Contract analysis

Section 1: Transaction Summary The following is a summary of the principal terms and conditions of the proposed issuance of asset-backed securities by Quorum Receivables Funding 2022-1 LLC, a Delaware limited liability company organized as a bankruptcy-remote special purpose entity for the purpose of acquiring, holding, and financing insurance premium finance receivables originated by Quorum Premium Finance LLC. Tran

Section 2: Parties to the Transaction Set forth below is a summary description of each of the principal parties to the proposed transaction, together with relevant identifying information. The roles and responsibilities of each party will be more fully described in the applicable transaction documents. 2.1 Sponsor / Parent Quorum Insurance Holdings Corp. ("QIH") QIH is a Delaware corporation whose shares of common st

Section 3: Capital Structure 3.1 Notes Summary Table The following table sets forth the proposed capital structure of the transaction, including the par amount, percentage of total issuance, preliminary ratings, credit enhancement, and coupon guidance for each tranche of notes: The coupon guidance set forth above is preliminary and is based on current market conditions as of the date of this term sheet. Final pricing

Section 4: Transaction Structure 4.1 SPV Structure The transaction utilizes a two-tier special purpose vehicle structure designed to achieve bankruptcy remoteness and true-sale isolation of the receivables from the originator and its parent. The organizational chain is as follows: Quorum Insurance Holdings Corp. (QIH — parent/sponsor) ↓ (wholly owns) Quorum Premium Finance LLC (QPF — originator/seller/servicer) ↓ (so

Section 5: Receivables Pool Characteristics (as of Cut-Off Date: June 30, 2022) The following information describes the characteristics of the initial receivables pool as of the statistical cut-off date of June 30, 2022. The data set forth below is based on information provided by QPF and is subject to verification by Veristead Analytics LLC. The actual pool composition at closing may differ from the pool described b

Section 6: Eligible Receivables Criteria Each receivable included in the initial pool (as of the cut-off date) and each receivable subsequently acquired by QRF 2022-1 during the revolving period must satisfy all of the following eligibility criteria as of the applicable date of determination. A receivable that fails to satisfy any of the following criteria is not an "Eligible Receivable" and may not be included in th

1. The receivable was originated by QPF in the ordinary course of its insurance premium finance business, in accordance with QPF's then-current credit and underwriting guidelines.

2. The receivable is denominated and payable in United States dollars.

3. The receivable is secured by a valid and enforceable assignment of the related policyholder's right to receive an unearned premium refund from the applicable insurance carrier upon cancellation of the related insurance policy.

4. The original term of the receivable does not exceed 12 months from the date of origination.

5. The obligor with respect to the receivable is a United States commercial policyholder (i.e., a corporation, partnership, limited liability company, or other business organization domiciled in the United States). No receivable with respect to which the obligor is an individual consumer is an Eligible Receivable.

6. The receivable is not in default as of the applicable date of determination. For purposes of this criterion, a receivable shall be deemed to be "in default" if any scheduled payment thereon is more than 60 days past due.

7. The receivable complies with all applicable federal and state usury laws, premium finance licensing requirements, and other applicable regulatory requirements, including any applicable requirements of the state in which the obligor is located or in which the related insurance policy was issued.

8. The receivable is subject to a valid, binding, and enforceable security interest in favor of QPF (or, following the applicable true sale transfer, in favor of QRH and QRF 2022-1, respectively) and such security interest has been, or will be prior to the applicable transfer date, duly perfected under the Uniform Commercial Code of the applicable jurisdiction.

9. The receivable is not subject to any lien, claim, encumbrance, or security interest other than (a) the security interest created in favor of QPF, QRH, and QRF 2022-1 (and, ultimately, Calvoneth Trust as trustee) as contemplated by the transaction documents, and (b) such other liens, claims, or encumbrances as are expressly permitted under the transaction documents (collectively, "Permitted Encumbrances").

10. The receivable was originated in compliance with QPF's credit and underwriting guidelines as in effect at the time of origination, including QPF's standard documentation, disclosure, and servicing procedures. Compliance with the eligibility criteria will be verified by Veristead Analytics LLC with respect to the initial pool and will be certified by QPF with respect to each subsequent addition of receivables duri

Section 7: Concentration Limits The following concentration limits shall apply at all times during the revolving period and must be satisfied at the time of each addition of receivables to the pool. If the addition of any receivable would cause any concentration limit to be exceeded, such receivable shall not be eligible for inclusion in the pool unless and until the applicable concentration limit is no longer exceed

Section 8: Sequential Payment Waterfall On each payment date during the term of the transaction, available funds (consisting of all collections on the receivables, investment earnings on amounts on deposit in the accounts, and any amounts drawn under the liquidity facility) shall be distributed by Calvoneth Trust Company, N.A. (as trustee and paying agent) in the following order of priority (each level to be paid in

1. Trustee Fees and Expenses. Payment of fees and expenses due to Calvoneth Trust Company, N.A. in its capacity as indenture trustee, paying agent, calculation agent, securities intermediary, and custodian. The trustee's annual fee is $35,000 per year, plus $5,000 per payment date (i.e., $60,000 per year for monthly payments), plus reimbursement of reasonable out-of-pocket expenses (including fees and expenses of tru

2. Servicing Fee. Payment of the servicing fee due to QPF (as servicer) at a rate of 1.00% per annum of the outstanding pool balance, payable monthly. At the initial pool balance of $612,000,000, the monthly servicing fee is approximately $510,000.

3. Class A Interest. Payment of accrued and unpaid interest on the Class A Notes at the applicable rate (Compounded SOFR plus the applicable spread as determined at pricing) on the outstanding principal balance of the Class A Notes.

4. Class B Interest. Payment of accrued and unpaid interest on the Class B Notes at the applicable rate (Compounded SOFR plus the applicable spread as determined at pricing) on the outstanding principal balance of the Class B Notes.

5. Class C Interest. Payment of accrued and unpaid interest on the Class C Notes at the applicable rate (Compounded SOFR plus the applicable spread as determined at pricing) on the outstanding principal balance of the Class C Notes.

6. Class A Principal. Payment of principal on the Class A Notes until paid in full.

7. Class B Principal. Payment of principal on the Class B Notes until paid in full.

8. Class C Principal. Payment of principal on the Class C Notes until paid in full.

9. Overcollateralization Replenishment. Replenishment of the overcollateralization to the target level of $15,000,000.

10. Residual. Distribution of all remaining amounts to QRF 2022-1 (for the account of QRH, and ultimately for the benefit of the sponsor, QIH, as holder of the retained interest). Note Regarding the Revolving Period: During the revolving period, principal collections that would otherwise be applied at priorities 6, 7, and 8 above are instead used by QRF 2022-1 to acquire additional eligible receivables from QPF (thro

Section 9: Early Amortization Events The revolving period shall terminate early and the amortization period shall commence immediately, without the need for any notice or demand by the trustee or the noteholders, upon the occurrence of any of the following early amortization events:

1. Net Loss Rate Trigger. The three-month rolling average net loss rate on the receivables pool exceeds 2.00% per annum. The three-month rolling average net loss rate shall be calculated by the calculation agent on each payment date based on the net losses incurred during the three most recently ended collection periods, expressed as an annualized percentage of the average aggregate pool balance during such periods.

2. Delinquency Rate Trigger. The 60+ day delinquency rate on the receivables pool exceeds 3.50% of the aggregate outstanding pool balance as of the end of any collection period. The 60+ day delinquency rate shall be calculated by the calculation agent on each payment date based on the aggregate outstanding principal balance of all receivables for which any scheduled payment is 60 or more days past due. For context, t

3. Available Funds Cap Deficit. An available funds cap deficit exists for two consecutive payment periods. An "available funds cap deficit" occurs when the available funds (including all collections, investment earnings, and any amounts drawn under the liquidity facility) are insufficient to pay in full all interest due on all classes of notes and all fees and expenses ranking senior to interest payments in the payme

4. Servicer Default / Rating Downgrade. A servicer default occurs under the Servicing Agreement (including, without limitation, any failure by QPF to remit collections within the time periods specified therein, any material breach of QPF's representations, warranties, or covenants thereunder, or any bankruptcy or insolvency event affecting QPF), or the credit rating of the servicer (QPF) or its parent (QIH) is downgr

5. Minimum Pool Balance. The aggregate outstanding pool balance falls below $450,000,000 during the revolving period (whether as a result of collections, losses, or QPF's inability to identify and sell sufficient additional eligible receivables to QRF 2022-1 to maintain the pool at or above such level). Upon the occurrence of an early amortization event, the revolving period shall terminate immediately, no further pu

Section 10: Servicing 10.1 Servicer QPF shall serve as the initial servicer of the receivables pool pursuant to the Servicing Agreement to be entered into among QRF 2022-1, QPF, and Calvoneth Trust Company, N.A. (as trustee). QPF has extensive experience in the servicing of insurance premium finance receivables and has served as servicer of its own portfolio since its inception. Servicing Fee: QPF shall be entitled t

Section 11: Liquidity Facility The following summarizes the key terms of the committed liquidity facility to be provided by Northvane Bank, N.A. to QRF 2022-1: Conditions to Draw: Draws on the liquidity facility shall be permitted only upon the joint certification by QPF (as servicer) and Calvoneth Trust Company, N.A. (as trustee) that (a) a timing mismatch exists between the receipt of collections and the upcoming p

Section 12: Accounts and Cash Management The following accounts shall be established and maintained at Calvoneth Trust Company, N.A. in connection with the transaction: Collection Account. The collection account shall be maintained at Calvoneth Trust Company, N.A. in the name of QRF 2022-1 (subject to the exclusive control of Calvoneth Trust as securities intermediary). All collections on the receivables, including a

Section 13: Placement Terms and Fees 13.1 Placement Agent Ridgeline Capital Markets LLC shall act as the sole placement agent for all tranches of notes in connection with the offering. The notes will be offered and sold in a private placement transaction pursuant to Rule 144A under the Securities Act of 1933, as amended (to qualified institutional buyers within the United States) and pursuant to Regulation S thereund

Section 14: Performance Guaranty QIH shall execute and deliver at closing a limited performance guaranty (the "Performance Guaranty") in favor of Calvoneth Trust Company, N.A. (as trustee for the benefit of the noteholders), guaranteeing the due and punctual performance by QPF of certain of QPF's obligations as servicer and seller under the transaction documents. The Performance Guaranty shall cover, among other thin

Section 15: Tax Considerations The following summarizes the principal U.S. federal income tax considerations relevant to the transaction. All tax opinions referenced below will be delivered by Calderwood & Harkness LLP (Sylvia Hartwell, tax partner) at or prior to closing. True Sale (Tax): Calderwood & Harkness (Sylvia Hartwell) will deliver an opinion that the transfers of receivables from QPF to QRH (pursuant to th