Table of Contents

As filed with the Securities and Exchange Commission on December 17, 2021

Securities Act File No. 333-                

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-2

  REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Check the appropriate box or boxes:

  Pre-Effective Amendment No.

  Post-Effective Amendment No.

 

 

Hercules Capital, Inc.

(Exact name of Registrant as specified in its charter)

 

 

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

(Address of Principal Executive Offices)

(650) 289-3060

(Registrant’s Telephone Number, Including Area Code)

Scott Bluestein

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: From time to time after the effective date of this registration statement.

 

Check box if the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans.

 

Check box 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 (“Securities Act”), other than securities offered in connection with a dividend reinvestment plan.

 

Check box if this Form is a registration statement pursuant to General Instruction A.2 or a post-effective amendment thereto.

 

Check box if this Form is a registration statement pursuant to General Instruction B or a post-effective amendment thereto that will become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act.

 

Check box if this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction B to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act.

It is proposed that this filing will become effective (check appropriate box):

when declared effective pursuant to Section 8(c) of the Securities Act.

Check each box that appropriately characterizes the Registrant:

 

Registered Closed-End Fund (closed-end company that is registered under the Investment Company Act of 1940 (“Investment Company Act”)).

 

Business Development Company (closed-end company that intends or has elected to be regulated as a business development company under the Investment Company Act).

 

Interval Fund (Registered Closed-End Fund or a Business Development Company that makes periodic repurchase offers under Rule 23c-3 under the Investment Company Act).

 

A.2 Qualified (qualified to register securities pursuant to General Instruction A.2 of this Form).

 

Well-Known Seasoned Issuer (as defined by Rule 405 under the Securities Act).

 

Emerging Growth Company (as defined by Rule 12b-2 under the Securities Exchange Act of 1934 (“Exchange Act”).

 

If an Emerging Growth Company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act.

 

New Registrant (registered or regulated under the Investment Company Act for less than 12 calendar months preceding this filing).

 

 

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

 

 

Title of Securities Being Registered   Amount Being
Registered
 

Proposed Maximum

Offering Price Per

Unit(1)

  Proposed Maximum
Aggregate Offering
Price(1)
 

Amount of

Registration
Fee(2)

Common Stock, $0.001 par value per share(3)(4)

               

Preferred Stock, $0.001 par value per share(3)

               

Warrants(5)

               

Subscription Rights(3)

               

Debt Securities(6)

               

Units(7)

               

Total

               

 

 

(1)

An unspecified amount of securities or aggregate principal amount, as applicable, of each identified class is being registered as may from time to time be sold at unspecified prices.

(2)

In accordance with Rules 456(b), 457(r) and 415(a)(6) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), the Registrant is deferring payment of all of the registration fees. Any registration fees will be paid subsequently on a pay-as-you-go basis.

(3)

Subject to Note 1 above, such shares of common stock or preferred stock, or subscription rights to purchase shares of common stock, may be sold separately or as units in combination with other securities registered hereunder.

(4)

Subject to Note 1 above, such shares of common stock may be issued upon conversion or exchange of other securities registered hereunder, to the extent any such securities are, by their terms, convertible or exchangeable for common stock.

(5)

Subject to Note 1 above, such warrants may be sold, from time to time separately or as units in combination with other securities registered hereunder and may represent rights to purchase common stock, preferred stock or debt securities.

(6)

Subject to Note 1 above, such principal amount of debt may be sold separately or as units in combination with other securities registered hereunder.

(7)

Subject to Note 1 above, such units may consist of a combination of any one or more of the securities being registered hereunder and may also include securities issued by third parties, including the U.S. Treasury.

 

 

 


Table of Contents

PROSPECTUS

Hercules Capital, Inc.

Common Stock

Preferred Stock

Warrants

Subscription Rights

Debt Securities

Units

This prospectus relates to the offer, from time to time, in one or more offerings or series of shares of our common stock, par value $0.001 per share, preferred stock, par value $0.001 per share, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, subscription rights, debt securities, or units comprised of any combination of the foregoing, which we refer to, collectively, as the “securities.” The preferred stock, debt securities, subscription rights and warrants (including as part of a unit) offered hereby may be convertible or exchangeable into shares of our common stock. We may sell our securities through underwriters or dealers, “at-the-market” to or through a market maker into an existing trading market or otherwise directly to one or more purchasers, including existing stockholders in a rights offering, or through agents or through a combination of methods of sale, including auctions. The identities of such underwriters, dealers, market makers or agents, as the case may be, will be described in one or more supplements to this prospectus. The securities may be offered at prices and on terms to be described in one or more supplements to this prospectus.

In the event we offer common stock, the offering price per share will not be less than the net asset value per share of our common stock at the time we make the offering except (1) in connection with a rights offering to our existing stockholders, (2) with the consent of the holders of the majority of our voting securities and approval of our Board of Directors, or (3) under such circumstances as the Securities and Exchange Commission may permit. See “Risk Factors” for more information.

We are a specialty finance company focused on providing senior secured loans to high-growth, innovative venture capital-backed and institutional-backed companies in a variety of technology, life sciences and sustainable and renewable technology industries. We source our investments through our principal office located in Palo Alto, CA, as well as through additional offices in Boston, MA, New York, NY, Bethesda, MD, and San Diego, CA. Our goal is to be the leading structured debt financing provider for venture capital-backed companies in technology-related industries requiring sophisticated and customized financing solutions. We invest primarily in structured debt with warrants and, to a lesser extent, in senior debt and equity investments. Our investment objective is to maximize our portfolio total return by generating current income from our debt investments and capital appreciation from our warrant and equity investments.

We use the term “structured debt with warrants” to refer to any debt investment, such as a senior or subordinated secured loan, that is coupled with an equity component, including warrants, options or other rights to purchase or convert into common or preferred stock. Our structured debt with warrants investments typically are secured by some or all of the assets of the portfolio company.

We are an internally-managed, non-diversified closed-end investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended. Our common stock is traded on the New York Stock Exchange, or NYSE, under the symbol “HTGC.” On December 16, 2021, the last reported sale price of a share of our common stock on the NYSE, was $16.20. The net asset value per share of our common stock as of September 30, 2021 (the last date prior to the date of this prospectus on which we determined net asset value) was $11.54.

An investment in our securities may be speculative and involves risks including a heightened risk of total loss of investment. In addition, the companies in which we invest are subject to special risks. See “Risk Factors” on page 11 of this prospectus, in our most recent Annual Report on Form 10-K, in our Quarterly Reports on Form 10-Q, in any of our other filings with the Securities and Exchange Commission, and in any applicable prospectus supplement and in any free writing prospectus to read about risks that you should consider before investing in our securities, including the risk of leverage.

Please read this prospectus and any free writing prospectus before investing and keep it for future reference. It contains important information about us that a prospective investor ought to know before investing in our securities. We file annual, quarterly and current reports, proxy statements and other information about us with the Securities and Exchange Commission. The information is available free of charge by contacting us at 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301 or by telephone calling collect at (650) 289-3060 or on our website at www.htgc.com. The Securities and Exchange Commission also maintains a website at www.sec.gov that contains such information.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus may not be used to consummate sales of any securities unless accompanied by a prospectus supplement.

The date of this prospectus is December 17, 2021


Table of Contents

You should rely only on the information contained in this prospectus, any applicable prospectus supplement, any free writing prospectus, the documents incorporated by reference in this prospectus and any applicable prospectus supplement, or any other information which we have referred you. We have not authorized any dealer, salesperson or other person to provide you with different information or to make representations as to matters not stated in this prospectus or in any free writing prospectus. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus, any applicable prospectus supplement, and any free writing prospectus do not constitute an offer to sell, or a solicitation of an offer to buy, any securities by any person in any jurisdiction where it is unlawful for that person to make such an offer or solicitation or to any person in any jurisdiction to whom it is unlawful to make such an offer or solicitation. The information in this prospectus, any applicable prospectus supplement, and any free writing prospectus is accurate only as of its date, and under no circumstances should the delivery of this prospectus, any applicable prospectus supplement, or any free writing prospectus or the sale of any securities imply that the information in this prospectus, any applicable prospectus supplement, or any free writing prospectus is accurate as of any later date or that the affairs of Hercules Capital, Inc. have not changed since the date hereof. This prospectus will be updated to reflect material changes.

 

 

TABLE OF CONTENTS

 

     Page  

Prospectus Summary

     1  

Fees and Expenses

     7  

Financial Highlights

     9  

Risk Factors

     11  

Forward-Looking Statements

     13  

Use of Proceeds

     14  

Price Range of Common Stock and Distributions

     15  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     16  

Portfolio Companies

     17  

Senior Securities

     38  

Business

     42  

Management

     43  

Certain United States Federal Income Tax Considerations

     44  

Sales of Common Stock Below Net Asset Value

     45  

Control Persons and Principal Stockholders

     50  

Dividend Reinvestment Plan

     51  

Description of Capital Stock

     52  

Description of Our Preferred Stock

     59  

Description of Our Subscription Rights

     61  

Description of Warrants

     63  

Description of Our Debt Securities

     65  

Regulation

     78  

Plan of Distribution

     79  

Custodian, Transfer and Dividend Paying Agent and Registrar

     81  

Legal Matters

     81  

Experts

     81  

Incorporation by Reference

     81  

Available Information

     82  

 

 

Hercules Capital, Inc., our logo and other trademarks of Hercules Capital, Inc. mentioned in this prospectus are the property of Hercules Capital, Inc. All other trademarks or trade names referred to in this prospectus are the property of their respective owners.


Table of Contents

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we have filed with the Securities and Exchange Commission using the “shelf” registration process as a “well-known seasoned issuer,” as defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act. Under the shelf registration process, which constitutes a delayed offering in reliance on Rule 415 under the Securities Act, we may offer, from time to time, in one or more offerings or series, our common stock, preferred stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, subscription rights or debt securities on the terms to be determined at the time of the offering. We may sell our securities through underwriters or dealers, “at-the-market” to or through a market maker, into an existing trading market or otherwise directly to one or more purchasers, including existing stockholders in a rights offering, or through agents or through a combination of methods of sale. The securities may be offered at prices and on terms described in one or more supplements to this prospectus. This prospectus provides you with a general description of the securities that we may offer. Each time we use this prospectus to offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material information relating to these offerings. Such prospectus supplement and/or free writing prospectus (collectively referred to hereinafter as the “prospectus supplement”) may also add, update or change information contained in this prospectus or in the documents we incorporate by reference herein. This prospectus and the prospectus supplement, together with any documents incorporated by reference herein, will include all material information relating to the applicable offering. Please carefully read this prospectus and the prospectus supplement, together with any documents incorporated by reference in this prospectus and the applicable prospectus supplement, any exhibits and the additional information described under the headings “Available Information,” “Incorporation of Certain Information By Reference,” “Prospectus Summary” and “Risk Factors” before you make an investment decision.


Table of Contents

PROSPECTUS SUMMARY

This summary highlights some of the information contained elsewhere in this prospectus. It is not complete and may not contain all of the information that you may want to consider. You should read carefully the more detailed information set forth under “Risk Factors” and the other information included or incorporated by reference in this prospectus and the accompanying prospectus supplement. In this prospectus, unless the context otherwise requires, the “Company,” “Hercules,” “HTGC,” “we,” “us” and “our” refer to Hercules Capital, Inc. and its wholly owned subsidiaries and its affiliated securitization trusts.

THE COMPANY

Overview

We are a specialty finance company focused on providing senior secured loans to high-growth, innovative venture capital-backed and institutional-backed companies in a variety of technology, life sciences and sustainable and renewable technology industries. We source our investments through our principal office located in Palo Alto, CA, as well as through additional offices in Boston, MA, New York, NY, Bethesda, MD, and San Diego, CA.

Our goal is to be the leading structured debt financing provider for venture capital-backed companies in technology-related industries requiring sophisticated and customized financing solutions. Our strategy is to evaluate and invest in a broad range of technology-related industries including technology, drug discovery and development, biotechnology, life sciences, healthcare, and sustainable and renewable technology and to offer a full suite of growth capital products. We focus our investments in companies active in the technology industry sub-sectors characterized by products or services that require advanced technologies, including, but not limited to, computer software and hardware, networking systems, semiconductors, semiconductor capital equipment, information technology infrastructure or services, internet consumer and business services, telecommunications, telecommunications equipment, renewable or alternative energy, media and life sciences. Within the life sciences sub-sector, we generally focus on medical devices, bio-pharmaceutical, drug discovery, drug delivery, drug development, health care services and information systems companies. Within the sustainable and renewable technology sub-sector, we focus on sustainable and renewable energy technologies and energy efficiency and monitoring technologies. We refer to all of these companies as “technology-related” companies and intend, under normal circumstances, to invest at least 80% of the value of our total assets in such businesses.

We invest primarily in structured debt with warrants and, to a lesser extent, in senior debt and equity investments. We invest primarily in private companies but also have investments in public companies. We use the term “structured debt with warrants” to refer to any debt investment, such as a senior or subordinated secured loan, that is coupled with an equity component, including warrants, options or other rights to purchase or convert into common or preferred stock. Our structured debt with warrants investments typically are secured by some or all of the assets of the portfolio company. We also provide “unitranche” loans, which are loans that combine both senior and mezzanine debt, generally in a first lien position.

Our investment objective is to maximize our portfolio total return by generating current income from our debt investments and capital appreciation from our warrant and equity investments. Our primary business objectives are to increase our net income, net operating income and net asset value, or NAV, by investing in structured debt with warrants and equity of venture capital-backed companies in technology-related industries with attractive current yields and the potential for equity appreciation and realized gains. Our equity ownership in our portfolio companies may exceed 25% of the voting securities of such companies, which represents a controlling interest under the Investment Company Act of 1940, as amended, or the 1940 Act. In some cases, we receive the right to make additional equity investments in our portfolio companies in connection with future equity financing rounds. Capital that we provide directly to venture capital-backed companies in technology-related industries is generally used for growth and general working capital purposes as well as in select cases for acquisitions or recapitalizations.

 

1


Table of Contents

In May 2020, Hercules Adviser LLC, or Adviser Subsidiary, was formed as our wholly owned Delaware limited liability subsidiary to provide investment advisory and related services to investment vehicles, or Adviser Funds, owned by one or more unrelated third-party investors, or External Parties. The Adviser Subsidiary will receive fee income for the services provided to Adviser Funds. We were granted no-action relief by the staff of the Securities and Exchange Commission, or SEC, to allow the Adviser Subsidiary to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended.

See “Business” in our most recent Annual Report on Form 10-K for additional information about us.

Corporate Information

We are an internally-managed, non-diversified, closed-end investment company that has elected to be regulated as a business development company, or a BDC, under the 1940 Act. Effective January 1, 2006, we elected to be treated for tax purposes as a regulated investment company, or RIC, under the Internal Revenue Code of 1986, as amended, or the Code.

As a RIC, we generally will not be subject to U.S. federal income tax on the portion of our investment company taxable income and net capital gain (i.e., net realized long-term capital gains in excess of net realized short-term capital losses) we distribute (or are deemed to distribute) as dividends for U.S. federal income tax purposes to stockholders with respect to that taxable year. We will be subject to a 4% non-deductible U.S. federal excise tax on certain undistributed income and gains unless we make distributions treated as dividends for U.S. federal income tax purposes in a timely manner to our stockholders in respect of each calendar year subject to certain requirements as defined for RICs. See “Certain United States Federal Income Tax Considerations” in our most recent Annual Report on Form 10-K incorporated by reference herein for additional information about our tax requirements. Additionally, we have established wholly-owned subsidiaries that are not consolidated for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities as a result of their ownership of certain portfolio investments.

We are a Maryland corporation formed in December 2003 that began investment operations in September 2004. Our principal executive offices are located at 400 Hamilton Avenue, Suite 310, Palo Alto, California 94301, and our telephone number is (650) 289-3060.

Risk Factors

Investing in Hercules involves risks. The following is a summary of the principal risks that you should carefully consider before investing in our securities. In addition, see “Risk Factors” beginning on page 11 and in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q incorporated by reference herein for a more detailed discussion of the principal risks as well as certain other risks you should carefully consider before deciding to invest in our securities.

 

   

As an internally managed BDC, we are subject to certain restrictions that may adversely affect our business and are dependent upon the availability of key management personnel for our future success. If we are not able to hire and retain qualified personnel, or if we lose any member of our senior management team, our ability to implement our business strategy could be significantly harmed.

 

   

Our business model depends (to a significant extent) upon strong referral relationships with venture capital and private equity fund sponsors, and our inability to develop or maintain these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.

 

   

We operate in a highly competitive market for investment opportunities.

 

2


Table of Contents
   

Regulations governing our operations as a BDC may affect our ability to, and the manner in which, we raise additional capital. If additional funds are unavailable or not available on favorable terms, our ability to grow will be impaired.

 

   

Our operating flexibility and financial condition could be negatively affected if we fail to qualify as a BDC or RIC.

 

   

Our executive officers and employees, through Adviser Subsidiary, are expected to manage other investment funds or accounts, including External Parties, that operate in the same or a related line of business as we do, which may result in significant conflicts of interest.

 

   

Our investments in Adviser Funds managed by our Adviser Subsidiary may create conflicts of interests.

 

   

Our revenues and results of operations relating to our Adviser Subsidiary’s business depend on the management fees and performance fees received from Adviser Funds.

 

   

Because we have substantial indebtedness, there could be increased risk in investing in our company.

 

   

There is a risk that you may not receive distributions or that our distributions may not grow over time.

 

   

We are exposed to risks associated with changes in interest rates.

 

   

The discontinuation of LIBOR may affect the value of the financial obligations to be held or issued by us that are linked to LIBOR.

 

   

Our financial results could be negatively affected if a significant portfolio investment fails to perform as expected.

 

   

Our investments may be in portfolio companies that have limited operating histories and resources.

 

   

Our investment strategy focuses on technology-related companies, which are subject to many risks, including volatility, intense competition, shortened product life cycles, changes in regulatory and governmental programs and periodic downturns, and you could lose all or part of your investment.

 

   

Price declines and illiquidity in the corporate debt markets could adversely affect the fair value of our portfolio investments, reducing our NAV through increased net unrealized depreciation.

 

   

Economic recessions or slowdowns could impair the ability of our portfolio companies to repay loans, which, in turn, could increase our non-performing assets, decrease the value of our portfolio, reduce our volume of new loans and have a material adverse effect on our results of operations.

 

   

Our portfolio companies may be unable to repay or refinance outstanding principal on their loans at or prior to maturity, and rising interest rates may make it more difficult for portfolio companies to make periodic payments on their loans.

 

   

Any unrealized depreciation we experience on our investment portfolio may be an indication of future realized losses, which could reduce our income available for distribution and could impair our ability to service our borrowings.

 

   

A lack of IPO or merger and acquisition opportunities may cause companies to stay in our portfolio longer, leading to lower returns, unrealized depreciation, or realized losses.

 

   

The majority of our portfolio companies will need multiple rounds of additional financing to repay their debts to us and continue operations. Our portfolio companies may not be able to raise additional financing, which could harm our investment returns.

 

   

If the assets securing the loans that we make decrease in value, then we may lack sufficient collateral to cover losses. We may suffer a loss if a portfolio company defaults on a loan and the underlying collateral is not sufficient.

 

3


Table of Contents
   

An investment strategy focused on privately-held companies presents certain challenges, including the lack of available information about these companies, a dependence on the talents and efforts of only a few key portfolio company personnel, and a greater vulnerability to economic downturns.

 

   

If our portfolio companies are unable to protect their intellectual property rights or are required to devote significant resources to protecting their intellectual property rights, then our investments could be harmed.

 

   

We generally will not control our portfolio companies.

 

   

The lack of liquidity in our investments may adversely affect our business and, if we need to sell any of our investments, we may not be able to do so at a favorable price.

 

   

Our warrant and equity-related investments are highly speculative, and we may not realize gains from these investments.

 

   

Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.

 

   

Our common stock may trade below its NAV per share, which limits our ability to raise additional equity capital.

 

   

Our common stock price has been and continues to be volatile and may decrease substantially.

 

   

The effects of the outbreak of COVID-19 have negatively affected the global economy and the United States economy, and may disrupt our operations, which could have an adverse effect on our business, financial condition and results of operations.

 

   

We may be the target of litigation.

 

   

Changes in laws or regulations governing our business could negatively affect the profitability of our operations.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our business, financial condition and/or operating results.

 

4


Table of Contents

OFFERINGS

We may offer, from time to time, in one or more offerings or series, our common stock, preferred stock, debt securities, subscription rights to purchase shares of our common stock, warrants representing rights to purchase shares of our common stock, preferred stock or debt securities, or units comprised of any combination of the foregoing, on terms to be determined at the time of the offering. We will offer our securities at prices and on terms to be set forth in one or more supplements to this prospectus. The offering price per share of our common stock, less any underwriting commissions or discounts, generally will not be less than the net asset value per share of our common stock at the time of an offering. However, we may issue shares of our common stock pursuant to this prospectus at a price per share that is less than our net asset value per share (a) in connection with a rights offering to our existing stockholders, (b) with the prior approval of the majority of our common stockholders or (c) under such other circumstances as the SEC may permit. Any such issuance of shares of our common stock below net asset value may be dilutive to the net asset value of our common stock. See “Risk Factors—Risks Relating to Our Securities” in our most recent Annual Report on Form 10-K as well as “Risk Factors” included in this prospectus.

We may offer our securities directly to one or more purchasers, including existing stockholders in a rights offering, through agents that we designate from time to time or to or through underwriters or dealers. The prospectus supplement relating to each offering will identify any agents or underwriters involved in the sale of our securities, and will set forth any applicable purchase price, fee, commission or discount arrangement between us and our agents or underwriters or among our underwriters or the basis upon which such amount may be calculated. See “Plan of Distribution.” We may not sell any of our securities through agents, underwriters or dealers without delivery of a prospectus supplement describing the method and terms of the offering of our securities. Set forth below is additional information regarding offerings of our securities:

 

Use of proceeds

Unless otherwise specified in a prospectus supplement or any free writing prospectus relating to an offering, we intend to use the net proceeds from selling our securities to fund investments in debt and equity securities in accordance with our investment objectives, to make acquisitions, to retire certain debt obligations and for other general corporate purposes. Each supplement to this prospectus relating to an offering will more fully identify the use of the proceeds from such offering. See “Use of Proceeds.”

 

Distributions

Subject to applicable legal restrictions and the sole discretion of our board of directors, we intend to declare and pay regular cash distributions on a quarterly basis. From time to time, we may also pay special interim distributions in the form of cash or shares of our common stock at the discretion of our board of directors. The timing and amount of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of our board of directors. See “Price Range of Common Stock and Distributions.”

 

Taxation

We have elected to be subject to tax as a RIC under Subchapter M of the Code. As a RIC, we generally will not be subject to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we timely distribute each tax year as distributions for U.S. federal income tax purposes to our stockholders. To qualify for and maintain our qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described herein). See “Material U.S. Federal Income Tax Considerations.”

 

5


Table of Contents

Distribution reinvestment plan

We have adopted a dividend reinvestment plan, through which all distributions are paid to our stockholders in the form of additional shares of our common stock, unless a stockholder elects to receive cash as provided below. In this way, a stockholder can maintain an undiluted investment in our common stock and still allow us to pay out the required distributable income. See “Dividend Reinvestment Plan” below.

 

NYSE Trading Symbol

“HTGC”

 

Leverage 

We borrow funds to make additional investments. We use this practice, which is known as “leverage,” to attempt to increase returns to our stockholders, but it involves significant risks. See “Risk Factors” and “Senior Securities”. We are currently allowed to borrow amounts such that our asset coverage, as calculated pursuant to the Investment Company Act, equals at least 150% after such borrowing. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Financial Condition, Liquidity and Capital Resources” in our most recent Annual Report on Form 10-K and “ Discussion and Analysis of Financial Condition and Results of Operations-Financial Condition, Liquidity and Capital Resources” in our most recent Quarterly Report on Form 10-Q.

 

Available information 

We file annual, quarterly and current periodic reports, proxy statements and other information with the SEC under the Exchange Act. The SEC maintains an Internet website that contains reports, proxy and information statements and other information filed electronically by us with the SEC which are available on the SEC’s Internet website at http://www.sec.gov. We maintain a website on the Internet at www.htgc.com. Except for the documents incorporated by reference into this prospectus, the information on our website is not part of this prospectus. We make available, free of charge, on our website our proxy statement, annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. See “Available Information.”

 

Incorporation by reference

This prospectus is part of a registration statement that we have filed with the SEC. The information incorporated by reference is considered to comprise a part of this prospectus from the date we file that document. Any reports filed by us with the SEC before the date that any offering of any securities by means of this prospectus and any accompanying prospectus supplement is terminated will automatically update and, where applicable, supersede any information contained in this prospectus or incorporated by reference in this prospectus. See “Incorporation by Reference.”

 

6


Table of Contents

FEES AND EXPENSES

The following table is intended to assist you in understanding the various costs and expenses that an investor in our common stock will bear directly or indirectly. However, we caution you that some of the percentages indicated in the table below are estimates and may vary. The footnotes to the fee table state which items are estimates. Except where the context suggests otherwise, whenever this prospectus contains a reference to fees or expenses paid by “you” or “us” or that “we” will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in Hercules Capital, Inc.

 

Stockholder Transaction Expenses (as a percentage of the public offering price):

  

Sales load (as a percentage of offering price)(1)

     —  

Offering expenses

     —   %(2) 

Dividend reinvestment plan fees

     —   %(3) 
  

 

 

 

Total stockholder transaction expenses (as a percentage of the public offering price)

     —   %(4) 
  

 

 

 

Annual Expenses (as a percentage of net assets attributable to common stock):(5)

  

Operating expenses

     5.01 %(6)(7) 

Interest and fees paid in connection with borrowed funds

     4.92 %(8) 

Acquired fund fees and expenses

     0.01 %(10) 
  

 

 

 

Total annual expenses

     9.94 %(9) 
  

 

 

 

 

(1)

In the event that our securities are sold to or through underwriters, a corresponding prospectus supplement to this prospectus will disclose the applicable sales load.

(2)

In the event that we conduct an offering of our securities, a corresponding prospectus supplement to this prospectus will disclose the estimated offering expenses.

(3)

The expenses associated with the administration of our dividend reinvestment plan are included in “Operating expenses.” We pay all brokerage commissions incurred with respect to open market purchases, if any, made by the administrator under the plan. For more details about the plan, see “Dividend Reinvestment Plan.”

(4)

Total stockholder transaction expenses may include sales load and will be disclosed in a future prospectus supplement, if any.

(5)

“Net assets attributable to common stock” equals the weighted average net assets for the nine months ended September 30, 2021, which is approximately $1,327.7 million.

(6)

“Operating expenses” represents our estimated operating expenses by annualizing our actual incurred for the nine months ended September 30, 2021, including all fees and expenses of our consolidated subsidiaries and excluding interests and fees on our debt.

(7)

We do not have an investment adviser and are internally managed by our executive officers under the supervision of our Board of Directors. As a result, we do not pay investment advisory fees, but instead we pay the operating costs associated with employing investment management professionals.

(8)

“Interest and fees paid in connection with borrowed funds” represents our estimated interest, fees and credit facility expenses by annualizing our actual interest, fees and credit facility expenses incurred for the nine months ended September 30, 2021.

(9)

“Total annual expenses” is the sum of “operating expenses,” “interest and fees paid in connection with borrowed funds,” and “Acquired fund fees and expenses.” “Total annual expenses” is presented as a percentage of weighted average net assets attributable to common stockholders because the holders of shares of our common stock (and not the holders of our debt securities or preferred stock, if any) bear all of our fees and expenses, including the fees and expenses of our wholly-owned consolidated subsidiaries, all of which are included in this fee table presentation.

(10)

Acquired fund fees and expenses represent the estimated indirect expense incurred due to investments in other investment companies and private funds.

 

7


Table of Contents

Example

The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. These amounts are based upon our payment of annual operating expenses at the levels set forth in the table above and assume no additional leverage.

 

     1 Year      3 Years      5 Years      10 Years  

You would pay the following expenses on a $1,000 common stock investment, assuming a 5% annual return

   $ 97      $ 277      $ 440      $ 784  

The example and the expenses in the tables above should not be considered a representation of our future expenses, and actual expenses may be greater or lesser than those shown. Moreover, while the example assumes, as required by the applicable rules of the SEC, a 5% annual return, our performance will vary and may result in a return greater or lesser than 5%. In addition, while the example assumes reinvestment of all distributions at NAV, participants in our dividend reinvestment plan may receive shares valued at the market price in effect at that time. This price may be at, above or below NAV. See “Dividend Reinvestment Plan” for additional information regarding our dividend reinvestment plan.

 

8


Table of Contents

FINANCIAL HIGHLIGHTS

The financial data set forth in the following table as of and for the years ended December 31, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012 and 2011 are derived from our consolidated financial statements. The financial data as of and for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, are derived from our consolidated financial statements, which have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose report thereon is incorporated by reference in this prospectus. The financial data as of and for the years ended December 31, 2015, 2014, 2013, 2012, and 2011 are derived from audited consolidated financial statements not incorporated by reference in this prospectus, which may be obtained from www.sec.gov or upon request. The financial data set forth in the following table as of and for the nine months ended September 30, 2021 is derived from our unaudited consolidated financial statements, but in the opinion of management, reflects all adjustments (consisting only of normal recurring adjustments) that are necessary to present fairly the results of such interim period. Interim results as of and for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. You should read these financial highlights in conjunction with our consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” incorporated by reference into this prospectus, any documents incorporated by reference in this prospectus, our most recent Annual Report on Form 10-K, or our Quarterly Reports on Form 10-Q incorporated by reference herein.

 

9


Table of Contents
    As of and for
the nine
months ended

September 30,
2021
    Year Ended December 31,  
    2020     2019     2018     2017     2016     2015     2014     2013     2012     2011  

Per share data(1):

                     

Net asset value at beginning of period

  $ 11.26     $ 10.55     $ 9.90     $ 9.96     $ 9.90     $ 9.94     $ 10.18     $ 10.51     $ 9.75     $ 9.83     $ 9.50  

Net investment income

    0.95       1.39       1.41       1.20       1.17       1.36       1.06       1.16       1.24       0.98       0.92  

Net realized gain (loss)

    0.12       (0.50     0.16       (0.12     (0.32     0.06       0.07       0.32       0.25       0.06       0.06  

Net unrealized appreciation (depreciation) on investments

    0.40       1.13       0.14       (0.23     0.11       (0.49     (0.51     (0.33     0.20       (0.09     0.11  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    1.47       2.02       1.71       0.85       0.96       0.93       0.62       1.15       1.69       0.95       1.09  

Net increase (decrease) in net assets from capital share transactions(1)

    (0.11     0.01       0.20       0.23       0.26       0.18       0.26       (0.37     0.10       (0.14     0.07  

Distributions of net investment income(6)

    (1.06     (1.03     (1.15     (1.26     (1.07     (1.14     (1.26     (1.27     (1.13     (0.98     (0.90

Distributions of capital gains(6)

    (0.09     (0.36     (0.18     —         (0.18     (0.11     —         —         —         —         —    

Stock-based compensation expense included in investment income(2)

    0.07       0.07       0.07       0.12       0.09       0.10       0.14       0.16       0.10       0.09       0.07  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value at end of period

  $ 11.54     $ 11.26     $ 10.55     $ 9.90     $ 9.96     $ 9.90     $ 9.94     $ 10.18     $ 10.51     $ 9.75     $ 9.83  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ratios and supplemental data:

                     

Per share market value at end of period

  $ 16.61     $ 14.42     $ 14.02     $ 11.05     $ 13.12     $ 14.11     $ 12.19     $ 14.88     $ 16.40     $ 11.13     $ 9.44  

Total return(3)

    23.05     14.31     39.36     (7.56 %)      1.47     26.87     (9.70 %)      (1.75 %)      58.49     28.28     (0.83 %) 

Shares outstanding at end of period

    115,925       114,726       107,364       96,501       84,424       79,555       72,118       64,715       61,837       52,925       43,853  

Weighted average number of common shares outstanding

    114,590       111,985       101,132       90,929       82,519       73,753       69,479       61,862       58,838       49,068       42,988  

Net assets at end of period

  $ 1,337,532     $ 1,291,704     $ 1,133,049     $ 955,444     $ 840,967     $ 787,944     $ 717,134     $ 658,864     $ 650,007     $ 515,968     $ 431,041  

Ratio of total expense to average net assets(4)

    9.93     11.30     11.95     10.73     11.37     11.25     11.55     10.97     11.06     10.28     9.61

Ratio of net investment income before investment gains and losses to average net assets(4)

    11.01     13.64     13.74     11.78     11.61     13.65     10.15     10.94     12.12     10.01     9.45

Portfolio turnover rate(5)

    33.14     32.38     31.30     38.76     49.03     36.22     46.34     56.15     56.05     N/A       N/A  

Weighted average debt outstanding

  $ 1,246,769     $ 1,309,903     $ 1,177,379     $ 826,931     $ 784,455     $ 635,365     $ 615,198     $ 535,127     $ 580,053     $ 360,857     $ 238,873  

Weighted average debt per common share

  $ 10.88     $ 11.70     $ 11.64     $ 9.09     $ 9.51     $ 8.61     $ 8.85     $ 8.65     $ 9.86     $ 7.35     $ 5.56  

 

(1)

All per share activity is calculated based on the weighted average shares outstanding for the relevant period, except net increase (decrease) in net assets from capital share transactions, which is based on the common shares outstanding as of the relevant balance sheet date.

(2)

Stock option expense is a non-cash expense that has no effect on net asset value. Pursuant to ASC Topic 718, net investment income includes the expense associated with the granting of stock options which is offset by a corresponding increase in paid-in capital.

(3)

The total return for the nine months ended September 30, 2021 and the years ended December 31, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012 and 2011 equals to the change in the ending market value over the beginning of the period price per share plus distributions paid per share during the period, divided by the beginning price assuming the distribution is reinvested on the date of the distribution. As such, the total return is not annualized. The total return does not reflect any sales load that must be paid by investors.

(4)

The ratios are calculated based on weighted average net assets for the relevant period and are annualized.

(5)

The portfolio turnover rate for the nine months ended September 30, 2021 and the years ended December 31, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012 and 2011 equals to the lesser of investment portfolio purchases or sales during the period, divided by the average investment portfolio value during the period. As such, portfolio turnover rate is not annualized.

(6)

Includes distributions on unvested restricted stock awards.

 

10


Table of Contents

RISK FACTORS

You should carefully consider the risk factors described below, and in the section titled “Risk Factors” in the applicable prospectus supplement and any related free writing prospectus, and the risks discussed in the section titled “Item 1A. Risk Factors” in our Annual Report on Form 10-K, the section titled “Item 1A. Risk Factors,” which are incorporated by reference herein, in our Quarterly Reports on Form 10-Q, which are incorporated by reference herein, and any subsequent filings we have made with the SEC that are incorporated by reference into this prospectus or any prospectus supplement, together with all of the other information included in this prospectus, the accompanying prospectus supplement and any documents incorporated by reference herein, including our consolidated financial statements and the related notes thereto, before you decide whether to make an investment in our securities. The risks set out below and described in such documents are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, the net asset value of our common stock and the trading price, if any, of our securities could decline, and you may lose all or part of your investment.

Investors in offerings of our common stock will likely incur immediate dilution upon the closing of such offering.

We generally expect the public offering price of any offering of shares of our common stock to be higher than the book value per share of our outstanding common stock (unless we offer shares pursuant to a rights offering or after obtaining prior approval for such issuance from our stockholders and our independent directors). Accordingly, investors purchasing shares of our common stock in offerings pursuant to this prospectus may pay a price per share that exceeds the tangible book value per share after such offering.

Your interest in us may be diluted if you do not fully exercise your subscription rights in any rights offering. In addition, if the subscription price is less than our net asset value per share, then you will experience an immediate dilution of the aggregate net asset value of your shares.

In the event we issue subscription rights, stockholders who do not fully exercise their subscription rights should expect that they will, at the completion of a rights offering pursuant to this prospectus, own a smaller proportional interest in us than would otherwise be the case if they fully exercised their rights. We cannot state precisely the amount of any such dilution in share ownership because we do not know at this time what proportion of the shares will be purchased as a result of such rights offering.

In addition, if the subscription price is less than the net asset value per share of our common stock, then our stockholders would experience an immediate dilution of the aggregate net asset value of their shares as a result of the offering. The amount of any decrease in net asset value is not predictable because it is not known at this time what the subscription price and net asset value per share will be on the expiration date of a rights offering or what proportion of the shares will be purchased as a result of such rights offering. Such dilution could be substantial. See “Risk Factors—Risks Relating to Our Securities—We have received the approval from our stockholders to issue shares of our common stock at prices below the then current NAV per share of our common stock, subject to certain limitations and with the approval from our independent directors. If we receive such approval from the independent directors, we may periodically issue shares of our common stock at a price below the then current NAV per share of common stock. Any such issuance could materially dilute your interest in our common stock and reduce our NAV per share.” in our most recent Annual Report on Form 10-K and “Sales of Common Stock Below Net Asset Value” below.

We may initially invest a portion of the net proceeds of offerings pursuant to this prospectus primarily in high-quality short-term investments, which will generate lower rates of return than those expected from the interest generated on first and second lien senior secured loans and mezzanine debt.

We may initially invest a portion of the net proceeds of offerings pursuant to this prospectus primarily in cash, cash equivalents, U.S. government securities and other high-quality short-term investments. These

 

11


Table of Contents

securities generally earn yields substantially lower than the income that we anticipate receiving once we are fully invested in accordance with our investment objective. As a result, we may not, for a time, be able to achieve our investment objective and/or we may need to, for a time, decrease the amount of any dividend that we may pay to our stockholders to a level that is substantially lower than the level that we expect to

pay when the net proceeds of offerings are fully invested in accordance with our investment objective. If we do not realize yields in excess of our expenses, we may incur operating losses and the market price of our shares may decline.

Our stockholders may receive shares of our common stock as dividends, which could result in adverse cash flow consequences to them.

In order to satisfy the Annual Distribution Requirement applicable to RICs, we have the ability to declare a large portion of a dividend in shares of our common stock instead of in cash. As long as a portion of such dividend is paid in cash (which portion could be as low as 20%) and certain requirements are met, the entire distribution would be treated as a dividend for U.S. federal income tax purposes. As a result, a stockholder would be taxed on 100% of the fair market value of the shares received as part of the dividend on the date a stockholder received it in the same manner as a cash dividend, even though most of the dividend was paid in shares of our common stock.

We cannot predict how tax reform legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business.

Legislative or other actions relating to taxes could have a negative effect on us. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service (“IRS”) and the U.S. Treasury Department. In December 2017, the U.S. House of Representatives and U.S. Senate passed tax reform legislation the Tax Cuts and Jobs Act, which the President signed into law. Such legislation has made many changes to the Code, including significant changes to the taxation of business entities, the deductibility of interest expense, and the tax treatment of capital investment. We cannot predict with certainty how any changes in the tax laws might affect us, our stockholders, or our portfolio investments. New legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting such legislation could significantly and negatively affect our ability to qualify for tax treatment as a RIC or the U.S. federal income tax consequences to us and our stockholders of such qualification, or could have other adverse consequences. Stockholders are urged to consult with their tax advisor regarding tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our securities.

 

12


Table of Contents

FORWARD-LOOKING STATEMENTS

The matters discussed in this prospectus, including the documents that we incorporate by reference herein, and any applicable prospectus supplement or free writing prospectus, including the documents we incorporate by reference therein, as well as in future oral and written statements by management of Hercules Capital, Inc., that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this prospectus should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this prospectus and any applicable prospectus supplement or free writing prospectus include statements as to:

 

   

our current and future management structure;

 

   

our future operating results;

 

   

our business prospects and the prospects of our prospective portfolio companies;

 

   

the impact of investments that we expect to make;

 

   

our informal relationships with third parties including in the venture capital industry;

 

   

the expected market for venture capital investments and our addressable market;

 

   

the dependence of our future success on the general economy and its impact on the industries in which we invest;

 

   

our ability to access debt markets and equity markets;

 

   

the current and future effects of the COVID-19 pandemic on us and our portfolio companies;

 

   

the ability of our portfolio companies to achieve their objectives;

 

   

our expected financings and investments;

 

   

our regulatory structure and tax status;

 

   

our ability to operate as a BDC, a SBIC and a RIC;

 

   

the adequacy of our cash resources and working capital;

 

   

the timing of cash flows, if any, from the operations of our portfolio companies;

 

   

the timing, form and amount of any distributions;

 

   

the impact of fluctuations in interest rates on our business;

 

   

the valuation of any investments in portfolio companies, particularly those having no liquid trading market; and

 

   

our ability to recover unrealized depreciation on investments.

You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this prospectus, any free writing prospectus, and the documents incorporated by reference into this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this prospectus.

 

13


Table of Contents

USE OF PROCEEDS

We intend to use the net proceeds from selling our securities to fund investments in debt and equity securities in accordance with our investment objectives, to make acquisitions, to retire certain debt obligations and for other general corporate purposes. The supplement to this prospectus or any free writing prospectus relating to an offering will more fully identify the use of proceeds from such offering.

We anticipate that substantially all of the net proceeds from any offering of our securities will be used as described above within twelve months, but in no event longer than two years. Pending such uses and investments, we will invest the net proceeds primarily in cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment. Our ability to achieve our investment objective may be limited to the extent that the net proceeds of any offering, pending full investment, are held in lower yielding short-term instruments.

 

14


Table of Contents

PRICE RANGE OF COMMON STOCK AND DISTRIBUTIONS

Our common stock is traded on the NYSE under the symbol “HTGC.”

The following table sets forth the range of high and low closing sales prices of our common stock, the sales price as a percentage of NAV and the distributions declared by us for each fiscal quarter. The stock quotations are interdealer quotations and do not include markups, markdowns or commissions.

 

          Price Range     Premium/
Discount of
High Sales

Price to NAV
    Premium/
Discount of
Low Sales

Price to NAV
    Cash
Distribution

per Share(2)
 
    NAV(1)         High             Low      

2019

           

First quarter

  $ 10.26     $ 14.04     $ 11.23       36.8     9.5   $ 0.330  

Second quarter

  $ 10.59     $ 13.75     $ 12.57       29.8     18.7   $ 0.340  

Third quarter

  $ 10.38     $ 13.44     $ 12.66       29.5     22.0   $ 0.350  

Fourth quarter

  $ 10.55     $ 14.44     $ 12.98       36.9     23.0   $ 0.400  

2020

           

First quarter

  $ 9.92     $ 15.99     $ 6.81       61.2     (31.4 )%    $ 0.320  

Second quarter

  $ 10.19     $ 11.83     $ 6.64       16.1     (34.8 )%    $ 0.320  

Third quarter

  $ 10.26     $ 11.97     $ 10.02       16.7     (2.3 )%    $ 0.340  

Fourth quarter

  $ 11.26     $ 14.42     $ 11.13       28.1     (1.2 )%    $ 0.370  

2021

           

First quarter

  $ 11.36     $ 16.60     $ 14.21       45.4     25.1   $ 0.370  

Second quarter

  $ 11.71     $ 17.66     $ 15.98       50.8     36.5   $ 0.390  

Third quarter

  $ 11.54     $ 17.56     $ 16.50       52.2     43.0   $ 0.390  

Fourth quarter (through December 16, 2021)

    *     $ 18.07     $ 16.20       *       *     $ 0.400  

 

(1)

NAV per share is generally determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAVs shown are based on outstanding shares at the end of each period.

(2)

Represents the dividends or distributions declared in the relevant quarter.

*

NAV has not yet been calculated for this period.

**

Cash distribution per share has not yet been determined for this period.

The last reported price for our common stock on December 16, 2021 was $16.20 per share.

Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from NAV or at premiums that are unsustainable over the long term are separate and distinct from the risk that our NAV will decrease. At times, our shares of common stock have traded at a premium to NAV and at times our shares of common stock have traded at a discount to the net assets attributable to those shares. It is not possible to predict whether the shares offered hereby will trade at, above, or below NAV.

 

15


Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained under the captions “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our most recent Annual Report on Form 10-K and of our Quarterly Reports on Form 10-Q are incorporated by reference herein.

 

16


Table of Contents

PORTFOLIO COMPANIES

The following tables set forth certain information as of September 30, 2021 regarding each portfolio company in which we had a debt or equity investment. Other than these investments, our only formal relationship with our portfolio companies is the offer to make available significant managerial assistance. In addition, we may have board representation or receive rights to observe the Board of Directors’ meetings of our portfolio companies.

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

 

Type of
Investment(1)

  Maturity
Date
   

Interest Rate and Floor(2)

  Principal
Amount
    Cost(3)     Value(4)  

Debt Investments

           

Communications & Networking

1-5 Years Maturity

     

Cytracom Holdings LLC(11)(17)(18)

450 Century Parkway

Allen, TX 75013

  Senior Secured    
February
2025
 
 
  Interest rate 3-month LIBOR + 9.25% or Floor rate of 10.31%   $ 9,000     $ 8,789     $ 8,797  

Rocket Lab Global Services, LLC(14)(16)

3881 McGowen Street

Long Beach, CA 90808

  Senior Secured     June 2024     Interest rate PRIME + 4.90% or Floor rate of 8.15%, PIK Interest 1.25%, 3.25% Exit Fee   $ 88,263       87,722       87,722  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    96,511       96,519  
         

 

 

   

 

 

 

Subtotal: Communications & Networking (7.22%)*

 

    96,511       96,519  
         

 

 

   

 

 

 

Consumer & Business Products

     

1-5 Years Maturity

     

Grove Collaborative, Inc.(17)(19)

1301 Sansome Street

San Francisco, CA 94111

  Senior Secured    
April
2025
 
 
  Interest rate PRIME + 5.50% or Floor rate of 8.75%, 6.75% Exit Fee   $ 19,600       19,177       19,177  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    19,177       19,177  
         

 

 

   

 

 

 

Subtotal: Consumer & Business Products (1.43%)*

 

    19,177       19,177  
         

 

 

   

 

 

 

Diversified Financial Services

           

Under 1 Year Maturity

           

Newfront(9)

55 2nd Street, Floor 18

San Francisco, CA 94105

  Convertible Debt    
August
2022
 
 
  PIK Interest 0.19%   $ 403       402       403  
         

 

 

   

 

 

 

Subtotal: Under 1 Year Maturity

 

    402       403  
         

 

 

   

 

 

 

1-5 Years Maturity

           

Gibraltar Business Capital, LLC(7)

400 Skokie Blvd #375

Northbrook, IL 60062

  Unsecured    
September
2026
 
 
  Interest rate FIXED 14.50%   $ 15,000       14,651       13,957  
    Unsecured   September
2026
    Interest rate FIXED 11.50%   $10,000     9,815     9,446  
       

 

 

   

 

 

   

 

 

 

Total Gibraltar Business Capital, LLC

  $ 25,000       24,466       23,403  

Hercules Adviser LLC(7)

400 Hamilton Avenue,

Suite 310

Palo Alto, CA 94301

  Unsecured     May 2023     Interest rate FIXED 5.00%   $ 6,100       6,100       6,100  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    30,566       29,503  
         

 

 

   

 

 

 

Subtotal: Diversified Financial Services (2.24%)*

 

    30,968       29,906  
         

 

 

   

 

 

 

 

17


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

 

Type of
Investment(1)

  Maturity
Date
   

Interest Rate and Floor(2)

  Principal
Amount
    Cost(3)     Value(4)  

Drug Delivery

           

1-5 Years Maturity

           

Antares Pharma Inc. (10)(11)

100 Princeton South Suite 300

Ewing, NJ 08628

  Senior Secured     July 2024     Interest rate PRIME + 4.50% or Floor rate of 8.50%, 4.03% Exit Fee   $ 20,000     $ 20,671     $ 20,765  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    20,671       20,765  
         

 

 

   

 

 

 

Subtotal: Drug Delivery (1.55%)*

 

    20,671       20,765  
         

 

 

   

 

 

 

Drug Discovery & Development

           

Under 1 Year Maturity

           

Mesoblast (5)(10)(11)(13)

55 Collins Street

Melbourne, Victoria, Australia 3000

  Senior Secured    
March
2022
 
 
  Interest rate PRIME + 4.95% or Floor rate of 9.70%, 9.40% Exit Fee   $ 50,000       54,310       54,310  

Petros Pharmaceuticals, Inc. (p.k.a.

Metuchen Pharmaceuticals LLC)

11 Commerce Drive

Cranford, NJ 07016

  Senior Secured    
December
2021
 
 
  Interest rate PRIME + 7.25% or Floor rate of 11.50%, 3.05% Exit Fee   $ 1,741       1,740       1,740  

TG Therapeutics, Inc.(10)(13)

787 Seventh Avenue

New York, NY 10019

  Senior Secured    
March
2022
 
 
  Interest rate PRIME + 4.75% or Floor rate of 10.25%, 3.25% Exit Fee   $ 15,410       16,298       16,298  
         

 

 

   

 

 

 

Subtotal: Under 1 Year Maturity

 

    72,348       72,348  
         

 

 

   

 

 

 

1-5 Years Maturity

           

Albireo Pharma, Inc.(10)(11)(17)

50 Milk Street

Boston, MA 02109

  Senior Secured     July 2024     Interest rate PRIME + 5.90% or Floor rate of 9.15%, 6.95% Exit Fee   $ 10,000       10,177       10,268  

Aldeyra Therapeutics, Inc.(11)

131 Hartwell Ave

Lexington, MA 02421

  Senior Secured    
October
2023
 
 
  Interest rate PRIME + 3.10% or Floor rate of 8.60%, 6.95% Exit Fee   $ 15,000       15,579       15,773  

Applied Genetic Technologies Corporation(11)

14193 Northwest 119th Terrace Alachua,

FL 32615

  Senior Secured    
April
2024
 
 
  Interest rate PRIME + 6.50% or Floor rate of 9.75%, 6.95% Exit Fee   $ 20,000       20,241       20,238  

Aveo Pharmaceuticals, Inc.(11)(15)

30 Winter Street

Boston, MA 02108

  Senior Secured    
September
2023
 
 
  Interest rate PRIME + 6.40% or Floor rate of 9.65%, 6.95% Exit Fee   $ 35,000       35,603       35,214  

Axsome Therapeutics, Inc.(10)(13)

22 Courtlandt St.

New York, NY 10007

  Senior Secured    
October
2025
 
 
  Interest rate PRIME + 5.90% or Floor rate of 9.15%, 5.82% Exit Fee   $ 50,000       49,627       51,618  

Bicycle Therapeutics PLC(5)(10)(11)

Meditrina Building, B900

Cambridge, UK CB22 3AT

  Senior Secured    
October
2024
 
 
  Interest rate PRIME + 5.60% or Floor rate of 8.85%, 5.00% Exit Fee   $ 24,000       24,182       24,153  

BiomX, INC (5)(10)

7 Pinhas Sapir St., 2nd Floor

Ness Ziona, Israel 7403635

  Senior Secured    
September
2025
 
 
  Interest rate PRIME + 5.70% or Floor rate of 8.95%, 6.55% Exit Fee   $ 9,000       8,927       8,927  

BridgeBio Pharma LLC(12)(13)(16)(17)

421 Kipling Street

Palo Alto, CA 94301

  Senior Secured     May 2025     Interest rate PRIME + 4.40% or Floor rate of 7.65%, 5.54% Exit Fee   $ 100,000       103,238       104,680  

Century Therapeutics(11)

3675 Market Street

Philadelphia, PA 19104

  Senior Secured    
April
2024
 
 
  Interest rate PRIME + 6.30% or Floor rate of 9.55%, 3.95% Exit Fee   $ 10,000       10,028       10,397  

Chemocentryx, Inc.(10)(11)

850 Maude Avenue

Mountain View, CA 94043

  Senior Secured    
December
2022
 
 
  Interest rate PRIME + 3.30% or Floor rate of 8.05%, 6.25% Exit Fee   $ 18,951       19,958       19,955  

 

18


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

 

Type of
Investment(1)

  Maturity
Date
 

Interest Rate and Floor(2)

  Principal
Amount
    Cost(3)     Value(4)  
    Senior
Secured
  February
2024
  Interest rate PRIME + 3.25%
or Floor rate of 8.50%, 7.15%
Exit Fee
  $ 5,000     $5,130     $5,131  
       

 

 

   

 

 

   

 

 

 

Total Chemocentryx, Inc.

  $ 23,951       25,088       25,086  

Codiak Biosciences, Inc.(11)(17)

500 Technology Square

Cambridge, MA 02139

  Senior Secured   October
2025
  Interest rate PRIME + 5.00% or Floor rate of 8.25%, 5.50% Exit Fee   $ 25,000       25,404       25,374  

Corium, Inc.(16)

4558 50th Street,

SE Grand Rapids, MI 49512

  Senior Secured   September
2026
  Interest rate PRIME + 5.70% or Floor rate of 8.95%, 7.75% Exit Fee   $ 91,500       90,618       90,618  

Eloxx Pharmaceuticals, Inc.(15)

480 Arsenal Way, Suite 130

Watertown, MA 02472

  Senior Secured   April
2025
  Interest rate PRIME + 6.25% or Floor rate of 9.50%, 6.55% Exit Fee   $ 12,500       12,360       12,360  

G1 Therapeutics, Inc.(10)(11)(17)

700 Park Offices Drive

Research Triangle Park, NC 27709

  Senior Secured   June 2025   Interest rate PRIME + 6.20% or Floor rate of 9.45%, 6.95% Exit Fee   $ 26,000       26,341       26,524  

Geron Corporation(10)(13)

149 Commonwealth Drive

Menlo Park, CA 94025

  Senior Secured   October
2024
  Interest rate PRIME + 5.75% or Floor rate of 9.00%, 6.55% Exit Fee   $ 22,750       22,913       22,933  

Hibercell, Inc.(15)

619 West 54th Street

New York, NY 10019

  Senior Secured   May 2025   Interest rate PRIME + 5.40% or Floor rate of 8.65%, 4.95% Exit Fee   $ 17,000       16,968       16,968  

Humanigen, Inc.(9)(10)

533 Airport Boulevard

Burlingame, CA 94010

  Senior Secured   March
2025
  Interest rate PRIME + 5.50% or Floor rate of 8.75%, 6.75% Exit Fee   $ 20,000       20,126       19,957  

Kaleido Biosciences, Inc.(13)

65 Hayden Avenue

Lexington, MA 02421

  Senior Secured   January
2024
  Interest rate PRIME + 6.10% or Floor rate of 9.35%, 7.55% Exit Fee   $ 22,500       23,351       23,371  

Locus Biosciences(15)

523 Davis Drive, Suite 350

Morrisville, NC 27709

  Senior Secured   July 2025   Interest rate PRIME + 6.10% or Floor rate of 9.35%, 4.95% Exit Fee   $ 8,000       7,938       7,896  

Nabriva Therapeutics(5)(10)

25-28 North Wall Quay

IFSC, Dublin 1, Ireland

  Senior Secured   June 2023   Interest rate PRIME + 4.30% or Floor rate of 9.80%, 6.95% Exit Fee   $ 5,000       5,444       5,418  

Phathom Pharmaceuticals, Inc.(10)(15)(16)

100 Campus Drive, Suite 102

Florham Park, NJ 07932

  Senior Secured   October
2026
  Interest rate PRIME + 2.25% or Floor rate of 5.50%, PIK Interest 3.35%, 7.50% Exit Fee   $ 86,500       85,035       85,035  

Scynexis, Inc.

101 Hudson Street, Suite 3610

Jersey City, NJ 07302

  Senior Secured   March
2025
  Interest rate PRIME + 5.80% or Floor rate of 9.05%, 3.95% Exit Fee   $ 16,000       15,765       15,765  

Seres Therapeutics, Inc.(11)

215 First St Cambridge,

MA 02142

  Senior Secured   November
2023
  Interest rate PRIME + 4.40% or Floor rate of 9.65%, 4.85% Exit Fee   $ 25,000       25,598       26,265  

Syndax Pharmaceutics Inc.(13)

35 Gatehouse Drive

Waltham, MA 02451

  Senior Secured   September
2023
  Interest rate PRIME + 5.10% or Floor rate of 9.85%, 4.99% Exit Fee   $ 20,000       20,538       20,872  

uniQure B.V.(5)(10)(11)(13)(16)(17)

Paasheuvelweg 25a

1105 BP

Amsterdam, Netherlands

  Senior Secured   June 2023   Interest rate PRIME + 3.35% or Floor rate of 8.85%, 4.95% Exit Fee   $ 35,000       35,975       36,345  
  Senior Secured   June 2023   Interest rate PRIME + 5.00% or Floor rate of 8.25%, 1.65% Exit Fee   $ 35,000       35,354       35,698  
       

 

 

   

 

 

   

 

 

 

Total uniQure B.V.

  $ 70,000       71,329       72,043  

 

19


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

 

Type of
Investment(1)

  Maturity
Date
   

Interest Rate and Floor(2)

  Principal
Amount
    Cost(3)     Value(4)  

Unity Biotechnology, Inc.(10)(11)

3280 Bayshore Blvd

Brisbane, CA 94005

  Senior Secured    
August
2024
 
 
  Interest rate PRIME + 6.10% or Floor rate of 9.35%, 6.25% Exit Fee   $ 25,000     $ 25,346     $ 25,921  

Valo Health, LLC (p.k.a. Integral Health Holdings, LLC)(11)

399 Boylston Street

Boston, MA 02116

  Senior Secured     May 2024     Interest rate PRIME + 6.45% or Floor rate of 9.70%, 3.85% Exit Fee   $ 11,500       11,481       11,537  

X4 Pharmaceuticals, Inc.(11)(13)

955 Massachusetts Ave

Cambridge, MA 02139

  Senior Secured     July 2024     Interest rate PRIME + 3.75% or Floor rate of 8.75%, 8.80% Exit Fee   $ 32,500       33,870       34,177  

Yumanity Therapeutics, Inc.(11)

790 Memorial Drive Suite 2C

Cambridge, MA 02139

  Senior Secured    
January
2024
 
 
  Interest rate PRIME + 4.00% or Floor rate of 8.75%, 5.92% Exit Fee   $ 14,106       14,542       14,588  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    857,657       863,976  
         

 

 

   

 

 

 

Subtotal: Drug Discovery & Development (70.00%)*

 

    930,005       936,324  
         

 

 

   

 

 

 

Healthcare Services, Other

 

   

1-5 Years Maturity

 

   

Carbon Health Technologies, Inc.(13)(17)(19)

55 Pacific Avenue, Suite 100

San Francisco, CA 94111

  Senior Secured    
March
2025
 
 
  Interest rate PRIME + 5.60% or Floor rate of 8.85%, 3.95% Exit Fee   $ 11,250       11,241       11,258  

Equality Health, LLC (13)(14)(17)

521 S. 3rd St.

Phoenix, AZ 85004

  Senior Secured    
February
2026
 
 
  Interest rate PRIME + 6.25% or Floor rate of 9.50%, PIK Interest 1.55%   $ 35,306       34,984       35,075  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    46,225       46,333  
         

 

 

   

 

 

 

Subtotal: Healthcare Services, Other (3.46%)*

 

    46,225       46,333  
         

 

 

   

 

 

 

Information Services

           

Under 1 Year Maturity

           

Planet Labs, Inc. (11)

490 2nd Street

San Francisco, CA 94107

  Senior Secured     June 2022     Interest rate PRIME + 5.50% or Floor rate of 11.00%, 3.00% Exit Fee   $ 25,000       25,317       25,317  
         

 

 

   

 

 

 

Subtotal: Under 1 Year Maturity

 

    25,317       25,317  
         

 

 

   

 

 

 

1-5 Years Maturity

           

Yipit, LLC (17)(18)

22 West 19th Street

New York, NY 10011

  Senior Secured    
September
2026
 
 
  Interest rate 1-month LIBOR + 9.08% or Floor rate of 10.08%   $ 45,900       44,984       44,984  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    44,984       44,984  
         

 

 

   

 

 

 

Subtotal: Information Services (5.26%)*

 

    70,301       70,301  
         

 

 

   

 

 

 

Internet Consumer & Business Services

         

Under 1 Year Maturity

           

Nextroll, Inc. (13)(14)(19)

2300 Harrison Street

San Francisco, CA 94110

  Senior Secured     June 2022     Interest rate PRIME + 3.75%
or Floor rate of 7.00%, PIK Interest 2.95%, 3.50% Exit Fee
  $ 21,395       21,950       21,950  
         

 

 

   

 

 

 

Subtotal: Under 1 Year Maturity

 

    21,950       21,950  
         

 

 

   

 

 

 

1-5 Years Maturity

           

AppDirect, Inc. (11)(17)

650 California Street

San Francisco, CA 92108

  Senior Secured    
August
2024
 
 
  Interest rate PRIME + 5.90%
or Floor rate of 9.15%, 7.95%
Exit Fee
  $ 30,790       31,230       32,253  

ePayPolicy Holdings, LLC (11)(17)

1120 S. Capital of Texas Hwy

Austin, TX 78746

  Senior Secured    
December
2024
 
 
  Interest rate 3-month LIBOR
+ 8.50% or Floor rate of
9.50%
  $ 8,169       7,999       8,129  

EverFi, Inc.(13)(14)(16)

3299 K St NW

Washington, D.C., DC 20007

  Senior Secured     May 2022     Interest rate PRIME + 3.90%
or Floor rate of 9.15%, PIK
Interest 1.50%
  $ 85,564       85,210       85,210  

Houzz, Inc. (9)(14)

540 Bryant Street

Palo Alto, CA 94301

  Convertible Debt     May 2028     PIK Interest 5.50%   $ 20,390       20,390       20,390  

 

20


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

 

Type of
Investment(1)

  Maturity
Date
 

Interest Rate and Floor(2)

  Principal
Amount
    Cost(3)     Value(4)  

Landing Holdings Inc. (14)(15)

535 Mission Street

San Francisco, CA 94105

  Senior Secured   March
2023
  Interest rate PRIME + 6.00% or Floor rate of 9.25%, PIK Interest 2.55%   $ 10,127     $ 9,974     $ 10,431  

Rhino Labs, Inc. (14)(15)(17)

99 Wall Street

New York, NY 10005

  Senior Secured   March
2024
  Interest rate PRIME + 5.50% or Floor rate of 8.75%, PIK Interest 2.25%   $ 8,089       7,913       7,995  

SeatGeek, Inc. (14)

902 Broadway

New York, NY 10013

  Senior Secured   June 2023   Interest rate PRIME + 5.00% or Floor rate of 10.50%, PIK Interest 0.50%   $ 60,531       59,805       59,902  

Skyword, Inc.(14)

38 Chauncy Street

Boston, MA 02109

  Senior Secured   September
2024
  Interest rate PRIME + 3.88% or Floor rate of 9.38%, PIK Interest 1.90%, 4.00% Exit Fee   $ 12,367       12,568       12,487  

Tectura Corporation(7)(8)(14)

951 Old County Road

Belmont, CA 94002

  Senior Secured   July 2024   PIK Interest 5.00%   $ 10,680       240       —    
  Senior Secured   July 2024   Interest rate FIXED 8.25%   $ 8,250       8,250       8,250  
  Senior Secured   July 2024   PIK Interest 5.00%   $ 13,023       13,023       44  
       

 

 

   

 

 

   

 

 

 

Total Tectura Corporation

  $ 31,953       21,513       8,294  

Thumbtack, Inc.(13)(14)

1001 Page Street

San Francisco, CA 94117

  Senior Secured   September
2023
  Interest rate PRIME + 3.45% or Floor rate of 8.95%, PIK Interest 1.50%, 3.95% Exit Fee   $ 25,521       25,741       26,362  

Zepz (p.k.a. Worldremit Group Limited)(5)(10)(16)(19)

Kensington Centre

66 Hammersmith Road

London, England W14 8UD

  Senior Secured   February
2025
  Interest rate 3-month LIBOR + 9.25% or Floor rate of 10.25%, 3.00% Exit Fee   $ 103,000       101,381       101,131  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    383,724       372,584  
         

 

 

   

 

 

 

Subtotal: Internet Consumer & Business Services (29.50%)*

 

    405,674       394,534  
         

 

 

   

 

 

 

Manufacturing Technology

           

1-5 Years Maturity

           

Velo3d, Inc.(19)

511 Division Street

Campbell, CA 95008

  Senior Secured   October
2023
  Interest rate PRIME + 5.75% or Floor rate of 9.00%, 3.00% Exit Fee   $ 7,143       7,199       7,199  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    7,199       7,199  
         

 

 

   

 

 

 

Subtotal: Manufacturing Technology (0.54%)*

 

    7,199       7,199  
         

 

 

   

 

 

 

Medical Devices & Equipment

           

Under 1 Year Maturity

           

Quanterix Corporation(11)

900 Middlesex Turnpike

Billerica, MA 01821

  Senior Secured   October
2021
  Interest rate PRIME + 2.75% or Floor rate of 8.00%, 0.96% Exit Fee   $ 1,943       1,993       1,993  
         

 

 

   

 

 

 

Subtotal: Under 1 Year Maturity

 

    1,993       1,993  
         

 

 

   

 

 

 

Subtotal: Medical Devices & Equipment (0.15%)*

 

    1,993       1,993  
         

 

 

   

 

 

 

Software

           

Under 1 Year Maturity

           

Regent Education(8)(14)

47 E. South Street Suite 201

Frederick, MD 21701

  Senior Secured   January
2022
  Interest rate FIXED 10.00%, PIK Interest 2.00%, 7.94% Exit Fee   $ 3,029       3,142       1,106  
         

 

 

   

 

 

 

Subtotal: Under 1 Year Maturity

      3,142       1,106  
         

 

 

   

 

 

 

1-5 Years Maturity

           

3GTMS, LLC. (11)(17)(18)

4 Armstrong Rd

Shelton, CT 06484

  Senior Secured   February
2025
  Interest rate 6-Month LIBOR + 9.28% or Floor rate of 10.28%   $ 10,000       9,799       9,990  

 

21


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

 

Type of
Investment(1)

  Maturity
Date
 

Interest Rate and Floor(2)

  Principal
Amount
    Cost(3)     Value(4)  

Bitsight Technologies, Inc.(13)(17)(19)

100 Cambridge Park Drive

Cambridge, MA 02140

  Senior Secured   November
2025
  Interest rate PRIME + 6.75% or Floor rate of 10.00%, 3.50% Exit Fee   $ 12,500     $ 12,377     $ 13,190  

Businessolver.com, Inc.(11)(17)

1025 Ashworth Road

West Des Moines, IA 50265

  Senior Secured   May 2023   Interest rate 6-month LIBOR + 7.50% or Floor rate of 8.50%   $ 41,197       40,821       41,176  

Campaign Monitor Limited(11)(19)

9 Lea Ave Nashville,

TN 37210

  Senior Secured   November
2025
  Interest rate 6-month LIBOR + 8.90% or Floor rate of 9.90%   $ 33,000       32,430       33,000  

Ceros, LLC(17)(18)

40 West 25th Street

New York, NY 10010

  Senior Secured   September
2026
  Interest rate 3-month LIBOR + 8.89% or Floor rate of 9.89%   $ 17,978       17,452       17,452  

Clarabridge, Inc.(12)(13)(14)(17)

11400 Commerce Park Drive,

Suite 500 Reston,

VA 20191

  Senior Secured   May 2024   Interest rate PRIME + 5.30% or Floor rate of 8.55%, PIK Interest 2.25%   $ 56,787       56,416       57,356  

Cloud 9 Software(13)

10 Mansell Court East Roswell,

GA 30076

  Senior Secured   April
2024
  Interest rate 3-month LIBOR + 8.20% or Floor rate of 9.20%   $ 9,953       9,846       9,953  

CloudBolt Software Inc.(11)(19)

51 Monroe Street

Rockville, MD 20850

  Senior Secured   October
2024
  Interest rate PRIME + 6.70% or Floor rate of 9.95%, 2.95% Exit Fee   $ 10,000       9,877       10,075  

Cybermaxx Intermediate Holdings, Inc.(17)

2115 Yeaman Place

Nashville, TN 37206

  Senior Secured   August
2026
  Interest rate 6-month LIBOR + 9.28% or Floor rate of 10.28%   $ 8,000       7,792       7,792  

Dashlane, Inc.(11)(14)(17)(19)

44 West 18th Street

New York, NY 10011

  Senior Secured   July 2025   Interest rate PRIME + 3.05% or Floor rate of 7.55%, PIK Interest 1.10%, 7.10% Exit Fee   $ 20,661       21,614       21,614  

Delphix Corp.(13)(19)

1400A Seaport Blvd #200

Redwood City, CA

  Senior Secured   February
2023
  Interest rate PRIME + 5.50% or Floor rate of 10.25%, 5.00% Exit Fee   $ 60,000       61,258       62,345  

Demandbase, Inc.(17)(19)

680 Folsom Street

San Francisco, CA 94107

  Senior Secured   August
2025
  Interest rate PRIME + 5.25% or Floor rate of 8.50%, 2.00% Exit Fee   $ 16,875       16,365       16,365  

Enmark Systems(17)(18)

3520 Green CT, Suite 100

Ann Arbor, MI 48105

  Senior Secured   September
2026
  Interest rate 6-Month Libor LIBOR + 6.83% or Floor rate of 7.83%, PIK Interest 2.19%   $ 8,000       7,789       7,789  

Esentire, Inc.(5)(10)(18)

278 Pinebush Road, Suite 200

Cambridge, Canada N3C 4E8

  Senior Secured   May 2024   Interest rate 3-month LIBOR + 9.96% or Floor rate of 10.96%   $ 21,000       20,671       20,671  

Gryphon Networks Corp.(17)

711 Atlantic Avenue, Suite 124

Boston, MA 02111

  Senior Secured   January
2026
  Interest rate 3-month LIBOR + 9.69% or Floor rate of 10.69%   $ 5,232       5,099       5,152  

Ikon Science Limited(5)(10)(11)(17)(18)

1 The Crescent

London, UK KT6 4BN

  Senior Secured   October
2024
  Interest rate 3-month LIBOR + 9.00% or Floor rate of 10.00%   $ 7,000       6,791       7,000  

Jolt Software, Inc.(14)

877 East 1200 South

Orem, UT 84097

  Senior Secured   October
2022
  Interest rate PRIME + 3.00% or Floor rate of 8.50%, PIK Interest 1.75%, 4.50% Exit Fee   $ 7,741       7,929       7,986  

Kazoo, Inc. (p.k.a. YouEarnedIt, Inc.)(11)(18)

206 East 9th Street, Floor 18

Austin, TX 78701

  Senior Secured   July 2023   Interest rate 3-month LIBOR + 10.14% or Floor rate of 11.14%   $ 8,628       8,433       8,459  

Khoros (p.k.a Lithium Technologies)(11)(17)

225 Bush St.

San Francisco, CA 94111

  Senior Secured   October
2022
  Interest rate 6-month LIBOR + 8.00% or Floor rate of 9.00%   $ 55,000       54,507       55,000  

Logicworks(13)(17)

155 Avenue of the Americas

New York, NY 10013

  Senior Secured   January
2024
  Interest rate PRIME + 7.50% or Floor rate of 10.75%   $ 10,000       9,846       10,031  

 

22


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

 

Type of
Investment(1)

  Maturity
Date
 

Interest Rate and Floor(2)

  Principal
Amount
    Cost(3)     Value(4)  

Mixpanel, Inc.(14)(19)

One Front Street

San Francisco, CA 94111

  Senior Secured   August
2024
  Interest rate PRIME + 4.70% or Floor rate of 7.95%, PIK Interest 1.80%, 3.00% Exit Fee   $ 20,339     $ 20,189     $ 21,065  

Mobile Solutions Services(11)(17)(18)

10731 E. Easter Ave

Centennial, CO 80112

  Senior Secured   December
2025
  Interest rate 6-month LIBOR + 9.87% or Floor rate of 10.87%   $ 18,933       18,408       18,910  

Nuvolo Technologies Corporation(13)(19)

115 W Century Rd

Paramus, NJ 07652

  Senior Secured   July 2025   Interest rate PRIME + 7.70% or Floor rate of 10.95%, 1.75% Exit Fee   $ 15,000       14,943       15,049  

Pollen, Inc.(14)(15)

2000 Shawnee Mission Parkway

Mission Woods, KS 66205

  Senior Secured   November
2023
  Interest rate PRIME + 4.75% or Floor rate of 8.00%, PIK Interest 0.50%, 4.50% Exit Fee   $ 20,448       20,374       20,195  

Pymetrics, Inc (14)

102 Madison Avenue

New York, NY 10016

  Senior Secured   October
2022
  Interest rate PRIME + 5.50% or Floor rate of 8.75%, PIK Interest 1.75%, 4.00% Exit Fee   $ 9,624       9,732       9,856  

Reltio, Inc.(13)(14)(19)

100 Marine Parkway

Redwood Shores, CA 94065

  Senior Secured   July 2023   Interest rate PRIME + 5.70% or Floor rate of 8.95%, PIK Interest 1.70%, 4.95% Exit Fee   $ 10,204       10,231       10,527  

Tact.ai Technologies, Inc.(11)(14)

2400 Broadway Street

Redwood City, CA 94063

  Senior Secured   February
2024
  Interest rate PRIME + 4.00% or Floor rate of 8.75%, PIK Interest 2.00%, 5.50% Exit Fee   $ 5,159       5,248       5,210  

ThreatConnect, Inc.(13)(17)(18)

3865 Wilson Blvd Arlington,

VA 22203

  Senior Secured   May 2026   Interest rate 3-month LIBOR + 9.00% or Floor rate of 10.00%   $ 11,172       10,844       10,844  

Udacity, Inc.(14)(17)

2440 W El Camino Real

Mountain View, CA 94040

  Senior Secured   September
2024
  Interest rate PRIME + 4.50% or Floor rate of 7.75%, PIK Interest 2.00%, 3.00% Exit Fee   $ 35,669       35,502       36,767  

Zimperium, Inc.(18)

560 Mission Street

San Francisco, CA 94105

  Senior Secured   July 2024   Interest rate 1-month LIBOR + 8.95% or Floor rate of 9.95%   $ 15,673       15,361       15,361  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    577,944       586,180  
         

 

 

   

 

 

 

Greater than 5 Years Maturity

           

Imperva, Inc.(19)

One Curiosity Way, Suite 203

San Matero, CA 94403

  Senior Secured   January
2027
  Interest rate 3-month LIBOR + 7.75% or Floor rate of 8.75%   $ 20,000       19,845       20,200  
         

 

 

   

 

 

 

Subtotal: Greater than 5 Years Maturity

 

    19,845       20,200  
         

 

 

   

 

 

 

Subtotal: Software (45.42%)*

 

    600,931       607,486  
         

 

 

   

 

 

 

Sustainable and Renewable Technology

           

Under 1 Year Maturity

           

Impossible Foods, Inc.(12)(13)

525 Chesapeake Drive

Redwood City, CA 94063

  Senior Secured   July 2022   Interest rate PRIME + 3.95% or Floor rate of 8.95%, 9.00% Exit Fee   $ 21,188       25,385       25,385  

Pineapple Energy LLC(6)(9)(14)(17)

315 Lake Street East

Wayzata, MN 55391

  Senior Secured   January
2022
  Interest rate FIXED 10.00%   $ 120       120       120  
         

 

 

   

 

 

 

Subtotal: Under 1 Year Maturity

 

    25,505       25,505  
         

 

 

   

 

 

 

1-5 Years Maturity

           

Pineapple Energy LLC(6)(8)(9)(14)(17)

315 Lake Street East

Wayzata, MN 55391

  Senior Secured   December
2023
  PIK Interest 10.00%   $ 7,500       7,500       7,500  
         

 

 

   

 

 

 

Subtotal: 1-5 Years Maturity

 

    7,500       7,500  
         

 

 

   

 

 

 

Subtotal: Sustainable and Renewable Technology (2.47%)*

 

    33,005       33,005  
         

 

 

   

 

 

 

Total: Debt Investments (169.23%)*

 

  $ 2,262,660     $ 2,263,542  
         

 

 

   

 

 

 

 

23


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Equity Investments

               

Communications & Networking

               

Peerless Network Holdings, Inc.

222 South Riverside Plaza

Chicago, IL 60606

    3.58   Communications & Networking   Equity   Common Stock   April 11, 2008     3,328     $ —       $ 8  
    Communications & Networking   Equity   Preferred Series A   April 11, 2008     1,135,000       1,230       4,322  
           

 

 

   

 

 

   

 

 

 

Total Peerless Network Holdings, Inc.

    1,138,328       1,230       4,330  
           

 

 

   

 

 

   

 

 

 

Subtotal: Communications & Networking (0.32%)*

 

    1,230       4,330  
             

 

 

   

 

 

 

Consumer & Business Products

               

TechStyle, Inc. (p.k.a. Just Fabulous, Inc.)

2301 Rosecrans Avenue

El Segundo, CA 90245

    0.49   Consumer & Business Products   Equity   Common Stock   April 30, 2010     42,989       128       373  
             

 

 

   

 

 

 

Subtotal: Consumer & Business Products (0.03%)*

 

    128       373  
             

 

 

   

 

 

 

Diversified Financial Services

               

Gibraltar Business Capital, LLC(7)

400 Skokie Blvd #375

Northbrook, IL 60062

 

 

100.00

 

Diversified Financial Services

 

Equity

 

Common Stock

 

March 1, 2018

 

 

830,000

 

 

 

1,884

 

 

 

1,166

 

    Diversified Financial Services   Equity   Preferred Series A   March 1, 2018     10,602,752       26,122       16,168  
           

 

 

   

 

 

   

 

 

 

Total Gibraltar Business Capital, LLC

    11,432,752       28,006       17,334  
           

 

 

   

 

 

   

 

 

 

Hercules Adviser LLC (7)

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

    100.00   Diversified Financial Services   Equity   Member Units   May 26, 2020       35       10,704  
             

 

 

   

 

 

 

Subtotal: Diversified Financial Services (2.10%)*

 

    28,041       28,038  
             

 

 

   

 

 

 

Drug Delivery

               

AcelRx Pharmaceuticals, Inc.(4)

351 Galveston Drive

Redwood City, CA 94063

    0.15   Drug Delivery   Equity   Common Stock   June 29, 2011     17 6,730       1,329       180  

Aytu BioScience, Inc. (p.k.a. Neos Therapeutics, Inc.)(4)

2940 N. Highway 360, Suite 100 Grand Prarie, TX 75050

 

 

0.05

 

Drug Delivery

 

Equity

 

Common Stock

 

March 28, 2014

 

 

13,600

 

 

 

1,500

 

 

 

39

 

BioQ Pharma Incorporated

185 Berry Street, Suite 160

San Francisco, CA 94107

    1.77   Drug Delivery   Equity   Preferred Series D   December 8, 2015     165,000       500       173  

Kaleo, Inc.

111 Virginia Street

Richmond, VA 23219

    0.46   Drug Delivery   Equity   Preferred Series B   May 24, 2012     82,500       1,007       2,340  

PDS Biotechnology Corporation (p.k.a. Edge Therapeutics, Inc.)(4)

300 Connell Drive, Suite 4000

Berkeley Heights, NJ 07922

 

 

 

 

0.02

 

 

 

Drug Delivery

 

 

Equity

 

 

Common Stock

 

 

November 7, 2014

 

 

 

 

2,498

 

 

 

 

 

 

309

 

 

 

 

 

 

37

 

 

             

 

 

   

 

 

 

Subtotal: Drug Delivery (0.21%)*

 

    4,645       2,769  
             

 

 

   

 

 

 

Drug Discovery & Development

               

Albireo Pharma, Inc.(4)(10)

50 Milk Street

Boston, MA 02109

    0.16   Drug Discovery & Development   Equity   Common Stock   September 14, 2020     25,000       1,000       780  

 

24


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Applied Molecular
Transport(4)(10)

1 Tower Place, Suite 850

San Francisco, CA 94080

 

 

0.00

 

Drug Discovery & Development

 

Equity

 

Common Stock

 

April 6, 2021

 

 

1,000

 

 

$

42

 

 

$

26

 

Aveo Pharmaceuticals, Inc.(4)

30 Winter Street

Boston, MA 02108

    0.55   Drug Discovery & Development   Equity   Common Stock   July 31, 2011     190,179       1,715       1,174  

Bicycle Therapeutics
PLC(4)(5)(10)

Meditrina Building, B900

Cambridge, UK CB22 3AT

 

 

0.41

 

Drug Discovery & Development

 

Equity

 

Common Stock

 

October 5, 2020

 

 

98,100

 

 

 

1,871

 

 

 

4,080

 

BridgeBio Pharma LLC(4)(16)

421 Kipling Street

Palo Alto, CA 94301

    0.15   Drug Discovery & Development   Equity   Common Stock   June 21, 2018     231,329       2,255       10,843  

Avalo Therapeutics, Inc. (p.k.a. Cerecor, Inc.)(4)

400 E Pratt Street, Suite 606

Baltimore, MD 21202

    0.12   Drug Discovery & Development   Equity   Common Stock   August 19, 2014     119,087       1,000       260  

Chemocentryx, Inc.(4)(10)

850 Maude Avenue

Mountain View, CA 94043

    0.02   Drug Discovery & Development   Equity   Common Stock   June 15, 2020     17,241       1,000       295  

Concert Pharmaceuticals, Inc.(4)(10)

99 Hayden Avenue, Suite 100

Lexington, MA 02421

    0.41   Drug Discovery & Development   Equity   Common Stock   February 13, 2014     70,796       1,367       231  

Dare Biosciences, Inc.(4)

11119 N Torrey Pines Road

La Jolla, CA 92037

    0.02   Drug Discovery & Development   Equity   Common Stock   January 8, 2015     13,550       1,000       23  

Dynavax Technologies(4)(10)

2929 Seventh Street, Suite 100

Berkeley, CA 94710

    0.02   Drug Discovery & Development   Equity   Common Stock   July 22, 2015     20,000       550       384  

Genocea Biosciences, Inc.(4)

161 First Street, Suite 2C

Cambridge, MA 02142

    0.12   Drug Discovery & Development   Equity   Common Stock   November 20, 2014     27,933       2,000       54  

Hibercell, Inc.(15)

619 West 54th Street

New York, NY 10019

    1.14   Drug Discovery & Development   Equity   Preferred Series B   May 7, 2021     3,466,840       4,250       4,252  

Humanigen, Inc.(4)(10)

533 Airport Boulevard

Burlingame, CA 94010

    0.07   Drug Discovery & Development   Equity   Common Stock   March 31, 2021     43,243       800       256  

Kaleido Biosciences, Inc.(4)

65 Hayden Avenue

Lexington, MA 02421

    0.20   Drug Discovery & Development   Equity   Common Stock   February 10, 2021     86,585       1,000       473  

Paratek Pharmaceuticals,
Inc.(4)

75 Park Plaza

Boston, MA 02116

 

 

1.14

 

Drug Discovery & Development

 

Equity

 

Common Stock

 

February 26, 2007

 

 

76,362

 

 

 

2,744

 

 

 

372

 

Rocket Pharmaceuticals,
Ltd.(4)

The Empire State Building,

350 Fifth Avenue

New York, NY 10118

 

 

0.00

 

Drug Discovery & Development

 

Equity

 

Common Stock

 

August 22, 2007

 

 

944

 

 

 

1,500

 

 

 

28

 

Savara, Inc.(4)

900 S. Capital of Texas Highway,

Suite 150

Austin, TX 78746

    0.01   Drug Discovery & Development   Equity   Common Stock   August 11, 2015     11,119       203       15  

Sio Gene Therapies, Inc. (p.k.a. Axovant Gene Therapies Ltd.)(4)(10)

11 Times Square

New York, NY 10036

 

 

 

 

0.02

 

 

 

Drug Discovery & Development

 

 

Equity

 

 

Common Stock

 

 

February 2, 2017

 

 

 

 

16,228

 

 

 

 

 

 

1,269

 

 

 

 

 

 

35

 

 

 

25


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Tricida, Inc.(4)

7000 Shoreline Court

South San Francisco, CA 94080

    0.20   Drug Discovery & Development   Equity   Common Stock   February 28, 2018     68,816     $ 863     $ 320  

uniQure B.V.(4)(5)(10)(16)

Paasheuvelweg 25a

Amsterdam, Netherlands 1105 BP

    0.04   Drug Discovery & Development   Equity   Common Stock   September 20, 2013     17,175       332       550  

Valo Health, LLC (p.k.a. Integral Health Holdings, LLC)

399 Boylston Street

Boston, MA 02116

 

 

0.31

 

Drug Discovery & Development

 

Equity

 

Preferred Series B

 

December 11, 2020

 

 

510,308

 

 

 

3,000

 

 

 

4,183

 

X4 Pharmaceuticals, Inc.(4)

955 Massachusetts Ave

Cambridge, MA 02139

    1.25   Drug Discovery & Development   Equity   Common Stock   November 26, 2019     198,277       1,641       1,049  
             

 

 

   

 

 

 

Subtotal: Drug Discovery & Development (2.22%)*

 

    31,402       29,683  
 

 

 

   

 

 

 

Healthcare Services, Other

               

23andMe, Inc.(4)(20)

899 West Evelyn Avenue

Mountain View, CA 94041

    0.20   Healthcare Services, Other   Equity   Common Stock   March 11, 2019     828,360       5,094       6,692  

Carbon Health Technologies, Inc.

55 Pacific Avenue, Suite 100

San Francisco, CA 94111

    0.21   Healthcare Services, Other   Equity   Preferred Series C   March 30, 2021     217,880       1,687       2,039  
             

 

 

   

 

 

 

Subtotal: Healthcare Services, Other (0.65%)*

 

    6,781       8,731  
 

 

 

   

 

 

 

Information Services

               

Zeta Global Corp.(4)(20)

3 Park Avenue, 33rd Floor

New York, NY 10016

    0.16   Information Services   Equity   Common Stock   November 20, 2007     295,861       —         1,565  
             

 

 

   

 

 

 

Subtotal: Information Services (0.12%)*

 

    —         1,565  
 

 

 

   

 

 

 

Internet Consumer & Business Services

           

Black Crow AI, Inc.(6)

75 Varick Street

New York, NY 10013

    5.31   Internet Consumer & Business Services   Equity   Preferred Series Seed   December 6, 2016     872,797       1,000       1,243  

Black Crow AI, Inc. affiliates(21)

75 Varick Street

New York, NY 10013

    0.00   Internet Consumer & Business Services   Equity   Preferred Note   December 6, 2016     3       3,000       3,000  

Brigade Group, Inc.

3871 Piedmont Avenue

Oakland, CA 94611

    0.05   Internet Consumer & Business Services   Equity   Common Stock   March 1, 2013     9,023       93       —    

Contentful Global, Inc. (p.k.a. Contentful, Inc.)(5)(10)

Ritterstr. 12-14

Berlin, Germany 10969

 

 

0.17

 

Internet Consumer & Business Services

 

Equity

 

Preferred Series C

 

September 24, 2018

 

 

41,000

 

 

 

138

 

 

 

516

 

    Internet Consumer & Business Services   Equity   Preferred Series D   November 20, 2018     108,500       500       1,409  
           

 

 

   

 

 

   

 

 

 

Total Contentful Global, Inc. (p.k.a. Contentful, Inc.)

    149,500       638       1,925  

DoorDash, Inc.(4)

901 Market Street, 6th Floor

San Francisco, CA 94103

    0.03   Internet Consumer & Business Services   Equity   Common Stock   December 20, 2018     100,000       1,153       20,598  

Lyft, Inc. (4)

185 Berry Street, #5000

San Francisco, CA 94107

    0.03   Internet Consumer & Business Services   Equity   Common Stock   December 26, 2018     100,738       5,262       5,399  

Nerdy Inc.(4)(20)

101 South Hanley Road

Clayton, MO 63105

    0.12   Internet Consumer & Business Services   Equity   Common Stock   September 17, 2021     100,000       1,000       836  

 

26


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Nextdoor.com, Inc.

875 Stevenson Street

San Francisco, CA 94103

    0.54   Internet Consumer & Business Services   Equity   Common Stock   August 1, 2018     328,190     $ 4,854     $ 9,435  

OfferUp, Inc.

227 Bellevue Way Northeast

Bellevue, WA 98004

    0.16   Internet Consumer & Business Services   Equity   Preferred Series A   October 25, 2016     286,080       1,663       1,719  
    Internet Consumer & Business Services   Equity   Preferred Series A-1   October 25, 2016     108,710       632       653  
           

 

 

   

 

 

   

 

 

 

Total OfferUp, Inc.

    394,790       2,295       2,372  

Oportun(4)

171 Constitution Drive

Menlo Park, CA 94025

    0.17   Internet Consumer & Business Services   Equity   Common Stock   June 28, 2013     48,365       578       1,211  

Reischling Press, Inc. (p.k.a. Blurb, Inc.)

3325 South 116th Street, Suite 161

Seattle, WA 98168

    0.05   Internet Consumer & Business Services   Equity   Common Stock   December 29, 2006     1,163       15       —    

Savage X Holding, LLC

800 Apollo Drive

El Segundo, CA 90245

    0.07   Internet Consumer & Business Services   Equity   Class A Units   April 30, 2010     42,137       13       64  

Tectura Corporation(7)

951 Old County Road

Belmont, CA 94002

    49.50   Internet Consumer & Business Services   Equity   Common Stock   April 9, 2007     414,994,863       900       —    
    Internet Consumer & Business Services   Equity   Preferred Series BB   April 9, 2007     1,000,000       —         —    
           

 

 

   

 

 

   

 

 

 

Total Tectura Corporation

    415,994,863       900       —    

TFG Holding, Inc.

800 Apollo Drive

El Segundo, CA 90245

    0.08   Internet Consumer & Business Services   Equity   Common Stock   April 30, 2010     42,989       89       231  

Uber Technologies, Inc. (p.k.a. Postmates, Inc.)(4)

540 Washington Street

San Francisco, CA 94111

 

 

0.00

 

Internet Consumer & Business Services

 

Equity

 

Common Stock

 

August 30, 2018

 

 

32,991

 

 

 

317

 

 

 

1,478

 

             

 

 

   

 

 

 

Subtotal: Internet Consumer & Business Services (3.57%)*

 

    21,207       47,792  
 

 

 

   

 

 

 

Medical Devices & Equipment

               

Flowonix Medical Incorporated

500 International Drive

Mount Olive, NJ 07828

    0.34   Medical Devices & Equipment   Equity   Preferred Series AA   November 3, 2014     221,893       1,500       —    

Gelesis, Inc.

500 Boylston Street

Boston, MA 02116

    2.39   Medical Devices & Equipment   Equity   Common Stock   November 30, 2009     227,013       —         4,636  
    Medical Devices & Equipment   Equity   Preferred Series A-1   December 30, 2011     243,432       503       4,973  
    Medical Devices & Equipment   Equity   Preferred Series A-2   December 31, 2011     191,626       500       3,914  
           

 

 

   

 

 

   

 

 

 

Total Gelesis, Inc.

    662,071       1,003       13,523  

Medrobotics Corporation

475 Paramount Drive

Raynham, MA 02767

    0.74   Medical Devices & Equipment   Equity   Preferred Series E   September 12, 2013     136,798       250       —    
    Medical Devices & Equipment   Equity   Preferred Series F   October 22, 2014     73,971       155       —    

 

27


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  
    Medical Devices & Equipment   Equity   Preferred Series G   October 16, 2015     163,934     $ 500     $ —    
           

 

 

   

 

 

   

 

 

 

Total Medrobotics Corporation

    374,703       905       —    

ViewRay, Inc.(4)

2 Thermo Fisher Way

Oakwood Village, OH 44146

    0.02   Medical Devices & Equipment   Equity   Common Stock   December 16, 2013     36,457       333       263  
             

 

 

   

 

 

 

Subtotal: Medical Devices & Equipment (1.03%)*

 

    3,741       13,786  
 

 

 

   

 

 

 

Semiconductors

               

Achronix Semiconductor Corporation

2903 Bunker Hill Lane

Santa Clara, CA 95054

    0.32   Semiconductors   Equity   Preferred Series C   July 1, 2011     277,995       160       726  
             

 

 

   

 

 

 

Subtotal: Semiconductors (0.05%)*

 

    160       726  
 

 

 

   

 

 

 

Software

               

3GTMS, LLC.

4 Armstrong Road

Shelton, CT 06484

    0.89   Software   Equity   Common Stock   August 9, 2021     1,000,000       1,000       857  

CapLinked, Inc.

2015 Manhattan Beach

Boulevard #108

Redondo Beach, CA 90278

    0.29   Software   Equity   Preferred Series A-3   October 26, 2012     53,614       51       88  

Docker, Inc.

144 Townsend Street

San Francisco, CA 94107

    0.03   Software   Equity   Common Stock   November 29, 2018     20,000       4,284       8  

Druva Holdings, Inc. (p.k.a. Druva, Inc.)

800 W California Avenue #100

Sunnyvale, CA 94041

    0.26   Software   Equity   Preferred Series 2   October 22, 2015     458,841       1,000       2,024  
    Software   Equity   Preferred Series 3   August 24, 2017     93,620       300       460  
           

 

 

   

 

 

   

 

 

 

Total Druva Holdings, Inc. (p.k.a. Druva, Inc.)

    552,461       1,300       2,484  

HighRoads, Inc.

120 Presidential Way, Suite 330

Woburn, MA 01801

    0.00   Software   Equity   Common Stock   January 18, 2013     190       307       —    

Lightbend, Inc.

625 Market Street

San Francisco, CA 94105

    0.61   Software   Equity   Preferred Series D   December 4, 2020     384,616       265       85  

Palantir Technologies(4)

1555 Blake Street, Suite 250

Denver, CO 80202

    0.07   Software   Equity   Common Stock   June 30, 2016     1,418,337       8,669       34,097  

SingleStore, Inc. (p.k.a. memsql, Inc.)

380 10th Street Suite 25

San Francisco, CA 94103

    0.55   Software   Equity  

Preferred Series E

 

November 25, 2020

 

 

580,983

 

 

 

2,000

 

 

 

2,500

 

    Software   Equity   Preferred Series F   August 12, 2021     52,956       280       272  
           

 

 

   

 

 

   

 

 

 

Total SingleStore, Inc. (p.k.a. memsql, Inc.)

    633,939       2,280       2,772  

Sprinklr, Inc.(4)(20)

29 West 35th Street, 7th Floor

New York, NY 10001

    0.27   Software   Equity   Common Stock   March 22, 2017     700,000       3,749       10,854  

Verana Health, Inc.

600 Harrison Street, Suite 250

San Francisco, CA 94028

    0.49   Software   Equity   Preferred Series E   July 8, 2021     952,562       2,000       1,936  
             

 

 

   

 

 

 

Subtotal: Software (3.98%)*

 

    23,905       53,181  
 

 

 

   

 

 

 

 

28


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Surgical Devices

               

Gynesonics, Inc.

600 Chesapeake Drive

Redwood City, CA 94063

    0.56   Surgical Devices   Equity   Preferred Series B   January 18, 2007     219,298     $ 250     $ 19  
    Surgical Devices   Equity   Preferred Series C   June 16, 2010     656,538       282       56  
    Surgical Devices   Equity   Preferred Series D   February 8, 2013     1,991,157       712       181  
    Surgical Devices   Equity   Preferred Series E   July 14, 2015     2,786,367       429       284  
    Surgical Devices   Equity   Preferred Series F   December 18, 2018     1,523,693       118       220  
    Surgical Devices   Equity   Preferred Series F-1   December 18, 2018     2,418,125       150       316  
           

 

 

   

 

 

   

 

 

 

Total Gynesonics, Inc.

    9,595,178       1,941       1,076  
           

 

 

   

 

 

   

 

 

 

Subtotal: Surgical Devices (0.08%)*

 

    1,941       1,076  
 

 

 

   

 

 

 

Sustainable and Renewable Technology

               

Impossible Foods, Inc.

525 Chesapeake Drive

Redwood City, CA 94063

    0.07  

Sustainable and

Renewable Technology

  Equity   Preferred Series E-1  

May 10,

2019

    188,611       2,000       3,352  

Modumetal, Inc.

Northlake R&D Center

Seattle, WA 98103

    0.05   Sustainable and Renewable Technology   Equity   Preferred Series A-1  

June 1,

2015

    103,584       500       —    

NantEnergy, LLC (p.k.a. Fluidic, Inc.)

8455 North 90th Street, Suite 4

Scottsdale, AZ 85258

    0.00   Sustainable and Renewable Technology   Equity   Common Units   August 31, 2013     59,665       102       —    

Pineapple Energy LLC (6)

315 Lake Street East

Wayzata, MN 55391

    15.67  

Sustainable and

Renewable Technology

  Equity   Class A Units   March 31, 2015     17,647       4,767       849  

Proterra, Inc.(4)(20)

1815 Rollins Road

Burlingame, CA 94010

    0.22  

Sustainable and

Renewable Technology

  Equity   Common Stock  

May 28,

2015

    457,841       543       4,140  

Pivot Bio, Inc.

2929 7th Street Suite 120

Berkeley, CA 94710

    0.28  

Sustainable and

Renewable Technology

  Equity   Preferred Series D  

June 28,

2021

    59,307       4,500       4,020  
             

 

 

   

 

 

 

Subtotal: Sustainable and Renewable Technology (0.92%)*

 

    12,412       12,361  
 

 

 

   

 

 

 

Total: Equity Investments (15.28%)*

 

  $ 135,593     $ 204,411  
             

 

 

   

 

 

 

Warrant Investments

               

Communications & Networking

               

Spring Mobile Solutions, Inc.

11710 Plaza America Drive

Reston, VA 20190

    0.57  

Communications &

Networking

  Warrant   Common Stock  

April 19,

2013

    2,834,375     $ 418     $ —    
             

 

 

   

 

 

 

Subtotal: Communications & Networking (0.00%)*

 

    418       —    
 

 

 

   

 

 

 

Consumer & Business Products

               

Penumbra Brands, LLC (p.k.a. Gadget Guard)

1010 South Highway 101, Suite 105

Encinitas, CA 92024

    0.88   Consumer & Business Products   Warrant   Common Stock  

June 3,

2014

    1,662,441       228       —    

Grove Collaborative, Inc.

1301 Sansome Street

San Francisco, CA 94111

    0.06   Consumer & Business Products   Warrant   Common Stock  

April 30,

2021

    83,625       432       317  

TechStyle, Inc. (p.k.a. Just Fabulous, Inc.)

2301 Rosecrans Avenue

El Segundo, CA 90245

    0.49   Consumer & Business Products   Warrant   Preferred Series B  

July 16,

2013

    206,185       1,102       1,890  

 

29


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

The Neat Company

3401 Market Street, Suite 120
Philadelphia, PA 19104

    0.01   Consumer & Business Products   Warrant   Common Stock   August 13, 2014     54,054     $ 365     $ —    

Whoop, Inc.

401 Park Drive
Boston, MA 02215

    0.10   Consumer & Business Products   Warrant   Preferred Series C   June 27, 2018     68,627       18       605  
             

 

 

   

 

 

 

Subtotal: Consumer & Business Products (0.21%)*

 

    2,145       2,812  
 

 

 

   

 

 

 

Drug Delivery

               

Aerami Therapeutics (p.k.a. Dance Biopharm, Inc.)

2520 Meridian Parkway
Durham, NC 94103

 

 

 

 

0.25

 

 

 

Drug Delivery

 

 

Warrant

 

 

Common Stock

 

 

September 30, 2015

 

 

 

 

110,882

 

 

 

 

 

 

74

 

 

 

 

 

 

—  

 

 

BioQ Pharma Incorporated

185 Berry Street, Suite 160
San Francisco, CA 94107

    1.77   Drug Delivery   Warrant   Common Stock   October 27, 2014     459,183       1       26  

PDS Biotechnology Corporation (p.k.a. Edge Therapeutics, Inc.)(4)

300 Connell Drive, Suite 4000
Berkeley Heights, NJ 07922

 

 

 

 

0.02

 

 

 

Drug Delivery

 

 

Warrant

 

 

Common Stock

 

 

August 28, 2014

 

 

 

 

3,929

 

 

 

 

 

 

390

 

 

 

 

 

 

3

 

 

             

 

 

   

 

 

 

Subtotal: Drug Delivery (0.00%)*

 

    465       29  
 

 

 

   

 

 

 

Drug Discovery & Development

               

Acacia Pharma Inc.(4)(5)(10)

Harston Mill
Cambridge, UK CB22 7GG

    0.20   Drug Discovery & Development   Warrant   Common Stock   June 29, 2018     201,330       304       35  

ADMA Biologics, Inc.(4)

465 Route 17S
Ramsey, NJ 07446

    0.07   Drug Discovery & Development   Warrant   Common Stock   December 21, 2012     89,750       295       —    

Albireo Pharma, Inc.(4)(10)

50 Milk Street
Boston, MA 02109

    0.16   Drug Discovery & Development   Warrant   Common Stock   June 8, 2020     5,311       60       70  

Axsome Therapeutics, Inc.(4)(10)

22 Courtlandt St.
New York, NY 10007

    0.04   Drug Discovery & Development   Warrant   Common Stock   September 25, 2020     15,541       681       171  

Brickell Biotech, Inc.(4)

5777 Central Avenue, Suite 102
Boulder, CO 80301

    0.01   Drug Discovery & Development   Warrant   Common Stock   February 18, 2016     9,005       118       —    

Century Therapeutics(4)

3675 Market Street
Philadelphia, PA 19104

    0.03   Drug Discovery & Development   Warrant   Common Units   September 14, 2020     16,112       37       156  

Concert Pharmaceuticals, Inc.(4)(10)

99 Hayden Avenue, Suite 100
Lexington, MA 02421

    0.41   Drug Discovery & Development   Warrant   Common Stock   December 22, 2011     61,273       178       3  

Dermavant Sciences Ltd. (10)

3780 Kilroy Airport Way
Long Beach, CA 90806

    0.18   Drug Discovery & Development   Warrant   Common Stock   May 31, 2019     223,642       100       388  

Evofem Biosciences, Inc.(4)

12400 High Bluff Drive, Suite 600
San Diego, CA 92130

    0.01   Drug Discovery & Development   Warrant   Common Stock   June 11, 2014     7,806       266       —    

 

30


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Genocea Biosciences, Inc.(4)

161 First Street, Suite 2C
Cambridge, MA 02142

    0.12   Drug Discovery & Development   Warrant   Common Stock   April 24, 2018     41,176     $ 165     $ 4  

Motif Bio PLC(10)

125 Park Avenue
New York, NY 10017

    40.90   Drug Discovery & Development   Warrant   Common Stock   November 14, 2017     121,337,041       282       —    

Myovant Sciences, Ltd.(4)(10)

2000 Sierra Point Parkway
Brisbane, CA 94005

    0.08   Drug Discovery & Development   Warrant   Common Stock   October 16, 2017     73,710       460       647  

Paratek Pharmaceuticals, Inc.(4)

75 Park Plaza
Boston, MA 02116

    1.14   Drug Discovery & Development   Warrant   Common Stock   December 12, 2016     469,388       644       550  

Phathom Pharmaceuticals, Inc.(4)(10)(15)(16)

100 Campus Drive, Suite 102
Florham Park, NJ 07932

    0.22   Drug Discovery & Development   Warrant   Common Stock   September 17, 2021     64,687       848       792  

Stealth Bio Therapeutics Corp.(4)(10)

275 Grove Street
Auburndale, MA 02466

    0.87   Drug Discovery & Development   Warrant   Common Stock   June 30, 2017     500,000       158       1  

Scynexis, Inc.(4)

101 Hudson Street, Suite 3610
Jersey City, NJ 07302

    0.26   Drug Discovery & Development   Warrant   Common Stock   May 14, 2021     60,591       188       118  

TG Therapeutics, Inc.(4)(10)

787 Seventh Avenue
New York, NY 10019

    0.11   Drug Discovery & Development   Warrant   Common Stock   February 28, 2019     147,058       564       3,236  

Tricida, Inc.(4)

7000 Shoreline Court
South San Francisco, CA 94080

    0.20   Drug Discovery & Development   Warrant   Common Stock   March 27, 2019     31,352       281       1  

Valo Health, LLC (p.k.a. Integral Health Holdings, LLC)

399 Boylston Street
Boston, MA 02116

    0.31   Drug Discovery & Development   Warrant   Common Units   June 15, 2020     102,216       257       838  

X4 Pharmaceuticals, Inc.(4)

955 Massachusetts Ave
Cambridge, MA 02139

    1.25   Drug Discovery & Development   Warrant   Common Stock   October 19, 2018     108,334       673       36  

Yumanity Therapeutics, Inc.(4)

790 Memorial Drive, Suite 2C
Cambridge, MA 02139

    0.15   Drug Discovery & Development   Warrant   Common Stock   December 20, 2019     15,414       110       41  
             

 

 

   

 

 

 

Subtotal: Drug Discovery & Development (0.53%)*

 

    6,669       7,087  
 

 

 

   

 

 

 

Electronics & Computer Hardware

               

908 Devices, Inc.(4)

645 Summer Street
Boston, MA 02210

    0.18   Electronics & Computer Hardware   Warrant   Common Stock   March 15, 2017     49,078       101       860  
             

 

 

   

 

 

 

Subtotal: Electronics & Computer Hardware (0.06%)*

 

    101       860  
 

 

 

   

 

 

 

 

31


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Information Services

               

InMobi Inc. (10)

475 Brannan Street, Suite 410
San Francisco, CA 94107

    0.16   Information Services   Warrant   Common Stock   November 19, 2014     65,587     $ 82     $ —    

Netbase Solutions, Inc.

3960 Freedom Circle
Santa Clara, CA 95054

    0.01   Information Services   Warrant   Preferred Series 1   August 22, 2017     60,000       356       525  

Planet Labs, Inc.

490 2nd Street
San Francisco, CA 94107

    0.25   Information Services   Warrant   Common Stock   June 21, 2019     357,752       615       4,178  

Sapphire Digital, Inc. (p.k.a. MDX Medical, Inc.)

210 Clay Avenue, 140
Lyndhurst, NJ 07071

 

 

 

 

0.92

 

 

 

Information Services

 

 

Warrant

 

 

Common Stock

 

 

May 25, 2017

 

 

 

 

2,812,500

 

 

 

 

 

 

283

 

 

 

 

 

 

744

 

 

             

 

 

   

 

 

 

Subtotal: Information Services (0.41%)*

 

    1,336       5,447  
 

 

 

   

 

 

 

Internet Consumer & Business Services

               

Aria Systems, Inc.

575 Market Street, 10th Floor
San Francisco, CA 94105

    0.14   Internet Consumer & Business Services   Warrant   Preferred Series G   May 22, 2015     231,535       73       —    

Cloudpay, Inc.(5)(10)

1 & 2 The Woodford Centre
Salisbury, England Wiltshire SP4 6BU

    0.39   Internet Consumer & Business Services   Warrant   Preferred Series B   April 10, 2018     6,763       54       300  

First Insight, Inc.

2000 Ericsson Drive, Suite 200
Warrendale, PA 15086

    0.37   Internet Consumer & Business Services   Warrant   Preferred Series B   May 10, 2018     75,917       96       80  

Houzz, Inc.

540 Bryant Street
Palo Alto, CA 94301

    0.14   Internet Consumer & Business Services   Warrant   Common Stock   October 29, 2019     529,661       20       153  

Interactions Corporation

31 Hayward Street
Franklin, MA 02038

    0.06   Internet Consumer & Business Services   Warrant   Preferred Series G-3   June 16, 2015     68,187       204       520  

Landing Holdings Inc.(15)

535 Mission Street
San Francisco, CA 94105

    0.13   Internet Consumer & Business Services   Warrant   Common Stock   March 12, 2021     11,806       116       169  

Lendio, Inc.

10235 South Jordan Gateway
South Jordan, UT 84095

    0.07   Internet Consumer & Business Services   Warrant   Preferred Series D   March 29, 2019     127,032       39       92  

LogicSource

20 Marshall Street
Sourth Norwalk, CT 06854

    0.39   Internet Consumer & Business Services   Warrant   Preferred Series C   March 21, 2016     79,625       30       165  

Rhino Labs, Inc.(15)

99 Wall Street
New York, NY 10005

    0.28   Internet Consumer & Business Services   Warrant   Common Stock   March 12, 2021     13,106       471       144  

RumbleON, Inc.(4)

4521 Sharon Road, Suite 370
Charlotte, NC 28211

    0.15   Internet Consumer & Business Services   Warrant   Common Stock   April 30, 2018     5,139       87       35  

SeatGeek, Inc.

902 Broadway
New York, NY 10013

    0.74   Internet Consumer & Business Services   Warrant   Common Stock   June 12, 2019     1,379,761       843       1,080  

ShareThis, Inc.

4009 Miranda Avenue, Suite 200
Palo Alto, CA 94304

    0.91   Internet Consumer & Business Services   Warrant   Preferred Series C   December 14, 2012     493,502       547       —    

 

32


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Skyword, Inc.

38 Chauncy Street
Boston, MA 02109

    0.31   Internet Consumer & Business Services   Warrant   Preferred Series B   August 23, 2019     444,444     $ 83     $ 16  

Snagajob.com, Inc.

1919 N Lynn Street
Arlington, VA 22209

    1.46   Internet Consumer & Business Services   Warrant   Common Stock  

April 20,

2020

    600,000       16       67  
    Internet Consumer & Business Services   Warrant   Preferred Series A  

June 30,

2016

    1,800,000       782       66  
    Internet Consumer & Business Services   Warrant   Preferred Series B   August 1, 2018     1,211,537       62       30  
           

 

 

   

 

 

   

 

 

 

Total Snagajob.com, Inc.

    3,611,537       860       163  

Tapjoy, Inc.

353 Sacramento Street
San Francisco, CA 94111

    0.35   Internet Consumer & Business Services   Warrant   Preferred Series D   July 1, 2014     748,670       316       80  

The Faction Group LLC

303 East 17th Avenue
Denver, CO 80203

    1.40   Internet Consumer & Business Services   Warrant   Preferred Series AA   November 3, 2014     8,076       234       802  

Thumbtack, Inc.

1001 Page Street
San Francisco, CA 94117

    0.08   Internet Consumer & Business Services   Warrant   Common Stock  

May 1,

2018

    190,953       553       984  

Zepz (p.k.a. Worldremit Group Limited) (5)(10)(16)

Kensington Centre
66 Hammersmith Road
London, England W14 8UD

    0.16   Internet Consumer & Business Services   Warrant   Preferred Series D   February 11, 2021     77,215       129       1,915  
    Internet Consumer & Business Services   Warrant   Preferred Series E   August 27, 2021     1,868       26       22  
           

 

 

   

 

 

   

 

 

 

Total Zepz (p.k.a. Worldremit Group Limited)

              79,083       155       1,937  

Xometry, Inc. (4)(20)

7951 Cessna Avenue
Gaithersburg, MD 20879

    1.01   Internet Consumer & Business Services   Warrant   Common Stock  

May 9,

2018

    87,784       47       2,973  
             

 

 

   

 

 

 

Subtotal: Internet Consumer & Business Services (0.72%)*

 

    4,828       9,693  
 

 

 

   

 

 

 

Media/Content/Info

               

Zoom Media Group, Inc.

112 Madison Avenue, 8th Floor
New York, NY 10016

    0.44   Media/Content/Info   Warrant   Preferred Series A   December 21, 2012     1,204       348       —    
             

 

 

   

 

 

 

Subtotal: Media/Content/Info (0.00%)*

 

    348       —    
 

 

 

   

 

 

 

Medical Devices & Equipment

               

Aspire Bariatrics, Inc.

319 North Pottstown Pike
Exton, PA 19406

    0.21   Medical Devices & Equipment   Warrant   Common Stock   January 28, 2015     22,572       455       —    

Flowonix Medical Incorporated

500 International Drive
Mount Olive, NJ 07828

    0.34   Medical Devices & Equipment   Warrant   Preferred Series AA   November 3, 2014     155,325       362       —    
    Medical Devices & Equipment   Warrant   Preferred Series BB   September 21, 2018     725,806       351       —    
           

 

 

   

 

 

   

 

 

 

Total Flowonix Medical Incorporated

    881,131       713       —    

 

33


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Intuity Medical, Inc.

3500 West Warren Avenue
Fremont, CA 94538

    0.29   Medical Devices & Equipment   Warrant   Preferred Series B-1   December 29, 2017     3,076,323     $ 294     $ 287  

Medrobotics Corporation

475 Paramount Drive
Raynham, MA 02767

    0.74   Medical Devices & Equipment   Warrant   Preferred Series E   March 13, 2013     455,539       370       —    

Outset Medical, Inc.(4)

3052 Orchard Drive
San Jose, CA 95134

    0.14   Medical Devices & Equipment   Warrant   Common Stock   September 27, 2013     62,794       402       1,955  

SonaCare Medical, LLC

801 E. Morehead Street, Suite 201
Charlotte, NC 28202

    0.02   Medical Devices & Equipment   Warrant   Preferred Series A   September 28, 2012     6,464       188       —    

Tela Bio, Inc.(4)

One Great Valley Parkway, Suite 24
Malvern, PA 19355

    0.11   Medical Devices & Equipment   Warrant   Common Stock   March 31, 2017     15,712       61       6  
             

 

 

   

 

 

 

Subtotal: Medical Devices & Equipment (0.17%)*

 

    2,483       2,248  
 

 

 

   

 

 

 

Semiconductors

               

Achronix Semiconductor Corporation

2903 Bunker Hill Lane
Santa Clara, CA 95054

    0.32   Semiconductors   Warrant   Preferred Series D-2   June 26, 2015     750,000       99       1,951  
             

 

 

   

 

 

 

Subtotal: Semiconductors (0.15%)*

 

    99       1,951  
 

 

 

   

 

 

 

Software

               

Bitsight Technologies, Inc.

100 Cambridge Park Drive
Cambridge, MA 02140

    0.12   Software   Warrant   Common Stock   November 18, 2020     29,691       284       600  

CloudBolt Software Inc.

51 Monroe Street
Rockville, MD 20850

    0.31   Software   Warrant   Common Stock   September 30, 2020     211,342       117       109  

Cloudian, Inc.

2600 Campus Drive
San Mateo, CA 94403

    0.17   Software   Warrant   Common Stock   November 6, 2018     477,454       72       41  

Couchbase, Inc.(4)(20)

3250 Olcott Street
Santa Clara, CA 95054

    0.24   Software   Warrant   Common Stock   April 25, 2019     105,350       462       1,493  

Dashlane, Inc.

44 West 18th Street
New York, NY 10011

    0.45   Software   Warrant   Common Stock   March 11, 2019     560,536       405       422  

Demandbase, Inc.

680 Folsom Street
San Francisco, CA 94107

    0.15   Software   Warrant   Common Stock   August 2, 2021     483,248       404       463  

Delphix Corp.

1400A Seaport Blvd #200
Redwood City, CA

    0.58   Software   Warrant   Common Stock   October 8, 2019     718,898       1,593       2,842  

DNAnexus, Inc.

420 Florence Street
Palo Alto, CA 94301

    0.14   Software   Warrant   Preferred Series C   March 21, 2014     909,091       97       95  

Evernote Corporation

305 Walnut Street
Redwood City, CA 94063

    0.05   Software   Warrant   Common Stock   September 30, 2016     62,500       106       75  

 

34


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Fuze, Inc.

2 Copley Place
Boston, MA 02116

    0.09   Software   Warrant   Preferred Series F   June 30, 2017     256,158     $ 89     $ —    

Lightbend, Inc.

625 Market Street
San Francisco, CA 94105

    0.61   Software   Warrant   Preferred Series C-1   February 14, 2018     854,787       130       59  

Mixpanel, Inc.

One Front Street
San Francisco, CA 94111

    0.23   Software   Warrant   Common Stock   September 30, 2020     82,362       252       503  

Nuvolo Technologies Corporation

115 W Century Road
Paramus, NJ 07652

    0.15   Software   Warrant   Common Stock   March 29, 2019     50,000       89       367  

OneLogin, Inc.

848 Battery Street
San Francisco, CA 94111

    0.40   Software   Warrant   Common Stock   February 2, 2016     381,620       305       1,560  

Poplicus, Inc.

19 South Park Avenue
San Francisco, CA 94107

    0.33   Software   Warrant   Common Stock   May 28, 2014     132,168       —         —    

Pymetrics, Inc.

102 Madison Avenue
New York, NY 10016

    0.45   Software   Warrant   Common Stock   September 15, 2020     150,943       76       149  

RapidMiner, Inc.

10 Milk Street
Boston, MA 02110

    0.30   Software   Warrant   Preferred Series C-1   November 28, 2017     4,982       24       47  

Reltio, Inc.

100 Marine Parkway
Redwood Shores, CA 94065

    0.10   Software   Warrant   Common Stock   June 30, 2020     69,120       215       290  

Signpost, Inc.

333 Hudson Street
New York, NY 10014

    0.32   Software   Warrant   Series Junior 1 Preferred   January 13, 2016     474,019       314       —    

SingleStore, Inc. (p.k.a. memsql, Inc.)

380 10th Street, Suite 25
San Francisco, CA 94103

    0.55   Software   Warrant   Preferred Series D   April 28, 2020     312,596       103       713  

Tact.ai Technologies, Inc.

2400 Broadway Street
Redwood City, CA 94063

    0.82   Software   Warrant   Common Stock   February 13, 2020     1,041,667       206       188  

Udacity, Inc.

2440 W El Camino Real
Mountain View, CA 94040

    0.28   Software   Warrant   Common Stock   September 25, 2020     486,359       218       297  

ZeroFox, Inc.

1111 Light Street, 3rd Floor
Baltimore, MD 21230

    0.20   Software   Warrant   Preferred Series C-1   May 7, 2020     648,350       100       302  

Zimperium, Inc.

560 Mission Street
San Francisco, CA 94105

    0.04   Software   Warrant   Common Stock   July 2, 2021     20,563       72       70  
             

 

 

   

 

 

 

Subtotal: Software (0.80%)*

 

    5,733       10,685  
 

 

 

   

 

 

 

 

35


Table of Contents

As of September 30, 2021

(dollar amounts in thousands)

(unaudited)

 

Portfolio Company

  Percentage
Ownership
   

Sub-Industry

 

Type of
Investment(1)

 

Series

 

Initial
Acquisition
Date

  Shares     Cost(3)     Value(4)  

Specialty Pharmaceuticals

               

Alimera Sciences, Inc.(4)

6120 Windward Parkway, Suite 290
Alpharetta, GA 30005

    0.44   Specialty Pharmaceuticals   Warrant   Common Stock   October 20, 2016     30,581     $ 132     $ 6  
             

 

 

   

 

 

 

Subtotal: Specialty Pharmaceuticals (0.00%)*

 

    132       6  
 

 

 

   

 

 

 

Surgical Devices

               

Gynesonics, Inc.

600 Chesapeake Drive
Redwood City, CA 94063

    0.56   Surgical Devices   Warrant   Preferred Series C   February 8, 2012     151,123       67       14  

TransMedics Group, Inc. (p.k.a Transmedics,
Inc.) (4)

200 Minuteman Road, Suite 302
Andover, MA 01810

 

 

 

 

0.23

 

 

 

Surgical Devices

 

 

Warrant

 

 

Common Stock

 

 

November 7, 2012

 

 

 

 

64,440

 

 

 

 

 

 

139

 

 

 

 

 

 

1,102

 

 

             

 

 

   

 

 

 

Subtotal: Surgical Devices (0.08%)*

 

    206       1,116  
 

 

 

   

 

 

 

Sustainable and Renewable Technology

               

Agrivida, Inc.

78E Olympia Avenue
Woburn, MA 01801

    0.32   Sustainable and Renewable Technology   Warrant   Preferred Series D   June 20, 2013     471,327       120       —    

Fulcrum Bioenergy, Inc.

4900 Hopyard Road
Pleasanton, CA 94588

    0.15   Sustainable and Renewable Technology   Warrant   Preferred Series C-1   September 13, 2012     280,897       275       706  

Halio, Inc. (p.k.a. Kinestral Technologies, Inc.)

400 East Jamie Court
South San Francisco, CA 94080

    0.36   Sustainable and Renewable Technology   Warrant   Preferred Series A   April 22, 2014     325,000       155       165  
    Sustainable and Renewable Technology   Warrant   Preferred Series B   April 7, 2015     131,883       62       54  
           

 

 

   

 

 

   

 

 

 

Total Halio, Inc. (p.k.a. Kinestral Technologies, Inc.)

    456,883       217       219  

Polyera Corporation

8025 Lamon Avenue
Skokie, IL 60077

    1.08   Sustainable and Renewable Technology   Warrant   Preferred Series C   December 11, 2012     311,609       338       —    
             

 

 

   

 

 

 

Subtotal: Sustainable and Renewable Technology (0.07%)*

 

    950       925  
 

 

 

   

 

 

 

Total: Warrant Investments (3.20%)*

 

  $ 25,913     $ 42,859  
             

 

 

   

 

 

 

Total: Investments in Securities (187.72%)*

 

  $ 2,424,166     $ 2,510,812  
             

 

 

   

 

 

 

Investment Funds & Vehicles

               

Forbion Growth Opportunities Fund
I C.V.(5)(10)(17)

Gooimeer 2-35
Naarden, Netherlands 1411 DVC

 

 

 

 

1.39

 

 

 

Drug Discovery & Development

 

 

Investment Funds & Vehicles

   

 

November 16, 2020

   

 

$

 

1,223

 

 

 

 

$

 

1,042

 

 

             

 

 

   

 

 

 

Total: Investments in Investment Funds & Vehicles (0.08%)*

 

  $ 1,223     $ 1,042  
 

 

 

   

 

 

 

Total: Investments before Cash and Cash Equivalents (187.80%)*

 

  $ 2,425,389     $ 2,511,854  
 

 

 

   

 

 

 

Cash & Cash Equivalents

               

GS Financial Square Government Fund

  Cash & Cash Equivalents   Institutional Shares       $ 206,000     $ 206,000  
             

 

 

   

 

 

 

Total: Investments in Cash & Cash Equivalents (15.40%)*

 

  $ 206,000     $ 206,000  
 

 

 

   

 

 

 

Total: Investments after Cash and Cash Equivalents (203.20%)*

 

  $ 2,631,389     $ 2,717,854  
 

 

 

   

 

 

 

 

*

Value as a percent of net assets

 

36


Table of Contents
(1)

Preferred and common stock, warrants, and equity interests are generally non-income producing.

(2)

Interest rate PRIME represents 3.25% as of September 30, 2021. 1-month LIBOR, 3-month LIBOR and 6-month LIBOR represent 0.08%, 0.13%, and 0.16%, respectively, as of September 30, 2021.

(3)

Gross unrealized appreciation, gross unrealized depreciation, and net unrealized appreciation for federal income tax purposes totaled $158.6 million, $70.5 million and $88.1 million, respectively. The tax cost of investments is $2.4 billion.

(4)

Except for warrants in 27 publicly traded companies and common stock in 34 publicly traded companies, all investments are restricted as of September 30, 2021 and were valued at fair value using Level 3 significant unobservable inputs as determined in good faith by the Company’s board of directors (the “Board”). No unrestricted securities of the same issuer are outstanding. The Company uses the Standard Industrial Code for classifying the industry grouping of its portfolio companies.

(5)

Non-U.S. company or the company’s principal place of business is outside the United States.

(6)

Affiliate investment as defined under the Investment Company Act of 1940, as amended, (the “1940 Act”) in which Hercules owns at least 5% but generally less than 25% of the company’s voting securities.

(7)

Control investment as defined under the 1940 Act in which Hercules owns at least 25% of the company’s voting securities or has greater than 50% representation on its board.

(8)

Debt is on non-accrual status as of September 30, 2021, and is therefore considered non-income producing. Note that as of September 30, 2021, only the PIK, or payment-in-kind, portion is on non-accrual for the Company’s debt investment in Tectura Corporation.

(9)

Denotes that all or a portion of the debt investment is convertible debt.

(10)

Indicates assets that the Company deems not “qualifying assets” under section 55(a) of 1940 Act. Qualifying assets must represent at least 70% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets.

(11)

Denotes that all or a portion of the debt investment secures the notes offered in the 2027 Asset-Backed Notes or 2028 Asset-Backed Notes.

(12)

Denotes that all or a portion of the debt investment is pledged as collateral under the Wells Facility.

(13)

Denotes that all or a portion of the debt investment is pledged as collateral under the Union Bank Facility.

(14)

Denotes that all or a portion of the debt investment principal includes accumulated PIK interest and is net of repayments.

(15)

Denotes that all or a portion of the investment in this portfolio company is held by Hercules Capital IV, L.P., the Company’s wholly owned small business investment company.

(16)

Denotes that the fair value of the Company’s total investments in this portfolio company represent greater than 5% of the Company’s total net assets as of September 30, 2021.

(17)

Denotes that there is an unfunded contractual commitment available at the request of this portfolio company as of September 30, 2021.

(18)

Denotes unitranche debt with first lien “last-out” senior secured position and security interest in all assets of the portfolio company whereby the “last-out” portion will be subordinated to the “first-out” portion in a liquidation, sale or other disposition.

(19)

Denotes second lien senior secured debt.

(20)

Denotes all or a portion of the public equity or warrant investment was acquired in a transaction exempt from registration under the Securities Act of 1933 (“Securities Act”) and may be deemed to be “restricted securities” under the Securities Act. As of September 30, 2021, the aggregate fair value of these securities is $28,553, or 2.13% of the Company’s net assets.

(21)

Denotes investment in a non-voting security in the form of a promissory note. The terms of the notes provide the Company with a lien on the issuers’ shares of Common Stock in portfolio company Black Crow AI, Inc., subject to release upon repayment of the outstanding balance of the notes. As of September 30, 2021, the Black Crow AI, Inc. affiliates promissory notes had an outstanding balance of $3.0 million.

 

37


Table of Contents

SENIOR SECURITIES

Information about our senior securities is shown in the following table as of September 30, 2021 and December 31, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012 and 2011. The annual information is derived from our audited consolidated financial statements for these periods, which have been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm. The “N/A” indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.

 

Class and Year

   Total Amount
Outstanding
Exclusive of
Treasury Securities(1)
     Asset Coverage
per Unit (2)
     Average
Market
Value
per Unit(3)
 

Securitized Credit Facility with Wells Fargo Capital Finance

        

December 31, 2011

   $ 10,186,830      $ 73,369        N/A  

December 31, 2012(6)

     —          —          N/A  

December 31, 2013(6)

     —          —          N/A  

December 31, 2014(6)

     —          —          N/A  

December 31, 2015

   $ 50,000,000      $ 26,352        N/A  

December 31, 2016

   $ 5,015,620      $ 290,234        N/A  

December 31, 2017(6)

     —          —          N/A  

December 31, 2018

   $ 13,106,582      $ 147,497        N/A  

December 31, 2019(6)

     —          —          N/A  

December 31, 2020(6)

     —          —          N/A  

September 30, 2021 (unaudited)(6)

     —          —          N/A  

Securitized Credit Facility with Union Bank, NA

        

December 31, 2011(6)

     —          —          N/A  

December 31, 2012(6)

     —          —          N/A  

December 31, 2013(6)

     —          —          N/A  

December 31, 2014(6)

     —          —          N/A  

December 31, 2015(6)

     —          —          N/A  

December 31, 2016(6)

     —          —          N/A  

December 31, 2017(6)

     —          —          N/A  

December 31, 2018

   $ 39,849,010      $ 48,513        N/A  

December 31, 2019

   $ 103,918,736      $ 23,423        N/A  

December 31, 2020(6)

     —          —          N/A  

September 30, 2021 (unaudited)(6)

     —          —          N/A  

Small Business Administration Debentures (HT II)(4)

        

December 31, 2011

   $ 125,000,000      $ 5,979        N/A  

December 31, 2012

   $ 76,000,000      $ 14,786        N/A  

December 31, 2013

   $ 76,000,000      $ 16,075        N/A  

December 31, 2014

   $ 41,200,000      $ 31,535        N/A  

December 31, 2015

   $ 41,200,000      $ 31,981        N/A  

December 31, 2016

   $ 41,200,000      $ 35,333        N/A  

December 31, 2017

   $ 41,200,000      $ 39,814        N/A  

December 31, 2018

     —          —          N/A  

Small Business Administration Debentures (HT III)(5)

        

December 31, 2011

   $ 100,000,000      $ 7,474        N/A  

December 31, 2012

   $ 149,000,000      $ 7,542        N/A  

December 31, 2013

   $ 149,000,000      $ 8,199        N/A  

December 31, 2014

   $ 149,000,000      $ 8,720        N/A  

December 31, 2015

   $ 149,000,000      $ 8,843        N/A  

December 31, 2016

   $ 149,000,000      $ 9,770        N/A  

December 31, 2017

   $ 149,000,000      $ 11,009        N/A  

 

38


Table of Contents

Class and Year

   Total Amount
Outstanding
Exclusive of
Treasury Securities(1)
     Asset Coverage
per Unit (2)
     Average
Market
Value
per Unit(3)
 

December 31, 2018

   $ 149,000,000      $
 
 
12,974
 
 
     N/A  

December 31, 2019

   $ 149,000,000      $
 
 
16,336
 
 
     N/A  

December 31, 2020

   $ 99,000,000      $
 
 
26,168
 
 
     N/A  

September 30, 2021 (unaudited)

     —          —          N/A  

Small Business Administration Debentures (HC IV)(8)

        

September 30, 2021 (unaudited)

   $ 64,500,000      $ 42,788        N/A  

2016 Convertible Notes

        

December 31, 2011

   $ 75,000,000      $ 10,623      $ 885  

December 31, 2012

   $ 75,000,000      $ 15,731      $ 1,038  

December 31, 2013

   $ 75,000,000      $ 16,847      $ 1,403  

December 31, 2014

   $ 17,674,000      $ 74,905      $ 1,290  

December 31, 2015

   $ 17,604,000      $ 74,847      $ 1,110  

December 31, 2016

     —          —          N/A  

April 2019 Notes

        

December 31, 2012

   $ 84,489,500      $ 13,300      $ 986  

December 31, 2013

   $ 84,489,500      $ 14,460      $ 1,021  

December 31, 2014

   $ 84,489,500      $ 15,377      $ 1,023  

December 31, 2015

   $ 64,489,500      $ 20,431      $ 1,017  

December 31, 2016

   $ 64,489,500      $ 22,573      $ 1,022  

December 31, 2017

     —          —          N/A  

September 2019 Notes

        

December 31, 2012

   $ 85,875,000      $ 13,086      $ 1,003  

December 31, 2013

   $ 85,875,000      $ 14,227      $ 1,016  

December 31, 2014

   $ 85,875,000      $ 15,129      $ 1,026  

December 31, 2015

   $ 45,875,000      $ 28,722      $ 1,009  

December 31, 2016

   $ 45,875,000      $ 31,732      $ 1,023  

December 31, 2017

     —          —          N/A  

2022 Notes

        

December 31, 2017

   $ 150,000,000      $ 10,935      $ 1,014  

December 31, 2018

   $ 150,000,000      $ 12,888      $ 976  

December 31, 2019

   $ 150,000,000      $ 16,227      $ 1,008  

December 31, 2020

   $ 150,000,000      $ 17,271      $ 1,017  

September 30, 2021 (unaudited)

   $ 150,000,000      $ 18,399      $ 1,018  

2024 Notes

        

December 31, 2014

   $ 103,000,000      $ 12,614      $ 1,010  

December 31, 2015

   $ 103,000,000      $ 12,792      $ 1,014  

December 31, 2016

   $ 252,873,175      $ 5,757      $ 1,016  

December 31, 2017

   $ 183,509,600      $ 8,939      $ 1,025  

December 31, 2018

   $ 83,509,600      $ 23,149      $ 1,011  

December 31, 2019

     —          —          N/A  

2025 Notes

        

December 31, 2018

   $ 75,000,000      $ 25,776      $ 962  

December 31, 2019

   $ 75,000,000      $ 32,454      $ 1,032  

December 31, 2020

   $ 75,000,000      $ 34,541      $ 1,020  

September 30, 2021 (unaudited)

   $ —        $ —          N/A  

 

39


Table of Contents

Class and Year

   Total Amount
Outstanding
Exclusive of
Treasury Securities(1)
     Asset Coverage
per Unit (2)
     Average
Market
Value
per Unit(3)
 

2033 Notes

        

December 31, 2018

   $ 40,000,000      $ 48,330      $ 934  

December 31, 2019

   $ 40,000,000      $ 60,851      $ 1,054  

December 31, 2020

   $ 40,000,000      $ 64,765      $ 1,072  

September 30, 2021 (unaudited)

   $ 40,000,000      $ 68,996      $ 1,058  

July 2024 Notes

        

December 31, 2019

   $ 105,000,000      $ 23,181        N/A  

December 31, 2020

   $ 105,000,000      $ 24,672        N/A  

September 30, 2021 (unaudited)

   $ 105,000,000      $ 26,284        N/A  

February 2025 Notes

        

December 31, 2020

   $ 50,000,000      $ 51,812        N/A  

September 30, 2021 (unaudited)

   $ 50,000,000      $ 55,197        N/A  

June 2025 Notes

        

December 31, 2020

   $ 70,000,000      $ 37,009        N/A  

September 30, 2021 (unaudited)

   $ 70,000,000      $ 39,426        N/A  

March 2026 A Notes

        

December 31, 2020

   $ 50,000,000      $ 51,812        N/A  

September 30, 2021 (unaudited)

   $ 50,000,000      $ 55,197        N/A  

March 2026 B Notes

        

September 30, 2021 (unaudited)

   $ 50,000,000      $ 55,197        N/A  

September 2026 Notes

        

September 30, 2021 (unaudited)

   $ 325,000,000      $ 8,492      $ 902  

2017 Asset-Backed Notes

        

December 31, 2012

   $ 129,300,000      $ 8,691      $ 1,000  

December 31, 2013

   $ 89,556,972      $ 13,642      $ 1,004  

December 31, 2014

   $ 16,049,144      $ 80,953      $ 1,375  

December 31, 2015

     —          —          N/A  

2021 Asset-Backed Notes

        

December 31, 2014

   $ 129,300,000      $ 10,048      $ 1,000  

December 31, 2015

   $ 129,300,000      $ 10,190      $ 996  

December 31, 2016

   $ 109,205,263      $ 13,330      $ 1,002  

December 31, 2017

   $ 49,152,504      $ 33,372      $ 1,001  

December 31, 2018

     —          —          N/A  

2027 Asset-Backed Notes

        

December 31, 2018

   $ 200,000,000      $ 9,666      $ 1,006  

December 31, 2019

   $ 200,000,000      $ 12,170      $ 1,004  

December 31, 2020

   $ 180,988,022      $ 14,314      $ 1,001  

September 30, 2021 (unaudited)

   $ 115,373,367      $ 23,921      $ 1,000  

2028 Asset-Backed Notes

        

December 31, 2019

   $ 250,000,000      $ 9,736      $ 1,004  

December 31, 2020

   $ 250,000,000      $ 10,362      $ 1,002  

September 30, 2021 (unaudited)

   $ 173,809,040      $ 15,879      $ 1,001  

2022 Convertible Notes

        

December 31, 2017

   $ 230,000,000      $ 7,132      $ 1,028  

December 31, 2018

   $ 230,000,000      $ 8,405      $ 946  

December 31, 2019

   $ 230,000,000      $ 10,583      $ 1,021  

December 31, 2020

   $ 230,000,000      $ 11,264      $ 1,027  

September 30, 2021 (unaudited)

   $ 230,000,000      $ 11,999      $ 1,043  

Total Senior Securities(7)

        

December 31, 2011

   $ 310,186,830      $ 2,409        N/A  

December 31, 2012

   $ 599,664,500      $ 1,874        N/A  

December 31, 2013

   $ 559,921,472      $ 2,182        N/A  

 

40


Table of Contents

Class and Year

   Total Amount
Outstanding
Exclusive of
Treasury Securities(1)
     Asset Coverage
per Unit (2)
     Average
Market
Value
per Unit(3)
 

December 31, 2014

   $ 626,587,644      $ 2,073        N/A  

December 31, 2015

   $ 600,468,500      $ 2,194        N/A  

December 31, 2016

   $ 667,658,558      $ 2,180        N/A  

December 31, 2017

   $ 802,862,104      $ 2,043        N/A  

December 31, 2018

   $ 980,465,192      $ 1,972        N/A  

December 31, 2019

   $ 1,302,918,736      $ 1,868        N/A  

December 31, 2020

   $ 1,299,988,022      $ 1,993        N/A  

September 30, 2021 (unaudited)

   $ 1,423,682,407      $ 1,939        N/A  

 

(1)

Total amount of each class of senior securities outstanding at the end of the period presented.

(2)

The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, including senior securities not subject to asset coverage requirements under the 1940 Act due to exemptive relief from the SEC, divided by senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the Asset Coverage per Unit.

(3)

Not applicable because senior securities are not registered for public trading.

(4)

Issued by Hercules Technology II, L.P., or HT II, one of our prior SBIC subsidiaries, to the Small Business Association, or SBA. On July 13, 2018, we completed repayment of the remaining outstanding HT II debentures and subsequently surrendered the SBA license with respect to HT II. These categories of senior securities were not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC.

(5)

Issued by HT III, one of our prior SBIC subsidiaries, to the SBA. On May 5, 2021, we completed repayment of the remaining outstanding HT III debentures and subsequently surrendered the SBA license with respect to HT III. These categories of senior securities were not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC.

(6)

The Company’s Wells Facility and Union Bank Facility had no borrowings outstanding as of the period ends noted above.

(7)

The total senior securities and Asset Coverage per Unit shown for those securities do not represent the asset coverage ratio requirement under the 1940 Act, because the presentation includes senior securities not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC. As of September 30, 2021 and December 31, 2020, our asset coverage ratio under our regulatory requirements as a business development company was 198.3% and 207.5%, respectively, excluding our SBA debentures as a result of our exemptive order from the SEC which allows us to exclude all SBA leverage from our asset coverage ratio.

(8)

Issued by Hercules Capital IV, L.P. or HC IV, a SBIC subsidiary, to the SBA. These categories of senior securities were not subject to the asset coverage requirements of the 1940 Act as a result of exemptive relief granted to us by the SEC.

 

41


Table of Contents

BUSINESS

The information contained under the caption “Business” of our most recent Annual Report on Form 10-K is incorporated by reference herein.

 

42


Table of Contents

MANAGEMENT

The information contained under the captions “Proposal 1: Election of Directors” and “Corporate Governance” in our most recent Proxy Statement for our Annual Meeting of Stockholders and “Business” of our most recent Annual Report on Form 10-K is incorporated by reference herein.

 

43


Table of Contents

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The information contained under the captions “Certain United States Income Tax Considerations” of our most recent Annual Report on Form 10-K is incorporated by reference herein.

 

44


Table of Contents

SALES OF COMMON STOCK BELOW NET ASSET VALUE

We are not generally able to issue and sell our common stock at a price below NAV per share. We may, however, sell our common stock, at a price below the current NAV of the common stock, or sell warrants, options or other rights to acquire such common stock, at a price below the current NAV of the common stock if our Board of Directors determines that such sale is in our best interests and the best interests of our stockholders and our stockholders have approved the practice of making such sales. In connection with the receipt of such stockholder approval, we will agree to limit the number of shares that we issue at a price below NAV pursuant to this authorization so that the aggregate dilutive effect on our then outstanding shares will not exceed 20%. Our Board of Directors, subject to its fiduciary duties and regulatory requirements, has the discretion to determine the amount of the discount, and as a result, the discount could be up to 100% of NAV per share.

In order to sell shares pursuant to this authorization:

 

   

a majority of our independent directors who have no financial interest in the sale must have approved the sale; and

 

   

a majority of such directors, who are not interested persons of the Company, in consultation with the underwriter or underwriters of the offering if it is to be underwritten, must have determined in good faith, and as of a time immediately prior to the first solicitation by us or on our behalf of firm commitments to purchase such shares or immediately prior to the issuance of such shares, that the price at which such shares are to be sold is not less than a price which closely approximates the market value of those shares, less any underwriting commission or discount; and

Any offering of common stock below NAV per share will be designed to raise capital for investment in accordance with our investment objectives and business strategies.

In making a determination that an offering below NAV per share is in our and our stockholders’ best interests, our Board of Directors would consider a variety of factors including:

 

   

The effect that an offering below NAV per share would have on our stockholders, including the potential dilution they would experience as a result of the offering;

 

   

The amount per share by which the offering price per share and the net proceeds per share are less than the most recently determined NAV per share;

 

   

The relationship of recent market prices of our common stock to NAV per share and the potential impact of the offering on the market price per share of our common stock;

 

   

Whether the proposed offering price would closely approximate the market value of our shares;

 

   

The potential market impact of being able to raise capital during the current financial market difficulties;

 

   

The nature of any new investors anticipated to acquire shares in the offering;

 

   

The anticipated rate of return on and quality, type and availability of investments to be funded with the proceeds from the offering, if any; and

 

   

The leverage available to us, both before and after any offering, and the terms thereof.

Sales by us of our common stock at a discount from NAV pose potential risks for our existing stockholders whether or not they participate in the offering, as well as for new investors who participate in the offering.

The following three headings and accompanying tables will explain and provide hypothetical examples on the impact of an offering at a price less than NAV per share on three different sets of investors:

 

   

existing stockholders who do not purchase any shares in the offering;

 

45


Table of Contents
   

existing stockholders who purchase a relatively small amount of shares in the offering or a relatively large amount of shares in the offering; and

 

   

new investors who become stockholders by purchasing shares in the offering.

Impact on Existing Stockholders not Participating in the Offering

Our existing stockholders who do not participate in an offering below NAV per share or who do not buy additional shares in the secondary market at the same or lower price we obtain in the offering (after expenses and commissions) face the greatest potential risks. All stockholders will experience an immediate decrease (often called dilution) in the NAV of the shares they hold. Stockholders who do not participate in the offering will also experience a disproportionately greater decrease in their participation in our earnings and assets and their voting power than stockholders who do participate in the offering. All stockholders may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discount to NAV increases.

The following table illustrates the level of NAV dilution that would be experienced by a nonparticipating stockholder in different hypothetical offerings of different sizes and levels of discount from NAV per share. Actual sales prices and discounts may differ from the presentation below.

 

46


Table of Contents

The examples assume that Company XYZ has 3,000,000 common shares outstanding, $40,000,000 in total assets and $10,000,000 in total liabilities. The current NAV and NAV per share are thus $30,000,000 and $10.00, respectively. The table illustrates the dilutive effect on nonparticipating Stockholder A of (1) an offering of 300,000 shares (10% of the outstanding shares) with proceeds to the Company XYZ at $9.00 per share after offering expenses and commissions, and (2) an offering of 600,000 shares (20% of the outstanding shares) with proceeds to the Company at $0.001 per share after offering expenses and commissions (a 100% discount from NAV).

 

     Prior to
Sale Below
NAV
    Example 1
10% Offering
at 10% Discount
    Example 2
20% Offering
at 100% Discount
 
    Following
Sale
    %
Change
    Following
Sale
    %
Change
 

Offering Price

        

Price per Share to Public(1)

     —       $ 9.47       —       $ 0.001       —    

Net Proceeds per Share to Issuer

     —       $ 9.00       —       $ 0.001       —    

Decrease to NAV

        

Total Shares Outstanding

     3,000,000       3,300,000       10.00     3,600,000       20.00

NAV per Share

   $ 10.00     $ 9.91       (0.90 )%    $ 8.33       (16.67 )% 

Share Dilution to Stockholder

        

Shares Held by Stockholder A

     30,000       30,000       —         30,000       —    

Percentage of Shares Held by Stockholder A

     1.00     0.91     (9.09 )%      0.83     (16.67 )% 

Total Asset Values

        

Total NAV Held by Stockholder A

   $ 300,000     $ 297,273       (0.90 )%    $ 250,005       (16.67 )% 

Total Investment by Stockholder A (Assumed to Be $10.00 per Share)

   $ 300,000     $ 300,000       —       $ 300,000       —    

Total Dilution to Stockholder A (Change in Total NAV Held By Stockholder)

     —       $ (2,727     —       $ (49,995     —    

Per Share Amounts

        

NAV per Share Held by Stockholder A

     —       $ 9.91       —       $ 8.33       —    

Investment per Share Held by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale)

   $ 10.00     $ 10.00       —       $ 10.00       —    

Dilution per Share Held by Stockholder A

     —       $ (0.09     —       $ (1.67     —    

Percentage Dilution per Share Held by Stockholder A

     —         —         (0.91 )%      —         (16.67 )% 

 

(1)

Assumes 5% in selling compensation and expenses paid by Company XYZ.

Impact on Existing Stockholders who do Participate in the Offering

Our existing stockholders who participate in an offering below NAV per share or who buy additional shares in the secondary market at the same or lower price as we obtain in the offering (after expenses and commissions) will experience the same types of NAV dilution as the nonparticipating stockholders, albeit at a lower level, to the extent they purchase less than the same percentage of the discounted offering as their interest in our shares immediately prior to the offering. The level of NAV dilution on an aggregate basis will decrease as the number of shares such stockholders purchase increases. Existing stockholders who buy more than their proportionate percentage will experience NAV dilution but will, in contrast to existing stockholders who purchase less than

their proportionate share of the offering, experience an increase (often called accretion) in NAV per share over their investment per share and will also experience a disproportionately greater increase in their participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests due to the offering. The level of accretion will increase as the excess number of shares purchased by such stockholder increases. Even a stockholder who over-participates will, however, be subject to the risk that we

 

47


Table of Contents

may make additional discounted offerings in which such stockholder does not participate, in which case such a stockholder will experience NAV dilution as described above in such subsequent offerings. These stockholders may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and the level of discount to NAV increases.

The following chart illustrates the level of dilution and accretion in the hypothetical 20% discount offering from the prior chart (Example 3) for a stockholder that acquires shares equal to (1) 50% of its proportionate share of the offering (i.e., 3,000 shares, which is 0.5% of an offering of 600,000 shares rather than its 1.0% proportionate share) and (2) 150% of such percentage (i.e., 9,000 shares, which is 1.5% of an offering of 600,000 shares rather than its 1.0% proportionate share). The prospectus supplement pursuant to which any discounted offering is made will include a chart for this example based on the actual number of shares in such offering and the actual discount from the most recently determined NAV per share.

 

     Prior to
Sale Below
NAV
    50%
Participation
    150%
Participation
 
  Following
Sale
    %
Change
    Following
Sale
    %
Change
 

Offering Price

          

Price per Share to Public(1)

     —       $ 8.42       —       $ 8.42       —    

Net Proceeds per Share to Issuer

     —       $ 8.00       —       $ 8.00       —    

Increase in Shares and Decrease to NAV

          

Total Shares Outstanding

     3,000,000       3,600,000       20.00     3,600,000       20.00

NAV per Share

   $ 10.00     $ 9.67       (3.33 )%    $ 9.67       (3.33 )% 

Dilution/Accretion to Participating Stockholder A

          

Share Dilution/Accretion

          

Shares Held by Stockholder A

     30,000       33,000       10.00     39,000       30.00

Percentage Outstanding Held by Stockholder A

     1.00     0.92     (8.33 )%      1.08     8.33

NAV Dilution/Accretion

          

Total NAV Held by Stockholder A

   $ 300,000     $ 319,000       6.33   $ 377,000       25.67

Total Investment by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale)

     —       $ 325,260       —       $ 375,780       —    

Total Dilution/Accretion to Stockholder A (Total NAV Less Total Investment)

     —       $ (6,260     —       $ 1,220       —    

NAV Dilution/Accretion per Share

    

NAV per Share Held by Stockholder A

     —       $ 9.67       —       $ 9.67       —    

Investment per Share Held by Stockholder A (Assumed to be $10.00 per Share on Shares Held Prior to Sale)

   $ 10.00     $ 9.86       (1.44 )%    $ 9.64       (3.65 )% 

NAV Dilution/Accretion per Share Experienced by Stockholder A (NAV per Share Less Investment per Share)

     —       $ (0.19     —       $ 0.03       —    

Percentage NAV Dilution/Accretion Experienced by Stockholder A (NAV Dilution/Accretion per Share Divided by Investment per Share)

     —         —         (1.93 )%      —         0.33

 

(1)

Assumes 5% in selling compensation and expenses paid by Company XYZ.

Impact on New Investors

Investors who are not currently stockholders, but who participate in an offering below NAV and whose investment per share is greater than the resulting NAV per share (due to selling compensation and expenses paid by us) will experience an immediate decrease, albeit small, in the NAV of their shares and their NAV per share

 

48


Table of Contents

compared to the price they pay for their shares. Investors who are not currently stockholders and who participate in an offering below NAV per share and whose investment per share is also less than the resulting NAV per share will experience an immediate increase in the NAV of their shares and their NAV per share compared to the price they pay for their shares. All these investors will experience a disproportionately greater participation in our earnings and assets and their voting power than our increase in assets, potential earning power and voting interests. These investors will, however, be subject to the risk that we may make additional discounted offerings in which such new stockholder does not participate, in which case such new stockholder will experience dilution as described above in such subsequent offerings. These investors may also experience a decline in the market price of their shares, which often reflects to some degree announced or potential decreases in NAV per share. This decrease could be more pronounced as the size of the offering and level of discount to NAV increases.

The following chart illustrates the level of dilution or accretion for new investors that would be experienced by a new investor in the same hypothetical 10% and 100% discounted offerings as described in the first chart above. The illustration is for a new investor who purchases the same percentage (1.00%) of the shares in the offering as Stockholder A in the prior examples held immediately prior to the offering. The prospectus supplement pursuant to which any discounted offering is made will include a chart for these examples based on the actual number of shares in such offering and the actual discount from the most recently determined NAV per share.

 

     Prior to
Sale Below
NAV
    Example 1
10% Offering
at 10% Discount
    Example 2
20% Offering
at 100% Discount
 
  Following
Sale
    %
Change
    Following
Sale
    %
Change
 

Offering Price

        

Price per Share to Public(1)

     —       $ 9.47       —       $ 0.001       —    

Net Proceeds per Share to Issuer

     —       $ 9.00       —       $ 0.001       —    

Increase in Shares and Decrease to NAV

        

Total Shares Outstanding

     3,000,000       3,300,000       10.00     3,600,000       20.00

NAV per Share

   $ 10.00     $ 9.91       (0.91 )%    $ 8.33       (16.67 )% 

Dilution/Accretion to New Investor A

        

Share Dilution

        

Shares Held by Investor A

     3,000       3,000       —         6,000       100.00

Percentage Outstanding Held by Investor A

     0.10     0.09     (9.09 )%      0.17     66.67

NAV Dilution

          

Total NAV Held by Investor A

     30,000     $ 29,727       (0.91 )%    $ 50,001       66.67

Total Investment by Investor A (At Price to Public)

     28,410     $ 28,410       —       $ 56,820       —    

Total Dilution/Accretion to Investor A (Total NAV Less Total Investment)

     $ 1,317       —       $ (6,819     —    

NAV Dilution per Share

          

NAV per Share Held by Investor A

     $ 9.91       —       $ 8.33       —    

Investment per Share Held by Investor A

     9.47     $ 9.47       —       $ 9.47       —    

NAV Dilution/Accretion per Share Experienced by Investor A (NAV per Share Less Investment per Share)

     —       $ 9.91       —       $ 8.33       —    

Percentage NAV Dilution/Accretion Experienced by Investor A (NAV Dilution/Accretion per Share Divided by Investment per Share)

     —         0.44       4.64     (1.14     (12.00 )% 

 

(1)

Assumes 5% in selling compensation and expenses paid by Company XYZ.

 

49


Table of Contents

CONTROL PERSONS AND PRINCIPAL STOCKHOLDERS

The information contained under the caption “Security Ownership of Management and Certain Beneficial Owners” in our most recent Definitive Proxy Statement on Schedule 14A is incorporated by reference herein.

 

50


Table of Contents

DIVIDEND REINVESTMENT PLAN

We have adopted a dividend reinvestment plan (the “DRP”), through which all distributions are paid to our stockholders in the form of additional shares of our common stock, unless a stockholder elects to receive cash as provided below. In this way, a stockholder can maintain an undiluted investment in our common stock and still allow us to pay out the required distributable income.

No action is required on the part of a registered stockholder to receive a distribution in shares of our common stock. A registered stockholder may elect to receive an entire distribution in cash by notifying American Stock Transfer & Trust Company, the plan administrator and our transfer agent and registrar, so that such notice is received by the plan administrator no later than three days prior to the payment date for distributions to stockholders. The plan administrator will set up an account for shares acquired through the DRP for each stockholder who has not elected to receive distributions in cash (each a “Participant”) and hold such shares in non-certificated form. Upon request by a Participant, received not less than three days prior to the payment date, the plan administrator will, instead of crediting shares to the Participant’s account, issue a certificate registered in the Participant’s name for the number of whole shares of our common stock and a check for any fractional share.

Those stockholders whose shares are held by a broker or other financial intermediary may receive distributions in cash by notifying their broker or other financial intermediary of their election.

We expect to use primarily newly-issued shares to implement the DRP, whether our shares are trading at a premium or at a discount to NAV, although we have the option under the DRP to purchase shares in the market to fulfill DRP requirements. The number of shares to be issued to a stockholder is determined by dividing the total dollar amount of the distribution payable to such stockholder by the market price per share of our common stock at the close of regular trading on the NYSE on the valuation date for such distribution. Market price per share on that date will be the closing price for such shares on the NYSE or, if no sale is reported for such day, at the average of their electronically-reported bid and asked prices. The number of shares of our common stock to be outstanding after giving effect to payment of the distribution cannot be established until the value per share at which additional shares will be issued has been determined and elections of our stockholders have been tabulated.

There is no charge to our stockholders for receiving their distributions in the form of additional shares of our common stock. The plan administrator’s fees for handling distributions in stock are paid by us. There are no brokerage charges with respect to shares we have issued directly as a result of distributions payable in stock. If a Participant elects by internet or by written or telephonic notice to the plan administrator to have the plan administrator sell part or all of the shares held by the plan administrator in the Participant’s account and remit the proceeds to the Participant, the plan administrator is authorized to deduct a $15.00 transaction fee plus brokerage commissions from the proceeds.

Any shares issued in connection with a stock split or stock dividend will be added to a Participant’s account with the Plan Administrator. The Plan Administrator may curtail or suspend transaction processing until the completion of such stock split or payment of such stock dividend.

Stockholders who receive distributions in the form of stock generally are subject to the same federal, state and local tax consequences as are stockholders who elect to receive their distributions in cash. A stockholder’s basis for determining gain or loss upon the sale of stock received in a distribution from us will be equal to the total dollar amount of the distribution payable to the stockholder.

The DRP may be terminated by us upon notice in writing mailed to each Participant at least 30 days prior to any record date for the payment of any distribution by us. All correspondence concerning the DRP, including requests for additional information, should be directed to the plan administrator by mail at American Stock Transfer & Trust Company, Attn: Dividend Reinvestment Department, P.O. Box 922, Wall Street Station, New York, NY 10269-0560 or by phone at 1-866-669-9888.

 

51


Table of Contents

DESCRIPTION OF CAPITAL STOCK

The following description is based on relevant portions of the Maryland General Corporation Law and on our charter and bylaws. This summary may not contain all of the information that is important to you, and we refer you to the Maryland General Corporation Law and our charter and bylaws for a more detailed description of the provisions summarized below. We urge you to read the applicable prospectus supplement and any related free writing prospectus that we may authorize to be provided to you related to any shares of our capital stock being offered.

Under the terms of our charter, our authorized capital stock consists of 200,000,000 shares of common stock, par value $0.001 per share, of which 116,375,323 shares are outstanding as of December 13, 2021. Under our charter, our Board of Directors is authorized to classify and reclassify any unissued shares of stock into other classes or series of stock, and to cause the issuance of such shares, without obtaining stockholder approval. In addition, as permitted by the Maryland General Corporation Law, but subject to the 1940 Act, our charter provides that the Board of Directors, without any action by our stockholders, may amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. Under Maryland law, our stockholders generally are not personally liable for our debts or obligations.

Common Stock

All shares of our common stock have equal rights as to earnings, assets, distributions and voting privileges, except as described below and, when they are issued, will be duly authorized, validly issued, fully paid and nonassessable.

Distributions may be paid to the holders of our common stock if, as and when authorized by our Board of Directors and declared by us out of assets legally available therefor. Shares of our common stock have no conversion, exchange, preemptive or redemption rights. In the event of a liquidation, dissolution or winding up of Hercules each share of our common stock would be entitled to share ratably in all of our assets that are legally available for distribution after we pay all debts and other liabilities and subject to any preferential rights of holders of our preferred stock, if any preferred stock is outstanding at such time. Each share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders, including the election of directors. Except as provided with respect to any other class or series of stock, the holders of our common stock will possess exclusive voting power. There is no cumulative voting in the election of directors, which means that holders of a majority of the outstanding shares of common stock will elect all of our directors, and holders of less than a majority of such shares will be unable to elect any director.

 

Title of Class

   Amount
Authorized
     Amount Held
by Company
for its Account
     Amount
Outstanding
 

Common Stock, $0.001 par value per share

     200,000,000        —          116,375,323  

Preferred Stock

Our charter authorizes our Board of Directors to classify and reclassify any unissued shares of stock into other classes or series of stock, including preferred stock. Prior to issuance of shares of each class or series, the Board of Directors is required by Maryland law and by our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the Board of Directors could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest. You should note, however, that any issuance of preferred stock must

 

52


Table of Contents

comply with the requirements of the 1940 Act. The 1940 Act requires, among other things, that (1) immediately after issuance and before any dividend or other distribution is made with respect to our common stock and before any purchase of common stock is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50% of our total assets after deducting the amount of such dividend, distribution or purchase price, as the case may be, and (2) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if distributions on such preferred stock are in arrears by two years or more. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. We believe that the availability for issuance of preferred stock will provide us with increased flexibility in structuring future financings and acquisitions.

Limitation on Liability of Directors and Officers; Indemnification and Advance of Expenses

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. Our 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.

Our charter authorizes us, 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 and at our 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 such person may become subject or which such person may incur by reason of his or her service in any such capacity, except 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 our best interest or to be liable to us or our stockholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office. Our charter also provides that, to the maximum extent permitted by Maryland law, with the approval of our Board of Directors and provided that certain conditions described in our charter are met, we may pay certain expenses incurred by any such indemnified person in advance of the final disposition of a proceeding upon receipt of an undertaking by or on behalf of such indemnified person to repay amounts we have so paid if it is ultimately determined that indemnification of such expenses is not authorized under our charter. Our bylaws obligate us, 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 and at our 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, except 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 our best interest or to be liable to us or our stockholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person’s office. Our bylaws also provide that, to the maximum extent permitted by Maryland law, with the approval of our Board of Directors and provided that certain conditions described in our bylaws are met, we may pay certain expenses incurred by any such indemnified person in advance of the final disposition of a proceeding upon receipt of an undertaking by or on behalf of such indemnified person to repay amounts we have so paid if it is ultimately determined that indemnification of such expenses is not authorized under our bylaws.

Maryland law requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is

 

53


Table of Contents

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 corporation’s 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.

We currently have in effect a directors’ and officers’ insurance policy covering our directors and officers and us for any acts and omissions committed, attempted or allegedly committed by any director or officer during the policy period. The policy is subject to customary exclusions.

Provisions of the Maryland General Corporation Law and Our Charter and Bylaws

The Maryland General Corporation Law and our charter and bylaws contain provisions that could make it more difficult for a potential acquiror to acquire us by means of a tender offer, proxy contest or otherwise. These provisions are expected to discourage certain coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us to negotiate first with our Board of Directors. We believe that the benefits of these provisions outweigh the potential disadvantages of discouraging any such acquisition proposals because, among other things, the negotiation of such proposals may improve their terms.

Classified Board of Directors

Our Board of Directors is divided into three classes of directors serving staggered three-year terms. The terms of the first, second and third classes will expire in 2023, 2024 and 2022, respectively. Upon expiration of their current terms, directors of each class are eligible to serve for three-year terms or until their successors are duly elected and qualify. Each year one class of directors will be elected by the stockholders. A classified board may render a change in control or removal of our incumbent management more difficult. We believe, however, that the longer time required to elect a majority of a classified Board of Directors will help to ensure the continuity and stability of our management and policies.

Election of Directors

Our charter provides that, except as otherwise provided in the bylaws, the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote in the election of directors will be required to elect each director. Our bylaws currently provide that directors are elected by a plurality of the votes cast in the election of directors. Pursuant to our charter and bylaws, our Board of Directors may amend the bylaws to alter the vote required to elect directors.

Number of Directors; Vacancies; Removal

Our charter provides that the number of directors will be set only by the Board of Directors in accordance with our bylaws. Our bylaws provide that a majority of our entire Board of Directors may at any time increase or

 

54


Table of Contents

decrease the number of directors. However, unless the bylaws are amended, the number of directors may never be less than one nor more than 12. We have elected to be subject to the provision of Subtitle 8 of Title 3 of the Maryland General Corporation Law, as amended (the “Maryland General Corporation Law”), regarding the filling of vacancies on the Board of Directors. Accordingly, at such time, except as may be provided by the Board of Directors in setting the terms of any class or series of preferred stock, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which the vacancy occurred and until a successor is elected and qualifies, subject to any applicable requirements of the 1940 Act.

Our charter provides that a director may be removed only for cause, as defined in the charter, and then only by the affirmative vote of at least two-thirds of the votes entitled to be cast in the election of directors.

Action by Stockholders

Under the Maryland General Corporation Law, stockholder action may be taken only at an annual or special meeting of stockholders or by unanimous consent in lieu of a meeting (unless the charter provides for stockholder action by less than unanimous written consent, which our charter does not). These provisions, combined with the requirements of our bylaws regarding the calling of a stockholder-requested special meeting of stockholders discussed below, may have the effect of delaying consideration of a stockholder proposal until the next annual meeting.

Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals

Our bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to the Board of Directors and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by the Board of Directors or (3) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of the bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of persons for election to the Board of Directors at a special meeting may be made only (1) pursuant to our notice of the meeting, (2) by the Board of Directors or (3) provided that the Board of Directors has determined that directors will be elected at the meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the bylaws.

The purpose of requiring stockholders to give us advance notice of nominations and other business is to afford our Board of Directors a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of any other proposed business and, to the extent deemed necessary or desirable by our Board of Directors, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure for conducting meetings of stockholders. Although our bylaws do not give our Board of Directors any power to disapprove stockholder nominations for the election of directors or proposals recommending certain action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders.

Calling of Special Meeting of Stockholders

Our bylaws provide that special meetings of stockholders may be called by our Board of Directors and certain of our officers. Additionally, our bylaws provide that, subject to the satisfaction of certain procedural and informational requirements by the stockholders requesting the meeting, a special meeting of stockholders shall be called by our secretary upon the written request of stockholders entitled to cast not less than a majority of all of the votes entitled to be cast at such meeting.

 

55


Table of Contents

Approval of Extraordinary Corporate Action; Amendment of Charter and Bylaws

Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business, unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Our charter generally provides for approval of charter amendments and extraordinary transactions by the stockholders entitled to cast at least a majority of the votes entitled to be cast on the matter. Our charter also provides that certain charter amendments and any proposal for our conversion, whether by merger or otherwise, from a closed-end company to an open-end company or any proposal for our liquidation or dissolution requires the approval of the stockholders entitled to cast at least 75% of the votes entitled to be cast on such matter. However, if such amendment or proposal is approved by at least 75% of our continuing directors (in addition to approval by our Board of Directors), such amendment or proposal may be approved by the stockholders entitled to cast a majority of the votes entitled to be cast on such a matter. The “continuing directors” are defined in our charter as our current directors, as well as those directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of the continuing directors then on the Board of Directors.

Our charter and bylaws provide that the Board of Directors will have the exclusive power to make, alter, amend or repeal any provision of our bylaws.

No Appraisal Rights

Except with respect to appraisal rights arising in connection with the Control Share Act discussed below, as permitted by the Maryland General Corporation Law, our charter provides that stockholders will not be entitled to exercise appraisal rights.

Control Share Acquisitions

The Maryland Control Share Acquisition Act (the “Control Share Act”) provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power:

 

   

one-tenth or more but less than one-third;

 

   

one-third or more but less than a majority; or

 

   

a majority or more of all voting power.

The requisite stockholder approval must be obtained each time an acquiror crosses one of the thresholds of voting power set forth above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition means the acquisition of control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition may compel the Board of Directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

 

56


Table of Contents

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may repurchase for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to repurchase control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of stockholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

The Control Share Act does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the Control Share Act any and all acquisitions by any person of our shares of stock.

Business Combinations

Under the Maryland Business Combination Act (the “Business Combination Act”), “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:

 

   

any person who beneficially owns 10% or more of the voting power of the corporation’s shares; or

 

   

an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.

A person is not an interested stockholder under this statute if the Board of Directors approved in advance the transaction by which such stockholder otherwise would have become an interested stockholder. However, in approving a transaction, the Board of Directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the 5-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the Board of Directors of the corporation and approved by the affirmative vote of at least:

 

   

80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

 

   

two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.

These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

The statute permits various exemptions from its provisions, including business combinations that are exempted by the Board of Directors before the time that the interested stockholder becomes an interested

 

57


Table of Contents

stockholder. Our Board of Directors has adopted a resolution exempting any business combination between us and any other person from the provisions of the Business Combination Act, provided that the business combination is first approved by the Board of Directors, including a majority of the directors who are not interested persons as defined in the 1940 Act.

Conflict with 1940 Act

Our bylaws provide that, if and to the extent that any provision of the Maryland General Corporation Law, or any provision of our charter or bylaws conflicts with any provision of the 1940 Act, the applicable provision of the 1940 Act will control.

Regulatory Restrictions

Our wholly-owned subsidiary, HC IV, has obtained a SBIC license. The SBA prohibits, without prior SBA approval, a “change of control” or transfers which would result in any person (or group of persons acting in concert) owning 10% or more of any class of capital stock of a SBIC. A “change of control” is any event which would result in a transfer of the power, direct or indirect, to direct the management and policies of a SBIC, whether through ownership, contractual arrangements or otherwise.

 

58


Table of Contents

DESCRIPTION OF OUR PREFERRED STOCK

In addition to shares of common stock, our charter authorizes the issuance of preferred stock. We may issue preferred stock from time to time in one or more classes or series, without stockholder approval. If we offer preferred stock under this prospectus we will issue an appropriate prospectus supplement. Prior to issuance of shares of each class or series, our Board of Directors is required by Maryland law and by our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, the Board of Directors could authorize the issuance of shares of preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest. You should note, however, that any such an issuance must adhere to the requirements of the 1940 Act, Maryland law and any other limitations imposed by law.

The following is a general description of the terms of the preferred stock we may issue from time to time. Particular terms of any preferred stock we offer will be described in the prospectus supplement accompanying each preferred share offering.

The 1940 Act requires, among other things, that (i) immediately after issuance and before any dividend or other distribution is made with respect to our common stock and before any purchase of common stock is made, such preferred stock together with all other senior securities must not exceed an amount equal to 50% of our total assets after deducting the amount of such dividend, distribution or purchase price, as the case may be, (ii) the holders of shares of preferred stock, if any are issued, must be entitled as a class to elect two directors at all times and to elect a majority of the directors if dividends or other distribution on the preferred stock are in arrears by two years or more, and (iii) such shares be cumulative as to distributions and have a complete preference over our common stock to payment of their liquidation in event of dissolution. Some matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote separately from the holders of common stock on a proposal to cease operations as a BDC. We believe that the availability for issuance of preferred stock will provide us with increased flexibility in structuring future financings and acquisitions.

For any series of preferred stock that we may issue, our Board of Directors will determine and the articles supplementary and the prospectus supplement relating to such series will describe:

 

   

the designation and number of shares of such series;

 

   

the rate and time at which, and the preferences and conditions under which, any dividends or other distributions will be paid on shares of such series, as well as whether such dividends or other distributions are participating or non-participating;

 

   

any provisions relating to convertibility or exchangeability of the shares of such series, including adjustments to the conversion price of such series;

 

   

the rights and preferences, if any, of holders of shares of such series upon our liquidation, dissolution or winding up of our affairs;

 

   

the voting powers, if any, of the holders of shares of such series;

 

   

any provisions relating to the redemption of the shares of such series;

 

   

any limitations on our ability to pay dividends or make distributions on, or acquire or redeem, other securities while shares of such series are outstanding;

 

   

any conditions or restrictions on our ability to issue additional shares of such series or other securities;

 

   

if applicable, a discussion of certain U.S. federal income tax considerations; and

 

59


Table of Contents
   

any other relative powers, preferences and participating, optional or special rights of shares of such series, and the qualifications, limitations or restrictions thereof.

All shares of preferred stock that we may issue will be identical and of equal rank except as to the particular terms thereof that may be fixed by our Board of Directors, and all shares of each series of preferred stock will be identical and of equal rank except as to the dates from which dividends or other distributions, if any, thereon will be cumulative. To the extent we issue preferred stock, the payment of distributions to holders of our preferred stock will take priority over payment of distributions to our common stockholders. We urge you to read the applicable prospectus supplement and any free writing prospectus that we may authorize to be provided to you related to any preferred stock being offered, as well as the complete articles supplementary that contain the terms of the applicable series of preferred stock.

 

60


Table of Contents

DESCRIPTION OF OUR SUBSCRIPTION RIGHTS

The following is a general description of the terms of the subscription rights we may issue from time to time. Particular terms of any subscription rights we offer will be described in the prospectus supplement relating to such subscription rights.

We may issue subscription rights to our stockholders to purchase common stock. Subscription rights may be issued independently or together with any other offered security and may or may not be transferable by the person purchasing or receiving the subscription rights. In connection with a subscription rights offering to our stockholders, we would distribute certificates evidencing the subscription rights and a prospectus supplement to our stockholders on the record date that we set for receiving subscription rights in such subscription rights offering.

Our stockholders will indirectly bear all of the expenses of the subscription rights offering, regardless of whether our stockholders exercise any subscription rights.

A prospectus supplement will describe the particular terms of any subscription rights we may issue, including the following:

 

   

the period of time the offering would remain open (which shall be open a minimum number of days such that all record holders would be eligible to participate in the offering and shall not be open longer than 120 days);

 

   

the title and aggregate number of such subscription rights;

 

   

the exercise price for such subscription rights (or method of calculation thereof);

 

   

the currency or currencies, including composite currencies, in which the price of such subscription rights may be payable;

 

   

if applicable, the designation and terms of the securities with which the subscription rights are issued and the number of subscription rights issued with each such security or each principal amount of such security;

 

   

the ratio of the offering (which, in the case of transferable rights, will require a minimum of three shares to be held of record before a person is entitled to purchase an additional share);

 

   

the number of such subscription rights issued to each stockholder;

 

   

the extent to which such subscription rights are transferable and the market on which they may be traded if they are transferable;

 

   

the date on which the right to exercise such subscription rights shall commence, and the date on which such right shall expire (subject to any extension);

 

   

if applicable, the minimum or maximum number of subscription rights that may be exercised at one time;

 

   

the extent to which such subscription rights include an over-subscription privilege with respect to unsubscribed securities and the terms of such over-subscription privilege;

 

   

any termination right we may have in connection with such subscription rights offering;

 

   

the terms of any rights to redeem, or call such subscription rights;

 

   

information with respect to book-entry procedures, if any;

 

   

the terms of the securities issuable upon exercise of the subscription rights;

 

   

the material terms of any standby underwriting, backstop or other purchase arrangement that we may enter into in connection with the subscription rights offering;

 

61


Table of Contents
   

if applicable, a discussion of certain U.S. federal income tax considerations applicable to the issuance or exercise of such subscription rights; and

 

   

any other terms of such subscription rights, including exercise, settlement and other procedures and limitations relating to the transfer and exercise of such subscription rights.

Each subscription right will entitle the holder of the subscription right to purchase for cash or other consideration such amount of shares of common stock at such subscription price as shall in each case be set forth in, or be determinable as set forth in, the prospectus supplement relating to the subscription rights offered thereby. Subscription rights may be exercised as set forth in the prospectus supplement beginning on the date specified therein and continuing until the close of business on the expiration date for such subscription rights set forth in the prospectus supplement. After the close of business on the expiration date, all unexercised subscription rights will become void.

Upon receipt of payment and the subscription rights certificate properly completed and duly executed at the corporate trust office of the subscription rights agent or any other office indicated in the prospectus supplement we will forward, as soon as practicable, the shares of common stock purchasable upon such exercise. If less than all of the rights represented by such subscription rights certificate are exercised, a new subscription certificate will be issued for the remaining rights. Prior to exercising their subscription rights, holders of subscription rights will not have any of the rights of holders of the securities purchasable upon such exercise. To the extent permissible under applicable law, we may determine to offer any unsubscribed offered securities directly to persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, as set forth in the applicable prospectus supplement.

Under the 1940 Act, we may generally only offer subscription rights (other than rights to subscribe expiring not later than 120 days after their issuance and issued exclusively and ratably to a class or classes of our security holders) on the condition that (1) the subscription rights expire by their terms within ten years; (2) the exercise price is not less than the current market value at the date of issuance; (3) our stockholders authorize the proposal to issue such subscription rights, and a “required” majority of our Board of Directors approves of such issuance on the basis that the issuance is in the best interests of the Company and our stockholders; and (4) if the subscription rights are accompanied by other securities, the subscription rights are not separately transferable unless no class of such subscription rights and the securities accompanying them has been publicly distributed. A “required” majority of our Board of Directors is a vote of both a majority of our directors who have no financial interest in the transaction and a majority of the directors who are not interested persons of the company. The 1940 Act also provides that the amount of our voting securities that would result from the exercise of all outstanding warrants, options and subscription rights at the time of issuance may not exceed 25% of our outstanding voting securities.

 

62


Table of Contents

DESCRIPTION OF WARRANTS

The following is a general description of the terms of the warrants we may issue from time to time. Particular terms of any warrants we offer will be described in the prospectus supplement relating to such warrants and will be subject to compliance with the 1940 Act.

We may issue warrants to purchase shares of our common stock, preferred stock or debt securities. Such warrants may be issued independently or together with shares of common stock, preferred stock or debt securities and may be attached or separate from such securities. We will issue each series of warrants under a separate warrant agreement to be entered into between us and a warrant agent. The warrant agent will act solely as our agent and will not assume any obligation or relationship of agency for or with holders or beneficial owners of warrants.

A prospectus supplement will describe the particular terms of any series of warrants we may issue, including the following:

 

   

the title and aggregate number of such warrants;

 

   

the price or prices at which such warrants will be issued;

 

   

the currency or currencies, including composite currencies, in which the price of such warrants may be payable;

 

   

if applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with each such security or each principal amount of such security;

 

   

in the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant and the price at which and the currency or currencies, including composite currencies, in which this principal amount of debt securities may be purchased upon such exercise;

 

   

in the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as the case may be, purchasable upon exercise of one warrant and the price at which and the currency or currencies, including composite currencies, in which these shares may be purchased upon such exercise;

 

   

the date on which the right to exercise such warrants shall commence and the date on which such right will expire (subject to any extension);

 

   

whether such warrants will be issued in registered form or bearer form;

 

   

if applicable, the minimum or maximum amount of such warrants that may be exercised at any one time;

 

   

if applicable, the date on and after which such warrants and the related securities will be separately transferable;

 

   

the terms of any rights to redeem, or call such warrants;

 

   

information with respect to book-entry procedures, if any;

 

   

the terms of the securities issuable upon exercise of the warrants;

 

   

if applicable, a discussion of certain U.S. federal income tax considerations; and

 

   

any other terms of such warrants, including terms, procedures and limitations relating to the exchange and exercise of such warrants.

We and the warrant agent may amend or supplement the warrant agreement for a series of warrants without the consent of the holders of the warrants issued thereunder to effect changes that are not inconsistent with the provisions of the warrants and that do not materially and adversely affect the interests of the holders of the warrants.

 

63


Table of Contents

Each warrant will entitle the holder to purchase for cash such common stock or preferred stock at the exercise price or such principal amount of debt securities as shall in each case be set forth in, or be determinable as set forth in, the prospectus supplement relating to the warrants offered thereby. Warrants may be exercised as set forth in the prospectus supplement beginning on the date specified therein and continuing until the close of business on the expiration date set forth in the prospectus supplement. After the close of business on the expiration date, unexercised warrants will become void.

Upon receipt of payment and a warrant certificate properly completed and duly executed at the corporate trust office of the warrant agent or any other office indicated in the prospectus supplement, we will, as soon as practicable, forward the securities purchasable upon such exercise. If less than all of the warrants represented by such warrant certificate are exercised, a new warrant certificate will be issued for the remaining warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants may surrender securities as all or part of the exercise price for warrants.

Prior to exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such exercise, including, in the case of warrants to purchase debt securities, the right to receive principal, premium, if any, or interest payments, on the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture or, in the case of warrants to purchase common stock or preferred stock, the right to receive dividends or other distributions, if any, or payments upon our liquidation, dissolution or winding up or to exercise any voting rights.

Under the 1940 Act, we may generally only offer warrants provided that (i) the warrants expire by their terms within ten years, (ii) the exercise or conversion price is not less than the current market value at the date of issuance, (iii) our stockholders authorize the proposal to issue such warrants, and our Board of Directors approves such issuance on the basis that the issuance is in the best interests of the Company and its stockholders and (iv) if the warrants are accompanied by other securities, the warrants are not separately transferable unless no class of such warrants and the securities accompanying them has been publicly distributed. The 1940 Act also provides that the amount of our voting securities that would result from the exercise of all outstanding warrants, as well as options and rights, at the time of issuance may not exceed 25% of our outstanding voting securities.

 

64


Table of Contents

DESCRIPTION OF OUR DEBT SECURITIES

We may issue debt securities in one or more series. The specific terms of each series of debt securities will be described in this prospectus and in the particular prospectus supplement relating to that series. The prospectus supplement may or may not modify the general terms found in this prospectus and will be filed with the SEC. For a complete description of the terms of a particular series of debt securities, including any supplemental indenture, you should read both this prospectus and the prospectus supplement and any free writing prospectus relating to that particular series.

As required by federal law for all bonds and notes of companies that are publicly offered, the debt securities are governed by a document called an “indenture.” An indenture is a contract between us and U.S. Bank National Association, a financial institution acting as trustee on your behalf, and is subject to and governed by the Trust Indenture Act of 1939, as amended. The trustee has two main roles. First, the trustee can enforce your rights against us if we default. There are some limitations on the extent to which the trustee acts on your behalf, described in the second paragraph under “Events of Default—Remedies if an Event of Default Occurs.” Second, the trustee performs certain administrative duties for us.

Because this section is a summary, it does not describe every aspect of the debt securities and the indenture. The following description summarizes the material provisions of the indenture. We urge you to read the indenture because it, and not this description, defines your rights as a holder of debt securities. For example, in this section, we use capitalized words to signify terms that are specifically defined in the indenture. We have filed the form of the indenture with the SEC. See “Available Information” for information on how to obtain a copy of the indenture.

A prospectus supplement, which will accompany this prospectus, will describe the particular terms of any series of debt securities being offered, including the following:

 

   

the designation or title of the series of debt securities;

 

   

the total principal amount of the series of debt securities;

 

   

the percentage of the principal amount at which the series of debt securities will be offered;

 

   

the date or dates on which principal will be payable;

 

   

the rate or rates (which may be either fixed or variable) and/or the method of determining such rate or rates of interest, if any;

 

   

the date or dates from which any interest will accrue, or the method of determining such date or dates, and the date or dates on which any interest will be payable;

 

   

the terms for redemption, extension or early repayment, if any;

 

   

the currencies in which the series of debt securities are issued and payable;

 

   

whether the amount of payments of principal, premium or interest, if any, on a series of debt securities will be determined with reference to an index, formula or other method (which could be based on one or more currencies, commodities, equity indices or other indices) and how these amounts will be determined;

 

   

the place or places, if any, other than or in addition to the City of New York, of payment, transfer, conversion and/or exchange of the debt securities;

 

   

the denominations in which the offered debt securities will be issued;

 

   

the provision for any sinking fund;

 

   

any restrictive covenants;

 

65


Table of Contents
   

any Events of Default;

 

   

whether the series of debt securities are issuable in certificated form;

 

   

any provisions for defeasance or covenant defeasance;

 

   

if applicable, U.S. federal income tax considerations relating to OID;

 

   

whether and under what circumstances we will pay additional amounts in respect of any tax, assessment or governmental charge and, if so, whether we will have the option to redeem the debt securities rather than pay the additional amounts (and the terms of this option);

 

   

any provisions for convertibility or exchangeability of the debt securities into or for any other securities;

 

   

whether the debt securities are subject to subordination and the terms of such subordination;

 

   

the listing, if any, on a securities exchange; and

 

   

any other terms.

The debt securities may be secured or unsecured obligations. Unless the prospectus supplement states otherwise, principal (and premium, if any) and interest, if any, will be paid by us in immediately available funds.

We are permitted, under specified conditions, to issue multiple classes of indebtedness if our asset coverage, as defined in the 1940 Act, is at least equal to 150%, subject to certain disclosure requirements, immediately after each such issuance. In addition, while any indebtedness and other senior securities remain outstanding, we must make provisions to prohibit any distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage.

General

The indenture provides that any debt securities proposed to be sold under this prospectus and the attached prospectus supplement (“offered debt securities”) and any debt securities issuable upon the exercise of warrants or upon conversion or exchange of other offered securities (“underlying debt securities”), may be issued under the indenture in one or more series.

For purposes of this prospectus, any reference to the payment of principal of or premium or interest, if any, on debt securities will include additional amounts if required by the terms of the debt securities.

The indenture does not limit the amount of debt securities that may be issued thereunder from time to time. Debt securities issued under the indenture, when a single trustee is acting for all debt securities issued under the indenture, are called the “indenture securities.” The indenture also provides that there may be more than one trustee thereunder, each with respect to one or more different series of indenture securities. See “Resignation of Trustee” section below. At a time when two or more trustees are acting under the indenture, each with respect to only certain series, the term “indenture securities” means the one or more series of debt securities with respect to which each respective trustee is acting. In the event that there is more than one trustee under the indenture, the powers and trust obligations of each trustee described in this prospectus will extend only to the one or more series of indenture securities for which it is trustee. If two or more trustees are acting under the indenture, then the indenture securities for which each trustee is acting would be treated as if issued under separate indentures.

We refer you to the prospectus supplement for information with respect to any deletions from, modifications of or additions to the Events of Default or our covenants that are described below, including any addition of a covenant or other provision providing event risk or similar protection.

 

66


Table of Contents

We have the ability to issue indenture securities with terms different from those of indenture securities previously issued and, without the consent of the holders thereof, to reopen a previous issue of a series of indenture securities and issue additional indenture securities of that series unless the reopening was restricted when that series was created.

Conversion and Exchange

If any debt securities are convertible into or exchangeable for other securities, the prospectus supplement will explain the terms and conditions of the conversion or exchange, including the conversion price or exchange ratio (or the calculation method), the conversion or exchange period (or how the period will be determined), if conversion or exchange will be mandatory or at the option of the holder or us, provisions for adjusting the conversion price or the exchange ratio and provisions affecting conversion or exchange in the event of the redemption of the underlying debt securities. These terms may also include provisions under which the number or amount of other securities to be received by the holders of the debt securities upon conversion or exchange would be calculated according to the market price of the other securities as of a time stated in the prospectus supplement.

Issuance of Securities in Registered Form

We may issue the debt securities in registered form, in which case we may issue them either in book-entry form only or in “certificated” form. Debt securities issued in book-entry form will be represented by global securities. We expect that we will usually issue debt securities in book-entry only form represented by global securities.

Book-Entry Holders

We will issue registered debt securities in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. This means debt securities will be represented by one or more global securities registered in the name of a depositary that will hold them on behalf of financial institutions that participate in the depositary’s book-entry system. These participating institutions, in turn, hold beneficial interests in the debt securities held by the depositary or its nominee. These institutions may hold these interests on behalf of themselves or customers.

Under the indenture, only the person in whose name a debt security is registered is recognized as the holder of that debt security. Consequently, for debt securities issued in book-entry form, we will recognize only the depositary as the holder of the debt securities and we will make all payments on the debt securities to the depositary. The depositary will then pass along the payments it receives to its participants, which in turn will pass the payments along to their customers who are the beneficial owners. The depositary and its participants do so under agreements they have made with one another or with their customers; they are not obligated to do so under the terms of the debt securities.

As a result, investors will not own debt securities directly. Instead, they will own beneficial interests in a global security, through a bank, broker or other financial institution that participates in the depositary’s book-entry system or holds an interest through a participant. As long as the debt securities are represented by one or more global securities, investors will be indirect holders, and not holders, of the debt securities.

Street Name Holders

In the future, we may issue debt securities in certificated form or terminate a global security. In these cases, investors may choose to hold their debt securities in their own names or in “street name.” Debt securities held in street name are registered in the name of a bank, broker or other financial institution chosen by the investor, and the investor would hold a beneficial interest in those debt securities through the account he or she maintains at that institution.

 

67


Table of Contents

For debt securities held in street name, we will recognize only the intermediary banks, brokers and other financial institutions in whose names the debt securities are registered as the holders of those debt securities and we will make all payments on those debt securities to them. These institutions will pass along the payments they receive to their customers who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required to do so. Investors who hold debt securities in street name will be indirect holders, and not holders, of the debt securities.

Legal Holders

Our obligations, as well as the obligations of the applicable trustee and those of any third parties employed by us or the applicable trustee, run only to the legal holders of the debt securities. We do not have obligations to investors who hold beneficial interests in global securities, in street name or by any other indirect means. This will be the case whether an investor chooses to be an indirect holder of a debt security or has no choice because we are issuing the debt securities only in book-entry form.

For example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that holder is required, under agreements with depositary participants or customers or by law, to pass it along to the indirect holders but does not do so. Similarly, if we want to obtain the approval of the holders for any purpose (for example, to amend an indenture or to relieve us of the consequences of a default or of our obligation to comply with a particular provision of an indenture), we would seek the approval only from the holders, and not the indirect holders, of the debt securities. Whether and how the holders contact the indirect holders is up to the holders.

When we refer to you, we mean those who invest in the debt securities being offered by this prospectus, whether they are the holders or only indirect holders of those debt securities. When we refer to your debt securities, we mean the debt securities in which you hold a direct or indirect interest.

Special Considerations for Indirect Holders

If you hold debt securities through a bank, broker or other financial institution, either in book-entry form or in street name, we urge you to check with that institution to find out:

 

   

how it handles securities payments and notices,

 

   

whether it imposes fees or charges,

 

   

how it would handle a request for the holders’ consent, if ever required,

 

   

Whether and how you can instruct it to send you debt securities registered in your own name so you can be a holder, if that is permitted in the future for a particular series of debt securities,

 

   

how it would exercise rights under the debt securities if there were a default or other event triggering the need for holders to act to protect their interests, and

 

   

if the debt securities are in book-entry form, how the depositary’s rules and procedures will affect these matters.

Global Securities

As noted above, we usually will issue debt securities as registered securities in book-entry form only. A global security represents one or any other number of individual debt securities. Generally, all debt securities represented by the same global securities will have the same terms.

Each debt security issued in book-entry form will be represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select. The financial institution that we

 

68


Table of Contents

select for this purpose is called the depositary. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depositary for all debt securities issued in book-entry form.

A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. We describe those situations below under “Special Situations when a Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the sole registered owner and holder of all debt securities represented by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account with the depositary or with another institution that has an account with the depositary. Thus, an investor whose security is represented by a global security will not be a holder of the debt security, but only an indirect holder of a beneficial interest in the global security.

Special Considerations for Global Securities

As an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s financial institution and of the depositary, as well as general laws relating to securities transfers. The depositary that holds the global security will be considered the holder of the debt securities represented by the global security.

If debt securities are issued only in the form of a global security, an investor should be aware of the following:

 

   

An investor cannot cause the debt securities to be registered in his or her name, and cannot obtain certificates for his or her interest in the debt securities, except in the special situations we describe below.

 

   

An investor will be an indirect holder and must look to his or her own bank or broker for payments on the debt securities and protection of his or her legal rights relating to the debt securities, as we describe under “Issuance of Securities in Registered Form” above.

 

   

An investor may not be able to sell interests in the debt securities to some insurance companies and other institutions that are required by law to own their securities in non-book-entry form.

 

   

An investor may not be able to pledge his or her interest in a global security in circumstances where certificates representing the debt securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective.

 

   

The depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor’s interest in a global security. We and the trustee have no responsibility for any aspect of the depositary’s actions or for its records of ownership interests in a global security. We and the trustee also do not supervise the depositary in any way.

 

   

If we redeem less than all the debt securities of a particular series being redeemed, DTC’s practice is to determine by lot the amount to be redeemed from each of its participants holding that series.

 

   

An investor is required to give notice of exercise of any option to elect repayment of its debt securities, through its participant, to the applicable trustee and to deliver the related debt securities by causing its participant to transfer its interest in those debt securities, on DTC’s records, to the applicable trustee.

 

   

DTC requires that those who purchase and sell interests in a global security deposited in its book-entry system use immediately available funds. Your broker or bank may also require you to use immediately available funds when purchasing or selling interests in a global security.

 

   

Financial institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in a global security, may also have their own policies affecting payments,

 

69


Table of Contents
 

notices and other matters relating to the debt securities. There may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible for the actions of any of those intermediaries.

Special Situations when a Global Security will be Terminated

In a few special situations described below, a global security will be terminated and interests in it will be exchanged for certificates in non-book-entry form (certificated securities). After that exchange, the choice of whether to hold the certificated debt securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred on termination to their own names, so that they will be holders. We have described the rights of legal holders and street name investors under “Issuance of Securities in Registered Form” above.

The prospectus supplement may list situations for terminating a global security that would apply only to the particular series of debt securities covered by the prospectus supplement. If a global security is terminated, only the depositary, and not we or the applicable trustee, is responsible for deciding the names of the institutions in whose names the debt securities represented by the global security will be registered and, therefore, who will be the holders of those debt securities.

Payment and Paying Agents

We will pay interest to the person listed in the applicable trustee’s records as the owner of the debt security at the close of business on a particular day in advance of each due date for interest, even if that person no longer owns the debt security on the interest due date. That day, often approximately two weeks in advance of the interest due date, is called the “record date.” Because we will pay all the interest for an interest period to the holders on the record date, holders buying and selling debt securities must work out between themselves the appropriate purchase price. The most common manner is to adjust the sales price of the debt securities to prorate interest fairly between buyer and seller based on their respective ownership periods within the particular interest period. This prorated interest amount is called “accrued interest.”

Payments on Global Securities

We will make payments on a global security in accordance with the applicable policies of the depositary as in effect from time to time. Under those policies, we will make payments directly to the depositary, or its nominee, and not to any indirect holders who own beneficial interests in the global security. An indirect holder’s right to those payments will be governed by the rules and practices of the depositary and its participants.

Payments on Certificated Securities

We will make payments on a certificated debt security as follows. We will pay interest that is due on an interest payment date by check mailed on the interest payment date to the holder at his or her address shown on the trustee’s records as of the close of business on the regular record date. We will make all payments of principal and premium, if any, by check at the office of the applicable trustee in New York, New York and/or at other offices that may be specified in the prospectus supplement or in a notice to holders against surrender of the debt security.

Alternatively, if the holder asks us to do so, we will pay any amount that becomes due on the debt security by wire transfer of immediately available funds to an account at a bank in New York City, on the due date. To request payment by wire, the holder must give the applicable trustee or other paying agent appropriate transfer instructions at least 15 business days before the requested wire payment is due. In the case of any interest payment due on an interest payment date, the instructions must be given by the person who is the holder on the relevant regular record date. Any wire instructions, once properly given, will remain in effect unless and until new instructions are given in the manner described above.

 

70


Table of Contents

Payment when Offices are Closed

If any payment is due on a debt security on a day that is not a business day, we will make the payment on the next day that is a business day. Payments made on the next business day in this situation will be treated under the indenture as if they were made on the original due date, except as otherwise indicated in the attached prospectus supplement. Such payment will not result in a default under any debt security or the indenture, and no interest will accrue on the payment amount from the original due date to the next day that is a business day.

Book-entry and other indirect holders should consult their banks or brokers for information on how they will receive payments on their debt securities.

Events of Default

You will have rights if an Event of Default occurs in respect of the debt securities of your series and is not cured, as described later in this subsection.

The term “Event of Default” in respect of the debt securities of your series means any of the following (unless the prospectus supplement relating to such debt securities states otherwise):

 

   

we do not pay the principal of, or any premium on, a debt security of the series on its due date, and do not cure this default within five days;

 

   

we do not pay interest on a debt security of the series when due, and such default is not cured within 30 days;

 

   

we do not deposit any sinking fund payment in respect of debt securities of the series on its due date, and do not cure this default within five days;

 

   

we remain in breach of a covenant in respect of debt securities of the series for 60 days after we receive a written notice of default stating we are in breach. The notice must be sent by either the trustee or holders of at least 25% of the principal amount of debt securities of the series;

 

   

we file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur and remain undischarged or unstayed for a period of 60 days;

 

   

on the last business day of each of 24 consecutive calendar months, we have an asset coverage of less than 100%; and

 

   

any other Event of Default in respect of debt securities of the series described in the applicable prospectus supplement occurs.

An Event of Default for a particular series of debt securities does not necessarily constitute an Event of Default for any other series of debt securities issued under the same or any other indenture. The trustee may withhold notice to the holders of debt securities of any default, except in the payment of principal, premium or interest, if it considers the withholding of notice to be in the best interests of the holders.

Remedies if an Event of Default Occurs

If an Event of Default has occurred and has not been cured, the trustee or the holders of at least 25% in principal amount of the debt securities of the affected series may declare the entire principal amount of all the debt securities of that series to be due and immediately payable. This is called a declaration of acceleration of maturity. In certain circumstances, a declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the debt securities of the affected series.

The trustee is not required to take any action under the indenture at the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability (called an “indemnity”). If reasonable

 

71


Table of Contents

indemnity is provided, the holders of a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. The trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or remedy will be treated as a waiver of that right, remedy or Event of Default.

Before you are allowed to bypass your trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the debt securities, the following must occur:

 

   

the holder must give your trustee written notice that an Event of Default has occurred and remains uncured;

 

   

the holders of at least 25% in principal amount of all outstanding debt securities of the relevant series must make a written request that the trustee take action because of the default and must offer reasonable indemnity to the trustee against the cost and other liabilities of taking that action;

 

   

the trustee must not have taken action for 60 days after receipt of the above notice and offer of indemnity; and

 

   

the holders of a majority in principal amount of the debt securities must not have given the trustee a direction inconsistent with the above notice during that 60 day period.

However, you are entitled at any time to bring a lawsuit for the payment of money due on your debt securities on or after the due date.

Holders of a majority in principal amount of the debt securities of the affected series may waive any past defaults other than:

 

   

the payment of principal, any premium or interest; or

 

   

in respect of a covenant that cannot be modified or amended without the consent of each holder.

Book-entry and other indirect holders should consult their banks or brokers for information on how to give notice or direction to or make a request of the trustee and how to declare or cancel an acceleration of maturity.

Each year, we will furnish to each trustee a written statement of certain of our officers certifying that to their knowledge we are in compliance with the indenture and the debt securities, or else specifying any default.

Merger or Consolidation

Under the terms of the indenture, we are generally permitted to consolidate or merge with another entity. We may also be permitted to sell all or substantially all of our assets to another entity. However, unless the prospectus supplement relating to certain debt securities states otherwise, we may not take any of these actions unless all the following conditions are met:

 

   

where we merge out of existence or sell our assets, the resulting entity must agree to be legally responsible for our obligations under the debt securities;

 

   

immediately after giving effect to such transaction, no Default or Event of Default shall have happened and be continuing;

 

   

under the indenture, no merger or sale of assets may be made if as a result any of our property or assets or any property or assets of one of our subsidiaries, if any, would become subject to any mortgage, lien or other encumbrance unless either (a) the mortgage, lien or other encumbrance could be created;

 

72


Table of Contents
   

pursuant to the limitation on liens covenant in the indenture without equally and ratably securing the indenture securities or (b) the indenture securities are secured equally and ratably with or prior to the debt secured by the mortgage, lien or other encumbrance;

 

   

we must deliver certain certificates and documents to the trustee; and

 

   

we must satisfy any other requirements specified in the prospectus supplement relating to a particular series of debt securities.

Modification or Waiver

There are three types of changes we can make to the indenture and the debt securities issued thereunder.

Changes Requiring Approval

First, there are changes that we cannot make to debt securities without specific approval of all of the holders. The following is a list of those types of changes:

 

   

change the stated maturity of the principal of or interest on a debt security;

 

   

reduce any amounts due on a debt security;

 

   

reduce the amount of principal payable upon acceleration of the maturity of a security following a default;

 

   

adversely affect any right of repayment at the holder’s option;

 

   

change the place (except as otherwise described in the prospectus or prospectus supplement) or currency of payment on a debt security;

 

   

impair your right to sue for payment;

 

   

adversely affect any right to convert or exchange a debt security in accordance with its terms;

 

   

modify the subordination provisions in the indenture in a manner that is adverse to holders of the debt securities;

 

   

reduce the percentage of holders of debt securities whose consent is needed to modify or amend the indenture;

 

   

reduce the percentage of holders of debt securities whose consent is needed to waive compliance with certain provisions of the indenture or to waive certain defaults;

 

   

modify any other aspect of the provisions of the indenture dealing with supplemental indentures, modification and waiver of past defaults, changes to the quorum or voting requirements or the waiver of certain covenants; and

 

   

change any obligation we have to pay additional amounts.

Changes Not Requiring Approval

The second type of change does not require any vote by the holders of the debt securities. This type is limited to clarifications and certain other changes that would not adversely affect holders of the outstanding debt securities in any material respect. We also do not need any approval to make any change that affects only debt securities to be issued under the indenture after the change takes effect.

Changes Requiring Majority Approval

Any other change to the indenture and the debt securities would require the following approval:

 

   

if the change affects only one series of debt securities, it must be approved by the holders of a majority in principal amount of that series; and

 

73


Table of Contents
   

if the change affects more than one series of debt securities issued under the same indenture, it must be approved by the holders of a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class for this purpose.

The holders of a majority in principal amount of all of the series of debt securities issued under an indenture, voting together as one class for this purpose, may waive our compliance with some of our covenants in that indenture. However, we cannot obtain a waiver of a payment default or of any of the matters covered by the bullet points included above under “—Changes Requiring Approval.”

Further Details Concerning Voting

When taking a vote, we will use the following rules to decide how much principal to attribute to a debt security:

 

   

for OID securities, we will use the principal amount that would be due and payable on the voting date if the maturity of these debt securities were accelerated to that date because of a default;

 

   

for debt securities whose principal amount is not known (for example, because it is based on an index), we will use a special rule for that debt security described in the prospectus supplement; and

 

   

for debt securities denominated in one or more foreign currencies, we will use the U.S. dollar equivalent.

Debt securities will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption. Debt securities will also not be eligible to vote if they have been fully defeased as described later under “Defeasance—Full Defeasance.”

We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding indenture securities that are entitled to vote or take other action under the indenture. If we set a record date for a vote or other action to be taken by holders of one or more series, that vote or action may be taken only by persons who are holders of outstanding indenture securities of those series on the record date and must be taken within eleven months following the record date.

Book-entry and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the indenture or the debt securities or request a waiver.

Defeasance

The following provisions will be applicable to each series of debt securities unless we state in the applicable prospectus supplement that the provisions of covenant defeasance and full defeasance will not be applicable to that series.

Covenant Defeasance

Under current U.S. federal tax law, we can make the deposit described below and be released from some of the restrictive covenants in the indenture under which the particular series was issued. This is called “covenant defeasance.” In that event, you would lose the protection of those restrictive covenants but would gain the protection of having money and government securities set aside in trust to repay your debt securities. If applicable, you also would be released from the subordination provisions as described under the “Indenture Provisions—Subordination” section below. In order to achieve covenant defeasance, we must do the following:

 

   

if the debt securities of the particular series are denominated in U.S. dollars, we must deposit in trust for the benefit of all holders of such debt securities a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities on their various due dates;

 

74


Table of Contents
   

we must deliver to the trustee a legal opinion of our counsel confirming that, under current U.S. federal income tax law, we may make the above deposit without causing you to be taxed on the debt securities any differently than if we did not make the deposit and just repaid the debt securities ourselves at maturity; and

 

   

we must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to covenant defeasance have been complied with.

If we accomplish covenant defeasance, you can still look to us for repayment of the debt securities if there were a shortfall in the trust deposit or the trustee is prevented from making payment. For example, if one of the remaining Events of Default occurred (such as our bankruptcy) and the debt securities became immediately due and payable, there might be a shortfall. Depending on the event causing the default, you may not be able to obtain payment of the shortfall.

Full Defeasance

If there is a change in U.S. federal tax law, as described below, we can legally release ourselves from all payment and other obligations on the debt securities of a particular series (called “full defeasance”) if we put in place the following other arrangements for you to be repaid:

 

   

if the debt securities of the particular series are denominated in U.S. dollars, we must deposit in trust for the benefit of all holders of such debt securities a combination of money and United States government or United States government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the debt securities on their various due dates.

 

   

we must deliver to the trustee a legal opinion confirming that there has been a change in current U.S. federal tax law or an IRS ruling that allows us to make the above deposit without causing you to be taxed on the debt securities any differently than if we did not make the deposit and just repaid the debt securities ourselves at maturity. Under current U.S. federal tax law, the deposit and our legal release from the debt securities would be treated as though we paid you your share of the cash and notes or bonds at the time the cash and notes or bonds were deposited in trust in exchange for your debt securities and you would recognize gain or loss on the debt securities at the time of the deposit;

 

   

we must deliver to the trustee a legal opinion of our counsel stating that the above deposit does not require registration by us under the 1940 Act, as amended, and a legal opinion and officers’ certificate stating that all conditions precedent to defeasance have been complied with;

 

   

Defeasance must not result in a breach of the indenture or any other material agreements; and

 

   

Satisfy the conditions for covenant defeasance contained in any supplemental indentures.

If we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the debt securities. You could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent. If applicable, you would also be released from the subordination provisions described later under “Indenture Provisions—Subordination.”

Form, Exchange and Transfer of Certificated Registered Securities

Holders may exchange their certificated securities, if any, for debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed.

Holders may exchange or transfer their certificated securities, if any, at the office of their trustee. We have appointed the trustee to act as our agent for registering debt securities in the names of holders transferring debt securities. We may appoint another entity to perform these functions or perform them ourselves.

 

75


Table of Contents

Holders will not be required to pay a service charge to transfer or exchange their certificated securities, if any, but they may be required to pay any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer agent is satisfied with the holder’s proof of legal ownership.

If we have designated additional transfer agents for your debt security, they will be named in your prospectus supplement. We may appoint additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts.

If any certificated securities of a particular series are redeemable and we redeem less than all the debt securities of that series, we may block the transfer or exchange of those debt securities during the period beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers or exchanges of any certificated securities selected for redemption, except that we will continue to permit transfers and exchanges of the unredeemed portion of any debt security that will be partially redeemed.

Resignation of Trustee

Each trustee may resign or be removed with respect to one or more series of indenture securities provided that a successor trustee is appointed to act with respect to these series. In the event that two or more persons are acting as trustee with respect to different series of indenture securities under the indenture, each of the trustees will be a trustee of a trust separate and apart from the trust administered by any other trustee.

Indenture Provisions—Subordination

Upon any distribution of our assets upon our dissolution, winding up, liquidation or reorganization, the payment of the principal of (and premium, if any) and interest, if any, on any indenture securities denominated as subordinated debt securities is to be subordinated to the extent provided in the indenture in right of payment to the prior payment in full of all senior indebtedness (as defined below), but our obligation to you to make payment of the principal of (and premium, if any) and interest, if any, on such subordinated debt securities will not otherwise be affected. In addition, no payment on account of principal (or premium, if any), sinking fund or interest, if any, may be made on such subordinated debt securities at any time unless full payment of all amounts due in respect of the principal (and premium, if any), sinking fund and interest on senior indebtedness has been made or duly provided for in money or money’s worth.

In the event that, notwithstanding the foregoing, any payment by us is received by the trustee in respect of subordinated debt securities or by the holders of any of such subordinated debt securities before all senior indebtedness is paid in full, the payment or distribution must be paid over to the holders of the senior indebtedness or on their behalf for application to the payment of all the senior indebtedness remaining unpaid until all the senior indebtedness has been paid in full, after giving effect to any concurrent payment or distribution to the holders of the senior indebtedness. Subject to the payment in full of all senior indebtedness upon this distribution by us, the holders of such subordinated debt securities will be subrogated to the rights of the holders of the senior indebtedness to the extent of payments made to the holders of the senior indebtedness out of the distributive share of such subordinated debt securities.

By reason of this subordination, in the event of a distribution of our assets upon our insolvency, certain of our senior creditors may recover more, ratably, than holders of any subordinated debt securities. The indenture provides that these subordination provisions will not apply to money and securities held in trust under the defeasance provisions of the indenture.

 

76


Table of Contents

Senior indebtedness is defined in the indenture as the principal of (and premium, if any) and unpaid interest on:

 

   

our indebtedness (including indebtedness of others guaranteed by us), whenever created, incurred, assumed or guaranteed, for money borrowed (other than indenture securities issued under the indenture and denominated as subordinated debt securities), unless in the instrument creating or evidencing the same or under which the same is outstanding it is provided that this indebtedness is not senior or prior in right of payment to the subordinated debt securities; and

 

   

renewals, extensions, modifications and refinancings of any of this indebtedness.

If this prospectus is being delivered in connection with the offering of a series of indenture securities denominated as subordinated debt securities, the accompanying prospectus supplement to this prospectus will set forth the approximate amount of our senior indebtedness outstanding as of a recent date.

Secured Indebtedness

Certain of our indebtedness, including certain series of indenture securities, may be secured. The prospectus supplement for each series of indenture securities will describe the terms of any security interest for such series and will indicate the approximate amount of our secured indebtedness as of a recent date. In the event of a distribution of our assets upon our insolvency, the holders of unsecured indenture securities may recover less, ratably, than holders of any of our secured indebtedness.

The Trustee under the Indenture

U.S. Bank National Association will serve as the trustee under the indenture.

Certain Considerations Relating to Foreign Currencies

Debt securities denominated or payable in foreign currencies may entail significant risks. These risks include the possibility of significant fluctuations in the foreign currency markets, the imposition or modification of foreign exchange controls and potential illiquidity in the secondary market. These risks will vary depending upon the currency or currencies involved and will be more fully described in the applicable prospectus supplement.

 

77


Table of Contents

REGULATION

The information contained under “Business” under the caption “Regulation” in our most recent Annual Report on Form 10-K is incorporated by reference herein.

 

78


Table of Contents

PLAN OF DISTRIBUTION

We may offer, from time to time, in one or more offerings or series, our common stock, preferred stock, debt securities, subscription rights to purchase shares of our common stock or warrants representing rights to purchase shares of our common stock, preferred stock or debt securities in one or more underwritten public offerings, at-the-market offerings, to or through a market maker or into an existing trading market for the securities, on an exchange, or otherwise, negotiated transactions, block trades, best efforts, auctions or a combination of these methods. The holders of our common stock will indirectly bear any fees and expenses in connection with any such offerings. We may sell the securities through underwriters or dealers, directly to one or more purchasers, including existing stockholders in a rights offering, through agents or through a combination of any such methods of sale. Any underwriter or agent involved in the offer and sale of the securities will be named in the applicable prospectus supplement. A prospectus supplement or supplements will also describe the terms of the offering of the securities, including: the purchase price of the securities and the proceeds we will receive from the sale; any over-allotment options under which underwriters may purchase additional securities from us; any agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation; any expenses we incur in connection with the sale of such securities; the public offering price; any discounts or concessions allowed or re-allowed or paid to dealers; and any securities exchange or market on which the securities may be listed. Only underwriters named in the applicable prospectus supplement will be underwriters of the securities offered by the applicable prospectus supplement.

The distribution of the securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at prevailing market prices at the time of sale, at prices related to such prevailing market prices, at negotiated prices, or at prices determined by an auction process, provided, however, that the offering price per share of our common stock, less any underwriting commissions or discounts, must equal or exceed the NAV per share of our common stock at the time of the offering except (1) in connection with a rights offering to our existing stockholders, (2) with the consent of the majority of our voting securities or (3) under such circumstances as the SEC may permit. The price at which securities may be distributed may represent a discount from prevailing market prices. Although we are not currently authorized to issue shares of our common stock at a price below our NAV per share, we may seek stockholder approval of this proposal again at a special meeting of stockholders or our next annual meeting of stockholders. Our Board of Directors, subject to its fiduciary duties and regulatory requirements, has the discretion to determine the amount of the discount, and as a result, the discount could be up to 100% of NAV per share.

In connection with the sale of our securities, underwriters or agents may receive compensation from us or from purchasers of our securities, for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters may sell our securities to or through dealers and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of our securities may be deemed to be underwriters under the Securities Act, and any discounts and commissions they receive from us and any profit realized by them on the resale of our securities may be deemed to be underwriting discounts and commissions under the Securities Act. Any such underwriter or agent will be identified and any such compensation received from us will be described in the applicable prospectus supplement.

Any underwriter may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance with Regulation M under the Exchange Act. Over-allotment involves sales in excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum price. Syndicate-covering or other short-covering transactions involve purchases of the securities, either through exercise of the over-allotment option or in the open market after the distribution is completed, to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities originally sold by the dealer are purchased in a stabilizing or covering transaction to cover short positions. Those activities may cause the price of

 

79


Table of Contents

the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of the activities at any time.

Any underwriters that are qualified market makers on the NYSE may engage in passive market making transactions in our common stock on the NYSE in accordance with Regulation M under the Exchange Act, during the business day prior to the pricing of the offering, before the commencement of offers or sales of our common stock. Passive market makers must comply with applicable volume and price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the highest independent bid for such security; if all independent bids are lowered below the passive market maker’s bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the market price of the securities at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued at any time.

We may sell securities directly or through agents we designate from time to time. We will name any agent involved in the offering and sale of securities and we will describe any commissions we will pay the agent in the applicable prospectus supplement. Unless the applicable prospectus supplement states otherwise, our agent will act on a best-efforts basis for the period of its appointment.

Unless otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no trading market, other than our common stock, which is traded on the NYSE. We may elect to list any other class or series of securities on any exchanges, but we are not obligated to do so. We cannot guarantee the liquidity of the trading markets for any securities.

Under agreements that we may enter, underwriters, dealers and agents who participate in the distribution of our securities may be entitled to indemnification by us against certain liabilities, including liabilities under the Securities Act, or contribution with respect to payments that the agents or underwriters may make with respect to these liabilities. Underwriters, dealers and agents may engage in transactions with, or perform services for, us in the ordinary course of business.

If so indicated in the applicable prospectus supplement, we will authorize underwriters or other persons acting as our agents to solicit offers by certain institutions to purchase our securities from us pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must be approved by us. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of our securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts. Such contracts will be subject only to those conditions set forth in the applicable prospectus supplement, and the applicable prospectus supplement will set forth the commission payable for solicitation of such contracts.

We may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings of stock. The third parties in such sale transactions will be underwriters and, if not identified in this prospectus, will be identified in the applicable prospectus supplement.

In compliance with the guidelines of the Financial Industry Regulatory Authority, the maximum compensation to the underwriters or dealers in connection with the sale of our securities pursuant to this

 

80


Table of Contents

prospectus and the applicable prospectus supplement may not exceed 8% of the aggregate offering price of the securities as set forth on the cover page of the applicable prospectus supplement.

In order to comply with the securities laws of certain states, if applicable, our securities offered hereby will be sold in such jurisdictions only through registered or licensed brokers or dealers.

CUSTODIAN, TRANSFER AND DIVIDEND PAYING AGENT AND REGISTRAR

Securities we hold in connection with our investments are held under a custody agreement with Computershare. The address of the custodian is 9062 Old Annapolis Road, Columbia, MD 21045. We have also entered into custody agreements with State Street Bank and Trust Company located at 100 Summer Street, 5th Floor, Boston Massachusetts 02110 and City National Bank located at 555 S. Flower St, 11th Floor, Los Angeles, CA 90071. The transfer agent and registrar for our common stock, American Stock Transfer & Trust Company, will act as our transfer agent, dividend paying and reinvestment agent and registrar. The principal business address of the transfer agent is 6201 15th Avenue, Brooklyn, New York 11219.

LEGAL MATTERS

Certain legal matters regarding the securities offered by this prospectus will be passed upon for us by Dechert LLP, New York, NY. Certain legal matters will be passed upon for underwriters, if any, by the counsel named in the prospectus supplement.

EXPERTS

The financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2020 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, located at 405 Howard Street, San Francisco, California 94105, given on the authority of said firm as experts in auditing and accounting.

INCORPORATION BY REFERENCE

This prospectus is part of a registration statement that we have filed with the SEC. Pursuant to the SBCAA, we are allowed to “incorporate by reference” the information that we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information.

We incorporate by reference the documents listed below and any future filings (including those made after the date of the filing of the registration statement of which this prospectus is a part) we will make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act until the termination of the offering of the securities covered by this prospectus; provided, however, that information “furnished” under Item 2.02 or Item 7.01 of Form 8-K or other information “furnished” to the SEC which is not deemed filed is not incorporated by reference:

 

   

our Annual Report on  Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on February 23, 2021;

 

81


Table of Contents
   

our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021, filed with the SEC on April  29, 2021, July  29, 2021 and October 28, 2021, respectively;

 

   

our Definitive Proxy Statement on  Schedule 14A, filed with the SEC on April 27, 2021;

 

   

our Current Reports on Form 8-K (other than information furnished rather than filed) filed with the SEC on February  23, 2021, March 4, 2021, March 8, 2021, April 29, 2021, May 28, 2021, June 25, 2021, July  13, 2021, July 29, 2021, September 15, 2021, September 16, 2021, September 24, 2021, October 20, 2021, October  28, 2021, November 10, 2021 and November 29, 2021; and

 

   

The description of our Common Stock referenced in our Registration Statement on Form 8-A (No. 001-35515), as filed with the SEC on April 17, 2012, including any amendment or report filed for the purpose of updating such description prior to the termination of the offering of the common stock registered hereby;

These documents may also be accessed on our website at www.htgc.com. Information contained in, or accessible through, our website is not a part of this prospectus.

You may request a copy of these filings (other than exhibits, unless the exhibits are specifically incorporated by reference into these documents) at no cost by writing or calling Investor Relations at the following address and telephone number:

Hercules Capital, Inc.

400 Hamilton Avenue, Suite 310

Palo Alto, California 94301

(650) 433-5578

AVAILABLE INFORMATION

We file annual, quarterly and current periodic reports, proxy statements and other information with the SEC under the Exchange Act. The SEC maintains an Internet website that contains reports, proxy and information statements and other information filed electronically by us with the SEC which are available on the SEC’s Internet website at http://www.sec.gov. Copies of these reports, proxy and information statements and other information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov.

We maintain a website on the Internet at www.htgc.com. Except for the documents incorporated by reference into this prospectus, the information on our website is not part of this prospectus. We make available, free of charge, on our website our proxy statement, annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

 

82


Table of Contents

Hercules Capital, Inc.

Common Stock

Preferred Stock

Warrants

Subscription Rights

Debt Securities

Units

 

 

PROSPECTUS

 

 

December 17, 2021

 

 


Table of Contents

PART C—OTHER INFORMATION

Item 25. Financial Statements and Exhibits

The consolidated financial statements as of December 31, 2020 and December 31, 2019 and for each of the three years in the period ended December 31, 2020 and the unaudited consolidated financial statements as of September 30, 2021 and 2020 for the three and nine months ended September 30, 2021 and 2020, as of June 30, 2021 and 2020 for the three and six months ended June 30, 2021 and 2020, and as of March 31, 2021 and 2020 for the three months ended March 31, 2021 and 2020 have been incorporated by reference in this registration statement in “Part A—Information Required in a Prospectus.”

2. Exhibits

 

Exhibit

Number

  

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.(29)
a.5    Articles of Amendment, dated February 23, 2016.(34)
b    Amended and Restated Bylaws of Hercules Capital, Inc.(34)
d.1    Specimen certificate of the Company’s 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.(71)
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.(26)
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)

 

C-1


Table of Contents

Exhibit

Number

  

Description

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)).(26)
d.18    Form of 6.25% Note due 2024, dated August 11, 2014 (Over-Allotment July 2024 Note).(27)
d.19    Form of 6.25% Note due 2024, dated May 2, 2016 (Additional July 2024 Note).(38)
d.20    Form of 6.25% Note due 2024, June 27, 2016 (Additional July 2024 Note).(39)
d.21    Form of 6.25% Note due 2024, July 5, 2016 (Additional July 2024 Note).(40)
d.22    Form of 6.25% Note due 2024, October 11, 2016 (Additional July 2024 Note).(43)
d.23    Indenture, dated January 25, 2017, between Hercules Capital, Inc. and U.S. Bank, National Association, as Trustee(45)
d.24    Form of 4.375% Convertible Note Due 2022 (included as part of Exhibit d.23)(45)
d.25    Fourth Supplemental Indenture, dated as of October 23, 2017, between the Registrant and U.S. Bank, National Association.(48)
d.26    Form of 4.625% Note due 2022, dated October 23, 2017 (included as part of Exhibit (d)(25)).(48)
d.27    Fifth Supplemental Indenture, dated as of April 26, 2018, between the Registrant and U.S. Bank, National Association.(53)
d.28    Form of 5.25% Note due 2025, dated April 23, 2018 (included as part of Exhibit (d)(27)).(53)
d.29    Sixth Supplemental Indenture, dated as of September 24, 2018, between the Registrant and U.S. Bank, National Association.(57)
d.30    Form of 6.25% Note due 2033, dated September 24, 2018 (included as part of Exhibit (d)(29)).(57)
d.31    Seventh Supplemental Indenture, dated as of September 16, 2021, between the Registrant and U.S. Bank, National Association (64)
d.32    Form of 2.625% Note due 2026, dated September 16, 2021 (included as part of Exhibit (d)(31) (64)
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)

 

C-2


Table of Contents

Exhibit

Number

  

Description

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.(31)
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.(31)
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)

 

C-3


Table of Contents

Exhibit

Number

  

Description

f.24    Indenture by and among Hercules Capital Funding Trust 2014-1 and U.S. Bank National Association, dated as of November 13, 2014.(28)
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.(28)
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.(28)
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.(28)
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.(28)
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.(28)
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.(33)
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.(32)
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.(35)
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.(36)
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.(37)
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.(37)
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.(41)
f.37    Fourth 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 3, 2017.(46)
f.38    Second Amendment to the Loan and Security Agreement, dated as of May  25, 2018, 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.(55)
f.39    Indenture, dated as of November  1, 2018, between Hercules Capital Funding Trust 2018-1, as Issuer, and U.S. Bank National Association, as Trustee.(59)

 

C-4


Table of Contents

Exhibit

Number

  

Description

f.40    Amended and Restated Trust Agreement, dated as of November  1, 2018, between Hercules Capital Funding 2018-1 LLC, as Trust Depositor, and Wilmington Trust, National Association, as Owner Trustee.(59)
f.41    Indenture, dated as of January  22, 2019, between Hercules Capital Funding Trust 2019-1, as Issuer, and U.S. Bank National Association, as Trustee.(61)
f.42    Amended and Restated Trust Agreement, dated as of January  22, 2019, between Hercules Capital Funding 2019-1 LLC, as Trust Depositor, and Wilmington Trust, National Association, as Owner Trustee.(61)
f.43    Fifth Amendment to the Amended and Restated Loan and Security Agreement, dated as of July  31, 2018, by and among Hercules Funding II LLC as borrower, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), as Administrative Agent, and the Lenders party thereto from time to time.(58)
f.44    Sixth Amendment to the Amended and Restated Loan and Security Agreement, dated as of October  26, 2018, by and among Hercules Funding II LLC as borrower, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), as Administrative Agent, and the Lenders party thereto from time to time.(58)
f.45    Seventh Amendment to the Amended and Restated Loan and Security Agreement, dated as of January  11, 2019, by and among Hercules Funding II LLC as borrower, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), as Administrative Agent, and the Lenders party thereto from time to time.(60)
f.46    Sale and Servicing Agreement, dated as of November 1, 2018, by and among Hercules Capital Funding Trust 2018-1, as Issuer, Hercules Capital, Inc., as Seller and Servicer, Hercules Capital Funding 2018-1 LLC, as Trust Depositor, and U.S. Bank National Association, as Trustee, Backup Servicer, Custodian and Paying Agent.(59)
f.47    Sale and Contribution Agreement, dated as of November  1, 2018, between Hercules Capital, Inc., as Seller, and Hercules Capital Funding 2018-1 LLC, as Trust Depositor.(59)
f.48    Note Purchase Agreement, dated as of October  25, 2018, by and among Hercules Capital, Inc., as Originator and Servicer, Hercules Capital Funding 2018-1 LLC, as Trust Depositor, Hercules Capital Funding Trust 2018-1, as Issuer, and Guggenheim Securities, LLC, as Initial Purchaser.(59)
f.49    Administration Agreement, dated November  1, 2018, by and among Hercules Capital, Inc., as Administrator, Hercules Capital Funding Trust 2018-1, as Issuer, Wilmington Trust, National Association, as Owner Trustee, and U.S. Bank National Association, as Trustee .(59)
f.50    Sale and Servicing Agreement, dated as of January  22, 2019, by and among Hercules Capital Funding Trust 2019-1, as Issuer, Hercules Capital, Inc., as Seller and Servicer, Hercules Capital Funding 2019-1 LLC, as Trust Depositor, and U.S. Bank National Association, as Trustee, Backup Servicer, Custodian and Paying Agent.(61)
f.51    Sale and Contribution Agreement, dated as of January 22, 2019, between Hercules Capital, Inc., as Seller, and Hercules Capital Funding 2019-1 LLC, as Trust Depositor.(61)
f.52    Note Purchase Agreement, dated as of January  14, 2019, by and among Hercules Capital, Inc., as Originator and Servicer, Hercules Capital Funding 2019-1 LLC, as Trust Depositor, Hercules Capital Funding Trust 2019-1, as Issuer, and Guggenheim Securities, LLC, as Initial Purchaser.(61)
f.53    Administration Agreement, dated January 22, 2019, by and among Hercules Capital, Inc., as Administrator, Hercules Capital Funding Trust 2019-1, as Issuer, Wilmington Trust, National Association, as Owner Trustee, and U.S. Bank National Association, as Trustee.(61)

 

C-5


Table of Contents

Exhibit

Number

  

Description

f.54    Loan and Security Agreement, dated as of February  20, 2019, by and among Hercules Funding IV LLC, as borrower, MUFG Union Bank, N.A., as the arranger and administrative agent, and the lenders party thereto from time to time.(63)
f.55    Sale and Servicing Agreement, dated as of February  20, 2019, by and among Hercules Funding IV LLC, as borrower, Hercules Capital, Inc., as originator and servicer, and MUFG Union Bank, N.A., as agent.(63)
f.56    First Amendment to the Loan and Security Agreement, dated as of June  28, 2019, by and among Hercules Funding IV LLC, as borrower, MUFG Union Bank, N.A., as the arranger and administrative agent, and the lenders party thereto from time to time.(65)
f.57    Eighth Amendment to Amended and Restated Loan and Security Agreement, dated as of July  2, 2019, by and among Hercules Funding II LLC, as borrower, Wells Fargo Capital Finance, LLC (f/k/a Wells Fargo Foothill, LLC), as the arranger and the administrative agent, and the lenders party thereto from time to time.(65)
f.58    Intercreditor Agreement, dated as of July  2, 2019, by and among Wells Fargo Capital Finance, LLC, as arranger and administrative agent, MUFG Union Bank, N.A., as arranger and administrative agent, Hercules Funding II LLC, Hercules Funding IV LLC, Hercules Capital, Inc., and U.S. Bank National Association, as special servicer.(65)
f.59    Note Purchase Agreement, dated as of July 16, 2019, by and among Hercules Capital, Inc. and the Purchasers party thereto(66)
f.59    Note Purchase Agreement, dated February 5, 2020, by and among Hercules Capital, Inc. and the Purchasers party thereto.(67)
f.60    Loan and Security Agreement, dated February  20, 2020 by and among Hercules Funding IV LLC, as borrower, MUFG Union Bank, N.A., as the administrative agent, lender and swingline lender and the lenders part thereto from time to time.(68)
f.61    Sale and Servicing Agreement, dated as of February  20, 2020, by and among Hercules Funding IV LLC, as borrower, Hercules Capital, Inc., as originator and servicer, and MUFG Union Bank, N.A., as agent.(68)
f.62    First Supplement to the Note Purchase Agreement, dated as of November  2, 2020, by and among Hercules Capital, Inc. and the Additional Purchasers party thereto.(69)
f.63    Revolving Credit Agreement, dated as of November  9, 2021, among Hercules Capital, Inc., the lenders and issuing banks from time to time party thereto and Sumitomo Mitsui Banking Corporation, as administrative agent.(70)
h.1    Form of Equity Underwriting Agreement.(30)
h.2    Form of Debt Underwriting Agreement.(30)
h.3    Equity Distribution Agreement, dated as of September 8, 2017, by and among the Registrant and JMP Securities LLC.(47)
h.4    Underwriting Agreement, dated as of June 22, 2016, by and among the Registrant and the Underwriters named therein.(39)
h.5    Debt Distribution Agreement, dated as of October 11, 2016, by and among the Registrant and FBR Capital Markets & Co.(43)
h.6    Underwriting Agreement, dated as of October 18, 2017, by and among the Registrant and the Underwriters named therein.(48)

 

C-6


Table of Contents

Exhibit

Number

  

Description

h.7    Underwriting Agreement, dated as of April 23, 2018, by and among the Registrant and the Underwriters named therein.(53)
h.8    Underwriting Agreement, dated as of June 12, 2018, by and among the Registrant and the Underwriters named therein.(56)
h.9    Underwriting Agreement, dated as of September 19, 2018, by and among the Registrant and the Underwriters named therein.(57)
i.1    Hercules Capital, Inc. Amended and Restated 2004 Equity Incentive Plan.(44)
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 Agreement.(44)
i.6    Form of Performance Restricted Stock Unit Award Agreement.(44)
i.7    Form of Retention Performance Stock Unit Award Agreement.(54)
i.8    Form of Cash Retention Bonus Award Agreement.(54)
i.9    Hercules Capital, Inc. Amended and Restated 2018 Equity Incentive Plan.(62)
i.10    Hercules Capital, Inc. 2018 Non-Employee Director Plan.(62)
i.11    Form of Restricted Stock Unit Award Agreement.(62)
i.12    Form of Restricted Stock Award Agreement (2018 Equity Incentive Plan).(62)
i.13    Form of Restricted Stock Award Agreement (Director Plan).(62)
i.14    Form of Nonstatutory Stock Option Award Agreement.(62)
i.15    Form of Incentive Stock Option Award Agreement.(62)
j.1*    Custodial Agreement by and between Hercules Growth Capital, Inc. and Wells Fargo Bank, National Association, dated as of July 29, 2015
j.2*    Custodial Agreement by and between Hercules Funding IV LLC and Wells Fargo Bank, National Association, dated as of April 23, 2021
j.3*    Safekeeping Custody Agreement by and between Hercules Funding IV LLC and City National Bank, a National Banking Association, dated as of June 23, 2021
k.1    Form of Transfer Agency and Registrar Services 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.(42)
k.5    Retention Agreement, dated as of October 26, 2017, by and between Hercules Capital, Inc. and Manual Henriquez.(49)
k.6    Retention Agreement, dated as of October 26, 2017, by and between Hercules Capital, Inc. and Scott Bluestein.(49)
k.7    Asset Purchase Agreement, dated as of November  1, 2017 by and between Ares Capital Corporation, a Maryland corporation and, together with each Seller Designee permitted pursuant to the Agreement, and Bearcub Acquisitions LLC, a Delaware limited liability company.(50)
k.8    Separation Agreement, dated as of November 2, 2017, by and between Hercules Capital, Inc. and Mark Harris.(51)
l.1*    Opinion of Dechert LLP.

 

C-7


Table of Contents

Exhibit

Number

  

Description

n.1*    Consent of PricewaterhouseCoopers LLP.
n.2*    Consent of Dechert LLP (included in Exhibit l.1).
p    Subscription Agreement dated February 2, 2004 between the Company and the subscribers named therein.(2)
r    Code of Ethics.(52)
s.1    Form of Prospectus Supplement For Common Stock Offerings.(30)
s.2    Form of Prospectus Supplement For Preferred Stock Offerings.(30)
s.3    Form of Prospectus Supplement For Debt Offerings.(30)
s.4    Form of Prospectus Supplement For Rights Offerings.(30)
s.5    Form of Prospectus Supplement For Warrant Offerings.(30)
s.6    Form of Prospectus For At-the-Market Offerings.(30)

 

*

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.

(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.

 

C-8


Table of Contents
(26)

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.

(27)

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.

(28)

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.

(29)

Previously filed as part of the Registration Statement on Form N-2 of the Company, as filed on April 20, 2015 (File No. 333-203511).

(30)

Previously filed as part of Pre-Effective Amendment No. 1, as filed on June 8, 2015 (File No 333-203511), to the Registration Statement on Form N-2 of the Company.

(31)

Previously filed as part of the current report on Form 8-K of the Company, as filed on June 30, 2015.

(32)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on November 13, 2015.

(33)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on December 18, 2015.

(34)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on February 25, 2016.

(35)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on March 8, 2016

(36)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on April 11, 2016

(37)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on May 10, 2016.

(38)

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.

(39)

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.

(40)

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.

(41)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on July 19, 2016.

(42)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on July 22, 2016.

(43)

Previously filed as part of Post-Effective Amendment No. 10, as filed on October 14, 2016 (File No. 333-203511), to the Registration Statement on Form N-2 of the Company.

(44)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on January 5, 2017.

(45)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on January 25, 2017.

(46)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on April 7, 2017.

(47)

Previously filed as part of Post-Effective Amendment No. 1, as filed on September 13, 2017 (File No. 333-214767), to the Registration Statement on Form N-2 of the Company.

(48)

Previously filed as part of Post-Effective Amendment No. 2, as filed on October 25, 2017 (File No. 333-214767), to the Registration Statement on Form N-2 of the Company.

(49)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on October 26, 2017.

(50)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on November 2, 2017.

(51)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on November 2, 2017.

(52)

Previously filed as part of the Annual Report on Form 10-K of the Company, as filed on February 22, 2018.

(53)

Previously filed as part of Post-Effective Amendment No. 4, as filed on April 26, 2018 (File No. 333-214767), to the Registration Statement on Form N-2 of the Company.

(54)

Previously filed as part of the Quarterly Report on Form 10-Q of the Company, as filed on May 3, 2018.

(55)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on June 1, 2018.

(56)

Previously filed as part of Post-Effective Amendment No. 1, as filed on June 14, 2018 (File No. 333-224281), to the Registration Statement on Form N-2 of the Company.

(57)

Previously filed as part of Post-Effective Amendment No. 2, as filed on September 24, 2018 (File No. 333-224281), to the Registration Statement on Form N-2 of the Company.

(58)

Previously filed as part of the Quarterly Report on Form 10-Q of the Company, as filed on November 1, 2018.

(59)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on November 2, 2018.

(60)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on January 17, 2019.

(61)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on January 22, 2019.

(62)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on January 31, 2019.

(63)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on February 21, 2019.

(64)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on September 21, 2021.

(65)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on July 3, 2019.

(66)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on July 16, 2019.

(67)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on February 6, 2020.

(68)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on February 20, 2020.

(69)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on November 4, 2020.

(70)

Previously filed as part of the Current Report on Form 8-K of the Company, as filed on November 10, 2021.

(71)

Previously filed as part of the of the Registration Statement on Form N-2 of the Company, as filed on April 29, 2019 (File No. 333-231089).

 

C-9


Table of Contents

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 to be incurred by the Registrant in connection with the offering described in this registration statement:

 

SEC registration fee(1)

   $                

FINRA filing fee(2)

  

NYSE listing fee(2)

  

Accounting fees and expenses(2)

  

Legal fees and expenses(2)

  

Printing(2)

  

Miscellaneous fees and expenses(2)

  
  

 

 

 

Total(2)

   $    
  

 

 

 

 

(1) 

In accordance with Rules 456(b), 457(r) and 415(a)(6) promulgated under the Securities Act, we are deferring payment of all of the registration fees. Any registration fees will be paid subsequently on a pay-as-you-go basis.

(2) 

These fees will be calculated based on the securities offered and the number of issuances and accordingly, cannot be estimated at this time. These fees, if any, will be reflected in the applicable prospectus supplement.

Item 28. Persons Controlled by or Under Common Control

The following list of entities sets for the Hercules Capital, Inc. which we consider are “controlled” by us, either directly or indirectly, as defined by the Investment Company Act of 1940, as of the date of this prospectus:

 

Name

   Jurisdiction of Organization

Hercules Technology III, L.P.

   Delaware

Hercules Capital IV, L.P.

   Delaware

Hercules Technology SBIC Management, LLC

   Delaware

Hercules Funding II, LLC

   Delaware

Hercules Funding IV, LLC

   Delaware

Hercules Technology Management Co II, Inc.

   Delaware

Hercules Capital Funding Trust 2018-1

   Delaware

Hercules Capital Funding 2018-1 LLC

   Delaware

Hercules Capital Funding Trust 2019-1

   Delaware

Hercules Capital Funding 2019-1 LLC

   Delaware

Bearcub Acquisitions LLC

   Delaware

HercGBC LLC

   Delaware

Gibraltar Acquisition LLC

   Delaware

HTGC UK Limited

   United Kingdom

Hercules Technology Management Co III LLC

   Delaware

Hercules Technology Management Co IV LLC

   Delaware

Hercules Capital Management LLC

   Delaware

Hercules Technology Management LLC

   Delaware

In addition, Hercules Capital, Inc. may be deemed to control certain portfolio companies that are not consolidated. For a more detailed discussion of these entities, see “Portfolio Companies” in the prospectus.

 

C-10


Table of Contents

Item 29. Number of Holders of Securities

The following table sets forth the approximate number of record holders of the Company’s common stock as of December 14, 2021:

 

Title of Class

   Number of
Record Holders
 

Common stock, par value $.001 per share

     120  

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 Registrant’s 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.

The Registrant’s 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 Registrant’s 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 Registrant’s 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 person’s 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 Registrant’s 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

 

C-11


Table of Contents

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 corporation’s 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 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).

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.

Not applicable.

 

  2.

Not applicable.

 

  3.

                

 

  a.

to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

C-12


Table of Contents
  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. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b), or other applicable SEC rule under the Securities Act, if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective 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;

provided, however, that paragraphs 3(a)(i), (ii), and (iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the Registrant pursuant to section 13, section 14 or section 15(d) of the Exchange Act that are incorporated by reference into the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b), or other applicable SEC rule under the Securities Act, that is part of the registration statement.

 

  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:

 

  i.

if the Registrant is relying on Rule 430B:

 

  (A)

Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

 

  (B)

Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (x), or (xi) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 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 effective date, supersede or modify any statement that was

 

C-13


Table of Contents
  made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

 

  ii.

if the Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) or Rule 497(b), (c), (d), or (e) under the Securities Act, as applicable, as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, 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, supersede 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 424 or Rule 497 under the Securities Act, as applicable;

 

  ii.

free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

 

  iii.

the portion of any other free writing prospectus or 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

 

  iv.

any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

 

  4.

that, for the purposes of determining any liability under the Securities Act,

 

  i.

the information omitted from the form of prospectus filed as part of a registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant under Rule 424(b)(1) under the Securities Act shall be deemed to be part of the Registration Statement as of the time it was declared effective; and

 

  ii.

each post-effective amendment that contains a form of prospectus 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;

 

  5.

that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

  6.

insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant, the Registrant has been advised that in the opinion of

 

C-14


Table of Contents
  the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant 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 Securities Act and will be governed by the final adjudication of such issue.

 

  7.

to send by first class mail or other means designed to ensure equally prompt delivery within two business days of receipt of a written or oral request, any prospectus or Statement of Additional Information.

 

C-15


Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this 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 17th day of December, 2021.

 

HERCULES CAPITAL, INC.
/s/    SCOTT BLUESTEIN

Scott Bluestein

Chief Executive Officer

KNOWN ALL PERSONS BY THESE PRESENT, that each person whose signature appears below hereby constitutes and appoints Scott Bluestein and Seth Meyer and each of them, his or her true and lawful attorneys-in fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign this Registration Statement on Form N-2 and any and all amendments thereto, including post-effective amendments and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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/    SCOTT BLUESTEIN        

Scott Bluestein

  

Chief Executive Officer (principal executive officer)

  December 17, 2021

/s/    SETH H. MEYER        

Seth H. Meyer

  

Chief Financial Officer (principal financial and accounting officer)

  December 17, 2021

/s/    ROBERT P. BADAVAS        

Robert P. Badavas

  

Director

  December 17, 2021

/s/    THOMAS J. FALLON        

Thomas J. Fallon

  

Director

  December 17, 2021

/s/    JOSEPH F. HOFFMAN        

Joseph F. Hoffman

  

Director

  December 17, 2021

/s/    DOREEN WOO HO        

Doreen Woo Ho

  

Director

  December 17, 2021

/s/    GAYLE CROWELL        

Gayle Crowell

  

Director

  December 17, 2021

/s/    WADE LOO        

Wade Loo

  

Director

  December 17, 2021

/s/    BRADFORD C. KOENIG        

Bradford C. Koenig

  

Director

  December 17, 2021


Table of Contents

Signature

  

Title

 

Date

/s/    PAM RANDHAWA        

Pam Randhawa

  

Director

  December 17, 2021

/s/    SCOTT BLUESTEIN        

Scott Bluestein

  

Director

  December 17, 2021