On June 22, 2022, Hercules Capital, Inc. (the “Company”) completed a term debt securitization in connection with which an affiliate of the Company completed a private placement of $150,000,000 in aggregate principal amount of fixed-rate asset-backed notes (the “Class A Notes”). The Company engaged Kroll Bond Rating Agency, Inc. to rate the Class A Notes. The Class A Notes were issued by Hercules Capital Funding Trust 2019-1 (the “Issuer”) pursuant to an indenture, dated as of June 22, 2022 by and between the Issuer and U.S. Bank Trust Company, National Association, as trustee, and were sold to the holders thereof pursuant to a note purchase agreement, dated as of June 22, 2022, by and among the Company, the Issuer, Hercules Capital Funding 2019-1 LLC, as Trust Depositor (the “Trust Depositor”) and each of the investors party thereto.

The Class A Notes are backed by a pool of senior loans made to certain portfolio companies of the Company and secured by certain assets of those portfolio companies and are to be serviced by the Company. The outstanding principal balance of the pool of loans as of June 22, 2022 was approximately $236.2 million. Interest on the Class A Notes will be paid, to the extent of funds available.

The Class A Notes will bear interest at a fixed rate of 4.95% per annum and have a legal final payment date of July 20, 2031. As part of this transaction, the Company entered into a sale and contribution agreement with the Trust Depositor under which the Company has agreed to sell or has contributed to the Trust Depositor certain senior loans made to certain portfolio companies of the Company (the “Loans”). The Class A Notes are secured obligations of the Issuer and are non-recourse to the Company.

The Issuer also entered into an indenture governing the Class A Notes. In addition, the Trust Depositor entered into an amended and restated trust agreement. The Loans will be serviced by the Company pursuant to a sale and servicing agreement.

The Company will perform certain servicing and administrative functions with respect to the Loans. The Company will be entitled to receive a monthly fee from the Issuer for servicing the Loans. This servicing fee will equal the product of one-twelfth (or in the case of the first payment date, a fraction equal to the number of days from and including May 31, 2022 through and including July 4, 2022 over 360) of 2.00% and the aggregate outstanding principal balance of the Loans, excluding all defaulted Loans and all purchased Loans, as of the first day of the related collection period (the period from the 5th day of the immediately preceding calendar month through the 4th day of the calendar month in which a payment date occurs, and for the first payment date, the period from and including May 31, 2022, to the close of business on July 4, 2022).

The Company will also serve as administrator to the Issuer under an administration agreement.