereof) and to the enforcement or exercise of any right or remedy against Hercules (in any such capacities) pursuant to this Agreement by
the Borrower or the Agent. Such enforcement of a right or remedy by the Agent shall have the same force and effect as if the right or remedy had been enforced or exercised by the Borrower directly. For clarification, the terms “Servicer
Indemnified Party” and “Originator Indemnified Party” shall include any of the Borrower’s assignees, including the Agent and the Lender Group and all of their respective officers, directors, employees, attorneys, agents and
representatives and their respective transferees, successors, participants and assigns. 
 [Remainder of Page Intentionally Left Blank]


  
 43 







 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 III, LLC, as Borrower
		
	By:	 	 /s/ Manuel A. Henriquez

	Name:	 	Manuel A. Henriquez
	Title:	 	President
	
	HERCULES CAPITAL, INC., as Originator and Servicer
		
	By:	 	 /s/ Mark R. Harris

	Name:	 	Mark R. Harris
	Title:	 	CFO
	
	MUFG UNION BANK, N.A., as Agent
		
	By:	 	 /s/ J. William Bloore

	Name:	 	J. William Bloore
	Title:	 	Managing Director


 [SIGNATURE PAGE TO SALE AND SERVICING AGREEMENT] 






 EXHIBIT A 

FORM OF SERVICER REPORT 
 HERCULES
FUNDING III LLC 
 SALE AND SERVICING AGREEMENT DATED MAY 5, 2016 

[SEE ATTACHED] 

  
 A-1 







 Date: <Report Date>

Monthly Servicer Report

On Behalf of Hercules Funding III, LLC
  

							
	 Notes Receivable
	  		  			
	 Notes Receivable Book Value as of the last Servicer Report
	  	<Previous Report Date>	  	 	—  	 
			
	 Plus: New Fundings
	  		  			
	 Plus: Other
	  		  			
		  		  	  
	  
	 
	 Subtotal: Additions
	  		  	$	—  	  
			
	 Less: Note Principal Collections
	  		  	$	—  	 
	 Less: Capitalized Costs
	  		  	$	—  	 
	 Less: Notes Paydowns and Pay-offs
	  		  	$	—  	 
	 Less: Other
	  		  	$	—  	 
		  		  	  
	  
	 
	 Subtotal: Subtractions
	  		  	$	—  	  
		  		  	  
	  
	 
	 Ending Notes Receivable
	  	<Report Date>	  	 	—  	 
			
	 Balances
	  		  			
	 Previous Outstanding Loan Amount
	  	<Previous Report Date>	  	$	—  	 
			
	 Plus: Advance Requests
	  		  	$	—  	 
	 Plus: Fees and Expenses on Borrowings
	  		  	$	—  	 
		  		  	  
	  
	 
	 Subtotal: Additions
	  		  			
			
	 Less: Notes Principal Collected
	  		  			
	 Less: Notes Interest and Fees Collected
	  		  	$	—  	 
	 Less: Other Adjustments
	  		  	$	—  	 
	 Less: Additional Paydowns
	  		  	$	—  	 
		  		  	  
	  
	 
	 Subtotal: Subtractions
	  		  	$	—  	  
			
	 Ending loan balance
	  	<Report Date>	  	$	—  	  

 The undersigned represents and warrants that this Borrowing Base Certificate is true and correct statement of, and that the
information contained herein is true and correct in all material respects regarding the status of Eligible Notes Receivable and the amounts reflected herein are in compliance with the provisions of the A&R Loan Agreement and the Exhibits and
Schedules thereto. The undersigned further represents and warrants that, after giving effect to the waiver letter by and among Hercules Funding III LLC, Hercules Capital, Inc., and MUFG Union Bank, N.A., executed in connection with the A&R Loan
Agreement, there is no Default and all representations and warranties contained in the A&R Loan Agreement and other Loan Documents are true and correct in all material respects and the Required Procedures have been completed in calculating the
information set forth above. Further, there are no disputes or claims with respect to the Eligible Notes Receivable. Capitalized terms are used herein and not otherwise defined herein shall have the meanings specified in the A&R Loan Agreement.

  

			
	Hercules Funding III, LLC
	By:	 	Andrew Olson
	Its:	 	Senior Controller
		
	By:	 	  

		 	Authorized Signer


  
 A-2 







 EXHIBIT B 

FORM OF S&SA ASSIGNMENT 

ASSIGNMENT NO.      OF LOANS (“S&SA Assignment”), dated as of
[        ] [    ], [        ] (the “Transfer Date”), by Hercules Capital, Inc. (the “Originator”) to
HERCULES FUNDING III LLC (the “Borrower”) pursuant to the Sale and Servicing Agreement referred to below. 
 WITNESSETH:

 WHEREAS, the Originator and the Borrower are parties to the Sale and Servicing Agreement dated as of May 5, 2016 (as such agreement
may have been, or may from time to time be, amended, supplemented or otherwise modified, the “Sale and Servicing Agreement”), by and among HERCULES FUNDING III LLC as the Borrower, Hercules Capital, Inc. as the Originator and
Servicer, and MUFG Union Bank, N.A. as Agent; 
 WHEREAS, pursuant to the Sale and Servicing Agreement, the Originator wishes to sell,
convey, transfer and assign Purchased Assets to the Borrower in exchange for cash consideration and other good and valid consideration the receipt and sufficiency of which is hereby acknowledged; and 

WHEREAS, the Borrower is willing to acquire such Purchased Assets subject to the terms and conditions hereof and of the Sale and Servicing
Agreement; 
 NOW THEREFORE, the Originator and the Borrower hereby agree as follows: 

1. Defined Terms. All capitalized terms defined in the Sale and Servicing Agreement and used herein shall have such defined
meanings when used herein, unless otherwise defined herein. 
 2. Designation of Loans. The Originator does hereby deliver
herewith a Loan Schedule containing a true and complete list of each Loan to be conveyed on the Transfer Date. Such list is marked as Schedule A to this S&SA Assignment and is hereby incorporated into and made a part of this S&SA Assignment.

 3. Conveyance of Purchased Assets. The Originator hereby sells, transfers, assigns and conveys to the Borrower, without
recourse, all of the right, title and interest of the Originator in and to the Loans listed on the Loan Schedule attached hereto and all Related Property and other related collateral constituting part of the Purchased Assets related to such Loan,
including, without limitation, all Collections on or with respect to the Loans, in each case arising on or after the related Transfer Date. 

4. Borrower Acknowledges Assignment. As of the Transfer Date, pursuant to this S&SA Assignment and
Section 2.01(a) of the Sale and Servicing Agreement, the Borrower acknowledges its receipt of the Loans listed on the attached Loan Schedule and all Related Property and other related collateral constituting part of the Purchased Assets
related to such Loan. 

  
 B-1 







 5. Acceptance of Rights But Not Obligations. The foregoing sale, transfer,
assignment, set over and conveyance does not, and is not intended to, result in a creation or an assumption by the Borrower of any obligation of the Originator or any other Person in connection with this S&SA Assignment or under any agreement or
instrument relating thereto except as specifically set forth herein. 
 6. Originator Acknowledges Receipt of Sales Price. The
Originator hereby acknowledges receipt of the Sales Price or that is otherwise distributed at its direction. 
 7. Amendment of
the Sale and Servicing Agreement. The Sale and Servicing Agreement is hereby amended by providing that all references to the “Sale and Servicing Agreement,” “this Agreement” and “herein” shall be deemed from and
after the Transfer Date to which this S&SA relates to be a dual reference to the Sale and Servicing Agreement as supplemented by this S&SA Assignment. Except as expressly amended hereby, all of the representations, warranties, terms,
covenants and conditions of the Sale and Servicing Agreement shall remain unamended and the Sale and Servicing Agreement shall continue to be, and shall remain, in full force and effect in accordance with its terms and except as expressly provided
herein, this S&SA Assignment shall not constitute or be deemed to constitute a waiver of compliance with or consent to noncompliance with any term or provision of the Sale and Servicing Agreement. 

8. Counterparts. This S&SA Assignment may be executed in any number of counterparts all of which taken together shall
constitute one and the same instrument. 

  
 B-2 







 IN WITNESS WHEREOF, the undersigned have caused this S&SA Assignment to be duly executed and
delivered by their respective duly authorized officers on the day and year first above written. 
  

			
	HERCULES CAPITAL, INC., as Originator
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	HERCULES FUNDING III LLC, as Borrower
		
	By:	 	  

	Name:	 	
	Title:	 	



  
 B-3 







 EXHIBIT C 

FORM OF LOAN SCHEDULE 
  

									
	 TRANSFERRED LOANS

	 Obligor
	  	Servicer
Loan No.	  	Outstanding Loan Balance	  	Origination
Date	  	Final
Maturity
Date
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	


  
 C-1 







 EXHIBIT D-2 

FORM OF FINAL COLLATERAL CERTIFICATION 
 BY
FACSIMILE: 
 MUFG Union Bank, N.A., as Agent 
 601 East
Potrero Grande Drive 
 Monterey Park, California 91754 
 Attn:
Commercial Loan Operations 
 Facsimile No.: (323) 720-2252 

cc: MUFG Union Bank, N.A., as Agent 
 Northern California
Commercial Banking Group 
 99 Almaden Boulevard, Suite 200 

San Jose, California 95113 
 Attention: J. William Bloore and
James B. Goudy 
 Facsimile: (408) 280-7163 
  

	 	Re:	Sale and Servicing Agreement dated as of May 5, 2016 (as such agreement may have been, or may from time to time be, amended, supplemented or otherwise modified, the “Agreement”), by and among
HERCULES FUNDING III LLC as the Borrower, Hercules Capital, Inc. as the Originator and Servicer, and MUFG Union Bank, N.A., as Agent 

 Ladies
and Gentlemen: 
 In accordance with the provisions of Section 2.05 of the above-referenced Agreement, the undersigned, as the
Collateral Custodian, hereby certifies as to each Loan in the Loan Schedule attached hereto that either (check the one that is applicable): 

it has received a copy of each executed Underlying Note endorsed in blank or accompanied by an allonge attached to such Underlying Note
endorsed in blank. 
 such Loan was sold or contributed to Borrower after the Closing Date and Collateral Custodian has not received
a copy of any executed Underlying Note evidencing such Loan. 
 The Collateral Custodian makes no representations as to (i) the
validity, legality, enforceability, sufficiency, due authorization or genuineness of any of the Underlying Notes or (ii) the collectibility, insurability, effectiveness or suitability of any such Loan. 

The Collateral Custodian hereby confirms that it is holding each such Underlying Note (if any) with respect to each Loan on behalf of the
Agent and Lenders pursuant to the terms and conditions of the Agreement and the Loan Agreement. 

  
 D-2-1 







 Capitalized terms used herein shall have the meaning ascribed to them in the Agreement. 

 

			
	MUFG UNION BANK, N.A., as Collateral Custodian
		
	By:	 	  

	Name:	 	
	Title:	 	



  
 D-2-2 







 EXHIBIT E 

FORM OF ASSIGNMENT OF MORTGAGE 

[TO BE PROVIDED BY AGENT, AS NECESSARY] 

  
 E-1 







 EXHIBIT G 

FORM OF SERVICER’S CERTIFICATE 

This Servicer’s Certificate is delivered pursuant to the provisions of Section 4.17(b) of the Sale and Servicing Agreement
dated as of May 5, 2016 (as such agreement may have been, or may from time to time be amended, supplemented or otherwise modified, the “Agreement”), by and among HERCULES FUNDING III LLC as the Borrower, Hercules Capital, Inc.
as the Originator and Servicer, and MUFG Union Bank, N.A., as Agent. This Servicer’s Certificate relates to the Payment Date to which the Servicer Report attached hereto relates. 

 

	 	1.	Capitalized terms used and not otherwise defined herein have the meanings assigned them in the Agreement. References herein and in the attached Servicer Report to certain sections are to the applicable subsections of
the Agreement. 

  

	 	2.	The Servicer is the Servicer under the Agreement. 

  

	 	3.	The undersigned hereby certifies to the Borrower and the Agent that: 

 1) all of the foregoing
information and all of the information set forth on attached Servicer Report is true and accurate in all material respects of the date hereof; and 

2) as of the date hereof, no Default or Event of Default has occurred and is continuing. 

IN WITNESS WHEREOF, the undersigned has caused this Servicer’s Certificate to be duly executed this
[            ] day of [            ], [        ].  

 

			
	HERCULES CAPITAL, INC., as Servicer
		
	By:	 	  

	Name:	 	
	Title:	 	


 [ATTACH FORM OF SERVICER REPORT] 

  
 G-1 







 EXHIBIT H 

CREDIT AND COLLECTION POLICY 

[SEE ATTACHED] 

  
 H-1 







 May 2016 

HERCULES CAPITAL, INC 

CREDIT MONITORING GUIDELINES 

Internal Confidential Document 






 CREDIT MONITORING GUIDELINES 

 

	I.	Monitoring of Portfolio Companies 

  

	 	A)	Loan Servicing 

  

	 	•	 	Generally, all loans to portfolio companies are typically entered into the Company’s WSO loan servicing software platform. The accounting and finance department, using the WSO software, prepares ACH files which
detail required principal, interest and other payments. Substantially all of the loans are set up using automatic monthly payments via ACH and the payments are set up to be made via ACH the first business day of each month. 


 

	 	•	 	At the beginning of each month, the accounting and finance department will review and reconcile the cash receipts from loan payments of all portfolio companies. An email is circulated each month to the CIO, Group Heads
and Legal team notifying them of any portfolio companies that have not made scheduled payments. While all payments are generally due on the 1st of each month, a small number of loans have a three
to five day grace period before payments are considered late. If a payment is not received after the applicable grace period and the Managing Director has been unable to remedy the late payment with the portfolio Company directly, the investment
committee is notified and the CIO and Associate General Counsel will begin to take appropriate action to ensure the Company’s best interests are preserved. 

  


	 	B)	Reporting Requirements 

  

	 	•	 	Monitoring of portfolio companies is led by the Deal Sponsor or a newly assigned Managing Director or Principal along with either an associate or analyst with oversight from the CEO, CIO, and Executive Committee as
required. Each portfolio company has a Partner 1 assigned to it, either a Managing Director or a Principal. In addition, many portfolio companies also have a Partner 2, either a Managing Director, Principal or an Associate. Each portfolio Company
also has an Associate or Analyst or in some cases both assigned to it as well. 

 Borrower Reporting Requirements: 

 

	 	•	 	 Monthly Reporting – Portfolio companies are generally required to provide monthly
financial statements typically within 30 days after the end of each month. The due date for monthly financials may be modified in the Loan and Security Agreement (“LSA”), subsequent loan amendments or in some cases the monthly financials
may only be required on a quarterly basis particularly for certain public companies. The monthly financial statements may also include a report detailing any potential material contingencies, including the commencement of any material




  
 Page 2 of 11 








	 	 
litigation or any other occurrence that would reasonably be expected to have a Material Adverse Effect (“MAE”) if applicable and in most cases we require that they be certified by the
portfolio company’s Chief Executive Officer or Chief Financial Officer, if applicable. 


  

	 	•	 	When monthly financial statements are received, they are uploaded into the Company’s proprietary Portfolio Monthly Reporting (“PMR”) and our SQL database systems to allow for appropriate monthly tracking
and monitoring. In the event that monthly financial statements have not been received as required, an automatic email notification is sent to the assigned Managing Director and/or Analyst/Associate notifying him/her that their respective company is
not in compliance; within 7 days the Managing Director and Analyst/Associate are notified again; and if the portfolio company remains out of compliance within 15 days the Executive Committee is notified of the non-compliance. Post the 15 day grace
period, the CIO will begin to take appropriate action to ensure the Company’s best interests are preserved and an inquiry is completed as to why the portfolio company is out of compliance. The inquiry may include a journal entry into our SQL
system identifying the actions taken to mitigate the non-compliance and any relevant subsequent updates that have been uncovered. 

  

	 	•	 	The Analyst or Partner 2 assigned to the portfolio company is required to review and certify the monthly financial statements that have been entered into our PMR system. The PMR system includes end user authentication
and electronic tracking of ledger entry “time stamping.” Generally, the person completing the review should be different than the person who has entered the monthly financial statements into the SQL systems, subject to available resources
and being able to identify an appropriate back-up person. The additional authentication steps were modified mid 2011, and previously entered financial statements in our PMR system may include the same individual entering and subsequently confirming
the numbers, due to limited resources at the time. Once this review is completed, the Partner 1 assigned to the portfolio company will then approve the monthly financial statements within a certain window of time as confirmation of their respective
monitoring and tracking of their assigned portfolio companies. An automatically generated report from the PMR system is sent each night to the CIO and each week to the CEO identifying the status of all monthly financial statements, along with other
relevant monitoring information. 

  

	 	•	 	Quarterly Reporting – Similar to Monthly Reporting but typically within 45 days of the end of each fiscal quarter unless the due date has been modified in the LSA or a subsequent amendment.


  

	 	•	 	 Annual Reporting – Similar to Monthly and Quarterly Reporting
requirements, portfolio companies are generally required to provide 



  
 Page 3 of 11 








	 	 
audited financial statements typically within 90-180 days of the end of each fiscal year unless the due date has been modified in the LSA or a subsequent amendment. However, not all portfolio
companies will have or will be required to provide audited financial statements. This may be the case with an early stage company where they may often receive a one year grace period for delivery of audited financial statements until such time as
meaningful operations have commenced or in some cases as required by the existing Board of Directors of the underlying company pursuant to the initial stock purchase agreement and articles of incorporation. Generally, the audits should be performed
by a qualified and accredited public accounting firm acceptable to the Company or the portfolio companies Board of Directors. Once the annual audited financial statements have been received by Hercules, they are uploaded into the Company’s
proprietary PMR and SQL systems to ensure appropriate tracking, monitoring and comparison with the previously entered monthly financial statements and trailing twelve month (“TTM”) data. 



 

	 	•	 	The Analyst or Partner 2 assigned to the portfolio company is required to review and certify that the uploaded audited financial statements are correct and that they are linked electronically to the actual file
documents received from the respective portfolio companies including any subsequently modified or amended statements. As previously outlined above, generally the person completing the review should be different than the person who has entered the
audited financial statements into the SQL systems, subject to available resources at the time and being able to identify an appropriate back-up person. The additional authentication steps were modified mid 2011, and previously entered financials to
our PMR system may include the same individual entering and subsequently confirming the numbers, due to limited resources at the time. Once the audited financial statements have been both reviewed and authenticated and properly uploaded into PMR
along with the actual file of the audited financial statements received, the PMR system will automatically perform a comparison to the previously received monthly financials and/or TTM financials. If any variance between the audited statements and
the unaudited monthly actual financial statements that have been entered is identified it will generally require a brief narrative related to the variance and a description of what steps have been taken to mitigate the variance. If a variance exists
and is greater than 5% for select line items, the Company, after discussion with the portfolio company to understand the variance, proceeds to reconcile the difference in one of two ways: 


 

	 	•	 	If the Company can determine the exact month(s) the adjustment took place, we update the respective monthly financials in the PMR and SQL systems, while maintaining and preserving the original monthly financials and
replacing it with the newly amended monthly financials noting the time and date along with who entered the new statements. 


  
 Page 4 of 11 








	 	•	 	If the Company cannot determine when exactly the adjustment was made, we add a Period 13 Adjustment that reconciles the audit to the monthly actuals and requires a separate comment to be made by the Partner 1 to explain
the difference and reference correspondence with the portfolio company regarding that difference. The Period 13 Adjustment must fully resolve the variance between audited and monthly unaudited financials. 


 

	 	•	 	Partner 1 is required to approve the audited financials after reviewing the information that was entered and (if necessary) making a Period 13 Adjustment. If an adjustment is required the audited financials cannot be
approved until the adjustment is made and the variance is fully resolved. CIO sign off is required if a Period 13 adjustment has been made and a variance exists above $250,000 for certain line items. 


 

	 	•	 	In the event that audited financial statements have not been received as required, an email notification is sent to the Managing Director and Analyst/Associate notifying him/her that their respective company is not in
compliance; within 7 days the Managing Director and Analyst/Associate are notified again and within 15 days the Executive Committee is notified of the non-compliance. At this point, the CIO will begin to take appropriate action to ensure the
Company’s best interests are preserved. 

  

	 	•	 	Compliance Certificate – Portfolio companies are generally required to provide a monthly compliance certificate typically within 30 days after the end of the each month. The monthly compliance
certificate requires the portfolio company to certify compliance with covenants and bring down applicable representations and warranties. In the event, that monthly compliance certificates have not been received as required, an email notification is
sent to the Managing Director and Analyst/Associate notifying him/her that their respective company is not in compliance; within 7 days the Managing Director and Analyst/Associate are notified again and within 15 days the Executive Committee is
notified of the non-compliance. 

  

	 	•	 	Non Compliance by any portfolio company with Borrower Reporting Requirements is brought to the attention of the Executive Committee pursuant to a nightly email alert generated by the SQL system. After discussion with
the deal team regarding any Borrowers that are late on their reporting requirements, the CIO will begin to take appropriate action to ensure the Company’s best interests are preserved. 


  
 Page 5 of 11 








	 	C)	Reporting Review Process 

  

	 	•	 	Monthly Review Procedures – Generally, portfolio company financial statements and compliance certificates are reviewed on a timely basis by the Analyst/Associate and Managing Director
responsible for the portfolio company. At both loan closing and on an ongoing basis post closing, the Company’s SQL system allows for various financial alerts to be set up and activated. The financial alerts may include but are not limited to:


  

	 	•	 	Cash < Debt 

  

	 	•	 	Leverage multiples 

  

	 	•	 	Revenue, EBITDA, and operating cash flow performance 

  

	 	•	 	Liquidity ratios 

  

	 	•	 	RML 

  

	 	•	 	Days Sales Outstanding and Days Payable Outstanding 

  

	 	•	 	Among others 

  

	 	•	 	If upon approval of the monthly financial statements any of the set financial alerts are triggered, the CEO, CIO, Group Head and Managing Director will be notified automatically via our PMR and SQL system by email that
an alert has been generated and action is required. 

  

	 	•	 	In addition to the various financial alerts, the Company’s PMR and SQL systems may also facilitate the tracking of soft covenants, milestones, and other events to be monitored and tracked real time through an alert
and notification system. However, we may not include such additional monitoring with every portfolio company as it is only completed on a case by case basis, with discretion given to the Managing Director or CIO to determine what if any additional
items should be monitored and tracked. We are in the process of enhacing our PMR and SQL systems to allow for greater flexibility in entering and tracking such potential soft covenants or key inputs in the future. 


 

	 	•	 	In addition, the PMR and SQL systems can also be set to automatically generate certain alerts that maybe custom tailored to monitor specific events and alert relevant persons when appropriate and within the existing
systems development parameters. 

  

	 	•	 	Through our SQL system we track various elements of a portfolio company’s performance and identify any concerns regarding the company’s financial performance. We generally maintain a detailed record of
financial performance for each portfolio company, including copies of the compliance certificates and monthly financial statements electronically in our PMR and SQL system. If there are issues, these issues are reviewed and actions are determined by
the Investment Committee. No less than once a month, the CIO reviews all watch list credits or credits of concern with the deal teams. 


  
 Page 6 of 11 








	 	•	 	Quarterly Review Procedures – Most portfolio companies undergo a full quarterly review. The Managing Director who sponsored the loan or is now responsible for such loan is required to present a
Quarterly Report Memorandum or “QRM” and certify that they have reviewed the company’s financial statements and performance and have to the best of their knowledge and ability outlined any material concerns or issues being faced by
the portfolio company. 

  

	 	•	 	On a quarterly basis, the Company may not require a QRM to be done for every portfolio company. The general parameters and guidelines for determining which portfolio companies undergo the QRM process are listed below:


  

	 	•	 	All rated 3, 4, 5 credits from the prior quarter 

  

	 	•	 	All public companies where Loan-to-Value is greater than 40% and the portfolio company has less than 9 months of cash on hand 

  

	 	•	 	All private companies where Remaining Months of Liquidity is less than 3 months and we do not have a signed term sheet on hand for a new round of equity or subordinated capital 


 

	 	•	 	All rated 2 companies with greater than $20 million of debt exposure 

  

	 	•	 	The Company’s CEO and CIO have the ability to add any portfolio company to the QRM process during the quarter 

  

	 	•	 	The purpose of the QRM is to determine at a more comprehensive level if there are any credit or performance issues impacting the portfolio company and to review the results of the portfolio company’s performance
compared to expectations based on management’s operating plan as well as to Hercules expected performance plan. The QRM is the basis for credit grading and enterprise valuation assessments. The QRM generally includes: 


 

	 	•	 	Portfolio Company Credit Rating 

  

	 	•	 	Portfolio Company Loan Specifics, Such as Initial Commitment, Fees, Interest Rate, Terms, etc. 

  

	 	•	 	Portfolio Company Loan to Value Analysis or “LTV” 

  

	 	•	 	Portfolio Company Enterprise Value compared to public comparables 


  
 Page 7 of 11 








	 	•	 	Portfolio Company Financial Performance Analysis versus Plan (Management and Hercules Case) 

  

	 	•	 	Portfolio Company Business Update and Recent Developments 

  

	 	•	 	There are multiple levels of review of the QRM within the Company’s management structure. At any review point in the process the QRM can be directed back to the Managing Director-Deal Sponsor with inquiries and
further disclosure or explanation requirements. Both the deal sponsor’s credit rating and enterprise valuation conclusions may change as a result of this review process. Each QRM report requires signed approval by the respective Group Head, who
is held accountable for their respective group’s investment performance and Credit Grading. Review and signed approval is also required by the Chief Investment Officer. 


 

	 	•	 	The Investment Committee, which is comprised of senior members of management, will meet collectively to sign off on the complete set of QRM’s and other results driven by QRM. At this juncture, the Investment
Committee will also determine collateral based valuation adjustments for loans. 

  

	 	•	 	The Investment Committee’s valuation and credit grade results are submitted to the Company’s Board of Directors Valuation Committee (“Valuation Committee”) in a summary report prepared by management.
In addition, all QRM reports are supplied to the Valuation Committee. Rated 3, 4 and 5 portfolio company QRM’s are attached to the summary report and the rated 1 and 2 reports are made available electronically. When applicable, third party
valuation expert results are summarized in the report. The Valuation Committee convenes quarterly to review management’s findings, make inquires as necessary and to ultimately conclude on the credit ratings and investment values for the current
quarter’s public disclosures. 

  

	 	D)	Components of the Quarterly Review 

  

	 	•	 	Loan Credit Grade Assignment – As part of the Quarterly Review, we grade all loans on a scale of 1 to 5. This system is intended to reflect the performance of the borrower’s business,
borrower performance to plan and the collateral coverage of the loans and other factors considered relevant. 

  

	 	•	 	Rating 1 – Loans involved with the least amount of risk in Hercules portfolio. The borrower is performing at or above expectations and the trends and risk profile is generally
favorable. 


  
 Page 8 of 11 








	 	•	 	Rating 2 – The borrower is performing as expected and the risk profile is neutral to favorable. Generally all new loans are initially graded 2. 


 

	 	•	 	Rating 3 – The borrower may be performing below expectations and the loan’s risk has increased meaningfully since origination or the company is approaching a natural capital
raising event within three to six months. Hercules generally increases its monitoring of a respective borrower that may have limited amounts of cash remaining on the balance sheet, as it is approaching its next equity capital raise within the next
three to six months period, or if the estimated fair value of the enterprise may be lower than when the loan was originated. The loan grade will generally, but not in all cases, be lowered to a level 3 even if the company is performing in accordance
to plan as it approaches the need to raise additional capital to fund its operations. Generally, venture stage companies seek to raise capital every nine to fourteen months, as they achieve new milestones. Other factors that may impact Loan grading
include, among others, when a company is completing or has completed a bridge financing as part of a pending equity close, a term sheet has been accepted and an equity close is pending, or a strategic investor has committed to funding, such as an
LOI. 

 Conversely, when a Loan grade has been lowered and the borrower closes its new equity capital raise, Hercules may
increase the loan grade back to grade 2 or maintain it at a grade 3 as the company continues to pursue its business plan. 
  

	 	•	 	Rating 4 – The borrower is performing materially below expectations. Loan risk has substantially increased since origination and the prospect of securing additional new capital is significantly
in question. Loans graded 4 may experience some partial loss or full return of principal but are expected to realize some near term unrealized or realized loss of interest, may be on non-accrual, or may require material deferment of interest or
restructuring of the existing Loan outstanding. Such Loans may require the fair value of the loan to be reduced or impaired to the amount Hercules anticipates being the future recoverable or liquidation value of the assets of the company in a
controlled liquidation scenario. Grade 4 investments are closely monitored.  

  

	 	•	 	Rating 5 – The borrower is in full workout mode, generally nonperforming and on non-accrual, materially performing below expectations and a significant risk of principal loss is probable. Loans graded
5 will often experience some partial principal loss or full loss of remaining principal, accrued interest and fees outstanding. Grade 5 loans will require the fair value of the loans be reduced to the amount, if any, Hercules anticipates will be
recovered. 


  
 Page 9 of 11 








	 	•	 	Financial Performance versus Plan Analysis – The Company and Management of the portfolio company perform independent projected financial analysis for the year. This plan is constructed to set
future expectations for the portfolio company’s financial performance. On a quarterly basis, both the Company and the portfolio company’s Management case are compared to the actual results of the quarter. Favorable and unfavorable
variances are generally marked and documented in the notes of the QRM. 

  

	 	•	 	Loan to Value and Enterprise Valuation Analysis – Company Management ascribes a loan to value or “LTV” of the underlying assets, both tangible and intangible (if applicable) or in
some cases uses a going concern valuation methodology based on EBITDA or some other multiple such as a multiple to revenues, among others, if approapriate or applicable, given the unique nature or each of the portfolio companies business model or
lack of any direct public comparables. The factors considered by the managing Director-Deal Sponsor in assigning an enterprise value to the portfolio company include, but are not limited to the portfolio company’s most recent capital
transaction, market comparable analyses including public comparables and M&A comparables, public to private illiquidity discount and other adjustments that are deemed applicable and appropriate, including an assigned weigting or probability of
the potential best estimated exit event, such as IPO or M&A. 

  

	 	E)	Follow-Up Monitoring of Portfolio Companies 

  

	 	•	 	Follow-Up Monitoring – The Company requires Analysts/Associates and Managing Directors to maintain frequent dialogue with their portfolio companies. Follow–up monitoring may include
discussions with management, discussions with existing financial sponsors as to the progress of the portfolio company, on-site visits by our personnel, and monthly and quarterly telephonic communications with key portfolio company personnel as well
as review of monthly or quarterly financial statements. Follow-up monitoring is tracked by our SQL system. Updates, developments, comments and other relevant information are posted in the SQL system on an ongoing basis. Each night, a summary of all
comments entered is sent to the Executive Team and applicable Group Head for review. If a comment for any particular portfolio company has not been entered into the SQL system for a period of, generally, 30 days, an automated system generated email
alert will be sent to the deal team and Executive Committee. 


  
 Page 10 of 11 








	II.	Monitoring of the Portfolio 

  

	 	•	 	We continuously evaluate our portfolio on a portfolio level by using our SQL database to monitor various aspects of our portfolio composition using several different criteria. We track and review the mix of our
investment portfolio by: geographic region, capital sponsor, venture capital partner, stage of development, financial sponsor syndicate, and sector, among other criteria. 


  
 Page 11 of 11