EXECUTION COPY


 




 


SALE AND CONTRIBUTION AGREEMENT


 


by and between


 


HORIZON TECHNOLOGY FINANCE CORPORATION,

as the Seller


 


and


 


HORIZON FUNDING 2013-1 LLC,

as the Trust Depositor


 


Dated as of June 28, 2013


  




 


Horizon Funding Trust 2013-1


Asset-Backed Notes




 




    	 



    	 



    

 


Table
of Contents


 


	 	 	 	Page
	 	 	 	 
	ARTICLE I       DEFINITIONS	 	1
	Section 1.01	Definitions	 	1
	Section 1.02	Other Terms	 	3
	Section 1.03	Computation of Time Periods	 	3
	Section 1.04	Interpretation	 	3
	Section 1.05	References	 	4
	Section 1.06	Calculations	 	4
	 	 	 	 
	ARTICLE II      TRANSFERS	 	4
	Section 2.01	Transfer of Loan Assets	 	4
	Section 2.02	Conditions to Transfer of Loan Assets to the Trust Depositor	 	6
	Section 2.03	Acceptance by the Trust Depositor	 	7
	Section 2.04	Conveyance of Substitute Loans	 	7
	Section 2.05	[Reserved]	 	8
	Section 2.06	Release of Excluded Amounts	 	9
	Section 2.07	Delivery of Documents in the Loan File; Recording of Assignments of Mortgage	 	9
	 	 	 	 
	ARTICLE III     REPRESENTATIONS AND WARRANTIES	 	9
	Section 3.01	Representations and Warranties Regarding the Seller	 	10
	Section 3.02	Representations and Warranties Regarding Each Loan and as to Certain Loans in the Aggregate	 	13
	Section 3.03	[Reserved]	 	14
	Section 3.04	Representations and Warranties Regarding the Required Loan Documents	 	14
	Section 3.05	[Reserved]	 	14
	Section 3.06	Representations and Warranties Regarding the Trust Depositor	 	14
	 	 	 	 
	ARTICLE IV     PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS	 	16
	Section 4.01	Custody of Loans	 	16
	Section 4.02	Filing	 	16
	Section 4.03	Changes in Name, Organizational Structure or Location	 	17
	Section 4.04	Costs and Expenses	 	17
	Section 4.05	Sale Treatment	 	17
	Section 4.06	Separateness from Trust Depositor	 	17
	 	 	 	 
	ARTICLE V      COVENANTS OF THE ORIGINATOR	 	17
	Section 5.01	Corporate Existence	 	17
	Section 5.02	[Reserved]	 	18
	Section 5.03	Security Interests	 	18


 




    	-i-



    	 



    

 


Table
of Contents


(continued)


 


	 	 	 	Page
	 	 	 	 
	Section 5.04	Compliance with Law	 	18
	Section 5.05	Liability of Seller	 	18
	Section 5.06	Limitation on Liability of Seller and Others	 	18
	Section 5.07	Reserved	 	18
	Section 5.08	Merger or Consolidation of Seller	 	18
	Section 5.09	Delivery of Collections	 	19
	Section 5.10	Underlying Custodial Agreements	 	19
	 	 	 	 
	ARTICLE VI REMEDIES UPON MISREPRESENTATION	 	19
	Section 6.01	Repurchases of, or Substitution for, Loans for Breach of Representations and Warranties	 	19
	Section 6.02	Reassignment of Repurchased or Substituted Loans	 	20
	 	 	 	 
	ARTICLE VII INDEMNIFICATION BY THE ORIGINATOR	 	20
	Section 7.01	Indemnification	 	20
	Section 7.02	Liabilities to Obligors	 	21
	Section 7.03	Operation of Indemnities	 	21
	 	 	 	 
	ARTICLE VIII MISCELLANEOUS	 	21
	Section 8.01	Amendment	 	21
	Section 8.02	Governing Law	 	22
	Section 8.03	Notices	 	23
	Section 8.04	Severability of Provisions	 	25
	Section 8.05	Third Party Beneficiaries		25
	Section 8.06	Counterparts	 	26
	Section 8.07	Headings	 	26
	Section 8.08	No Bankruptcy Petition; Disclaimer	 	26
	Section 8.09	Jurisdiction	 	26
	Section 8.10	Prohibited Transactions with Respect to the Issuer	 	26
	Section 8.11	No Partnership	 	27
	Section 8.12	Successors and Assigns	 	27
	Section 8.13	Duration of Agreement	 	27
	Section 8.14	Limited Recourse	 	27
	 	 	 	 
	Exhibit A	Form of Assignment	 	A-1
	 	 	 	 
	Schedule A	2013-1 Loans	 	S-B-1


 




    	-ii-



    	 



    

 


SALE
AND CONTRIBUTION AGREEMENT


 


THIS SALE AND CONTRIBUTION
AGREEMENT, dated as of June 28, 2013 (as amended, modified, restated, waived, or supplemented from time to time, this “Agreement”),
is between HORIZON TECHNOLOGY FINANCE CORPORATION, a Delaware corporation (together with its successors and assigns, “Horizon,”
and in its capacity as originator, together with its successors and assigns, the “Seller”) and HORIZON
FUNDING 2013-1 LLC, a Delaware limited liability company (together with its successors and assigns, the “Trust
Depositor”).


 


WHEREAS, in
the regular course of its business, the Seller originates and/or otherwise acquires Loans;


 


WHEREAS, the
Trust Depositor desires to acquire the 2013-1 Loans (as defined herein) from the Seller and may acquire from time to time thereafter
certain Substitute Loans;


 


WHEREAS, it
is a condition to the Trust Depositor’s acquisition of the 2013-1 Loans and any Substitute Loans from the Seller that the
Seller make certain representations, warranties and covenants regarding the 2013-1 Loan Assets for the benefit of the Trust Depositor
as well as Horizon Funding Trust 2013-1, a Delaware statutory trust (the “Issuer”);


 


WHEREAS, on
the Closing Date, the Trust Depositor will purchase and accept assignment of the 2013-1 Loan Assets and certain other assets from
the Seller as provided herein; and


 


WHEREAS, on
the Closing Date, the Trust Depositor will sell, convey and assign all its right, title and interest in the 2013-1 Loan Assets,
to the Issuer, pursuant to a Sale and Servicing Agreement, dated as of the date hereof (as amended, modified, restated, replaced,
waived, substituted, supplemented or extended from time to time, the “Sale and Servicing Agreement”), among
Horizon, as the seller and the servicer, the Trust Depositor, as the trust depositor, the Issuer, as the issuer, and U.S. Bank
National Association, as the trustee.


 


NOW, THEREFORE,
based upon the above recitals, the mutual promises and agreements contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:


 


ARTICLE
I


 


DEFINITIONS


 


Section
1.01         Definitions.


 


Capitalized terms used
but not defined in this Agreement shall have the meanings attributed to such terms in the Sale and Servicing Agreement, unless
the context otherwise requires. In addition, as used herein, the following defined terms, unless the context otherwise requires,
shall have the following meanings:


 




    	 



    	 



    

  


“2013-1 Loan Assets”
means any assets acquired by the Trust Depositor from the Seller on the Closing Date pursuant to Section 2.01, which assets
shall include the Seller’s right, title and interest in the following:


 


(a)          the
2013-1 Loans, and all monies due, to become due or paid in respect thereof accruing on and after the Cutoff Date and all Insurance
Proceeds, Liquidation Proceeds and other recoveries thereon, in each case as they arise after the Cutoff Date;


 


(b)          all
security interests and Liens and Related Property subject thereto from time to time purporting to secure payment by Obligors under
such 2013-1 Loans;


 


(c)          all
guaranties, indemnities and warranties, and other agreements or arrangements of whatever character from time to time supporting
or securing payment of such 2013-1 Loans;


 


(d)          the
Transaction Accounts, together with all cash and investments in each of the foregoing;


 


(e)          all
collections and records (including Computer Records) with respect to the foregoing;


 


(f)          all
documents relating to the applicable Loan Files and other Records relating to the Initial Loans and Related Property; and


 


(g)         all
income, payments, proceeds and other benefits of any and all of the foregoing, including but not limited to, all accounts, cash
and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures,
general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights,
software, supporting obligations, accessions, and other property consisting of, arising out of, or related to the foregoing, but
excluding any Excluded Amounts with respect thereto.


 


“2013-1 Loans” means
those Loans listed on Schedule A hereto, which Loans shall be conveyed to the Trust Depositor on the Closing Date.


 


“Indemnified Party”
shall have the meaning provided in Section 7.01.


 


“Ineligible Loan” shall
have the meaning provided in Section 6.01.


 


“Loan” means an individual
loan to an Obligor, or any portion thereof, made by the Seller.


 


“Loan Assets” means,
collectively and as applicable, the 2013-1 Loan Assets and the Substitute Loan Assets, as applicable.


 


“Substitute Loan Assets”
means any assets acquired by the Trust Depositor in connection with a substitution of one or more Substitute Loans pursuant to
Section 2.04, which assets shall include the Seller’s right, title and interest in the following:


 




    	2



    	 



    

  


(a)          the
Substitute Loans listed in the related Subsequent List of Loans and all monies due, to become due or paid in respect thereof accruing
on and after the applicable Substitute Loan Cutoff Date and all Insurance Proceeds, Liquidation Proceeds and other recoveries thereon,
in each case as they arise after the applicable Substitute Loan Cutoff Date;


 


(b)          all
security interests and Liens and Related Property subject thereto from time to time purporting to secure payment by Obligors under
such Loans;


 


(c)          all
guaranties, indemnities and warranties, and other agreements or arrangements of whatever character from time to time supporting
or securing payment of such Loans;


 


(d)          all
collections and records (including Computer Records) with respect to the foregoing;


 


(e)          all
documents relating to the applicable Loan Files and other Records relating to such Substitute
Loans and Related Property; and


 


(f)          all
income, payments, proceeds and other benefits of any and all of the foregoing, including but not limited to, all accounts, cash
and currency, chattel paper, electronic chattel paper, tangible chattel paper, copyrights, copyright licenses, equipment, fixtures,
general intangibles, instruments, commercial tort claims, deposit accounts, inventory, investment property, letter of credit rights,
software, supporting obligations, accessions, and other property consisting of, arising out of, or related to the foregoing, but
excluding any Excluded Amounts with respect thereto.


 


Section
1.02         Other Terms


 


All accounting terms
used but not specifically defined herein shall be construed in accordance with generally accepted accounting principles in the
United States. The symbol “$” shall mean the lawful currency of the United States of America. All terms used in Article
9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.


 


Section
1.03         Computation of Time Periods.


 


Unless otherwise stated
in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from”
means “from and including,” the words “to” and “until” each mean “to but excluding,”
and the word “within” means “from and excluding a specified date and to and including a later specified date.”


 


Section
1.04         Interpretation.


 


In this Agreement,
unless a contrary intention appears:


 


(a)          the
singular number includes the plural number and vice versa;


 


(b)          reference
to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted
by the Transaction Documents;


 




    	3



    	 



    

 





(c)          reference
to any gender includes each other gender;


 


(d)          reference
to day or days without further qualification means calendar days;


 


(e)          unless
otherwise stated, reference to any time means New York, New York time;


 


(f)          references
to “writing” include printing, typing, lithography, electronic or other means of reproducing words in a visible form;


 


(g)          reference
to any agreement (including any Transaction Document), document or instrument means such agreement, document or instrument as amended,
modified, supplemented, replaced, restated, waived or extended and in effect from time to time in accordance with the terms thereof
and, if applicable, the terms of the other Transaction Documents, and reference to any promissory note includes any promissory
note that is an extension or renewal thereof or a substitute or replacement therefor; and


 


(h)          reference
to any Applicable Law means such Applicable Law as amended, modified, codified, replaced or reenacted, in whole or in part, and
in effect from time to time, including rules and regulations promulgated thereunder and reference to any Section or other provision
of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive
amendment, modification, codification, replacement or reenactment of such Section or other provision.


 


Section
1.05         References.


 


All section references
(including references to the Preamble), unless otherwise indicated, shall be to Sections (and the Preamble) in this
Agreement.


 


Section
1.06         Calculations.


 


Except as otherwise
provided herein, all interest rate and basis point calculations hereunder will be made on the basis of a 360 day year and the actual
days elapsed in the relevant period and will be carried out to at least three decimal places.


 


ARTICLE
II


 


TRANSFERS


 


Section
2.01         Transfer of Loan Assets.


 


(a)          The
Seller shall sell, assign and convey Loan Assets to the Trust Depositor pursuant to the terms and provisions hereof.


 


(b)          Subject
to and upon the terms and conditions set forth herein, the Seller hereby sells, transfers, assigns, sets over and otherwise conveys
to the Trust Depositor all the right, title and interest of the Seller in and to the 2013-1 Loan Assets for a purchase price of
$189,340,892, to be paid in a combination of cash and equity interest.


 




    	4



    	 



    

  


To the extent the purchase
price paid to the Seller for any Loan Assets is less than the fair market value of such Loan Assets, the difference between such
fair market value and such purchase price shall be deemed to be a capital contribution made by the Seller to the Trust Depositor
on the Closing Date in the case of the 2013-1 Loans and as of the related Substitute Loan Cutoff Date in the case of any Substitute
Loans. For all purposes of this Agreement, any contributed Loan Assets shall be treated the same as Loan Assets sold for cash,
including without limitation for purposes of Section 6.01.


 


(c)          The
Seller and the Trust Depositor each acknowledge with respect to itself that the representations and warranties of the Seller in
Sections 3.01, 3.02 and 3.04 hereof and of the Trust Depositor in the Sale and Servicing Agreement and in
Section 3.06 hereof will run to and be for the benefit of the Issuer and the Trustees, and the Issuer and the Trustees may
enforce directly (without joinder of the Trust Depositor when enforcing against the Seller) the repurchase obligations of the Seller
or the Trust Depositor, as applicable, with respect to breaches of such representations and warranties that materially and adversely
affect the interest of any Noteholder as set forth in the Sale and Servicing Agreement or in this Agreement.


 


(d)          The
sale, transfer, assignment, set-over and conveyance of the Loan Assets by the Seller to the Trust Depositor pursuant to this Agreement
does not constitute and is not intended to result in a creation or an assumption by the Trust Depositor of any obligation of the
Seller in connection with the Loan Assets, or any agreement or instrument relating thereto, including, without limitation, (i)
any obligation to any Obligor relating to any unfunded commitment from the Seller, (ii) any taxes, fees, or other charges imposed
by any Governmental Authority and (iii) any insurance premiums that remain owing with respect to any Loan Asset at the time such
Loan Asset is sold hereunder. Without limiting the foregoing, (x) the Trust Depositor does not assume any obligation to purchase
any additional notes or loans under agreements governing the Loan Assets and (y) the sale, transfer, assignment, set-over and conveyance
of the Loan Assets by the Seller to the Trust Depositor pursuant to this Agreement does not constitute and is not intended to result
in a creation or an assumption by the Trust Depositor or the Issuer of any obligation of the Seller as agent or collateral agent
under any Co-Lender Loan.


 


(e)          The
Seller and the Trust Depositor intend and agree that (i) the transfer of the Loan Assets by the Seller to the Trust Depositor hereunder
and the transfer of the Loan Assets by the Trust Depositor to the Issuer under the Sale and Servicing Agreement are each intended
to be an absolute sale, conveyance and transfer of ownership of the applicable Loan Assets, as the case may be, rather than the
mere granting of a security interest to secure a borrowing and (ii) such Loan Assets shall not be part of the Seller’s or
the Trust Depositor’s estate in the event of a filing of a bankruptcy petition or other action by or against such Person
under any Insolvency Law. In the event, however, that notwithstanding such intent and agreement, such transfers are deemed to be
a mere granting of a security interest to secure indebtedness, the Seller shall be deemed to have granted (and as of the Closing
Date hereby grants) to the Trust Depositor and the Trust Depositor shall be deemed to have granted and assigned (and as of the
Closing Date hereby grants and assigns) to the Issuer, as the case may be, a security interest in all right, title and interest
of the Seller or of the Trust Depositor, respectively, in such Loan Assets, and this Agreement shall constitute a security agreement
under Applicable Law, securing the repayment of the purchase price paid hereunder, the obligations and/or interests represented
by the Securities, in the order and priorities, and subject to the other terms and conditions of, this Agreement, the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, together with such other obligations or interests as may arise hereunder
and thereunder in favor of the parties hereto and thereto.


 




    	5



    	 



    

  


(f)          If
any such transfer of the Loan Assets is deemed to be the mere granting of a security interest to secure a borrowing, the Trust
Depositor may, to secure the Trust Depositor’s own borrowing under the Sale and Servicing Agreement (to the extent that the
transfer of the Loan Assets thereunder is deemed to be a mere granting of a security interest to secure a borrowing), repledge
and reassign (i) all or a portion of the Loan Assets pledged to the Trust Depositor by the Seller and with respect to which the
Trust Depositor has not released its security interest at the time of such pledge and assignment, and (ii) all proceeds thereof.
Such repledge and reassignment may be made by the Trust Depositor with or without a repledge and reassignment by the Trust Depositor
of its rights under any agreement with the Seller, and without further notice to or acknowledgment from the Seller. The Seller
waives, to the extent permitted by Applicable Law, all claims, causes of action and remedies, whether legal or equitable (including
any right of setoff), against the Trust Depositor or any assignee of the Trust Depositor relating to such action by the Trust Depositor
in connection with the transactions contemplated by this Agreement and the other Transaction Documents.


 


(g)          The
Seller and the Trust Depositor acknowledge and agree that, solely for administrative convenience, any assignment agreement required
to be executed and delivered in connection with the transfer of a 2013-1 Loan or Substitute Loan in accordance with the terms of
related Underlying Loan Agreements may reflect that the Seller or any Affiliate thereof is assigning such 2013-1 Loan or Substitute
Loan directly to the Issuer. Nothing in such assignment agreements shall be deemed to impair the transfers of the Loan Assets by
the Seller to the Trust Depositor in accordance with the terms of this Agreement and the subsequent transfer of the Loan Assets
by the Trust Depositor to the Issuer in accordance with the terms of the Sale and Servicing Agreement.


 


Section
2.02         Conditions to Transfer of Loan Assets to the Trust Depositor.


 


On or before the Closing
Date, the Seller shall deliver or cause to be delivered to the Trust Depositor, the Owner Trustee and the Trustee each of the documents,
certificates and other items as follows:


 


(a)          a
certificate of an officer of the Seller substantially in the form of Exhibit C to the Sale and Servicing Agreement;


 


(b)          copies
of resolutions of Horizon, as Seller and Servicer, approving the execution, delivery and performance of this Agreement, the Transaction
Documents to which it is a party and the transactions contemplated hereunder and thereunder, certified in each case by the Secretary
or an Assistant Secretary of Horizon;


 


(c)          officially
certified evidence dated within 30 days of the Closing Date of due formation and good standing of the Seller under the laws of
the State of Delaware;


 


(d)          the
initial List of Loans, certified by an officer of the Seller, together with an Assignment with respect to the 2013-1 Loan Assets
substantially in the form of Exhibit A, attached hereto (along with the delivery of any instruments and Loan Files as required
under Section 2.07);


 




    	6



    	 



    

  


(e)          a
letter from McGladrey LLP, a Delaware limited liability partnership or another nationally recognized accounting firm, addressed
to the Seller and the Trust Depositor (with a copy to the Trustee and the Rating Agency), stating that such firm has reviewed a
sample of the 2013-1 Loans and performed specific procedures for such sample with respect to certain loan terms and that identifies
those 2013-1 Loans that do not conform;


 


(f)          a
UCC-1 financing statement, naming the Seller as seller or debtor, naming the Trust Depositor as assignor, buyer or secured party,
and naming the Issuer as assignee of assignor, buyer or secured party and describing the Loan Assets being sold by it to the Trust
Depositor as collateral, which financing statement shall be filed on the Closing Date with the office of the Secretary of State
of the State of Delaware and in such other locations as the Trust Depositor shall have required;


 


(g)          an
Officer’s Certificate listing the Servicer’s Servicing Officers;


 


(h)          a
fully executed copy of each of the Transaction Documents.


 


On or before the Closing
Date, the Servicer shall have notified and directed the Obligor with respect to each such Loan to make all payments on the Loans,
whether by check, wire transfer or otherwise, directly to the Lockbox Account.


 


Section
2.03         Acceptance by the Trust Depositor.


 


On the Closing Date,
if the conditions set forth in Section 2.02 have been satisfied, the Seller shall deliver, on behalf of the Trust Depositor,
to the Trustee the 2013-1 Loan Assets and such delivery to and acceptance by the Trustee shall be deemed to be delivery to and
acceptance by the Trust Depositor.


 


Section
2.04         Conveyance of Substitute Loans.


 


(a)          With
respect to any Substitute Loans to be conveyed to the Issuer by the Trust Depositor pursuant to Section 2.04 and Section
2.06 of the Sale and Servicing Agreement, the Seller hereby sells, transfers, assigns, sets over and otherwise conveys to the
Trust Depositor, without recourse other than as expressly provided herein (and the Trust Depositor shall purchase through cash
payment and/or by exchange of one or more related Loans released by the Issuer to the Trust Depositor on the related Substitute
Loan Cutoff Date), all the right, title and interest of the Seller in and to such Substitute Loans and Related Property.


 


The purchase price
may equal, exceed or be less than the fair market value of such Substitute Loan as of the related Substitute Loan Cutoff Date,
plus in each case accrued interest thereon. To the extent the purchase price of any Substitute Loan is less than the fair market
value thereof, the Seller will be deemed to have made a capital contribution with respect to such excess to the Trust Depositor.
In the event that the Trust Depositor is no longer the sole Certificateholder, the Trust Depositor will obtain the approval of
an independent pricing advisor prior to receiving any Substitute Loan from the Seller.


 




    	7



    	 



    

  


(b)          [Reserved].


 


(c)          The
Seller shall transfer to the Trust Depositor hereunder the applicable Substitute Loans and Related Property only upon the satisfaction
of each of the following conditions on or prior to the related Substitute Loan Cutoff Date (in addition to the conditions set forth
in Section 2.09 of the Sale and Servicing Agreement):


 


(i)          the
Seller shall have provided the Trust Depositor with timely notice of such substitution, which shall be delivered no later than
11:00 a.m. on the related Substitute Loan Cutoff Date;


 


(ii)         there
shall have occurred, with respect to each such Substitute Loan, a corresponding Substitution Event with respect to one or more
Loans then in the Collateral;


 


(iii)        the
Seller and the Trust Depositor shall have delivered to the Issuer and the Trustee a Subsequent List of Loans listing the applicable
Substitute Loans and an assignment agreement as required by the related Underlying Loan Agreement indicating that the Issuer is
the holder of the related Substitute Loan;


 


(iv)        the
Seller shall have deposited or caused to be deposited in the Collection Account all Collections received by it with respect to
the applicable Substitute Loans on and after the related Substitute Loan Cutoff Date;


 


(v)         each
of the representations and warranties made by the Seller pursuant to Sections 3.02 and 3.04 applicable to the Substitute
Loans shall be true and correct as of the related Substitute Loan Cutoff Date; and


 


(vi)        the
Seller shall bear all incidental transaction costs incurred in connection with a substitution effected pursuant to this Agreement
and shall, at its own expense, on or prior to the related Substitute Loan Cutoff Date, indicate in its Computer Records that ownership
of each Substitute Loan identified on the Subsequent List of Loans has been sold by the Seller to the Trust Depositor and by the
Trust Depositor to the Issuer pursuant to the Transfer and Servicing Agreements.


 


(d)          The
Servicer, the Issuer and the Trustee (at the request of the Servicer) shall execute and deliver such instruments, consents or other
documents and perform all acts reasonably requested by the Servicer in order to effect the transfer and release of any of the Issuer’s
interests in the Loans that are being substituted.


 


(e)          The
Seller represents and warrants that each Substitute Loan is a Qualified Substitute Loan as of the date such Substitute Loan is
transferred to the Trust Depositor hereunder.


 


Section
2.05         [Reserved].


 




    	8



    	 



    

  


Section
2.06         Release of Excluded Amounts.


 


The parties acknowledge
and agree that the Trust Depositor has no interest in the Excluded Amounts. Immediately upon the release to the Trust Depositor
by the Issuer of any Excluded Amounts, the Trust Depositor hereby irrevocably agrees to release to the Seller such Excluded Amounts,
which release shall be automatic and shall require no further act by the Trust Depositor; provided that the Trust Depositor
shall execute and deliver such instruments of release and assignment or other documents, or otherwise confirm the foregoing release
of such Excluded Amounts, as may be reasonably requested by the Seller in writing.


 


Section
2.07         Delivery of Documents in the Loan File.


 


(a)          Subject
to the delivery requirements set forth in Section 2.07(b), the Seller shall deliver, on behalf of the Trust Depositor, possession
of all the Loan Files to the Trustee (or the Custodian on its behalf) on behalf of and for the account of the Noteholders. The
Seller shall also identify on the List of Loans (including any deemed amendment thereof associated with any Substitute Loans),
whether by attached schedule or marking or other effective identifying designation, all Loans that are evidenced by such instruments.


 


(b)          With
respect to each Loan in the Collateral, (i) at least two (2) Business Days before the Closing Date in the case of the 2013-1 Loans
and two (2) Business Days before the related Substitute Loan Cutoff Date in the case of any Substitute Loans (or, in each case,
such lesser time as shall be acceptable to the Trustee), the Seller or the Trust Depositor will deliver or cause to be delivered
to the Trustee (or to the Custodian on its behalf), to the extent not previously delivered, each of the documents in the Loan File
with respect to such Loan; and (ii) on or before the Closing Date in the case of the 2013-1 Loans and on or before the related
Substitute Loan Cutoff Date in the case of any Substitute Loans (or, in each case, such lesser time as shall be acceptable to the
Trustee), the Seller or the Trust Depositor will deliver or cause to be delivered to the Trustee (or to the Custodian on its behalf),
to the extent not previously delivered, each of the documents in the Loan File that is not part of the Required Loan Documents
with respect to such Loan.


 


ARTICLE
III


 


REPRESENTATIONS AND WARRANTIES


 


The Seller makes, and
upon each conveyance of Substitute Loans, as applicable, is deemed to make, the representations and warranties in Section 3.01
through Section 3.04, on which the Trust Depositor will rely in conveying the 2013-1 Loan Assets on the Closing Date (and
any Substitute Loan Assets on the relevant Substitute Loan Cutoff Date) to the Issuer, and on which the Issuer and the Securityholders
will rely. The Seller acknowledges that such representations and warranties are being made by the Seller for the benefit of the
Issuer and the Securityholders.


 


Such representations
and warranties are given as of the execution and delivery of this Agreement and as of the Closing Date (or Substitute Loan Cutoff
Date, as applicable), but shall survive the sale, transfer and assignment of the 2013-1 Loan Assets to the Trust Depositor and
the sale, transfer and assignment of the 2013-1 Loan Assets by the Trust Depositor to the Issuer. The repurchase obligation or
substitution obligation of the Seller set forth in Section 6.01 constitutes the sole remedy available for a breach of a
representation or warranty of the Seller set forth in Section 3.01 through Section 3.04 of this Agreement.


 




    	9



    	 



    

 


Section
3.01         Representations and Warranties Regarding the Seller.


 


The Seller represents
and warrants that:


 


(a)          Organization
and Good Standing. The Seller is a corporation duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the power to own its assets and to transact the business in which it is currently engaged. The Seller
is duly qualified to do business and is in good standing in each jurisdiction in which the character of the business transacted
by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would reasonably be
expected to have a material adverse effect on the business, properties, assets, or condition (financial or otherwise) of the Seller.


 


(b)          Authorization;
Valid Sale; Binding Obligations. The Seller has the power and authority to make, execute, deliver and perform this Agreement
and the other Transaction Documents to which it is a party and all of the transactions contemplated under this Agreement and the
other Transaction Documents to which it is a party, and to create the Trust Depositor and cause the Trust Depositor to make, execute,
deliver and perform its obligations under this Agreement and the other Transaction Documents to which the Trust Depositor is a
party and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and the
other Transaction Documents to which it is a party. This Agreement shall effect a valid sale, transfer and assignment of or grant
of a security interest in the Loan Assets from the Seller to the Trust Depositor, enforceable against the Seller and creditors
of and purchasers from the Seller. This Agreement and the other Transaction Documents to which the Seller is a party constitute
the legal, valid and binding obligation of the Seller enforceable in accordance with their respective terms, except as enforcement
of such terms may be limited by applicable Insolvency Laws and general principles of equity, whether considered in a suit at law
or in equity.


 


(c)          No
Consent Required. The Seller is not required to obtain the consent of any other party (other than (i) the filing of UCC financing
statements and (ii) those that it has already obtained) or any consent, license, approval or authorization from, or registration
or declaration with, any Governmental Authority (other than those that it has already obtained) in connection with the execution,
delivery, performance, validity or enforceability of this Agreement or the other Transaction Documents to which it is a party.


 


(d)          No
Violations. The execution, delivery and performance by the Seller of this Agreement and the other Transaction Documents to
which it is a party, and the consummation of the transactions contemplated hereby and thereby, will not violate in any material
respect any Applicable Law applicable to the Seller, or conflict with, result in a default under or constitute a breach of the
Seller’s organizational documents or the material Contractual Obligations to which the Seller is a party or by which the
Seller or any of the Seller’s properties may be bound, or result in the creation or imposition of any Lien of any kind upon
any of its properties pursuant to the terms of any such material Contractual Obligations, other than as contemplated by the Transaction
Documents.


 




    	10



    	 



    

  


(e)          Litigation.
No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the
knowledge of the Seller threatened, against the Seller or any of its properties or with respect to this Agreement or the other
Transaction Documents to which it is a party or the Securities (1) that, if adversely determined, would in the reasonable judgment
of the Seller be expected to have a material adverse effect on the business, properties, assets or condition (financial or otherwise)
of the Seller or the transactions contemplated by this Agreement or the other Transaction Documents to which the Seller is a party
or (2) seeking to adversely affect the federal income tax or other federal, state or local tax attributes of the Certificate or
Notes.


 


(f)          Solvency.
The Seller, at the time of and after giving effect to each conveyance of Loan Assets hereunder, is Solvent on and as of the date
thereof.


 


(g)          Taxes.
The Seller has filed or caused to be filed all tax returns which, to its knowledge, are required to be filed and has paid all taxes
shown to be due and payable on such returns or on any assessments made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental Authority (other than any amount of tax due, the validity
of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in accordance
with generally accepted accounting principles have been provided on the books of the Seller); no tax Lien has been filed and, to
the Seller’s knowledge, no claim is being asserted, with respect to any such tax, fee or other charge.


 


(h)          Place
of Business; No Changes. The Seller’s location (within the meaning of Article 9 of the UCC) is the State of Delaware.
The Seller has not changed its name, whether by amendment of its Certificate of Incorporation, by reorganization or otherwise,
within the four months preceding the Closing Date. The Seller has not changed its location within the four months preceding the
Closing Date.


 


(i)          Not
an Investment Company. The Seller is not and, after giving effect to the transactions contemplated by the Transaction Documents,
will not be required to be registered as an “investment company” under the 1940 Act.


 


(j)          Sale
Treatment. Other than for accounting and tax purposes, the Seller has treated the transfer of the 2013-1 Loan Assets to the
Trust Depositor for all purposes as a sale and purchase on all of its relevant books and records and other applicable documents.


 


(k)          Security
Interest.


 


(i)          This
Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in favor of the Trust Depositor in
all right, title and interest of the Seller in the 2013-1 Loan Assets, which security interest is prior to all other Liens (except
for Permitted Liens), and is enforceable as such against creditors of and purchasers from the Seller;


 


(ii)         the
2013-1 Loan Assets, along with the related Loan Files, constitute “general intangibles,” “instruments,”
“accounts,” “investment property,” or “chattel paper,” within the meaning of the applicable
UCC;


 




    	11



    	 



    

  


(iii)        the
Seller owns and has, and upon the sale and transfer thereof by the Seller to the Trust Depositor, the Trust Depositor will have
good and marketable title to the 2013-1 Loan Assets free and clear of any Lien (other than Permitted Liens), claim or encumbrance
of any Person;


 


(iv)        the
Seller has received all consents and approvals required by the terms of the 2013-1 Loan Assets to the sale of the 2013-1 Loan Assets
hereunder to the Trust Depositor;


 


(v)         the
Seller has caused the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions
under Applicable Law in order to perfect the security interest in the 2013-1 Loan Assets granted to the Trust Depositor under this
Agreement to the extent perfection can be achieved by filing a financing statement;


 


(vi)        other
than the security interest granted to the Trust Depositor pursuant to this Agreement, the Seller has not pledged, assigned, sold,
granted a security interest in or otherwise conveyed any of the 2013-1 Loan Assets. The Seller has not authorized the filing of
and is not aware of any financing statements naming the Seller as debtor that include a description of collateral covering the
2013-1 Loan Assets other than any financing statement (A) relating to the security interest granted to the Trust Depositor under
this Agreement, or (B) that has been terminated or for which a release or partial release has been filed. The Seller is not aware
of the filing of any judgment or tax Lien filings against the Seller;


 


(vii)       all
original executed copies of each Underlying Note (if any) that constitute or evidence the 2013-1 Loan Assets have been delivered
to the Trustee;


 


(viii)      the
Seller has received a written acknowledgment from the Trustee that the Trustee or its bailee is holding any Underlying Notes that
constitute or evidence any 2013-1 Loan Assets solely on behalf of and for the benefit of the Securityholders; and


 


(ix)         none
of the Underlying Notes that constitute or evidence any 2013-1 Loan Assets has any marks or notations indicating that they have
been pledged, assigned or otherwise conveyed to any Person other than the Trust Depositor.


 


(l)          Value
Given. The cash payments and the corresponding increase in the Seller’s equity interest in the Trust Depositor received
by the Seller in respect of the purchase price of the Loan Assets sold hereunder constitute reasonably equivalent value in consideration
for the transfer to the Trust Depositor of such Loan Assets under this Agreement, such transfer was not made for or on account
of an antecedent debt owed by the Seller to the Trust Depositor, and such transfer was not and is not voidable or subject to avoidance
under any Insolvency Law.


 


(m)          No
Defaults. The Seller is not in default with respect to any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or governmental agency, which default would reasonably be expected to have consequences that would
materially and adversely affect the condition (financial or otherwise) or operations of the Seller or its respective properties
or might have consequences that would materially and adversely affect its performance hereunder.


 




    	12



    	 



    

  


(n)          Bulk
Transfer Laws. The transfer, assignment and conveyance of the 2013-1 Loan Assets by the Seller pursuant to this Agreement are
not subject to the bulk transfer laws or any similar statutory provisions in effect in any applicable jurisdiction.


 


(o)          Origination
and Collection Practices. The origination and collection practices used by the Seller and any of its Affiliates with respect
to each 2013-1 Loan have been consistent with the Servicing Standard and have complied in all material respects with the Credit
and Collection Policy.


 


(p)          Lack
of Intent to Hinder, Delay or Defraud. Neither the Seller nor any of its Affiliates sold, or will sell, any interest in any
2013-1 Loan Asset with any intent to hinder, delay or defraud any of their respective creditors.


 


(q)          Nonconsolidation.
The Seller conducts its affairs such that the Trust Depositor would not be substantively consolidated in the estate of the Seller
and their respective separate existences would not be disregarded in the event of the Seller’s bankruptcy.


 


(r)          Accuracy
of Information. All written factual information heretofore furnished by the Seller for purposes of or in connection with this
Agreement or the other Transaction Documents to which the Seller is a party, or any transaction contemplated hereby or thereby
is, and all such written factual information hereafter furnished by the Seller to any party to the Transaction Documents will be,
true and accurate in all material respects, on the date such information is stated or certified; provided that the Seller
shall not be responsible for any factual information furnished to it by any third party not affiliated with it, or the Trust Depositor
or the Servicer, except to the extent that a Responsible Officer of the Seller has actual knowledge that such factual information
is inaccurate in any material respect.


 


The representations
and warranties set forth in Section 3.01(k) may not be waived by any Person and shall survive the termination of this Agreement.
The Seller and the Trust Depositor shall provide the Rating Agency with prompt written notice upon obtaining knowledge of any breach
of the representations and warranties set out in Section 3.01(k).


 


Section
3.02        Representations and Warranties Regarding Each Loan and as to
Certain Loans in the Aggregate.


 


The Seller represents
and warrants (x) with respect to Section 3.02(a), Section 3.02(b), Section 3.02(d) and Section 3.02(e),
as to each 2013-1 Loan as of the Closing Date, and as of the related Substitute Loan Cutoff Date with respect to each Substitute
Loan, and (y) with respect to Section 3.02(c), as to the 2013-1 Loans in the aggregate as of the Closing Date, and as of
the related Substitute Loan Cutoff Date with respect to Substitute Loans (after giving effect to the addition of such Substitute
Loans to the Collateral), that:


 


(a)          List
of Loans. The information set forth in the List of Loans attached to the Sale and Servicing Agreement as Exhibit G (as
the same may be amended or deemed amended in respect of a conveyance of Substitute Loans on the related Substitute Loan Cutoff
Date) is true, complete and correct.


 




    	13



    	 



    

  


(b)          Eligible
Loan. Each 2013-1 Loan and each Substitute Loan satisfies the criteria for the definition of Eligible Loan set forth in the
Sale and Servicing Agreement.


 


(c)          No
Liens. Each 2013-1 Loan and each Substitute Loan is free and clear of all Liens, other than Permitted Liens, and, to the Seller’s
knowledge, no offsets, defenses or counterclaims against the Seller have been asserted or threatened with respect to such 2013-1
Loan and such Substitute Loan, respectively.


 


(d)          Security
Interest. Each 2013-1 Loan and each Substitute Loan is secured by a perfected security interest in certain property of the
related Obligor identified in the loan documentation in favor of the Seller, as registered lienholder, or the Seller has taken
all necessary action with respect to each 2013-1 Loan and each Substitute Loan to secure a perfected security interest in such
property.


 


(e)          Compliance
with Law. Each 2013-1 Loan and each Substitute Loan complies in all material respects, as of such date and as of the date on
which it was originated, with applicable federal and state laws.


 


Section
3.03         [Reserved].


 


Section
3.04         Representations and Warranties Regarding the Required Loan
Documents.


 


The Seller represents
and warrants on the Closing Date with respect to the 2013-1 Loans (or as of the related Substitute Loan Cutoff Date, with respect
to Substitute Loans), that except as otherwise provided in Section 2.07, the Required Loan Documents and each other item
included in the Loan File for each 2013-1 Loan (or Substitute Loan, as applicable) are in the possession of the Trustee or the
Custodian, on behalf of the Trustee.


 


Section
3.05         [Reserved].


 


Section
3.06         Representations and Warranties Regarding the Trust Depositor.


 


By its execution of
this Agreement, the Trust Depositor represents and warrants to the Seller that:


 


(a)          Organization
and Good Standing. The Trust Depositor is a limited liability company duly organized, validly existing and in good standing
under the laws of Delaware and has the power to own its assets and to transact the business in which it is currently engaged. The
Trust Depositor is duly qualified to do business as and is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify
would have a material adverse effect on the business, properties, assets or condition (financial or other) of the Trust Depositor
or the Issuer.


 




    	14



    	 



    

  


(b)          Authorization;
Valid Sale; Binding Obligations. The Trust Depositor has the power and authority to make, execute, deliver and perform this
Agreement and the other Transaction Documents to which it is a party and all of the transactions contemplated under this Agreement
and the other Transaction Documents to which it is a party, and to create the Issuer and cause it to make, execute, deliver and
perform its obligations under this Agreement and the other Transaction Documents to which the Issuer is a party, and the Trust
Depositor has taken all necessary limited liability company action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to cause the Issuer to be created. This Agreement shall
effect a valid sale, transfer and assignment of or grant of a security interest in the Loan Assets from the Seller to the Trust
Depositor. This Agreement and the other Transaction Documents to which the Trust Depositor is a party constitute the legal, valid
and binding obligation of the Trust Depositor enforceable in accordance with their respective terms, except as enforcement of such
terms may be limited by applicable Insolvency Laws and general principles of equity, whether considered in a suit at law or in
equity.


 


(c)          No
Consent Required. The Trust Depositor is not required to obtain the consent of any other party (other than those that it has
already obtained) or any consent, license, approval or authorization from, or registration or declaration with, any Governmental
Authority (other than those that it has already obtained) in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or the other Transaction Documents to which it is a party.


 


(d)          No
Violations. The execution, delivery and performance by the Trust Depositor of this Agreement and the other Transaction Documents
to which it is a party, and the consummation of the transactions contemplated hereby and thereby, will not violate in any material
respect any Applicable Law applicable to the Trust Depositor, or conflict with, result in a default under or constitute a breach
of the Trust Depositor’s organizational documents or any material Contractual Obligations to which the Trust Depositor is
a party or by which the Trust Depositor or any of the Trust Depositor’s properties may be bound, or result in the creation
or imposition of any Lien of any kind upon any of its properties pursuant to the terms of any such material Contractual Obligations,
other than as contemplated by the Transaction Documents.


 


(e)          Litigation.
No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the
knowledge of the Trust Depositor threatened, against the Trust Depositor or any of its properties or with respect to this Agreement,
any other Transaction Documents to which it is a party or the Securities (i) that, if adversely determined, would in the reasonable
judgment of the Trust Depositor be expected to have a material adverse effect on the business, properties, assets or condition
(financial or otherwise) of the Trust Depositor or the Issuer or the transactions contemplated by this Agreement or any other Transaction
Documents to which the Trust Depositor is a party or (ii) seeking to adversely affect the federal income tax or other federal,
state or local tax attributes of the Securities.


 


(f)          Solvency.
The Trust Depositor, at the time of, and after giving effect to each conveyance of Loan Assets hereunder and of Combined Loan Assets
under the Sale and Servicing Agreement, is Solvent.


 




    	15



    	 



    

  


(g)          Taxes.
The Trust Depositor has filed or caused to be filed all tax returns which, to its knowledge, are required to be filed and has paid
all taxes shown to be due and payable on such returns or on any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any amount of tax due,
the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves
in accordance with generally accepted accounting principles have been provided on the books of the Trust Depositor); no tax Lien
has been filed and, to the Trust Depositor’s knowledge, no claim is being asserted, with respect to any such tax, fee or
other charge.


 


(h)          Place
of Business; No Changes. The Trust Depositor’s location (within the meaning of Article 9 of the UCC) is the State of
Delaware. The Trust Depositor has not changed its name, whether by amendment of its certificate of formation, by reorganization
or otherwise, and has not changed its location, within the four months preceding the Closing Date.


 


(i)          Not
an Investment Company. The Trust Depositor is not and, after giving effect to the transactions contemplated by the Transaction
Documents, will not be required to be registered as an “investment company” within the meaning of the 1940 Act.


 


(j)          Sale
Treatment. Other than for accounting and tax purposes, the Trust Depositor has treated the transfer of Loan Assets from the
Seller for all purposes as a sale and purchase on all of its relevant books and records and other applicable documents.


 


ARTICLE
IV


 


PERFECTION OF TRANSFER AND


PROTECTION OF SECURITY INTERESTS


 


Section
4.01         Custody of Loans.


 


The contents of each
Loan File shall be held in the custody of the Custodian (on behalf of the Trustee) under the terms of the Sale and Servicing Agreement
for the benefit of, and as agent for, the Securityholders.


 


Section
4.02         Filing.


 


On the Closing Date,
the Seller shall cause the UCC financing statement(s) referred to in Section 2.02(f) hereof to be filed. Notwithstanding
the obligations of the Seller set forth in the preceding sentence, the Trust Depositor hereby authorizes the Servicer to prepare
and file, at the expense of the Seller, such UCC financing statements (including but not limited to renewal, continuation or in
lieu statements) and amendments or supplements thereto or other instruments as the Servicer may from time to time deem necessary
or appropriate in order to perfect and maintain the security interest granted hereunder in accordance with the UCC.


 




    	16



    	 



    

  


Section
4.03         Changes in Name, Organizational Structure or Location.


 


(a)          During
the term of this Agreement, the Seller shall not change its name, principal place of business, form of organization, existence,
state of formation or location without first giving at least 30 days’ prior written notice to the Trust Depositor and Servicer.


 


(b)          If
any change in the Seller’s name, form of organization, existence, state of formation, location or other action would make
any financing or continuation statement or notice of ownership interest or Lien relating to any 2013-1 Loan Asset or Substitute
Loan Asset seriously misleading within the meaning of applicable provisions of the UCC or any title statute, the Seller, or the
Servicer on its behalf, no later than five (5) Business Days after the effective date of such change, shall file such amendments
as may be required (including, but not limited to, any filings and other acts necessary or advisable under the UCC of each relevant
jurisdiction) to preserve and protect the Trust Depositor’s, the Issuer’s and the Trustee’s interests in the
2013-1 Loan Assets, any Substitute Loan Assets and the proceeds thereof.


 


Section
4.04         Costs and Expenses.


 


The initial Servicer
will be obligated to pay all reasonable costs and disbursements in connection with the perfection and the maintenance of perfection,
as against all third parties, of the Trust Depositor’s and Issuer’s right, title and interest in and to the 2013-1
Loan Assets and the Substitute Loan Assets (including, without limitation, the security interests in the Related Property related
thereto and the security interests provided for in the Indenture); provided that to the extent permitted by the Underlying
Loan Agreements, the Servicer may seek reimbursement for such costs and disbursements from the related Obligors.


 


Section
4.05         Sale Treatment.


 


Other than for accounting
and tax purposes, the Seller shall treat the transfer of Loan Assets made hereunder for all purposes as a sale and purchase on
all of its relevant books and records.


 


Section
4.06         Separateness from Trust Depositor.


 


The Seller agrees to
take or refrain from taking or engaging in with respect to the Trust Depositor, each of the actions or activities specified in
the “substantive consolidation” opinion of Dechert LLP (including any certificates of the Seller delivered in connection
therewith) delivered on the Closing Date, upon which the conclusions therein are based.


 


ARTICLE
V


 


COVENANTS OF THE ORIGINATOR


 


Section
5.01         Corporate Existence.


 


During the term of
this Agreement, the Seller will keep in full force and effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its formation and will obtain and preserve its qualification to do business in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and enforceability of this Agreement, the other Transaction
Documents and each other instrument or agreement necessary or appropriate for the proper administration of this Agreement and the
transactions contemplated hereby. In addition, all transactions and dealings between the Seller and the Trust Depositor will be
conducted on an arm’s-length basis.


 




    	17



    	 



    

 


Section
5.02         [Reserved].


 


Section
5.03         Security Interests.


 


The Seller will not
sell, pledge, assign or transfer to any Person other than the Trust Depositor, or grant, create, incur, assume or suffer to exist
any Lien on any Loan in the Collateral or its interest in any Related Property, other than the Lien granted to the Trust Depositor,
whether now existing or hereafter transferred to the Trust Depositor, or as otherwise expressly contemplated by this Agreement.
The Seller will promptly notify the Trust Depositor upon obtaining knowledge of the existence of any Lien on any Loan in the Collateral
or its interest in any Related Property; and the Seller shall defend the right, title and interest of the Trust Depositor in, to
and under the Loans in the Collateral and the Trust Depositor’s interest in any Related Property, against all claims of third
parties; provided that nothing in this Section 5.03 shall prevent or be deemed to prohibit the Seller from suffering
to exist Permitted Liens upon any of the Loans in the Collateral or its interest in any Related Property.


 


Section
5.04         Compliance with Law.


 


The Seller hereby agrees
to comply in all material respects with all Applicable Law applicable to the Seller except where the failure to do so would not
reasonably be expected to have a material adverse effect on the Securityholders.


 


Section
5.05         Liability of Seller.


 


The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement.


 


Section
5.06         Limitation on Liability of Seller and Others.


 


The Seller and any
director, officer, employee or agent of the Seller may rely in good faith on any document of any kind, prima facie properly executed
and submitted by the appropriate Person respecting any matters arising hereunder. The Seller shall not be under any obligation
to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under this Agreement, and that
in its opinion may involve it in any expense or liability.


 


Section
5.07         Reserved.


 


Section
5.08         Merger or Consolidation of Seller.


 


Any Person into which
the Seller may be merged or consolidated, or any Person resulting from such merger, conversion or consolidation to which the Seller
is a party, or any Person succeeding to substantially all of the business or substantially all of the lending business of the Seller
shall be the successor to the Seller hereunder, without execution or filing of any paper or any further act on the part of any
of the parties hereto, notwithstanding anything herein to the contrary; provided that if the Seller is the Servicer at the
time of such merger, conversion, consolidation or sale, such transaction meets the requirements set forth in Section 5.13
of the Sale and Servicing Agreement.


 




    	18



    	 



    

  


Section
5.09         Delivery of Collections.


 


The Seller agrees to
deposit into the Collection Account promptly (but in no event later than two (2) Business Days after receipt) all Collections received
by the Seller in respect of any 2013-1 Loan or Substitute Loan, for application in accordance with Section 7.05 of the Sale
and Servicing Agreement.


 


Section
5.10         Underlying Custodial Agreements.


 


The Seller agrees to
fully cooperate with the Trust Depositor, the Issuer and the Trustee, and from and after the occurrence and during the continuance
of an Event of Default or Servicer Default to take such actions as may be requested in the reasonable discretion of the Trustee,
under any Underlying Loan Agreements. The Seller further agrees to fully cooperate with the Trust Depositor, the Issuer and the
Trustee, and from and after the occurrence and during the continuance of an Event of Default or Servicer Default to take such actions
as may be requested in the sole and absolute discretion of the Trustee to cause to be defended, enforced, preserved and protected
the rights and privileges of the Trust Depositor, the Issuer, the Trustee and the Secured Parties under or with respect to the
Underlying Loan Agreements and any underlying loan documents or other collateral held by the underlying custodians.


 


ARTICLE
VI


 


REMEDIES UPON MISREPRESENTATION


 


Section
6.01         Repurchases of, or Substitution for, Loans for Breach of Representations
and Warranties.


 


Upon a discovery by a Responsible Officer of the Trust Depositor,
a Responsible Officer of the Servicer, the Backup Servicer or any subservicer, a Responsible Officer of the Owner Trustee or a
Responsible Officer of the Trustee of a breach of a representation or warranty as set forth in Section 3.01, Section
3.02 or Section 3.04 or as made or deemed made relating to any 2013-1 Loan or Substitute Loan, as applicable, that materially
and adversely affects the interests of the Securityholders (each such Loan with respect to which such breach exists, an “Ineligible
Loan”), the party discovering such breach or failure shall give prompt written notice to the other parties to this Agreement;
provided that neither the Owner Trustee nor the Trustee shall have a duty
or obligation to inquire or to investigate the breach of any of such representations or warranties; provided that neither the Owner
Trustee, the Trustee nor the Backup Servicer shall have a duty or obligation (i) to discover or make an attempt to discover, inquire
about or investigate the breach of any of such representations or warranties or (ii) to determine if such breach materially and
adversely affects the interests of the Securityholders. Within 30 days of the earlier of (x) its discovery or (y) its receipt of
notice of any breach of a representation or warranty, the Seller shall (a) promptly cure such breach in all material respects,
(b) repurchase each such Ineligible Loan by depositing in the Lockbox Account, for further credit to the Collection Account, within
such 30 day period, an amount equal to the Transfer Deposit Amount for such Ineligible Loan, or (c) remove such 2013-1 Loan or
Substitute Loan from the Collateral, deposit the Transfer Deposit Amount with respect to such Loan into the Lockbox Account, for
further credit to the Collection Account, and, not later than the date a repurchase of such affected Loan would be required hereunder,
effect a substitution for such affected Loan with a Substitute Loan in accordance with the substitution requirements set forth
in Section 2.04.


 




    	19



    	 



    

  


Section
6.02         Reassignment of Repurchased or Substituted Loans.


 


Upon receipt by the
Trustee for deposit in the Collection Account of the amounts described in Section 6.01 (or upon the Substitute Loan Cutoff
Date related to a Substitute Loan described in Section 6.01), and upon receipt of an Officer’s Certificate of the
Servicer in the form attached as Exhibit F to the Sale and Servicing Agreement, the Trustee and the Issuer shall assign
to the Trust Depositor and the Trust Depositor shall assign to the Seller all of the Trustee’s and the Issuer’s (or
Trust Depositor’s, as applicable) right, title and interest in the 2013-1 Loans or Substitute Loans being repurchased or
substituted for the related Loan Assets without recourse, representation or warranty. Such reassigned 2013-1 Loan or Substitute
Loan shall no longer thereafter be included in any calculations of Outstanding Loan Balances or otherwise be deemed a part of the
Collateral.


 


ARTICLE
VII


 


INDEMNIFICATION BY THE ORIGINATOR


 


Section
7.01         Indemnification.


 


The Seller agrees to
indemnify, defend and hold harmless the Trust Depositor, its officers, directors, employees and agents (any one of which is an
“Indemnified Party”) from and against any and all claims, losses, penalties, fines, forfeitures, judgments (provided
that any indemnification for damages is limited to actual damages, not consequential, special or punitive damages), reasonable
legal fees and related costs and any other reasonable costs, fees and expenses that such Person may sustain as a result of the
Seller’s fraud or the failure of the Seller to perform its duties in compliance in all material respects with the terms of
this Agreement, except to the extent arising from gross negligence, willful misconduct or fraud by the Person claiming indemnification.
Any Person seeking indemnification hereunder shall promptly notify the Seller if such Person receives a complaint, claim, compulsory
process or other notice of any loss, claim, damage or liability giving rise to a claim of indemnification hereunder but failure
to provide such notice shall not relieve the Seller of its indemnification obligations hereunder unless the Seller is deprived
of material substantive or procedural rights or defenses as a result thereof. The Seller shall assume (with the consent of the
Indemnified Party, such consent not to be unreasonably withheld) the defense and any settlement of any such claim and pay all expenses
in connection therewith, including reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or decree which
may be entered against the Indemnified Party in respect of such claim. If the consent of the Indemnified Party required in the
immediately preceding sentence is unreasonably withheld, the Seller shall be relieved of its indemnification obligations hereunder
with respect to such Person. The parties agree that the provisions of this Section 7.01 shall not be interpreted to provide
recourse to the Seller against loss by reason of the bankruptcy, insolvency or lack of creditworthiness of an Obligor with respect
to a 2013-1 Loan or Substitute Loan. The Seller shall have no liability for making indemnification hereunder to the extent any
such indemnification constitutes recourse for uncollectible or uncollected 2013-1 Loans or Substitute Loans.


 




    	20



    	 



    

  


Section
7.02         Liabilities to Obligors.


 


No obligation or liability
to any Obligor under any of the 2013-1 Loans or Substitute Loans is intended to be assumed by the Trust Depositor, the Trustees,
the Issuer or the Securityholders under or as a result of this Agreement and the transactions contemplated hereby.


 


Section
7.03         Operation of Indemnities.


 


If the Seller has made
any indemnity payments to an Indemnified Party pursuant to this Article VII and such Indemnified Party thereafter collects
any such amounts from others, such Indemnified Party will repay such amounts collected to the Seller.


 


ARTICLE
VIII


 


MISCELLANEOUS


 


Section
8.01         Amendment.


 


(a)          This
Agreement may be amended from time to time by the parties hereto by written agreement, with the prior written consent of the Trustee
but without the consent of any Securityholder, to (i) cure any ambiguity or to correct or supplement any provisions herein that
may be inconsistent with any other provisions in this Agreement or in the Offering Memorandum, (ii) comply with any changes in
the Code, USA PATRIOT Act, or U.S. securities laws (including the regulations implementing such laws), (iii) add to the covenants
of any party hereto for the benefit of the Securityholders, and (iv) add any new provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the provisions of this Agreement; provided that no such
amendment shall materially and adversely affect the interests of any Noteholder. Notice of any such proposed amendment must be
sent to all Securityholders and the Rating Agency at least ten (10) Business Days prior to the execution of such amendment and
(y) such amendment shall not be deemed to materially and adversely affect the interests of any Noteholder if the Person requesting
such amendment obtains an Opinion of Counsel addressed to the Trustee to that effect.


 


(b)          Except
as provided in Section 8.01(a) hereof, this Agreement may be amended from time to time by the parties hereto by written
agreement, with the prior written consent of the Trustee and with the consent of the Majority Noteholders and with notice to each
of the Rating Agency and the Owner Trustee, for the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights of the Securityholders; provided that (i)
if such amendment materially and adversely affects any Notes, such amendment shall also require the consent of the majority of
the Outstanding Principal Balance of such Notes and (ii) no such amendment shall reduce in any manner the amount of, or delay the
timing of, any amounts received on any 2013-1 Loans or Substitute Loans which are required to be distributed on any Note or the
Certificate without the consent of the Holder of such Note or the Certificate or reduce the percentage of Securityholders that
are required to consent to any such amendment without the consent of the Securityholders holding 100% of the Notes or the Certificate
affected thereby.


 




    	21



    	 



    

  


(c)          [Reserved].


 


(d)          Promptly
after the execution of any such amendment or consent, written notification of the substance of such amendment or consent shall
be furnished by the Trustee to the Noteholders, by the Owner Trustee to the Certificateholders and by the Seller to the Rating
Agency. It shall not be necessary for the consent of any Securityholders required pursuant to Section 8.01(b) to approve
the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the authorization by the Securityholders of the execution thereof
shall be subject to such reasonable requirements as the Trustee may prescribe for the Noteholders and as the Owner Trustee may
prescribe for the Certificateholders.


 


(e)          Prior
to the execution of any amendment to this Agreement, the Owner Trustee and the Trustee shall be entitled to receive and conclusively
rely upon an Opinion of Counsel (which Opinion of Counsel may rely upon an Officer’s Certificate of the Servicer with respect
to the effect of any such amendment on the economic interests of any Securityholders) stating that the execution of such amendment
is authorized or permitted by this Agreement. Each of the Trustee and the Owner Trustee may, but shall not be obligated to, enter
into or consent to any such amendment that affects such Person’s own rights, duties, indemnities or immunities under this
Agreement or otherwise.


 


Section
8.02         Governing Law.


 


(a)          THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT
OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.


 


(b)          EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (I) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
8.02(b).


 




    	22



    	 



    

  


Section
8.03         Notices.


 


All notices, demands,
certificates, requests and communications hereunder (“notices”) shall be in writing and shall be effective (a)
upon receipt when sent through the U.S. mails, registered or certified mail, return receipt requested, postage prepaid, with such
receipt to be effective the date of delivery indicated on the return receipt, or (b) one Business Day after delivery to an overnight
courier, or (c) on the date personally delivered to a Responsible Officer of the party to which sent, or (d) on the date transmitted
by legible telecopier with a confirmation of receipt, in all cases addressed to the recipient as follows:


 


(i)           if
to the Servicer or the Seller:


 


Horizon Technology Finance Corporation





312 Farmington Avenue,

Farmington, Connecticut 06032

Attention: Legal Department

Re: Horizon Funding Trust 2013-1

Telephone: (860) 676-8654

Facsimile No.: 860-676-8655


 


with a copy to:


 


Horizon Technology Finance Corporation





312 Farmington Avenue,

Farmington, Connecticut 06032

Attention: Legal Department

Re: Horizon Funding Trust 2013-1

Telephone: (860) 676-8654

Facsimile No.: 860-676-8655


 


(ii)          if
to the Trust Depositor:


 


Horizon Funding 2013-1 LLC





c/o Horizon Technology Finance Corporation 


312 Farmington Avenue,

Farmington, Connecticut 06032

Attention: Legal Department

Re: Horizon Funding Trust 2013-1

Telephone: (860) 676-8654

Facsimile No.: 860-676-8655


 


with a copy to:


 


Horizon Funding 2013-1 LLC





c/o Horizon Technology Finance Corporation 


312 Farmington Avenue,

Farmington, Connecticut 06032

Attention: Legal Department

Re: Horizon Funding Trust 2013-1

Telephone: (860) 676-8654

Facsimile No.: 860-676-8655


 




    	23



    	 



    

  


(iii)         if
to the Trustee:


 


U.S. Bank National Association


190 S. LaSalle St., 7th Floor


Chicago, IL 60603


Attention: Structured Finance – Horizon 2013-1


Facsimile No.: (651) 495-8090


 


(iv)         if
to the Backup Servicer:


 


U.S. Bank National Association


60 Livingston Avenue


EP-MN-WS3D


St. Paul, MN 55107


Attention: Deborah Jones Franco


Facsimile No.: (651) 495-8090


 


(v)          If
to the Custodian with respect to Loan Files:


 


U.S. Bank National Association


1133 Rankin Street, Suite 100


St. Paul, MN 55116


Attention: Receiving Unit


Ref: Horizon Funding Trust 2013-1


 


(vi)         if
to the Owner Trustee:


 


Wilmington Trust, National Association


1100 North Market Street


Wilmington, Delaware 19890


Attention: Corporate Trust Administration


Facsimile No.: (302) 636-4140


 


with a copy to:


 


the Seller and the Servicer as provided in clause
(i) above


 


(vii)        if
to the Issuer:


 


Horizon Funding Trust 2013-1


c/o Wilmington Trust, National Association


1100 North Market Street


Wilmington, Delaware 19890


 




    	24



    	 



    

 


Attention: Corporate Trust Administration


Facsimile No.: (302) 636-4140


 


with a copy to:


 


the Seller and the Servicer as provided in clause
(i) above


 


(viii)      if
to the Rating Agency:


 


Moody’s Investors Service


7 World Trade Center


250 Greenwich Street


New York, New York 10007


 


(ix)         if
to the Initial Purchaser:


 


Guggenheim Securities, LLC


135 East 57th St, 7th Floor


New York, NY 10022


Attention: Chief Operating Officer / General Counsel


Re: Horizon Funding Trust 2013-1


Facsimile No.: (646) 786-4931


 


Each party hereto may,
by notice given in accordance herewith to each of the other parties hereto, designate any further or different address to which
subsequent notices shall be sent.


 


Section
8.04         Severability of Provisions.


 


If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever prohibited or held invalid or unenforceable,
then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement,
the Notes or Certificates or the rights of the Securityholders, and any such prohibition, invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such covenants, agreements, provisions or terms in any other jurisdiction.


 


Section
8.05         Third Party Beneficiaries.


 


Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent that no third party (other than the Issuer, the Trustee
and the Owner Trustee) shall be deemed a third party beneficiary of this Agreement, and specifically that the Obligors are not
third party beneficiaries of this Agreement.


 




    	25



    	 



    

 





Section
8.06         Counterparts.


 


This Agreement may
be executed by facsimile signature and in several counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.


 


Section
8.07         Headings.


 


The headings of the
various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions
hereof.


 


Section
8.08         No Bankruptcy Petition; Disclaimer.


 


(a)          Each
of the Seller and the Trust Depositor covenants and agrees that, prior to the date that is one year and one day (or, if longer,
the preference period then in effect and one day) after the payment in full of all amounts owing in respect of all outstanding
Notes rated by any Rating Agency, it will not institute against the Trust Depositor (in the case of the Seller), or the Issuer,
or join any other Person in instituting against the Trust Depositor or the Issuer, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceedings under the laws of the United States or any state of the United
States. This Section 8.08 will survive the termination of this Agreement.


 


(b)          The
provisions of this Section 8.08 shall be for the third party benefit of those entitled to rely thereon, including the Securityholders,
and shall survive the termination of this Agreement.


 


Section
8.09         Jurisdiction.


 


Any legal action or
proceeding with respect to this Agreement may be brought in the courts of the United States for the Southern District of New York,
and by execution and delivery of this Agreement, each party hereto consents, for itself and in respect of its property, to the
non-exclusive jurisdiction of those courts. Each such party irrevocably waives any objection, including any objection to the laying
of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this Agreement or any document related hereto.


 


Section
8.10         Prohibited Transactions with Respect to the Issuer.


 


The Seller shall not:


 


(a)          Provide
credit to any Noteholder or Certificateholder for the purpose of enabling such Noteholder or Certificateholder to purchase Notes
or Certificates, respectively;


 


(b)          Purchase
any Notes or Certificates in an agency or trustee capacity; or


 


(c)          Except
in its capacity as Servicer as provided in the Sale and Servicing Agreement, lend any money to the Issuer.


 




    	26



    	 



    

 





Section
8.11         No Partnership.


 


Nothing herein contained
shall be deemed or construed to create a co-partnership or joint venture between the parties hereto.


 


Section
8.12         Successors and Assigns.


 


This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.


 


Section
8.13         Duration of Agreement.


 


This Agreement shall
continue in existence and effect until the termination of the Sale and Servicing Agreement.


 


Section
8.14         Limited Recourse.


 


The obligations of
the Trust Depositor and the Seller under this Agreement and the other Transaction Documents are solely the obligations of the Trust
Depositor and the Seller, respectively. No recourse shall be had for the payment of any amount owing by the Trust Depositor or
the Seller or otherwise under this Agreement, any other Transaction Document or for the payment by the Trust Depositor or the Seller
of any fee in respect hereof or thereof or any other obligation or claim of or against the Trust Depositor or the Seller arising
out of or based upon this Agreement or any other Transaction Document, against any Affiliate, shareholder, partner, manager, member,
director, officer, employee, representative or agent of the Trust Depositor or the Seller or of any Affiliate of such Person. The
provisions of this Section 8.14 shall survive the termination of this Agreement.


 


[Remainder of Page Intentionally Left
Blank.]


  




    	27



    	 



    

 


IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed by their respective officers as of the day and year first above
written.


 


	 	HORIZON TECHNOLOGY FINANCE 

CORPORATION,
	 	as the Seller
	 	 	 
	 	By:	/s/ Robert D. Pomeroy, Jr.
	 	Name:	Robert D. Pomeroy, Jr.
	 	Title:	Chief Executive Officer
	 	 	 
	 	HORIZON FUNDING 2013-1 LLC
	 	as the Trust Depositor
	 	 	 
	 	By:	/s/ Robert D. Pomeroy, Jr.
	 	Name: 	Robert D. Pomeroy, Jr.
	 	Title:	Chief Executive Officer


 


Horizon Funding Trust 2013-1


Sale and Contribution Agreement