As filed with the Securities and Exchange Commission on October 14, 2016
Securities Act File No. 333-203511
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Check appropriate box or boxes)
Pre-Effective Amendment No.
Post-Effective Amendment No. 10
Hercules Capital, Inc.
(formerly known as Hercules Technology Growth Capital, Inc.)
(Exact name of Registrant as specified in charter)
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
(Address of Principal Executive Offices)
Registrants Telephone Number, including Area Code: (650) 289-3060
Manuel A. Henriquez
Chief Executive Officer
Hercules Capital, Inc.
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
(Name and address of agent for service)
COPIES TO:
William Bielefeld
Ian Hartman
Jay Alicandri
Dechert LLP
1095 Avenue of the Americas
New York, NY 10036
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of this Registration Statement.
If any securities being registered on this form will be offered on a delayed or continuous basis in reliance on Rule 415 under the Securities Act of 1933, other than securities offered in connection with a dividend reinvestment plan, check the following box. x
It is proposed that this filing will become effective (check appropriate
box):
x
when declared effective pursuant to
section 8(c).
EXPLANATORY NOTE
This Post-Effective Amendment No. 10 to the Registration Statement on Form N-2 (File No. 333-203511) of Hercules Capital, Inc. (the Registration Statement) is being filed pursuant to Rule 462(d) under the Securities Act of 1933, as amended (the Securities Act), solely for the purpose of filing exhibits to the Registration Statement. Accordingly, this Post-Effective Amendment No. 10 consists only of a facing page, this explanatory note and Part C of the Registration Statement on Form N-2 setting forth the exhibits to the Registration Statement. This Post-Effective Amendment No. 10 does not modify any other part of the Registration Statement. Pursuant to Rule 462(d) under the Securities Act, this Post-Effective Amendment No. 10 shall become effective immediately upon filing with the Securities and Exchange Commission. The contents of the Registration Statement are hereby incorporated by reference.
PART COTHER INFORMATION
Item 25. Financial Statements and Exhibits
1. Financial Statements
The following financial statements of Hercules Capital, Inc. (the Company or the Registrant) are included in this registration statement in Part AInformation Required in a Prospectus:
AUDITED FINANCIAL STATEMENTS |
||||
Reports of Independent Registered Public Accounting Firm |
F-2 | |||
Consolidated Statements of Assets and Liabilities as of December 31, 2015 and 2014 |
F-3 | |||
Consolidated Statements of Operations for the three years ended December 31, 2015 |
F-5 | |||
Consolidated Statements of Changes in Net Assets for the three years ended December 31, 2015 |
F-6 | |||
Consolidated Statements of Cash Flows for the three years ended December 31, 2015 |
F-7 | |||
Consolidated Schedule of Investments as of December 31, 2015 |
F-8 | |||
Consolidated Schedule of Investments as of December 31, 2014 |
F-24 | |||
Notes to Consolidated Financial Statements |
F-41 | |||
Schedule 12-14 Investments In and Advances to Affiliates |
F-82 | |||
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS |
||||
Consolidated Statements of Assets and Liabilities as of June 30, 2016 (unaudited) and December 31, 2015 |
F-83 | |||
Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015 (unaudited) |
F-85 | |||
Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2016 and 2015 (unaudited) |
F-86 | |||
Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015 (unaudited) |
F-87 | |||
Consolidated Schedule of Investments as of June 30, 2016 (unaudited) |
F-88 | |||
Consolidated Schedule of Investments as of December 31, 2015 (unaudited) |
F-103 | |||
Notes to Consolidated Financial Statements (unaudited) |
F-120 | |||
Schedule 12-14 Investments In and Advances to Affiliates |
F-157 |
C-1
2. Exhibits
Exhibit
|
Description |
|
a.1 | Articles of Amendment and Restatement. (2) | |
a.2 | Articles of Amendment, dated March 6, 2007. (10) | |
a.3 | Articles of Amendment, dated April 5, 2011. (17) | |
a.4 | Articles of Amendment, dated April 3, 2015. (30) | |
a.5 | Articles of Amendment, dated February 25, 2016. (35) | |
b | Amended and Restated Bylaws of Hercules Capital, Inc. (35) | |
d.1 | Specimen certificate of the Companys common stock, par value $.001 per share. (3) | |
d.2 | Form of Indenture and related exhibits. (18) | |
d.3 | Form of Warrant Agreement. (18) | |
d.4 | Form of Subscription Agent Agreement. (18) | |
d.5 | Form of Subscription Certificate. (18) | |
d.6 | Statement of Eligibility of Trustee on Form T-1. (31) | |
d.7 | Indenture, dated March 6, 2012 between the Registrant and U.S. Bank National Association. (19) | |
d.8 | First Supplemental Indenture, dated April 17, 2012 between the Registrant and U.S. Bank, National Association. (19) | |
d.9 | Second Supplemental Indenture, dated as of September 24, 2012, between the Registrant and U.S. Bank, National Association. (21) | |
d.10 | Third Supplemental Indenture, dated as of July 14, 2014, between the Registrant and U.S. Bank, National Association. (27) | |
d.11 | Form of 7.00% Senior Note due 2019, dated as of April 17, 2012 (Existing April 2019 Note) (included as part of Exhibit (d)(8)). (19) | |
d.12 | Form of 7.00% Senior Note due 2019, dated as of July 6, 2012 (Additional April 2019 Note). (20) | |
d.13 | Form of 7.00% Senior Note due 2019, dated as of July 12, 2012 (Over-Allotment April 2019 Note). (23) | |
d.14 | Form of 7.00% Senior Note due 2019, dated as of September 24, 2012 (September 2019 Note) (included as part of Exhibit (d)(9)). (21) | |
d.15 | Form of 7.00% Senior Note due 2019, dated as of October 2, 2012 (Over-Allotment September 2019 Note). (22) | |
d.16 | Form of 7.00% Senior Note due 2019, dated as of October 17, 2012 (Over-Allotment II September 2019 Note). (24) | |
d.17 | Form of 6.25% Note due 2024, dated July 14, 2014 (July 2024 Note) (included as part of Exhibit (d)(10)). (27) | |
d.18 | Form of 6.25% Note due 2024, dated August 11, 2014 (Over-Allotment July 2024 Note). (28) | |
d.19 | Form of 6.25% Note due 2024, dated May 2, 2016 (Additional July 2024 Note). (39) | |
d.20 | Form of 6.25% Note due 2024, dated June 27, 2016 (Additional July 2024 Note). (41) |
C-2
Exhibit
|
Description |
|
d.21 | Form of 6.25% Note due 2024, dated July 5, 2016 (Additional July 2024 Note). (42) | |
d.22* | Form of 6.25% Note due 2024, dated October 11, 2016 (Additional July 2024 Note). | |
e | Form of Dividend Reinvestment Plan. (4) | |
f.1 | Loan Sale Agreement between Hercules Funding LLC and Hercules Technology Growth Capital, Inc. dated as of August 1, 2005. (5) | |
f.2 | Indenture between Hercules Funding Trust I and U.S. Bank National Association dated as of August 1, 2005. (5) | |
f.3 | Note Purchase Agreement among Hercules Funding Trust I, Hercules Funding I LLC, Hercules Technology Growth Capital, Inc. and Citigroup Global Markets Realty Corp. dated as of August 1, 2005. (5) | |
f.4 | First Omnibus Amendment by and among Hercules Funding Trust I, Hercules Funding I, LLC, Hercules Technology Growth Capital, Inc., U.S. Bank National Association, Lyon Financial Services, Inc. and Citigroup Global Markets Realty Corp. dated March 6, 2006. (6) | |
f.5 | Intercreditor Agreement among Hercules Technology Growth Capital, Inc., Alcmene Funding, L.L.C. and Citigroup Global Markets Realty Corp. dated as of March 6, 2006. (6) | |
f.6 | Warrant Participation Agreement between the Company and Citigroup Global Markets Realty Corp. dated as of August 1, 2005. (7) | |
f.7 | Second Amendment to Warrant Participation Agreement dated as of October 16, 2006. (7) | |
f.8 | Second Omnibus Amendment by and among Hercules Funding Trust I, Hercules Funding I, LLC, Hercules Technology Growth Capital, Inc., U.S. Bank National Association, Lyon Financial Services, Inc. and Citigroup Global Markets Realty Corp. dated December 6, 2006. (8) | |
f.9 | Amended and Restated Sale and Servicing Agreement by and among Hercules Funding Trust I, Hercules Funding I LLC, the Company, U.S. Bank National Association, Lyon Financial Services, Inc., Citigroup Global Markets Inc., and Deutsche Bank AG dated as of May 2, 2007. (11) | |
f.10 | Fourth Amendment to the Warrant Participation Agreement by and among Hercules Technology Growth Capital, Inc. and Citigroup Global Markets Realty Corp., dated as of May 2, 2007. (12) | |
f.11 | Amended and Restated Note Purchase Agreement by and among Hercules Funding Trust I, Hercules Funding I LLC, Hercules Technology Growth Capital, Inc. and Citigroup Global Markets, Inc. dated as of May 2, 2007. (12) | |
f.12 | First Amendment to Amended and Restated Note Purchase Agreement by and among Hercules Funding Trust I, Hercules Funding I LLC, Hercules Technology Growth Capital, Inc. and Citigroup Global Markets, Inc. dated as of May 7, 2008. (14) | |
f.13 | Second Amendment to Amended and Restated Sale and Servicing Agreement by and among Hercules Funding Trust I, Hercules Funding I LLC, Hercules Technology Growth Capital, Inc., U.S. Bank National Association, Lyon Financial Services, Inc., Citigroup Global Markets Inc., and Deutsche Bank AG dated as of May 7, 2008. (14) | |
f.14 | Form of SBA Debenture. (15) | |
f.15 | Amended and Restated Loan and Security Agreement by and among Hercules Funding II, LLC, the Lenders thereto and Wells Fargo Capital Finance, LLC, dated as of June 29, 2015. (32) | |
f.16 | Amended and Restated Sales and Servicing Agreement among Hercules Funding II, LLC, Hercules Technology Growth Capital, Inc. and Wells Fargo Capital Finance, LLC, dated as of June 29, 2015. (32) |
C-3
Exhibit
|
Description |
|
f.17 | Amended and Restated Loan and Security Agreement by and between Hercules Technology Growth Capital, Inc. and Union Bank, N.A. dated November 2, 2011. (16) | |
f.18 | Indenture by and between Hercules Capital Funding Trust 2012-1 and U.S. Bank National Association, dated as of December 19, 2012. (25) | |
f.19 | Amended and Restated Trust Agreement by and between Hercules Capital Funding 2012-1 LLC and Wilmington Trust, National Association, dated as of December 19, 2012. (25) | |
f.20 | Sale and Servicing Agreement by and between Hercules Capital Funding 2012-1 LLC, Hercules Capital Funding Trust 2012-1 LLC, Hercules Technology Growth Capital, Inc. and U.S. Bank National Association, dated as of December 19, 2012. (25) | |
f.21 | Sale and Contribution Agreement by and between Hercules Technology Growth Capital, Inc. and Hercules Capital Funding 2012-1 LLC, dated as of December 19, 2012. (25) | |
f.22 | Note Purchase Agreement by and between the Hercules Technology Growth Capital, Inc., Hercules Capital Funding 2012-1 LLC, as Trust Depositor, Hercules Capital Funding Trust 2012-1, as Issuer, and Guggenheim Securities, LLC, as Initial Purchaser, dated as of December 12, 2012. (25) | |
f.23 | Administration Agreement by and between Hercules Capital Funding Trust 2012-1LLC, Hercules Technology Growth Capital, Inc, Wilmington Trust, National Association, and U.S. Bank National Association, dated as of December 19, 2012. (25) | |
f.24 | Indenture by and among Hercules Capital Funding Trust 2014-1 and U.S. Bank National Association, dated as of November 13, 2014. (29) | |
f.25 | Amended and Restated Trust Agreement by and among Hercules Capital Funding 2014-1 LLC and Wilmington Trust, National Association, dated as of November 13, 2014. (29) | |
f.26 | Sale and Servicing Agreement by and among Hercules Capital Funding Trust 2014-1, Hercules Technology Growth Capital, Inc., Hercules Capital Funding 2014-1 LLC and U.S. Bank National Association, dated as of November 13, 2014. (29) | |
f.27 | Sale and Contribution Agreement by and among Hercules Technology Growth Capital, Inc. and Hercules Capital Funding 2014-1 LLC, dated as of November 13, 2014. (29) | |
f.28 | Note Purchase Agreement among Hercules Technology Growth Capital, Inc., Hercules Capital Funding 2014-1 LLC, Hercules Capital Funding Trust 2014-1 and Guggenheim Securities, LLC, dated as of November 4, 2014. (29) | |
f.29 | Administration Agreement among Hercules Technology Growth Capital, Inc., Hercules Capital Funding Trust 2014-1, Wilmington Trust National Association and U.S. Bank National Association, dated November 13, 2014. (29) | |
f.30 | First Amendment to Amended and Restated Loan and Security Agreement by and among Hercules Funding II LLC and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated as of December 16, 2015. (34) | |
f.31 | First Amendment and Waiver to Second Amended and Restated Loan and Security Agreement by and among Hercules Technology Growth Capital, Inc. and MUFG Union Bank, N.A., dated as of November 3, 2015. (33) | |
f.32 | Second Amendment to Amended and Restated Loan and Security Agreement by and among Hercules Funding II LLC and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated as of March 8, 2016. (36) |
C-4
Exhibit
|
Description |
|
f.33 | Third Amendment to Amended and Restated Loan and Security Agreement by and among Hercules Funding II LLC and Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), dated as of April 7, 2016. (37) | |
f.34 | Loan and Security Agreement by and among Hercules Funding III, LLC, as borrower, MUFG Union Bank, N.A., as the arranger and administrative agent, and the lenders party thereto from time to time, dated as of May 5, 2016. (38) | |
f.35 | Sale and Servicing Agreement by and among Hercules Funding III LLC, as borrower, Hercules Capital, Inc., as originator and servicer, and MUFG Union Bank, N.A., as agent, dated as of May 5, 2016. (38) | |
f.36 | First Amendment to Loan and Security Agreement by and among Hercules Funding III LLC, as borrower, MUFG Union Bank, N.A., as the arranger and administrative agent, and the lenders party thereto from time to time, dated as of July 14, 2016. (43) | |
h.1 | Form of Equity Underwriting Agreement. (31) | |
h.2 | Form of Debt Underwriting Agreement. (31) | |
h.3 | Amended and Restated Equity Distribution Agreement, dated as of August 26, 2016, by and among the Registrant and JMP Securities LLC. (46) | |
h.4 | Underwriting Agreement, dated as of June 22, 2016, by and among the Registrant and the Underwriters named therein. (41) | |
h.5* | Debt Distribution Agreement, dated as of October 11, 2016, by and among the Registrant and FBR Capital Markets & Co. | |
i.1 | Hercules Technology Growth Capital, Inc. 2004 Equity Incentive Plan (2015 Amendment and Restatement). (26) | |
i.2 |
Hercules Technology Growth Capital, Inc. 2006 Non-Employee Director Plan (2007 Amendment and
Restatement). (13) |
|
i.3 | Form of Incentive Stock Option Award under the 2004 Equity Incentive Plan. (2) | |
i.4 | Form of Nonstatutory Stock Option Award under the 2004 Equity Incentive Plan. (2) | |
i.5 | Form of Restricted Stock Award under the 2004 Equity Incentive Plan. (15) | |
j | Form of Custody Agreement between the Company and Union Bank of California. (2) | |
k.1 | Form of Registrar Transfer Agency and Service Agreement between the Company and American Stock Transfer & Trust Company. (2) | |
k.2 | Warrant Agreement dated June 22, 2004 between the Company and American Stock Transfer & Trust Company, as warrant agent. (1) | |
k.3 | Lease Agreement dated June 13, 2006 between the Company and 400 Hamilton Associates. (9) | |
k.4 | Form of Indemnification Agreement. (44) | |
l.1 | Opinion of Dechert LLP. (40) | |
l.2 | Opinion of Dechert LLP. (41) | |
l.3 | Opinion of Dechert LLP. (42) | |
l.4* | Opinion of Dechert LLP. |
C-5
Exhibit
|
Description |
|
n.1 | Consent of PricewaterhouseCoopers LLP. (45) | |
n.2 | Report of PricewaterhouseCoopers LLP. (45) | |
n.3 | Consent of Dechert LLP (included in Exhibit l). (40) | |
p | Subscription Agreement dated February 2, 2004 between the Company and the subscribers named therein. (2) | |
r | Code of Ethics. (2) | |
s.1 | Form of Prospectus Supplement For Common Stock Offerings. (31) | |
s.2 | Form of Prospectus Supplement For Preferred Stock Offerings. (31) | |
s.3 | Form of Prospectus Supplement For Debt Offerings. (31) | |
s.4 | Form of Prospectus Supplement For Rights Offerings. (31) | |
s.5 | Form of Prospectus Supplement For Warrant Offerings. (31) | |
s.6 | Form of Prospectus For At-the-Market Offerings. (31) | |
99.1 | Statement of Computation of Ratios of Earnings to Fixed Charges. (45) |
* | Filed herewith. |
(1) | Previously filed as part of the Registration Statement on Form N-2 of the Company, as filed on February 22, 2005. |
(2) | Previously filed as part of Pre-Effective Amendment No. 1, as filed on May 17, 2005 (File No. 333-122950) to the Registration Statement on Form N-2 of the Company. |
(3) | Previously filed as part of Pre-Effective Amendment No. 2, as filed on June 8, 2005 (File No. 333-122950) to the Registration Statement on Form N-2 of the Company. |
(4) | Previously filed as part of Post-Effective Amendment No. 1, as filed on June 10, 2005 (File No. 333-122950) to the Registration Statement on Form N-2 of the Company. |
(5) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on August 5, 2005. |
(6) | Previously filed as part of Post-Effective Amendment No. 3, as filed on March 9, 2006 (File No. 333-126604) to the Registration Statement on Form N-2 of the Company. |
(7) | Previously filed as part of the Pre-Effective Amendment No. 1, as filed on October 17, 2006 (File No. 333-136918) to the Registration Statement on Form N-2 of the Company. |
(8) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on December 6, 2006. |
(9) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on August 1, 2006. |
(10) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed March 9, 2007. |
(11) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed May 4, 2007. |
(12) | Previously filed as part of the Pre-Effective Amendment No. 1, as filed May 15, 2007 (File No. 333-141828), to the Registration Statement on Form N-2 of the Company. |
(13) | Previously filed as part of the Securities to be Offered to Employees in Employee Benefit Plans on Form S-8, as filed October 2, 2007. |
(14) | Previously filed as part of the Pre-Effective Amendment No. 2, as filed June 5, 2008 (File No. 333-150403), to the Registration Statement on Form N-2 of the Company. |
(15) | Previously filed as part of the Annual Report on Form 10-K of the Company, as filed on March 16, 2009. |
(16) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on November 4, 2011. |
(17) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on April 11, 2011. |
(18) | Previously filed as part of the Registration Statement on Form N-2 of the Company, as filed on February 8, 2012 (File No. 333-179431). |
(19) | Previously filed as part of Post-Effective Amendment No. 1, as filed on April 17, 2012 (File No. 333-179431), to the Registration Statement on Form N-2 of the Company. |
(20) | Previously filed as part of Post-Effective Amendment No. 2, as filed on July 6, 2012 (File No. 333-179431), to the Registration Statement on Form N-2 of the Company. |
(21) | Previously filed as part of Post-Effective Amendment No. 5, as filed on September 24, 2012 (File No. 333-179431), to the Registration Statement on Form N-2 of the Company. |
(22) | Previously filed as part of Post-Effective Amendment No. 7, as filed on October 2, 2012 (File No. 333-179431), to the Registration Statement on Form N-2 of the Company. |
(23) | Previously filed as part of Post-Effective Amendment No. 3, as filed on July 12, 2012 (File No. 333-179431), to the Registration Statement of the Company. |
C-6
(24) | Previously filed as part of Post-Effective Amendment No. 8, as filed on October 17, 2012 (File No. 333-179431), to the Registration Statement on Form N-2 of the Company. |
(25) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on December 20, 2012. |
(26) | Previously filed as part of the Securities to be Offered to Employees in Employee Benefit Plans on Form S-8, as filed on August 28, 2015. |
(27) | Previously filed as part of Post-Effective Amendment No. 5, as filed on July 14, 2014 (File No. 333-187447), to the Registration Statement on Form N-2 of the Company. |
(28) | Previously filed as part of Post-Effective Amendment No. 6, as filed on August 11, 2014 (File No. 333-187447), to the Registration Statement on Form N-2 of the Company. |
(29) | Previously filed as part of Post-Effective Amendment No. 8, as filed on March 25, 2015 (File No. 333-187447), to the Registration Statement on Form N-2 of the Company. |
(30) | Previously filed as part of the Registration Statement on Form N-2, as filed on April 20, 2015 (File No. 333-203511). |
(31) | Previously filed as part of Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2, as filed on June 8, 2015 (File No 333-203511). |
(32) | Previously filed as part of the current report on Form 8-K of the Company, as filed on June 30, 2015. |
(33) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on November 13, 2015. |
(34) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on December 18, 2015. |
(35) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on February 25, 2016. |
(36) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on March 8, 2016 |
(37) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on April 11, 2016 |
(38) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on May 10, 2016. |
(39) | Previously filed as part of Post-Effective Amendment No. 3, as filed on May 2, 2016 (File No. 333-203511), to the Registration Statement on Form N-2 of the Company. |
(40) | Previously filed as part of Post-Effective Amendment No. 5, as filed on June 3, 2016 (file No. 333-203511), to the Registration Statement on Form N-2 of the Company. |
(41) | Previously filed as part of Post-Effective Amendment No. 6, as filed on June 27, 2016 (File No. 333-203511), to the Registration Statement on Form N-2 of the Company. |
(42) | Previously filed as part of Post-Effective Amendment No. 7, as filed on July 5, 2016 (File No. 333-203511), to the Registration Statement on Form N-2 of the Company. |
(43) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on July 19, 2016. |
(44) | Previously filed as part of the Current Report on Form 8-K of the Company, as filed on July 22, 2016. |
(45) | Previously filed as part of Post-Effective Amendment No. 8, as filed on August 18, 2016 (file No. 333-203511), to the Registration Statement on Form N-2 of the Company. |
(46) | Previously filed as part of Post-Effective Amendment No. 9, as filed on August 30, 2016 (file No. 333-203511), to the Registration Statement on Form N-2 of the Company. |
Item 26. Marketing Arrangements
The information contained under the heading Plan of Distribution of the prospectus is incorporated herein by reference, and any information concerning any underwriters will be contained in any prospectus supplement if any, accompanying this prospectus.
Item 27. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses payable by us in connection with the offering (excluding placement fees):
Amount | ||||
SEC registration fee |
$ | 58,100 | * | |
FINRA filing fee |
47,510 | |||
NYSE listing fee |
136,190 | |||
Accounting fees and expenses |
108,000 | |||
Legal fees and expenses |
310,000 | |||
Printing expenses |
65,000 | |||
Miscellaneous |
5,200 | |||
|
|
|||
Total |
$ | 730,000 | ||
|
|
Note: Except the SEC registration fee and the FINRA filing fee, all listed amounts are estimates.
* | This amount has been offset against filing fees associated with unsold securities registered under a previous registration statement. |
C-7
Item 28. Persons Controlled by or Under Common Control
Hercules Technology SBIC Management, LLC is a wholly owned subsidiary of the Company. Hercules Technology SBIC Management, LLC is the general partner of Hercules Technology II, L.P., Hercules Technology III, LP and Hercules Technology IV, LP and the Company owns substantially all of the limited partnership interests in Hercules Technology II, L.P. Hercules Technology III, L.P. and Hercules Funding II, LLC, Hercules Funding III, LLC, Hercules Technology Management Co. II, Inc., Hercules Technology Management Co. III, Inc., Hercules Technology Management Co. V, Inc., Hercules Technology I, LLC, Hercules Technology II, LLC, Hydra Ventures LLC, Hercules Capital Funding Trust 2014-1, Hercules Capital Funding 2014-1 LLC, Achilles Technology Management Co., Inc., Achilles Technology Management Co I, Inc. and Achilles Technology Management Co II, Inc. are wholly owned subsidiaries of the Company. Accordingly, the Company may be deemed to control, directly or indirectly, the following entities:
Name |
Jurisdiction of Organization | |||
Hercules Technology II, L.P. |
Delaware | |||
Hercules Technology III, L.P. |
Delaware | |||
Hercules Technology IV, L.P. |
Delaware | |||
Hercules Technology SBIC Management, LLC |
Delaware | |||
Hercules Funding II, LLC |
Delaware | |||
Hercules Funding III, LLC |
Delaware | |||
Hercules Technology Management Co II, Inc. |
Delaware | |||
Hercules Technology Management Co III, Inc. |
Delaware | |||
Hercules Technology Management Co V, Inc. |
Delaware | |||
Hercules Technology I, LLC |
Delaware | |||
Hercules Technology II LLC |
Delaware | |||
Hydra Ventures LLC |
Delaware | |||
Hercules Capital Funding Trust 2014-1 |
Delaware | |||
Hercules Capital Funding 2014-1 LLC |
Delaware | |||
Achilles Technology Management Co., Inc. |
Delaware | |||
Achilles Technology Management Co I, Inc. |
Delaware | |||
Achilles Technology Management Co II, Inc. |
Delaware |
All of the entities are included in the Companys consolidated financial statements as of June 30, 2016.
Item 29. Number of Holder of Securities
The following table sets forth the approximate number of shareholders of the Companys common stock as of August 1, 2016:
Title of Class |
Number of
Record Holders |
|||
Common stock, par value $.001 per share |
44,600 |
Item 30. Indemnification
Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active and deliberate dishonesty established by a final judgment as being material to the cause of action. The Registrants charter contains such a provision which eliminates directors and officers liability to the maximum extent permitted by Maryland law, subject to the requirements of the 1940 Act.
C-8
The Registrants charter authorizes the Registrant, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to obligate itself to indemnify any present or former director or officer or any individual who, while a director or officer of the Registrant and at its request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee, from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity and, under certain circumstances and provided certain conditions have been met, to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. The Registrants bylaws obligate the Registrant, to the maximum extent permitted by Maryland law and subject to the requirements of the 1940 Act, to indemnify any present or former director or officer or any individual who, while a director or officer of the Registrant and at its request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner or trustee and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in any such capacity from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her service in any such capacity and, under certain circumstances and provided certain conditions have been met, to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. The charter and bylaws also permit the Registrant to indemnify and, under certain circumstances and provided certain conditions have been met, advance expenses to any person who served a predecessor of the Registrant in any of the capacities described above and any of the Registrants employees or agents or any employees or agents of its predecessor. In accordance with the 1940 Act, the Registrant will not indemnify any person for any liability to which such person would be subject by reason of such persons willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. Additionally, the Registrant will not indemnify any person with respect to any matter as to which such person shall have been finally adjudicated in any proceeding not to have acted in good faith in the reasonable belief that their action was in the best interests of the Registrant.
Maryland law requires a corporation (unless its charter provides otherwise, which the Registrants charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or threatened to be made, a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that a personal benefit was improperly received, unless in either case a court orders indemnification, and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporations receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation and (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the Company pursuant to the provisions described above, or otherwise, the Company has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person in the successful defense of an action, suit or proceeding) is asserted by a
C-9
director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The Company carries liability insurance for the benefit of its directors and officers (other than with respect to claims resulting from the willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office) on a claims-made basis of up to $3,000,000, subject to a $250,000 retention and the other terms thereof.
The Company has agreed to indemnify the underwriters against specified liabilities for actions taken in their capacities as such, including liabilities under the Securities Act of 1933, as amended.
Item 31. Business and Other Connections of Investment Advisor
Not applicable.
Item 32. Location of Accounts and Records
The Company maintains at its principal office, 400 Hamilton Avenue Suite 310 Palo Alto, CA 94301, physical possession of each account, book or other document required to be maintained by Section 31(a) of the 1940 Act and the rules thereunder.
Item 33. Management Services
Not applicable.
Item 34. Undertakings
The Registrant undertakes:
1. | to suspend the offering of shares until the prospectus is amended if (a) subsequent to the effective date of its registration statement, the NAV declines more than ten percent from its NAV as of the effective date of the registration statement or (b) the NAV increases to an amount greater than the net proceeds (if applicable) as stated in the prospectus. |
2. | Not applicable. |
3. | Not applicable. |
4. |
a. | to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
i. | to include any prospectus required by Section 10(a)(3) of the Securities Act; |
ii. | to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and |
iii. | to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
C-10
b. | that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof; |
c. | to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; |
d. | that, for the purpose of determining liability under the Securities Act to any purchaser, if the Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 497(b), (c), (d) or (e) under the Securities Act as part of a registration statement relating to an offering, other than prospectus filed in reliance on Rule 430A under the Securities Act, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness, provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supercede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use; |
e. | that for the purpose of determining liability of the Registrant under the Securities Act to any purchaser in the initial distribution of securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to the purchaser: |
i. | any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 497 under the Securities Act; |
ii. | the portion of any advertisement pursuant to Rule 482 under the Securities Act relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and |
iii. | any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser. |
f. | to file a post-effective amendment to the registration statement, and to suspend any offers or sales pursuant the registration statement until such post-effective amendment has been declared effective under the Securities Act, in the event the shares of the Registrant are trading below its NAV per share and either (a) the Registrant receives, or has been advised by its independent registered accounting firm that it will receive, an audit report reflecting substantial doubt regarding the Registrants ability to continue as a going concern or (b) the Registrant has concluded that a fundamental change has occurred in its financial position or results of operations; and |
5. | Not applicable. |
6. | Not applicable. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Post-Effective Amendment No. 10 to the Registration Statement on Form N-2 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, and State of California, on the 14th day of October, 2016.
H ERCULES C APITAL , I NC . |
/ S / M ANUEL A. H ENRIQUEZ |
Manuel A. Henriquez Chairman of the Board, President and Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature |
Title |
Date |
||
/ S / M ANUEL A. H ENRIQUEZ Manuel A. Henriquez |
Chairman of the Board, President and Chief Executive Officer (principal executive officer) |
October 14, 2016 | ||
/ S / M ARK R. H ARRIS Mark R. Harris |
Chief Financial Officer (principal financial and accounting officer) |
October 14, 2016 | ||
/ S / A LLYN C. W OODWARD , J R . Allyn C. Woodward, Jr. |
Director |
October 14, 2016 | ||
/ S / R OBERT P. B ADAVAS Robert P. Badavas |
Director |
October 14, 2016 | ||
/ S / T HOMAS J. F ALLON Thomas J. Fallon |
Director |
October 14, 2016 | ||
/ S / S USANNE D. L YONS Susanne D. Lyons |
Director |
October 14, 2016 | ||
/ S / J OSEPH F. H OFFMAN Joseph F. Hoffman |
Director |
October 14, 2016 |
EXHIBIT INDEX
Exhibit Number |
Description |
|
d.22* | Form of 6.25% Note due 2024, dated October 11, 2016 (Additional July 2024 Note). | |
h.5* | Debt Distribution Agreement, dated as of October 11, 2016, by and among the Registrant and FBR Capital Markets & Co. | |
l.4* | Opinion of Dechert LLP. |
* | Filed herewith. |
Exhibit (d)(22)
This Security is a Global Note within the meaning of the Indenture hereinafter referred to and is registered in the name of The Depository Trust Company or a nominee thereof. This Security may not be exchanged in whole or in part for a Security registered, and no transfer of this Security in whole or in part may be registered, in the name of any Person other than The Depository Trust Company or a nominee thereof, except in the limited circumstances described in the Indenture.
Unless this certificate is presented by an authorized representative of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment and such certificate issued in exchange for this certificate is registered in the name of Cede & Co., or such other name as requested by an authorized representative of The Depository Trust Company, any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful, as the registered owner hereof, Cede & Co., has an interest herein.
Hercules Capital, Inc.
No. |
Up to $ CUSIP No. 427096 862 ISIN No. US4270968625 |
[ ]% Notes due 2024
Hercules Capital, Inc., a corporation duly organized and existing under the laws of Maryland (herein called the Company, which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the principal sum of up to [ ] (U.S. $[ ]) on July 30, 2024, and to pay interest thereon from July 14, 2014 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly on January 30, April 30, July 30 and October 30 in each year, commencing [ ], 2016, at the rate of [ ]% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security is registered at the close of business on the Regular Record Date for such interest, which shall be January 15, April 15, July 15 and October 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. This Security may be issued as part of a series.
Payment of the principal of (and premium, if any, on) and any such interest on this Security will be made at the office of the Trustee located at 100 Wall Street, Suite 1600, New York, New York, 10005, Attention: Hercules Capital, Inc. ([ ]% Notes Due 2024) and at
such other address as designated by the Trustee, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided , however , that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register; provided, further, however , that so long as this Security is registered to Cede & Co., such payment will be made by wire transfer in accordance with the procedures established by The Depository Trust Company and the Trustee.
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
Dated:
HERCULES CAPITAL, INC. | ||
By: | ||
Name: | ||
Title: |
Attest | ||
By: | ||
Name: | ||
Title: |
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated:
U.S. BANK NATIONAL ASSOCIATION as Trustee |
||
By: | ||
Authorized Signatory |
Hercules Capital, Inc.
[ ]% Notes due 2024
This Security is one of a duly authorized issue of Senior Securities of the Company (herein called the Securities), issued and to be issued in one or more series under an Indenture, dated as of March 6, 2012 (herein called the Base Indenture, which term shall have the meaning assigned to it in such instrument), between the Company and U.S. Bank National Association, as Trustee (herein called the Trustee, which term includes any successor trustee under the Base Indenture), and reference is hereby made to the Base Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered, as amended and supplemented by the Third Supplemental Indenture relating to the Securities, dated as of July 14, 2014, by and between the Company and the Trustee (herein called the Third Supplemental Indenture; and together with the Base Indenture, the Indenture). In the event of any conflict between the Base Indenture and the Third Supplemental Indenture, the Third Supplemental Indenture shall govern and control.
This Security is one of the series designated on the face hereof. Under a Board Resolution, Officers Certificate pursuant to Board Resolutions or an indenture supplement, the Company may from time to time, without the consent of the Holders of Securities, issue additional Securities of this series (in any such case Additional Securities) having the same ranking and the same interest rate, maturity and other terms as the Securities. Any Additional Securities and the existing Securities will constitute a single series under the Indenture and all references to the relevant Securities herein shall include the Additional Securities unless the context otherwise requires. The aggregate amount of outstanding Securities represented hereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. The Trustee shall make an appropriate notation in its system of record to reflect the issuance of any Securities hereunder.
The Securities of this series are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after July 30, 2017, at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to the date fixed for redemption. The Trustee shall note any such redemption, in whole or in part, on its system of record.
Notice of redemption shall be given in writing and mailed, first-class postage prepaid or by overnight courier guaranteeing next-day delivery, provided that so long as the Securities are registered to Cede & Co., such notice shall be given in accordance with the Trustees and the Depositarys standard practices and procedures, to each Holder of the Securities to be redeemed, not less than thirty (30) nor more than sixty (60) days prior to the Redemption Date, at the Holders address appearing in the Security Register. All notices of redemption shall contain the information set forth in Section 11.04 of the Base Indenture.
Any exercise of the Companys option to redeem the Securities will be done in compliance with the Indenture and the Investment Company Act, to the extent applicable.
If the Company elects to redeem only a portion of the Securities, the Trustee or, with respect to Global Notes, the Depositary will determine the method for selecting the particular Securities to be redeemed, in accordance with the Indenture and the Investment Company Act, to the extent applicable. In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.
Unless the Company defaults in payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Notes called for redemption.
Holders of Securities do not have the option to have the Securities repaid prior to July 30, 2024.
The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for sixty (60) days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in denominations of $25 and any integral multiples of $25 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Company or Trustee may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
The Indenture and this Security shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws.
Exhibit (h)(5)
HERCULES CAPITAL, INC.
6.25% Notes due 2024
DEBT DISTRIBUTION AGREEMENT
Dated October 11, 2016
TABLE OF CONTENTS
SECTION 1. | Description of Placement Securities | 1 | ||||
SECTION 2. | Placements | 2 | ||||
SECTION 3. | Sale of Placement Securities by the Sales Manager | 3 | ||||
SECTION 4. | Suspension of Sales | 4 | ||||
SECTION 5. | Representations and Warranties | 4 | ||||
SECTION 6. | Sale and Delivery to the Sales Manager; Settlement | 11 | ||||
SECTION 7. | Covenants of the Company | 12 | ||||
SECTION 8. | Conditions of the Sales Managers Obligations | 18 | ||||
SECTION 9. | Indemnity and Contribution by the Company and the Sales Manager | 20 | ||||
SECTION 10. | Representations, Warranties and Agreements to Survive Delivery | 22 | ||||
SECTION 11. | Termination of Agreement | 22 | ||||
SECTION 12. | Notices | 23 | ||||
SECTION 13. | Parties | 24 | ||||
SECTION 14. | Governing Law and Time | 24 | ||||
SECTION 15. | Effect of Headings | 24 | ||||
SECTION 16. | Absence of Fiduciary Relationship | 24 | ||||
EXHIBITS | ||||||
Exhibit A Form of Placement Notice | ||||||
Exhibit B Authorized Individuals for Placement Notices and Acceptances | ||||||
Exhibit C Compensation | ||||||
Exhibit D Officers Certificate |
i
EXECUTION COPY
HERCULES CAPITAL, INC.
6.25% Notes due 2024
DEBT DISTRIBUTION AGREEMENT
October 11, 2016
FBR Capital Markets & Co.
1300 North 17 th Street
Suite 1400
Arlington, VA 22209
Ladies and Gentlemen:
Hercules Capital, Inc., a Maryland corporation (the Company ), proposes to issue and sell through FBR Capital Markets & Co., acting as agent and/or principal (the Sales Manager ) the Companys 6.25% Notes due 2024 (the Placement Securities ), to be issued under an indenture dated as of March 6, 2012 (the Base Indenture ), among the Company and U.S. Bank National Association (the Trustee ), as supplemented thereto by the Third Supplemental Indenture thereto dated July 14, 2014 (the Supplemental Indenture , together with the Base Indenture, the Indenture ) (the Notes ). The Indenture has been qualified under the Trust Indenture Act of 1939, as amended (the Trust Indenture Act ). The Company confirms its agreement (this Agreement ) with the Sales Manager, as follows:
SECTION 1. Description of Placement Securities . The Company agrees that, from time to time during the term of this Agreement, on the terms and subject to the conditions set forth herein, it may issue and sell through the Sales Manager, acting as agent and/or principal, the Placement Securities. Notwithstanding anything to the contrary contained herein, except as set forth in a Placement Notice (as defined below) the parties hereto agree that compliance with the limitations set forth in this Section 1 on the number of the Placement Securities to be issued and sold under this Agreement shall be the sole responsibility of the Company, and the Sales Manager shall have no obligation in connection with such compliance. The issuance and sale of the Placement Securities through the Sales Manager will be effected pursuant to the Registration Statement (as defined below) filed by the Company and declared effective by the Securities and Exchange Commission (the Commission ), although nothing in this Agreement shall be construed as requiring the Company to use the Registration Statement to offer, sell or issue the Placement Securities. The Company has filed, in accordance with the provisions of the Securities Act of 1933, as amended (the Securities Act ) and the rules and regulations thereunder (the Securities Act Rules and Regulations ), with the Commission a registration statement on Form N-2 (File No. 333-203511), including a base prospectus, specifically relating to the Placement Securities to be issued from time to time by the Company. The Company has prepared a prospectus supplement specifically relating to the Placement Securities (the Prospectus Supplement ) to the base prospectus included as part of the Registration Statement. The Company will furnish to the Sales Manager, for use by the Sales Manager, copies of the
b ase prospectus included as part of the Registration Statement, as supplemented by the Prospectus Supplement, if any, relating to the Placement Securities. Except where the context otherwise requires, the Registration Statement, as amended when it became effective, including all documents filed as part thereof, and including any information contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to Rule 497 under the Securities Act or deemed to be a part of such registration statement pursuant to Rule 430C of the Securities Act, is herein called the Registration Statement . The base prospectus included in the Registration Statement, as it may be supplemented by the Prospectus Supplement, from time to time, in the form in which such prospectus and/or Prospectus Supplement have most recently been filed by the Company with the Commission pursuant to Rule 497 under the Securities Act is herein called the Prospectus . For purposes of this Agreement, all references to the Registration Statement and the Prospectus shall be deemed to include any amendment or supplement thereto that has been filed, and declared effective (in the case of a Registration Statement), with the Commission pursuant to EDGAR.
SECTION 2. Placements . Each time that the Company wishes to issue and sell the Placement Securities hereunder (each, a Placement ), it will notify the Sales Manager by email notice (or other method mutually agreed to in writing by the parties) containing the parameters in accordance with which it desires Placement Securities to be sold, which shall at a minimum include the aggregate principal amount of the Placement Securities to be issued and sold, the time period during which sales are requested to be made, any limitation on the aggregate principal amount of the Placement Securities that may be sold in any one day and any minimum price below which sales may not be made (a Placement Notice ), a form of which containing such minimum sales parameters necessary is attached hereto as Exhibit A . The Placement Notice shall originate from any of the individuals from the Company set forth on Exhibit B (with a copy to each of the other individuals from the Company listed on such schedule), and shall be addressed to each of the individuals from the Sales Manager set forth on Exhibit B , as such Exhibit B may be amended from time to time. If the Sales Manager wishes to accept such proposed terms included in the Placement Notice (which it may decline to do so for any reason in its sole discretion) or, following discussion with the Company, wishes to accept amended terms, the Sales Manager will, prior to 4:30 p.m. (New York City time) on the Business Day (as defined below) following the Business Day on which such Placement Notice is delivered to the Sales Manager, issue to the Company a notice by email (or other method mutually agreed to in writing by the parties) addressed to all of the individuals from the Company and the Sales Manager set forth on Exhibit B ) setting forth the terms that the Sales Manager is willing to accept. Where the terms provided in the Placement Notice are amended as provided for in the immediately preceding sentence, such terms will not be binding on the Company or the Sales Manager until the Company delivers to the Sales Manager an acceptance by email (or other method mutually agreed to in writing by the parties) of all of the terms of such Placement Notice, as amended (the Acceptance ), which email shall be addressed to all of the individuals from the Company and the Sales Manager set forth on Exhibit B . The Placement Notice (as amended by the corresponding Acceptance, if applicable) shall be effective upon receipt by the Company of the Sales Managers acceptance of the terms of the Placement Notice or upon receipt by the Sales Manager of the Companys Acceptance, as the case may be, unless and until (i) the entire amount of Placement Securities have been sold, (ii) in accordance with the Placement Notice requirements set forth in the second sentence of this paragraph, the Company terminates the Placement Notice, (iii) the Company issues a subsequent Placement Notice with parameters
2
superseding those on the earlier dated Placement Notice, (iv) the Agreement has been terminated under the provisions of Section 8 or Section 11 or (v) either party shall have suspended the sale of the Placement Securities in accordance with Section 4 below. The amount of any discount, commission or other compensation to be paid by the Company to the Sales Manager in connection with the sale of the Placement Securities shall be calculated in accordance with the terms set forth in Exhibit C . It is expressly acknowledged and agreed that neither the Company nor the Sales Manager will have any obligation whatsoever with respect to a Placement or any Placement Securities unless and until the Company delivers a Placement Notice to the Sales Manager and either (i) the Sales Manager accepts the terms of such Placement Notice or (ii) where the terms of such Placement Notice are amended, the Company accepts such amended terms by means of an Acceptance pursuant to the terms set forth above, and then only upon the terms specified in the Placement Notice (as amended by the corresponding Acceptance, if applicable) and herein. In the event of a conflict between the terms of this Agreement and the terms of a Placement Notice (as amended by the corresponding Acceptance, if applicable), the terms of the Placement Notice (as amended by the corresponding Acceptance, if applicable) will control. The term Business Day means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close.
SECTION 3. Sale of Placement Securities by the Sales Manager . Subject to the provisions of Section 6(a), the Sales Manager, for the period specified in the Placement Notice (as amended by the corresponding Acceptance, if applicable), will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the Placement Securities up to the amount specified, and otherwise in accordance with the terms of such Placement Notice (as amended by the corresponding Acceptance, if applicable). The Sales Manager will provide written confirmation to the Company no later than the opening of the Trading Day (as defined below) immediately following the Trading Day on which it has made sales of Placement Securities hereunder setting forth the number of Placement Securities sold on such day, the compensation payable by the Company to the Sales Manager pursuant to Section 2 with respect to such sales, and the Net Proceeds (as defined below) payable to the Company, with an itemization of the deductions made by the Sales Manager (as set forth in Section 6(b)) from the gross proceeds that it receives from such sales. Subject to the terms of the Placement Notice (as amended by the corresponding Acceptance, if applicable), the Sales Manager may sell Placement Securities by any method permitted by law deemed to be an at the market offering as defined in Rule 415 of the Securities Act, including without limitation sales made directly on the New York Stock Exchange ( NYSE ), on any other existing trading market for the Notes, or to or through a market maker. If specified in a Placement Notice (as amended by the corresponding Acceptance, if applicable), the Sales Manager may also sell Placement Securities by any other method permitted by law, including but not limited to in privately negotiated transactions. For the purposes hereof, Trading Day means any day on which the Notes are purchased and sold on the principal market Notes are listed or quoted and during which there has been no market disruption of, unscheduled closing of or suspension of trading on such principal market.
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SECTION 4. Suspension of Sales . The Company or the Sales Manager may, upon notice to the other party in writing (including by email correspondence to each of the individuals of the other party set forth on Exhibit B , if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) or by telephone (confirmed
immediately by verifiable facsimile transmission or email correspondence to each of the individuals of the other party set forth on Exhibit B ), suspend any sale of Placement Securities; provided , however , that such suspension shall not affect or impair either partys obligations with respect to any Placement Securities sold hereunder prior to the receipt of such notice. Each of the parties agrees that no such notice under this Section 4 shall be effective against the other unless it is made to one of the individuals named on Exhibit B hereto, as such Exhibit may be amended from time to time.
SECTION 5. Representations and Warranties .
(a) Representations and Warranties by the Company . The Company represents and warrants to the Sales Manager as of the date hereof and as of each Representation Date (as defined herein) on which a certificate is required to be delivered pursuant to Section 7(n) of this Agreement and as of the time of each sale of any Placement Securities or any securities pursuant to this Agreement (the Applicable Time ), and agrees with the Sales Manager, as follows:
(i) The Company meets the requirements for use of Form N-2 under the Securities Act and the Securities Act Rules and Regulations. At the time the Registration Statement became effective, the Registration Statement complied in all material respects with the requirements of the Securities Act, the Securities Act Rules and Regulations and the Trust Indenture Act and did not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus complied, as of its date, in all material respects, with the requirements of the Securities Act, the Securities Act Rules and Regulations and the Trust Indenture Act as of the Applicable Time, did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; the Prospectus, as of the date of the Prospectus Supplement, will comply in all material respects with the requirements of the Securities Act, the Securities Act Rules and Regulations and the Trust Indenture Act, and the Prospectus, as of the date of the Prospectus Supplement and the Applicable Time, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided , however , that the representations and warranties in this subsection shall not apply to (i) that part of the Registration Statement which shall constitute the Statement of Eligibility Under the Trust Indenture Act on Form T-1 of the Trustee, or (ii) statements in or omissions from the Registration Statement or Prospectus or any amendments or supplements thereto made in reliance upon and in conformity with information relating to the Sales Manager furnished to the Company in writing by the Sales Manager expressly for use in the Registration Statement or Prospectus, it being understood and agreed that the only such information furnished by the Sales Manager consists of the following information in the Prospectus Supplement furnished on behalf the Sales Manager: the last paragraph under the caption Plan of Distribution. The Placement Securities have been duly registered under the Securities Act pursuant to the Registration Statement.
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(ii) Each of the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendments thereto has become effective; the Commission has not issued, and is not, to the knowledge of the Company, threatening to issue, any stop order under the Securities Act or other order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto, and no proceedings for such purpose have been instituted or are pending or, to the best knowledge of the Company are contemplated or threatened by the Commission.
(iii) The Company has elected to be regulated by the Commission as a business development company under the Investment Company Act of 1940, as amended (the Investment Company Act ), and has not withdrawn that election, and the Commission has not ordered that such election be withdrawn nor to the best of the Companys knowledge have proceedings to effectuate such withdrawal been initiated or threatened by the Commission.
(iv) To the Companys knowledge, PricewaterhouseCoopers LLP, the accounting firm that audited the financial statements of the Company set forth in the Registration Statement and Prospectus, were and are independent registered accounting firms as required by the Securities Act and the Securities Act Rules and Regulations and the rules and regulations of the Public Company Accounting Oversight Board.
(v) The financial statements, together with the related schedules and notes thereto, of the Company set forth in the Registration Statement and the Prospectus fairly present in all material respects the results of operations and financial condition of the Company and its subsidiaries as of the dates indicated and the results of their operations for the respective periods specified, and are prepared in conformity with U.S. generally accepted accounting principles ( GAAP ) and the selected financial information and data included in the Registration Statement and the Prospectus have been prepared on a basis consistent with that of the books and records of the Company.
(vi) The Company (A) has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Maryland, has full corporate power and authority to conduct its business as described in the Prospectus; (B) has full power and authority to execute and deliver this Agreement, the Indenture and the Notes, and to consummate the transactions contemplated hereby; and (C) is duly licensed or qualified to do business as a foreign corporation and in good standing in each jurisdiction where the Company is required to be qualified or licensed or in good standing, except where the failure to be so qualified or licensed or to be in good standing would not result in a material adverse effect upon the financial condition, business or operations of the Company and its subsidiaries, taken as a whole ( Material Adverse Effect ).
(vii) The Company is not, or with the giving of notice or lapse of time or both would not be, in default or violation with respect to its charter or bylaws or governing documents. The Company is not, or with the giving of notice or lapse of time or both would not be, in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the properties or assets of the Company is subject, or in violation of any statutes, laws, ordinances or governmental rules or regulations or any orders or decrees to which it is subject.
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(viii) The Companys authorized capitalization is as set forth in the Prospectus; the outstanding shares of common stock, par value $0.001 per share (the Common Stock ) have been duly authorized and validly issued and are fully paid and non-assessable and conform in all material respects to the description thereof in the Prospectus under the heading Description of Capital Stock. The outstanding shares of Common Stock have been validly issued and fully paid and non-assessable. The stockholders of the Company have no preemptive rights with respect to the shares of Common Stock and none of the outstanding shares of capital stock of the Company have been issued in violation of any preemptive rights of any security holder.
(ix) Except as set forth in the Prospectus, subsequent to the respective dates as of which information is given in the Registration Statement and the Prospectus, (A) the Company and its subsidiaries have not incurred any liabilities or obligations, direct or contingent, or entered into any transactions, other than in the ordinary course of business, that are material to the Company and its subsidiaries taken as a whole, (B) there has not been any material change in the capital stock of the Company, or any material adverse change, or, to the Companys knowledge, any development involving a prospective material adverse change, in the condition (financial or otherwise), business, net worth, property or results of operations of the Company (excluding changes due to investment activities in the ordinary course of business), (C) there has been no dividend or distribution declared or paid in respect of the Companys capital stock and (D) the Company and its subsidiaries have not incurred any short-term debt or long-term debt that is, in either case, material with respect to the Company and its subsidiaries taken as a whole (excluding debt resulting from a draw down on the Companys credit facilities).
(x) There is no pending or, to the knowledge of the Company, threatened action, suit or proceeding, legal or governmental, to which the Company or any of its subsidiaries is a party, before or by any court or governmental agency or body, that is required to be described in the Prospectus and is not so described.
(xi) There are no contracts, agreements or understandings of the Company or any of its subsidiaries that are required to be filed as exhibits to the Registration Statement by the Securities Act or by the Securities Act Rules and Regulations that have not been so filed or incorporated by reference therein as permitted by the Securities Act Rules and Regulations.
(xii) This Agreement has been duly authorized, executed and delivered by the Company.
(xiii) The Company has all requisite corporate power and authority to execute, issue, sell and perform its obligations contemplated by the Notes. The Notes have been duly authorized by the Company and, when duly issued and executed by the Company in accordance with this Agreement and the Indenture, assuming due authentication of the Notes by the Trustee, upon delivery by the Company against payment therefor in accordance with the terms hereof and the Indenture, will be validly issued and delivered and will constitute valid and
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binding obligations of the Company entitled to the benefits of the Indenture, enforceable against the Company in accordance with their terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law); the Notes will conform to the description thereof in the Prospectus.
(xiv) The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under the Indenture. The Indenture has been duly and validly authorized, executed and delivered by the Company and constitutes the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and other laws relating to or affecting creditors rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Indenture conforms in all material respects to the description thereof in the Prospectus, as amended or supplemented.
(xv) The execution, delivery and performance of this Agreement and the Indenture, the issuance and sale of the Placement Securities and the consummation of the transactions contemplated herein and the Prospectus (including the issuance and sale of the Placement Securities and the use of the proceeds from the sale of the Placement Securities as described in the Prospectus under the caption Use of Proceeds) and compliance by the Company with its obligations hereunder do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or result in a breach or violation of any of the terms and provisions of, constitute a default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any properties or assets of the Company or any of its subsidiaries pursuant to, any agreement, indenture, mortgage, lease or other instrument to which the Company or any of its subsidiaries is a party or by which it or any of its properties or assets may be bound nor will such action result in any violation of the Companys or any of its subsidiaries charter, bylaws or other organizational documents, or any order, law, statute, rule, regulation, judgment, order, writ or decree of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their respective assets, properties or operations. As used herein, a Repayment Event means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holders behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.
(xvi) No consent, approval, authorization, notification or order of, or filing with, any court or governmental agency or body is required for the consummation by the Company or any of its subsidiaries of the transactions contemplated by this Agreement, except such as may be required by the securities or Blue Sky laws of the various states, the rules and regulations of the FINRA (as defined below) or the securities laws of any jurisdiction outside of the United States in connection with the offer and sale of the Placement Securities.
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(xvii) This Agreement complies as to form in all material respects with all applicable provisions of the Investment Company Act and the approval by the Board of Directors of the Company of this Agreement have been made in accordance with the requirements of Section 15 of the Investment Company Act applicable to companies that have elected to be regulated as business development companies under the Investment Company Act.
(xviii) Except as disclosed in the Prospectus, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company or to require the Company to include such securities with the Placement Securities registered pursuant to the Registration Statement.
(xix) There are no material restrictions, limitations or regulations with respect to the ability of the Company or any of its subsidiaries to invest its assets as described in the Prospectus, other than as described therein.
(xx) Any third-party statistical and market-related data included in the Prospectus are based on or derived from sources that the Company believes to be reliable and accurate.
(xxi) The Placement Securities have been authorized for listing on the NYSE, subject to official notice of issuance or sale of the Placement Securities, as the case may be.
(xxii) Except as described in the Prospectus, the Company and each of its subsidiaries have all necessary licenses, authorizations, consents and approvals and have made all necessary filings required under any federal, state or local law, regulation or rule, and have obtained all necessary licenses, authorizations, consents and approvals from other persons, required in order to conduct their business as described under the heading Business in the Prospectus, except to the extent that any failure to have any such licenses, authorizations, consents or approvals, to make any such filings or to obtain any such authorizations, consents or approvals is not, alone or in the aggregate, reasonably likely to result in a Material Adverse Effect; neither the Company nor any of its subsidiaries is in violation of, or in default under, any such license, authorization, consent or approval of any federal, state or local law, regulation or rule or any decree, order or judgment applicable to the Company or any of its subsidiaries, the effect of which is reasonably likely to result in a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notification or communication from any agency or department of federal, state, or local government or any regulatory authority or the staff thereof threatening to revoke or modify any license, authorization, consent or approval, which alone or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would be reasonably likely to result in a Material Adverse Effect.
(xxiii) Except as disclosed in the Prospectus under the caption Certain Relationships and Related Transactions, the Company and its subsidiaries have not entered into any transaction with any person which would be required to be disclosed under Item 404 of the Commissions Regulation S-K.
(xxiv) Except as otherwise disclosed in the Prospectus, as of the date thereof, no extension of credit has been made by the Company to an executive officer or director of the Company in violation of Section 402 of Sarbanes-Oxley Act of 2002, as amended ( Sarbanes-Oxley ).
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(xxv) Except with respect to the Sales Manager or as disclosed in the Prospectus, the Company has not incurred any liability for any finders fees or similar payments in connection with the issuance and sale the Placement Securities.
(xxvi) The Notes are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended ( Exchange Act ), and are listed on the NYSE, and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Notes under the Exchange Act or delisting the Notes from the NYSE, nor has the Company received any notification that the Commission or the NYSE is contemplating terminating such registration or listing.
(xxvii) The Company (A) has not taken, directly or indirectly, any action designed to cause or to result in, or that has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price or any security of the Company to facilitate the issuance or the sale or resale of the Placement Securities, (B) has not since the filing of the Registration Statement sold, bid for or purchased, or paid anyone compensation for soliciting purchases of the Notes of the Company except in connection with the April 21, 2016 and June 27, 2016 offerings of the Notes and (C) will not, until the completion of the distribution (within the meaning of Regulation M under the Exchange Act), of the Placement Securities, sell, bid for or purchase, pay or agree to pay to any person any compensation for soliciting another to purchase any other securities of the Company; provided , that any action in connection with the Companys dividend reinvestment plan will not be deemed to be within the restrictions of this Section 5(xxvii).
(xxviii) Except as described in the Prospectus, the Company currently is organized and operated, in conformance with the requirements to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended ( Subchapter M of the Code ).
(xxix) The Company has been organized and operated as, and currently is organized and operated, in material conformance with the requirements of the Investment Company Act and the rules and regulations promulgated thereunder applicable to business development companies.
(xxx) The provisions of the corporate charter and by-laws of the Company and the investment objective, policies and restrictions described in the Registration Statement and the Prospectus are not inconsistent with the requirements of the Investment Company Act and the rules and regulations promulgated thereunder applicable to a business development company, allow the Company to be in compliance in all material respects with the requirements of the Investment Company Act and the rules and regulations promulgated thereunder applicable to a business development company.
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(xxxi) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with managements general or specific authorization; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. GAAP and to maintain accountability for assets; (C) access to assets is permitted only in accordance with managements general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Since the Companys most recent audited fiscal year, there have been, to the Companys knowledge, no changes in the Companys internal controls over financial reporting that could significantly affect internal controls over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses.
(xxxii) The Company has established and maintains disclosure controls and procedures (as such term is defined in Rules 13a-14 and 15d-14 under the Exchange Act) designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commissions rules and forms, and is accumulated and communicated to the Companys management, including its principal executive officers or officers and principal financial officer or officers, as appropriate to allow timely decisions regarding disclosure.
(xxxiii) The Company and its officers and directors, in their capacities as such, are in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder.
(xxxiv) Neither the Company nor, to the Companys knowledge, any employee of the Company has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment, or received or retained any funds in violation of any law, rule or regulation.
(xxxv) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury ( OFAC ); and neither the Company nor any of its subsidiaries will, directly or indirectly, use the proceeds of the offering of the Placement Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
(xxxvi) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any employee or agent of the Company or any of its subsidiaries, has made any payment of funds of the Company or any of its subsidiaries or received or retained any funds in violation of any applicable law, rule or regulation, including without limitation the know your customer and anti-money laundering laws of any applicable jurisdiction.
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(xxxvii) The Companys wholly-owned, small business investment company subsidiaries, Hercules Technology II, L.P. and Hercules Technology III, L.P. have been organized and operated as, and currently are organized and operated, in material conformance with the requirements of the Small Business Investment Act of 1958 and the rules and regulations promulgated thereunder applicable to small business investment companies.
(b) Any certificate required by this Agreement that is signed by any officer of the Company and delivered to the Sales Manager or counsel for the Sales Manager shall be deemed a representation and warranty by the Company to the Sales Manager, as to the matters covered thereby.
SECTION 6. Sale and Delivery to the Sales Manager; Settlement .
(a) Sale of Placement Securities . On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, upon the Sales Managers acceptance of the terms of a Placement Notice or upon receipt by the Sales Manager of an Acceptance, as the case may be, and unless the sale of the Placement Securities described therein has been declined, suspended, or otherwise terminated in accordance with the terms of this Agreement, the Sales Manager, for the period specified in the Placement Notice (as amended by the corresponding Acceptance, as applicable), will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such Placement Securities in negotiated transactions or transactions that are deemed to be at the market offerings up to the amount specified, and otherwise in accordance with the terms of such Placement Notice (as amended by the corresponding Acceptance, as applicable). The Company acknowledges and agrees that (i) there can be no assurance that the Sales Manager will be successful in selling Placement Securities, (ii) the Sales Manager will incur no liability or obligation, other than pursuant to Section 9, to the Company or any other person or entity if it does not sell Placement Securities for any reason other than a failure by the Sales Manager to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such Placement Securities as required under this Section 6, and (iii) the Sales Manager shall be under no obligation to purchase the Placement Securities on a principal basis pursuant to this Agreement, except as otherwise agreed by the Sales Manager in the Placement Notice (as amended by the corresponding Acceptance, if applicable).
(b) Settlement of Placement Securities . Unless otherwise specified in the applicable Placement Notice (as amended by the corresponding Acceptance, as applicable), settlement for sales of Placement Securities will occur on the third (3rd) Trading Day (or such earlier day as is industry practice for regular-way trading) following the date on which such sales are made (each, a Settlement Date ). The amount of proceeds to be delivered to the Company on a Settlement Date against receipt of the Placement Securities sold (the Net Proceeds ) will be equal to the aggregate sales price received by the Sales Manager at which such Placement Securities were sold, after deduction for (i) the Sales Managers commission, discount or other compensation for such sales payable by the Company pursuant to Section 2 hereof and (ii) any other amounts due and payable by the Company to the Sales Manager hereunder pursuant to Section 7(l) hereof.
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(c) Delivery of Placement Securities . On or before each Settlement Date, concurrently with the receipt by the Company of the Net Proceeds due to the Company in respect of such Settlement Date, the Company will cause the Trustee, or will cause its transfer agent to, electronically transfer the Placement Securities being sold by crediting the Sales Managers or its designees account (provided the Sales Manager shall have given the Company and the Trustee) written notice of such designee prior to the Settlement Date) at The Depository Trust Company through its Deposit and Withdrawal at Custodian System or by such other means of delivery as may be mutually agreed upon by the parties hereto which in all cases shall be freely tradable, transferable, registered shares in good deliverable form. On each Settlement Date, the Sales Manager will deliver the related Net Proceeds in same day funds to an account designated by the Company on, or prior to, the Settlement Date. The Company agrees that if the Company, Trustee (if applicable) or its transfer agent (if applicable), defaults in its obligation to deliver Placement Securities on a Settlement Date, the Company agrees that it will (i) hold the Sales Manager harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and (ii) pay to the Sales Manager any commission, discount, or other compensation to which it would otherwise have been entitled absent such default.
(d) Intentionally Deleted.
(e) Limitations on Offering Size . Under no circumstances shall the Company cause or request the offer or sale of any Placement Securities, if after giving effect to the sale of such Placement Securities, the aggregate offering price of the Placement Securities sold pursuant to this Agreement would exceed the lesser of (A) the amount available for offer and sale under the currently effective Registration Statement, (B) the amount authorized from time to time to be issued and sold under this Agreement by the Company and notified to the Sales Manager in writing. Under no circumstances shall the Company cause or request the offer or sale of any Placement Securities pursuant to this Agreement (i) at a price lower than the minimum price authorized from time to time by the Company and notified to the Sales Manager in writing, and (ii) at a purchase price lower than the Minimum Fungibility Price. For purposes hereof, the Minimum Fungibility Price means an amount equal to (a) the principal amount of the Notes, reduced by (b) one-fourth of 1% (0.25%) of the principal amount, multiplied by the number of complete years to maturity, plus (c) any pre-issuance accrued interest on the Notes from the immediately preceding interest payment date to the date of issuance of the Notes.
SECTION 7. Covenants of the Company . The Company covenants with the Sales Manager as follows:
(a) To notify the Sales Manager promptly following the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, and the suspension of the qualification of the Placement Securities for offering or sale in any jurisdiction. The Company will make every reasonable effort to prevent the issuance of any stop order described in this subsection hereunder and, if any such stop order is issued, to use commercially reasonable efforts to obtain the lifting thereof at the earliest possible moment, and to advise the Sales Manager promptly of any examination pursuant to Section 8(e) of the Securities Act or of the Company becoming the subject of a proceeding under Section 8A of the Securities Act in connection with any offering of the Placement Securities.
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(b) To give the Sales Manager notice of any intention to file any amendment to the Registration Statement (including any post-effective amendment) or any amendment or supplement to the Prospectus (including any revised prospectus proposed for use by the Sales Manager in connection with the offering, which differs from the prospectus on file at the Commission at the time the Registration Statement becomes effective, whether such revised prospectus is required to be filed pursuant to Rule 497(b) or Rule 497(h) of the Securities Act Rules and Regulations), whether required to be filed pursuant to the Investment Company Act, the Securities Act or otherwise, and to furnish the Sales Manager with copies of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and to not file any such amendment or supplement to which the Sales Manager or counsel for the Sales Manager shall reasonably object, except as may be required by applicable law; provided , however , in the event of any such objection, the Sales Manager agree to cooperate with the Company to ensure that an acceptable filing can be promptly made.
(c) To furnish, upon request and without charge, to the Sales Manager a signed copy of the Registration Statement (including exhibits thereto) and to furnish to the Sales Manager in New York City, without charge, prior to noon (12:00 p.m.) New York City time on the business day next succeeding the date of this Agreement and during the period mentioned in Section 7(d) below, as many copies of the Prospectus and any supplements and amendments thereto or to the Registration Statement as the Sales Manager may reasonably request.
(d) Before amending or supplementing the Registration Statement or the Prospectus, to furnish to the Sales Manager a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which the Sales Manager reasonably object in writing within two Business Days after receipt, and to file with the Commission within the applicable period specified in Rule 497 under the Securities Act any prospectus required to be filed pursuant to such rule.
(e) If any event shall occur or a condition exist as a result of which it is necessary, in the reasonable opinion of counsel for the Company in consultation with counsel for the Sales Manager, to amend or supplement the Registration Statement or the Prospectus in order to make the statements therein not misleading in the light of the circumstances existing at the time the Prospectus is delivered to a purchaser, to forthwith amend or supplement the Registration Statement or Prospectus by preparing and filing with the Commission (and furnishing to the Sales Manager a reasonable number of copies of) an amendment or amendments of the Registration Statement or an amendment or amendments of or a supplement or supplements to, the Prospectus (in form and substance satisfactory to counsel for the Sales Manager), at the Companys expense, which will amend or supplement the Registration Statement or the Prospectus so that the statements in the Prospectus, as so amended or supplemented, will not, in the light of the circumstances under which they were made, be misleading when the Prospectus is delivered to a purchaser, and the Sales Manager and their counsel agree to cooperate with the Company to ensure that an acceptable filing can be promptly made.
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(f) Except as by mutually agreed by the Company and the Sales Manager, the Company and the Sales Manager agree that no sales of Placement Securities shall take place, and the Company shall not request the sale of any Placement Securities that would be sold, and the Sales Manager shall not be obligated to sell, (i) with respect to the Companys quarterly filings on Form 10-Q, during any period commencing upon the 30 th day following the end of each fiscal quarter and ending on the date on which the Company files with the Commission a prospectus supplement under Rule 497 relating to the Placement Securities that includes updated financial and other information as of the end of the Companys most recent quarterly period (the 10-Q Filing ), and (ii) with respect to the Companys annual report filings on Form 10-K, during any period commencing upon the 50 th day following the end of the Companys fiscal year and ending on the date on which the Company files with the Commission a prospectus supplement under Rule 497 related to the Placement Securities that includes updated audited financial information and other information as of the end of the Companys most recent fiscal year (the 10-K Filing ) (each of a 10-Q Filing, an 8-K Filing and/or a 10-K Filing shall also be referred to herein as a 497 Filing ). To the extent the Company releases its earnings for its most recent quarterly period or fiscal year, as applicable (an Earnings Release ) before it files with the Commission its quarterly report on Form 10-Q for such quarterly period or annual report on Form 10-K for such fiscal year, as applicable, then the Sales Manager and the Company agree that no sales of Placement Securities shall take place for the period beginning on the date of the Earnings Release and ending on the date of the applicable 497 Filing. Notwithstanding the foregoing, without the prior written consent of each of the Company and the Sales Manager, no sales of Placement Securities shall take place, and the Company shall not request the sale of any Placement Securities that would be sold, and the Sales Manager shall not be obligated to sell, during any period in which the Company is in possession of material non-public information.
(g) To endeavor, in cooperation with the Sales Manager and their counsel, to assist such counsel to qualify the Placement Securities for offer and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Sales Manager may designate; provided , however , that the Company shall not be obligated to file any general consent to service of process, or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not now so qualified. The Company will file such statements and reports as may be required to consummate the transactions contemplated hereby by the laws of each jurisdiction in which the Placement Securities have been qualified as above provided.
(h) The Company will use the net proceeds received by it from the sale of the Placement Securities in the manner specified in the Prospectus under Use of Proceeds.
(i) To use its best efforts to maintain its status as a business development company under the Investment Company Act, except unless authorized by the vote of a majority of the outstanding voting securities of the Company as defined by the Investment Company Act.
(j) To use its best efforts to conform with the applicable requirements to be treated as a regulated investment company under Subchapter M of the Code for so long as the Company is a business development company under the Investment Company Act.
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(k) Except for the authorization of actions permitted to be taken by the Sales Manager as contemplated herein or in the Prospectus, not to take, directly or indirectly, within 30 days of the date of the Prospectus, any action designed to cause or to result in, or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the issuance of the sale or resale of the Placement Securities.
(l) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of counsel for the Company and the Companys accountants in connection with the registration and delivery of the Placement Securities under the Securities Act and all other fees or expenses in connection with the preparation and filing of the Registration Statement, the Prospectus Supplement and the Prospectus, and any amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the mailing and delivering of copies thereof to the Sales Manager, in the quantities hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of the Placement Securities to the Sales Manager, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky memorandum in connection with the offer and sale of the Placement Securities under state securities laws and all expenses in connection with the qualification of the Placement Securities for offer and sale under state securities laws, including filing fees and the reasonable fees and disbursements of counsel for the Sales Manager in connection with such qualification and in connection with the Blue Sky memorandum, (iv) all filing fees, reasonable disbursements and up to $10,000 in reimbursement of the Sales Managers counsel fees incurred in connection with the review and qualification of the offering of the Placement Securities by the Financial Industry Regulatory Authority, Inc. ( FINRA ), if any, (v) the fees and expenses of the Trustee, (vi) any fees charged by the rating agencies for the rating of the Placement Securities, (vii) the fees and expenses incurred in connection with listing the Placement Securities on the NYSE, (viii) the fees and expenses of any transfer agent, registrar or depositary in connection with the issuance of the Placement Securities, (ix) the costs and expenses of the Company relating to investor presentations on any road show undertaken in connection with the marketing of the offering of the Placement Securities, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and, with the prior approval of the Company, the cost of any aircraft chartered in connection with the road show and (x) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section 7(l). It is understood, however, that except as provided in this Section 7(l) and in Section 9, entitled Indemnity and Contribution by the Company and the Sales Manager, the Sales Manager will pay all of its costs and expenses, including fees and disbursements of its counsel, stock transfer taxes payable on resale of any of the Placement Securities by them and any advertising expenses connected with any offers they may make.
(m) To make generally available to the Companys security holders and to the Sales Manager, as soon as reasonably practicable, an earnings statement for the purposes of and to provide the benefits contemplated by Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder.
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(n) Representation Dates; Certificate . Upon commencement of the offering of Placement Securities pursuant to the terms of this Agreement and:
(i) each time the Company files the Prospectus relating to the Placement Securities or amends or supplements the Registration Statement or the Prospectus relating to the Placement Securities (other than amendments or supplements that are filed solely to report sales of the Placement Securities pursuant to this Agreement) by means of a post-effective amendment, sticker, or supplement relating to the Placement Securities, including for a 10-K Filing and a 10-Q Filing; and
(ii) at any other time reasonably requested by the Sales Manager (each such date of filing of one or more of the documents referred to in clauses (n)(i) and any time of request pursuant to this Section 7(n) shall be a Representation Date ), the Company shall furnish the Sales Manager with a certificate, in the form attached hereto as Exhibit D within three (3) Trading Days of any Representation Date. The requirement to provide a certificate under this Section 7(n) shall be waived for any Representation Date occurring at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall be considered a Representation Date) and the next occurring Representation Date; provided , however , that such waiver shall not apply for any Representation Date on which a Comfort Letter (as defined below) is required to be delivered pursuant to Section 7(p). Notwithstanding the foregoing, if the Company subsequently decides to sell Placement Securities following a Representation Date when the Company relied on such waiver and did not provide the Sales Manager with a certificate under this Section 7(n), then before the Company delivers the Placement Notice or the Sales Manager sells any Placement Securities, the Company shall provide the Sales Manager with a certificate, in the form attached hereto as Exhibit D , dated the date of the Placement Notice.
(o) Legal Opinions of Company Corporate Counsel . Upon commencement of the offering of Placement Securities pursuant to the terms of this Agreement and each date on which a Comfort Letter is required to be delivered pursuant to Section 7(p), the Company shall cause to be furnished to the Sales Manager written opinions and a negative assurance letter of Dechert LLP, corporate counsel to the Company ( Company Corporate Counsel ), or other counsel satisfactory to the Sales Manager, in form and substance reasonably satisfactory to the Sales Manager and its counsel, dated the date that the opinions are required to be delivered, modified, as necessary, to relate to the Registration Statement and the Prospectus as then amended or supplemented. Thereafter, on each Representation Date (other than each date on which a Comfort Letter is required to be delivered pursuant to Section 7(p)) for which no waiver is applicable, the Company shall cause to be furnished to the Sales Manager a negative assurance letter of Company Corporate Counsel, or other counsel satisfactory to the Sales Manager, in form and substances reasonably satisfactory to the Sales Manager and its counsel, modified, as necessary, to relate to the Registration Statement and the Prospectus as then amended or supplemented. Notwithstanding the foregoing, the requirement to provide such opinions shall be waived for any Representation Date occurring during a fiscal quarter during which the Company does not intend to sell Placement Securities prior to the next occurring Representation Date. In the event the Company subsequently decides to sell Placement Securities following a Representation Date when the Company relied on such waiver and did not provide the Sales
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Manager with an opinion from Company Corporate Counsel under this Section 7(o), then before the Sales Manager resumes sales of Placement Securities, the Company shall cause to be furnished to the Sales Manager the negative assurance letter of Company Corporate Counsel contemplated in this Section 7(o).
(p) Comfort Letter . Upon commencement of the offering of Placement Securities pursuant to the terms of this Agreement, on the date of each 10-K Filing, and each time that the Registration Statement is amended or the Prospectus supplemented to include audited financial statements for a fiscal year end, the Company shall cause its independent accountants to furnish the Sales Manager a letter (the Comfort Letter ), dated the date the Comfort Letter is delivered, in form and substance satisfactory to the Sales Manager, (i) confirming that they are an independent registered public accounting firm within the meaning of the Securities Act, the Exchange Act and the Public Company Accounting Oversight Board, and (ii) stating, as of such date, the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants comfort letters to underwriters in connection with registered public offerings.
(q) Legal Opinions of Sales Manager Counsel . Upon commencement of the offering of Placement Securities pursuant to the terms of this Agreement and on each date on which a Comfort Letter is required to be delivered pursuant to Section 7(p), Duane Morris LLP, counsel for the Sales Manager ( Sales Manager Counsel ), or other counsel satisfactory to the Sales Manager, shall furnish to the Sales Manager written opinions and a negative assurance letter, in form and substance reasonably satisfactory to the Sales Manager, dated the date that the opinions are required to be delivered, modified, as necessary, to relate to the Registration Statement and the Prospectus as then amended or supplemented. Thereafter, on each Representation Date (other than each date on which a Comfort Letter is required to be delivered pursuant to Section 7(p)) for which no waiver is applicable, Sales Manager Counsel, or other counsel satisfactory to the Sales Manager, shall furnish to the Sales Manager a negative assurance letter, in form and substances reasonably satisfactory to the Sales Manager, modified, as necessary, to relate to the Registration Statement and the Prospectus as then amended or supplemented. Notwithstanding the foregoing, the requirement to provide such opinions shall be waived for any Representation Date occurring during a fiscal quarter during which the Company does not intend to sell Placement Securities prior to the next occurring Representation Date. In the event the Company subsequently decides to sell Placement Securities following a Representation Date when the Sales Manager Counsel relied on such waiver and did not provide the Sales Manager with an opinion under this Section 7(q), then before the Sales Manager resumes sales of Placement Securities, the Sales Manager Counsel shall furnish to the Sales Manager the negative assurance letter contemplated in this Section 7(q).
(r) As soon as practicable after furnishing with the Commission, the Company will make generally available to its security holders and to the Sales Manager an earnings statement or statements of the Company and its subsidiaries which will satisfy the provisions of Section 11(a) of the Securities Act and Rule 158.
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(s) The Company will cooperate with any reasonable due diligence review conducted by the Sales Manager (or its counsel or other representatives), including, without limitation, providing information and making available documents and senior corporate officers, as the Sales Manager may reasonably request; provided , however , that the Company shall be required to make available documents and senior corporate officers only (i) at the Companys principal offices and (ii) during the Companys ordinary business hours. The parties acknowledge that the due diligence review contemplated by this Section 7(s) will include, without limitation, during the term of this Agreement a quarterly diligence conference to occur within five Business Days after each quarterly filing of the Prospectus whereby the Company will make its senior corporate officers available to address diligence inquiries of the Sales Manager and will provide such additional information and documents as the Sales Manager may reasonably request.
(t) Except by means of the Prospectus or as otherwise agreed by the parties, the Company (including its agents and representatives, other than the Sales Manager in its capacity as such) will not make, use, prepare, authorize, approve or refer to any written communication (as defined in Rule 405 under the Securities Act and including without limitation any (i) advertisement as defined in Rule 482 under the Securities Act and (ii) any material required to be filed with the Commission, that constitutes an offer to sell or solicitation of an offer to buy Placement Securities hereunder.
(u) The Company shall not deliver to the Sales Manager a Placement Notice pursuant to Section 3 and, in the event that the period specified in a Placement Notice previously delivered by the Company to the Sales Manager has not been expired, the Company shall suspend the sale of Placement Securities pursuant to Section 4 upon the occurrence of an event that would cause the Company to reasonably conclude that the Prospectus included an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.
SECTION 8. Conditions of the Sales Managers Obligations . The obligations of the Sales Manager hereunder with respect to a Placement will be subject to the continuing accuracy and completeness of the representations and warranties of the Company contained in this Agreement or in certificates of any officer of the Company delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement . The Registration Statement shall have become effective and shall be available for the sale of all Placement Securities contemplated to be issued by any Placement Notice (as amended by the corresponding Acceptance, if applicable).
(b) No Material Notices . None of the following events shall have occurred and be continuing: (i) receipt by the Company of any request for additional information from the Commission or any other federal or state governmental authority during the period of effectiveness of the Registration Statement, the response to which would require any post-effective amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Placement Securities for sale in any jurisdiction or the initiation or
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threatening of any proceeding for such purpose; (iv) the occurrence of any event that makes any material statement made in the Registration Statement or the Prospectus untrue in any material respect or that requires the making of any changes in the Registration Statement, the Prospectus, or such documents so that it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (v) the Companys reasonable determination that a post-effective amendment to the Registration Statement would be appropriate.
(c) Material Changes . There shall not have been any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries taken as a whole, except as set forth in or contemplated in the Prospectus (after giving effect to any amendment or supplement thereto) the effect of which, is, in the reasonable judgment of the Sales Manager, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Placement Securities as contemplated by the Registration Statement (after giving effect to any amendment thereof) and the Prospectus Supplement (after giving effect to any amendment or supplement thereto).
(d) Opinions of Company Corporate Counsel and Sales Manager . The Sales Manager shall have received the opinions of Company Corporate Counsel and Sales Manager Counsel required to be delivered pursuant to Sections 7(o) and (q), respectively, on or before the date on which delivery of such opinion is required pursuant to Sections 7(o) and (q), respectively.
(e) Representation Certificate . The Sales Manager shall have received the certificate required to be delivered pursuant to Section 7(n) on or before the date on which delivery of such certificate is required pursuant to Section 7(n).
(f) Accountants Comfort Letter . The Sales Manager shall have received the Comfort Letter required to be delivered pursuant Section 7(p) on or before the date on which such delivery of such letter is required pursuant to Section 7(p).
(g) Approval for Listing . The Placement Securities shall either have been (i) approved for listing on NYSE, subject only to notice of issuance, or (ii) the Company shall have filed an application for listing of the Placement Securities on NYSE at, or prior to, the issuance of any Placement Notice.
(h) No Suspension . Trading in the Notes shall not have been suspended on the NYSE.
(i) Securities Act Filings Made . All filings with the Commission required by Rule 497 under the Securities Act to have been filed prior to the issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Rule 497 under the Securities Act.
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(j) Termination of Agreement . If any condition specified in this Section 8 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Sales Manager by notice to the Company, and such termination shall be without liability of any party to any other party except as provided in Section 7(l) hereof and except that, in the case of any termination of this Agreement, Sections 5, 9, 10, 14 and 16 hereof shall survive such termination and remain in full force and effect.
(k) FINRA Compliance . FINRA shall have confirmed that it has no objection with respect to the fairness and reasonableness of the placement terms and arrangements set forth herein.
SECTION 9. Indemnity and Contribution by the Company and the Sales Manager .
(a) The Company will indemnify and hold harmless the Sales Manager, its partners, members, directors, officers, employees, agents, affiliates and each person, if any, who controls such Sales Manager within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an Indemnified Party ), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject, under the Securities Act, the Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statement or the Prospectus, or arise out of or are based upon the omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Indemnified Party for any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending against any loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Indemnified Party is a party thereto), whether threatened or commenced, and in connection with the enforcement of this provision with respect to any of the above as such expenses are incurred; provided , however , that the Company will not be liable in any such case to the extent that any such loss, damage or liability arises out or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Company by the Sales Manager for use therein, it being understood and agreed that the only such information furnished by the Sales Manager consists of the information described as such in subsection (b) below.
(b) The Sales Manager will indemnify and hold harmless the Company, each of its directors and each of its officers who signs a Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an Sales Manager Indemnified Party ), against any losses, claims, damages or liabilities to which such Sales Manager Indemnified Party may become subject, under the Securities Act, the Exchange Act, the Investment Company Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statement or the Prospectus, or arise out of or are based upon the omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omissions or alleged omission was made in reliance upon and in
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conformity with written information furnished to the Company by the Sales Manager specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by such Sales Manager Indemnified Party in connection with investigation or defending against any such loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Sales Manager Indemnified Party is a party thereto), whether threatened or commenced, based upon any such untrue statement or omission, or any such alleged untrue statement or omission as such expenses are incurred, it being understood and agreed that the only such information furnished by the Sales Manager consists of the following information in the Prospectus furnished on behalf of the Sales Manager: the last paragraph under the caption Plan of Distribution.
(c) A ctions against Parties; Notification . Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above, except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party.
(d) Contribution . If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Sales Manager on the other from the offering of the Placement Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Sales Manager on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations.
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The relative benefits received by the Company on the one hand and the Sales Manager on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Sales Manager. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Sales Manager and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d) . Notwithstanding the provisions of this subsection (d), the Sales Manager shall be required to contribute any amount in excess of the amount by which the total price at which the Placement Securities underwritten by them and distributed to the public were offered to the public exceeds the amount of any damages which such Sales Manager has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission . No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation . The Company and the Sales Manager agree that it would not be just and equitable if contribution pursuant to this Section 9(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 9(d).
(e) Notwithstanding any other provision of this Section 9, no party shall be entitled to indemnification and contribution under this Agreement in violation of Section 17(i) of the Investment Company Act.
SECTION 10. Representations, Warranties and Agreements to Survive Delivery . All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Sales Manager or controlling person, or by or on behalf of the Company, and shall survive delivery of the Placement Securities to the Sales Manager.
SECTION 11. Termination of Agreement .
(a) Termination; General . The Sales Manager may terminate this Agreement, by notice to the Company, as hereinafter specified at any time (i) if there has been, since the time of execution of this Agreement or since the date as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of the Sales
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Manager, impracticable or inadvisable to market the Placement Securities or to enforce contracts for the sale of the Placement Securities, or (iii) if trading in the Notes has been suspended or limited by the Commission or the NYSE, or if trading generally on the American Stock Exchange, the NYSE or the Nasdaq Global Market has been suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by order of the Commission, the FINRA or any other governmental authority, or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States or in Europe, or (iv) if a banking moratorium has been declared by either Federal or New York authorities.
(b) Termination by the Company . The Company shall have the right, by giving one (1) day notice, unless such notice is waived by the recipient, as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Upon termination of this Agreement pursuant to this Section 11(b), any outstanding Placement Notices shall also be terminated.
(c) Termination by the Sales Manager . The Sales Manager shall have the right, by giving one (1) day notice, unless such notice is waived by the recipient, as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement. Upon termination of this Agreement pursuant to this Section 11(c), any outstanding Placement Notices shall also be terminated.
(d) Automatic Termination . Unless earlier terminated pursuant to this Section 11, this Agreement shall automatically terminate upon the earlier of (i) the issuance and sale of all of the Placement Securities through the Sales Manager on the terms and subject to the conditions set forth herein with an aggregate offering price equal to the amount set forth in Section 1 of this Agreement and (ii) twenty-four (24) months from the date hereof.
(e) Continued Force and Effect . This Agreement shall remain in full force and effect unless terminated pursuant to Sections 11(a), (b), (c), or (d) above or otherwise by mutual agreement of the parties.
(f) Effectiveness of Termination . Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided , however , that such termination shall not be effective until the close of business on the date of receipt of such notice by the Sales Manager or the Company, as the case may be . If such termination shall occur prior to the Settlement Date for any sale of Placement Securities, such Placement Securities shall settle in accordance with the provisions of this Agreement.
(g) Liabilities . If this Agreement is terminated pursuant to this Section 11, such termination shall be without liability of any party to any other party except as provided in Section 7(l) hereof, and except that, in the case of any termination of this Agreement, Sections 5, 9, 10, 14 and 16 hereof shall survive such termination and remain in full force and effect.
SECTION 12. Notices . Except as otherwise provided in this Agreement, all notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Sales Manager shall be directed to the Sales Manager at FBR Capital Markets & Co., 1300 North 17 th Street, Suite 1400, Arlington, VA 22209, Attention: Legal Department and notices to the Company shall be directed to it at the offices of the Company at 400 Hamilton Avenue, Suite 310, Palo Alto, CA 94301, Attention of General Counsel.
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SECTION 13. Parties . This Agreement shall inure to the benefit of and be binding upon the Sales Manager, the Company and its successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Sales Manager, the Company and their respective successors and the controlling persons and officers and directors referred to in Section 9 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained . This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Sales Manager, the Company and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation . No purchaser of Placement Securities from the Sales Manager shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. Governing Law and Time . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings . The Section and Exhibit headings herein are for convenience only and shall not affect the construction hereof.
SECTION 16. Absence of Fiduciary Relationship . The Company acknowledges and agrees that:
(a) No Other Relationship . The Sales Manager has been retained solely to act as Sales Manager in connection with the sale of the Placement Securities and that no fiduciary, advisory or agency relationship between the Company and the Sales Manager has been created in respect of any of the transactions contemplated by this Agreement or the Prospectus, irrespective of whether the Sales Manager has advised or is advising the Company on other matters;
(b) Arms Length Negotiations . This Agreement was established by the Company following discussions and arms-length negotiations with the Sales Manager and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement;
(c) Absence of Obligation to Disclose . The Company has been advised that the Sales Manager and their affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Sales Manager have no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and
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(d) Waiver . The Company waives, to the fullest extent permitted by law, any claims it may have against the Sales Manager for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Sales Manager shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including stockholders, employees or creditors of the Company.
[Signature Page Follows]
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If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement by and among the Sales Manager, the Company in accordance with its terms.
Very truly yours, | ||||
HERCULES CAPITAL, INC. | ||||
By: |
/s/ Melanie Grace |
|||
Name: | Melanie Grace | |||
Title: | General Counsel, Chief Compliance Officer and Secretary |
CONFIRMED AND ACCEPTED, as of the date first above written:
FBR CAPITAL MARKETS & CO. | ||
By: |
/s/ Patrice McNicoll |
|
Name: | Patrice McNicoll | |
Title: | Senior Managing Director and Head of Capital Markets |
Exhibit (l)(4)
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Cira Centre 2929 Arch Street Philadelphia, PA 19104-2808 +1 215 994 4000 Main +1 215 994 2222 Fax www.dechert.com
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October 11, 2016
Hercules Capital, Inc.
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
Re: Registration Statement on Form N-2
Ladies and Gentlemen:
We have acted as special counsel to Hercules Capital, Inc., a Maryland corporation (the Company ), in connection with the preparation and filing of a Registration Statement on Form N-2, originally filed on November 3, 2015 with the U.S. Securities and Exchange Commission (the Commission ) under the Securities Act of 1933, as amended (the Securities Act ) and as subsequently amended on March 7, 2016, March 22, 2016, May 2, 2016, May 10, 2016, June 3, 2016, June 27, 2016, July 5, 2016, August 18, 2016 and August 30, 2016 (as amended, the Registration Statement ) and the prospectus supplement, dated October 11, 2016 (including the base prospectus filed therewith, the Prospectus Supplement ), filed with the Commission on October 11, 2016 pursuant to Rule 497 under the Securities Act, relating to the proposed issuance by the Company of up to $150,000,000 aggregate principal amount of 6.25% notes due 2024 (the Notes ), to be sold to a sales manager pursuant to a debt distribution agreement substantially in the form filed as Exhibit (h)(5) to the Registration Statement (the Distribution Agreement ). This opinion letter is being furnished to the Company in accordance with the requirements of Item 25 of Form N-2 under the Investment Company Act of 1940, as amended, and we express no opinion herein as to any matter other than as to the legality of the Notes.
The Notes are to be issued pursuant to the indenture dated as of March 6, 2012 (the Base Indenture ), between the Company and U.S. Bank National Association, as trustee (the Trustee ), as supplemented by the third supplemental indenture dated as of July 14, 2014 (the Third Supplemental Indenture and together with the Base Indenture, the Indenture ), between the Company and the Trustee.
In rendering the opinions expressed below, we have examined and relied on originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the Company and others, and such other documents as we have deemed necessary or appropriate as a basis for the opinions set forth below, including the following documents:
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Hercules Capital, Inc. October 11, 2016 Page 2 |
(i) | the Registration Statement; |
(ii) | the Prospectus Supplement; |
(iii) | the Distribution Agreement; |
(iv) | the Indenture; |
(v) | a specimen copy of the form of the Notes to be issued pursuant to the Indenture; |
(vi) | the Articles of Amendment and Restatement of the Company, dated as of June 8, 2005 (the Articles of Amendment and Restatement ); |
(vii) | the Articles of Amendment of the Company dated as of March 8, 2007 ( Amendment 1 ); |
(viii) | the Articles of Amendment of the Company dated as of April 6, 2011 ( Amendment 2 ); |
(ix) | the Articles of Amendment of the Company dated as of April 6, 2015 ( Amendment 3 ); |
(x) | the Articles of Amendment of the Company dated as of February 23, 2016 ( Amendment 4 , collectively, with Amendment 1, Amendment 2, Amendment 3 and the Articles of Amendment and Restatement, the Articles ); |
(xi) | the Amended and Restated Bylaws of the Company dated as of February 25, 2016; |
(xii) | a certificate of good standing with respect to the Company issued by the State Department of Assessments and Taxation of Maryland as of a recent date; and |
(xiii) | the resolutions adopted by the Companys board of directors as of September 14, 2016. |
As to the facts upon which this opinion is based, we have relied upon certificates of public officials and certificates and written statements of agents, officers, directors and representatives of the Company without having independently verified such factual matters.
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Hercules Capital, Inc. October 11, 2016 Page 3 |
In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as original documents, the conformity to original documents of all documents submitted to us as copies, the legal capacity of natural persons who are signatories to the documents examined by us and the legal power and authority of all persons signing on behalf of the parties to such documents.
On the basis of the foregoing and subject to the assumptions, qualifications and limitations set forth in this letter, we are of the opinion that:
1. | The Base Indenture constitutes the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms. |
2. | The Third Supplemental Indenture is duly authorized, executed and delivered by the Company and constitutes the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms. |
3. | When duly executed by the Company and authenticated by the Trustee in accordance with the terms of the Indenture and delivered to the sales manager against payment therefor in accordance with the terms of the Distribution Agreement, the Notes will constitute the legal and binding obligations of the Company, enforceable against the Company in accordance with their terms. |
The opinions set forth herein are subject to the following assumptions, qualifications, limitations and exceptions being true and correct at or before the time of the Notes:
(i) | the Company is duly incorporated and validly existing in good standing under the laws of the State of Maryland; |
(ii) | the Indenture and the Notes have been duly authorized, executed and delivered by each party thereto (other than the Company); |
(iii) | the final terms of the Notes have been duly established and approved by all necessary corporate action on the part of the Company; |
(iv) | the terms of the Notes as established comply with the requirements of the Investment Company Act of 1940, as amended; and |
(v) | the Notes have been duly executed by the Company and authenticated by the Trustee in accordance with the Indenture and delivered to and paid for by the purchasers thereof. |
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Hercules Capital, Inc. October 11, 2016 Page 4 |
The opinions set forth herein as to enforceability of obligations of the Company are subject to: (i) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws now or hereinafter in effect affecting the enforcement of creditors rights generally, and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and the discretion of the court or other body before which any proceeding may be brought; (ii) the unenforceability under certain circumstances under law or court decisions of provisions providing for the indemnification of, or contribution to, a party with respect to a liability where such indemnification or contribution is contrary to public policy; (iii) provisions of law which may require that a judgment for money damages rendered by a court in the United States be expressed only in U.S. dollars; (iv) requirements that a claim with respect to any debt securities denominated other than in U.S. dollars (or a judgment denominated other than in U.S. dollars in respect of such claim) be converted into U.S. dollars at a rate of exchange prevailing on a date determined pursuant to applicable law; and (v) governmental authority to limit, delay or prohibit the making of payments outside the United States or in foreign currency or composite currency.
We express no opinion as to the validity, legally binding effect or enforceability of any provision in any agreement or instrument that (i) requires or relates to payment of any interest at a rate or in an amount which a court may determine in the circumstances under applicable law to be commercially unreasonable or a penalty or forfeiture or (ii) relates to governing law and submission by the parties to the jurisdiction of one or more particular courts.
The opinions expressed herein are limited to the laws of the State of New York.
This opinion letter has been prepared for your use solely in connection with the Registration Statement. We assume no obligation to advise you of any changes in the foregoing subsequent to the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the caption Legal Matters in the Registration Statement and the Prospectus Supplement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Dechert LLP