Contract analysis

ARTICLE I DEFINITIONS AND INTERPRETATION

Section 1.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the meanings assigned to them below: "Accounts" means, collectively, the Collection Account, the Payment Account, the Reserve Account, and the Liquidity Reserve Account, each maintained at Calvoneth Trust Company, N.A. in its capacity as Securit

Section 1.02. Rules of Construction. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) The terms "herein," "hereof," "hereto," "hereunder," and similar terms refer to this Agreement as a whole and not to any particular Article, Section, or subdivision; (b) The headings of Articles, Sections, and subdivisions are for convenience of reference only and s

Section 1.03. Incorporation of Indenture Definitions. Capitalized terms used but not otherwise defined in this Agreement shall have the respective meanings assigned to them in the Indenture. In the event of any conflict between the definitions set forth in this Agreement and the definitions set forth in the Indenture, the definitions in the Indenture shall control.

ARTICLE II APPOINTMENT OF SERVICER; ACCEPTANCE; SERVICING TRANSFERRED RECEIVABLES

Section 2.01. Appointment. The Issuer hereby appoints Quorum Premium Finance LLC as the initial Servicer of the Receivables, and the Trustee, acting for the benefit of the Noteholders and other Secured Parties, hereby acknowledges and consents to such appointment. The Servicer hereby accepts such appointment and agrees to service, manage, administer, and collect the Receivables on behalf of the Issuer in accordance w

Section 2.02. Acceptance by Servicer. The Servicer accepts the appointment set forth in Section 2.01 and represents and covenants that: (a) it possesses the organizational capacity, operational infrastructure, personnel, technology systems, and licenses necessary to service the Receivables in all 50 states in which the Receivables have been or may be originated; (b) as of the Closing Date, it services an aggregate in

Section 2.03. Scope of Servicing Duties. Subject to and in accordance with the terms of this Agreement and the Servicing Standard, the Servicer shall manage, service, administer, and make Collections on the Receivables on behalf of the Issuer. Without limiting the generality of the foregoing, the Servicer's duties shall include: (a) billing obligors and processing payments (including scheduled payments, prepayments,

Section 2.04. Subservicing. The Servicer may delegate any of its servicing duties hereunder to one or more qualified subservicers; provided, however, that any such delegation shall be subject to each of the following conditions: (a) the Servicer shall have received the prior written consent of the Trustee, which consent shall not be unreasonably withheld or delayed; (b) the Servicer shall have delivered written notic

Section 2.05. Power of Attorney. The Issuer hereby irrevocably constitutes and appoints the Servicer, with full power of substitution, as the Issuer's true and lawful attorney-in-fact, coupled with an interest, with full authority in the place and stead of the Issuer and in the name of the Issuer or otherwise, from time to time in the Servicer's discretion, to take any action and to execute any instrument that the Se

Section 2.06. Authorization. The Servicer represents that it has been duly authorized to enter into and perform its obligations under this Agreement, as evidenced by the Manager's Certificate dated July 27, 2022, executed by Sandra Ling-Hwang as Manager of the Servicer, certifying the authorizing resolutions of the Servicer.

Section 2.07. Identification of Receivables. The Servicer shall maintain accurate and complete records identifying each Receivable in the pool, including without limitation the following data elements: (i) obligor name and identifying information; (ii) outstanding principal balance; (iii) payment schedule; (iv) APR; (v) original and remaining term; (vi) state of origination; (vii) insurance carrier and policy informa

Section 2.08. Eligible Receivable Criteria. The Servicer shall ensure that each Receivable transferred to the Issuer, whether on the Closing Date or during the Revolving Period, satisfies each of the following criteria (an "Eligible Receivable") as of the applicable transfer date: (i) it was originated by the Servicer in the ordinary course of its business; (ii) it is denominated and payable in U.S. dollars; (iii) it

ARTICLE III SERVICING STANDARD AND PROCEDURES

Section 3.01. Servicing Standard. The Servicer shall service and administer the Receivables with reasonable care, using that degree of skill, attention, and diligence as a prudent premium finance company would exercise in servicing comparable insurance premium finance receivables held in its own portfolio (the "Servicing Standard"). In performing its duties hereunder, the Servicer shall (a) act in the best interests

Section 3.02. Collection Procedures. The Servicer shall use commercially reasonable efforts to collect all amounts due on the Receivables as and when they become due. Without limitation, the Servicer's standard collection activities shall include: (a) sending invoices, billing statements, and payment reminders to obligors in accordance with the terms of each premium finance agreement; (b) processing electronic funds

Section 3.03. Delinquency Management. The Servicer shall maintain and implement a delinquency management program consistent with its customary practices and the Servicing Standard. With respect to any Receivable that becomes 60 or more days past due (as of the Cut-Off Date, the 60+ day Delinquency Rate was 0.87%): (a) the Servicer shall promptly initiate cancellation of the underlying insurance policy where permitted

Section 3.04. Loss Mitigation and Recovery. The Servicer shall use commercially reasonable efforts to maximize recoveries on Defaulted Receivables. Recovery efforts may include, without limitation: (a) pursuit of unearned premium refunds from insurance carriers; (b) direct collection action against obligors; (c) engagement of qualified third-party collection agencies (subject to the subservicing restrictions in Secti

Section 3.05. Insurance Policy Cancellation Procedures. When authorized by the terms of the applicable premium finance agreement and applicable state law, the Servicer shall cancel insurance policies securing Defaulted Receivables in accordance with the applicable state insurance and premium finance statutes. The Servicer shall (a) give all statutorily required advance notices of cancellation to the obligor and the a

Section 3.06. Maintenance of Records. The Servicer shall maintain complete and accurate records with respect to each Receivable, including: (a) the original premium finance agreement and any amendments or modifications thereto; (b) the complete billing and payment history; (c) all material correspondence with the obligor; (d) insurance policy information, including the carrier name, policy number, premium amount, and

Section 3.07. Compliance with Laws. The Servicer shall comply with all applicable federal, state, and local laws, rules, and regulations in connection with the servicing of the Receivables, including without limitation: (a) state premium finance company licensing and reporting requirements in each of the 50 states; (b) state usury laws; (c) federal and state consumer protection laws, to the extent applicable to comme

Section 3.08. Insurance. The Servicer shall at all times maintain in full force and effect (a) errors and omissions insurance in an amount not less than $10,000,000 per occurrence, (b) fidelity bond coverage in an amount not less than $10,000,000, and (c) such other insurance coverages as are customary for servicers of premium finance receivables portfolios of comparable size and character, in each case with insurers

ARTICLE IV COLLECTIONS AND REMITTANCES

Section 4.01. Collection Account. All Collections received by the Servicer in respect of the Receivables shall be deposited into the Collection Account maintained at Calvoneth Trust Company, N.A., as Securities Intermediary, subject to the Account Control Agreement. The Servicer shall remit all Collections to the Collection Account not later than the second (2nd) Business Day following the Servicer's receipt thereof.

Section 4.02. Commingling. The Servicer shall not commingle Collections with its own funds or with the funds of any other Person for more than two (2) Business Days following receipt. During any such interim period, the Servicer shall hold all Collections in trust for the benefit of the Issuer, the Trustee, and the Noteholders. If the short-term unsecured credit rating of the Servicer or the Sponsor is downgraded bel

Section 4.03. Daily Reports. The Servicer shall furnish to the Trustee, in electronic format, on each Business Day, a report showing with respect to the immediately preceding Business Day: (a) total Collections received; (b) a breakdown of Collections by type (scheduled payments, prepayments, late fees, unearned premium refunds, recoveries on Defaulted Receivables, and other); (c) the amount remitted, or to be remitt

Section 4.04. Monthly Remittance. Not later than the third (3rd) Business Day prior to each Payment Date, the Servicer shall deliver to the Trustee a written calculation of the amounts available for distribution on such Payment Date, together with instructions for the application of Available Funds in accordance with the Payment Waterfall set forth in Section 5.04.

Section 4.05. Investment of Collections. Pending distribution in accordance with the Payment Waterfall, amounts on deposit in the Collection Account and the other Accounts shall be invested in Eligible Investments as directed in writing by the Servicer, subject to the maturity and credit quality restrictions set forth in the Indenture. All investment earnings on amounts on deposit in the Accounts shall constitute par

ARTICLE V DISTRIBUTIONS AND PAYMENT WATERFALL

Section 5.01. Payment Dates. Distributions to Noteholders and other parties entitled to receive amounts hereunder shall be made on each Payment Date, being the 15th day of each calendar month or, if such day is not a Business Day, the next succeeding Business Day. The first Payment Date shall be [●], 2022.

Section 5.02. Determination of Available Funds. On each Determination Date, the Servicer shall calculate the amount of Available Funds for the related Payment Date, which shall consist of the sum of: (a) all Collections received during the preceding Collection Period and on deposit in the Collection Account; (b) all investment earnings on amounts on deposit in the Accounts; (c) any amounts drawn under the Liquidity F

Section 5.03. Servicer's Calculation. The Servicer shall calculate the amounts payable to each Class of Notes and to each other party entitled to receive amounts on each Payment Date, and shall deliver such calculations to the Trustee together with the Monthly Servicer Report. The Trustee, in its capacity as calculation agent under the Indenture, shall be entitled to verify the Servicer's calculations, but shall have

Section 5.04. Payment Waterfall. On each Payment Date, the Trustee shall apply Available Funds in the following order of priority (the "Payment Waterfall"), in each case to the extent of Available Funds remaining after payment of amounts having higher priority: First: To the Trustee, the Trustee Fee and all unpaid fees, expenses, and indemnification amounts owed to the Trustee under this Agreement and the Indenture (

Section 5.05. Distributions During Revolving Period. During the Revolving Period, principal Collections shall be reinvested by the Servicer, on behalf of the Issuer, in newly originated Eligible Receivables satisfying the criteria in Section 2.08 and the Concentration Limits. Interest and fee amounts shall be distributed on each Payment Date in accordance with priorities First through Fifth and, if applicable, Ninth

Section 5.06. Distributions During Amortization Period. During the Amortization Period, principal Collections shall no longer be reinvested but shall be distributed on each Payment Date sequentially to Noteholders in accordance with priorities Sixth, Seventh, and Eighth of the Payment Waterfall, subject to higher-ranking payments. The Servicer shall continue to collect on outstanding Receivables and to remit all Coll

ARTICLE VI REPORTING OBLIGATIONS

Section 6.01. Monthly Servicer Report. Not later than the 10th day of each calendar month (or, if not a Business Day, the next succeeding Business Day), the Servicer shall deliver to the Trustee, the Back-Up Servicer, each Rating Agency, and the Issuer a Monthly Servicer Report substantially in the form of Exhibit A, which shall include the following information with respect to the preceding Collection Period: (a) th

Section 6.02. Annual Compliance Certificate. Not later than 90 days after the end of each fiscal year of the Servicer, the Servicer shall deliver to the Trustee and each Rating Agency an officer's certificate, signed by a responsible officer of the Servicer, substantially in the form of Exhibit C, certifying: (a) that the Servicer has complied in all material respects with its obligations under this Agreement during

Section 6.03. Annual Independent Public Accountant's Report. Not later than 90 days after the end of each fiscal year of the Servicer, the Servicer shall cause Meridian Ledger LLP (or another PCAOB-registered public accounting firm acceptable to the Trustee and each Rating Agency) to deliver to the Trustee and each Rating Agency a report on the Servicer's compliance with the servicing criteria set forth in this Agree

Section 6.04. Assessment of Compliance with Servicing Criteria. The Servicer shall deliver annually, together with the report required by Section 6.03, an assessment of the Servicer's compliance with the servicing criteria specified in this Agreement, in a form consistent with applicable SEC guidance to the extent relevant to Rule 144A transactions (including Item 1122 of Regulation AB, to the extent voluntarily inco

Section 6.05. Rating Agency Notifications. The Servicer shall promptly notify Brindoval Ratings Inc. (Attention: Andrew Petrosian) and Pinnacle Rating Services LLC (Attention: Monica Sung), and shall provide reasonable supporting information, upon the occurrence of any of the following: (a) any Servicer Default or potential Servicer Default; (b) any Early Amortization Event or potential Early Amortization Event; (c)

Section 6.06. Access to Records and Information. The Servicer shall provide to the Trustee, the Back-Up Servicer, the Verification Agent (Veristead Analytics LLC; Attention: Katharine Drummond), and any Noteholder holding not less than 25% in outstanding principal amount of any Class of Notes, reasonable access to the servicing records, information, and systems relating to the Receivables, upon reasonable prior writt

Section 6.07. Notices to Trustee. The Servicer shall promptly notify the Trustee (Attention: Gerald K. Fontaine, Calvoneth Trust Company, N.A.) of: (a) any breach by the Servicer of any representation, warranty, or covenant under this Agreement or any other Transaction Document; (b) any pending or threatened litigation, arbitration, or regulatory proceeding involving the Servicer that could reasonably be expected to

ARTICLE VII EARLY AMORTIZATION EVENTS

Section 7.01. Early Amortization Events. Each of the following shall constitute an "Early Amortization Event" hereunder: (a) the three-month rolling average Net Loss Rate exceeds 2.00%; (b) the 60+ day Delinquency Rate exceeds 3.50%; (c) an Available Funds Cap Deficit (as defined in the Indenture) exists for two consecutive Payment Dates; (d) a Servicer Default under Section 8.01 has occurred and is continuing beyond

Section 7.02. Consequences of Early Amortization Event. Upon the occurrence and continuance of any Early Amortization Event: (a) the Revolving Period shall automatically terminate on the earliest date on which the Servicer knew or should have known of such Early Amortization Event; (b) the Amortization Period shall commence; (c) principal Collections shall no longer be reinvested but shall instead be applied on each

Section 7.03. Cure Provisions. Certain Early Amortization Events may be cured as follows: (a) With respect to Section 7.01(f) (Pool Balance below Minimum Pool Balance): such Early Amortization Event may be cured, prior to the effective commencement of the Amortization Period, by the Servicer or the Sponsor causing additional Eligible Receivables to be transferred to the Issuer sufficient to restore the Pool Balance t

ARTICLE VIII SERVICER DEFAULTS AND SERVICER TERMINATION

Section 8.01. Servicer Defaults. Each of the following shall constitute a "Servicer Default" hereunder: (a) any failure by the Servicer to remit any required payment or deposit to the Collection Account within two (2) Business Days of the date required; (b) any failure by the Servicer to deliver the Monthly Servicer Report or any other report required under this Agreement within five (5) Business Days of the date req

Section 8.02. Notice of Servicer Default. The Servicer shall promptly, and in any event within two (2) Business Days after becoming aware thereof, notify the Trustee, the Back-Up Servicer, and each Rating Agency in writing of the occurrence of any Servicer Default or any event that, with the giving of notice or the passage of time, would constitute a Servicer Default. The Trustee shall give notice of any Servicer Def

Section 8.03. Trustee's Right to Terminate. Upon the occurrence and continuance of any Servicer Default beyond any applicable cure period, the Trustee, acting at the written direction of holders of not less than a majority in outstanding principal amount of the Controlling Class, may (and shall, if so directed) terminate all of the Servicer's rights and obligations under this Agreement by delivery of written notice t

Section 8.04. Successor Servicer. Upon the effective date of the appointment of a Successor Servicer: (a) the terminated Servicer shall reasonably cooperate in the orderly transfer of servicing duties to the Successor Servicer, including the transfer of all records, data, files, and systems access, and shall continue to perform servicing duties during any transition period, not to exceed 90 days; (b) the Successor Se

Section 8.05. Qualifications of Successor Servicer. Any Successor Servicer appointed hereunder shall satisfy each of the following qualifications: (a) it shall be legally qualified and licensed as a premium finance company (or equivalent) in all states in which the Receivables were originated; (b) it shall have demonstrated experience servicing insurance premium finance receivables portfolios with an aggregate outsta

Section 8.06. Waiver of Defaults. Holders of not less than a majority in outstanding principal amount of the Controlling Class may, by written notice delivered to the Trustee, waive any Servicer Default; provided, however, that a Servicer Default arising under Section 8.01(e) (Event of Insolvency) may not be waived. Any such waiver shall be limited to the specific Servicer Default identified therein and shall not ext

Section 9.01. Servicing Fee. As compensation for its services hereunder, the Servicer shall be entitled to receive a fee (the "Servicing Fee") equal to 1.00% per annum of the outstanding Pool Balance, which shall accrue daily and be payable monthly on each Payment Date, in arrears, from Available Funds in accordance with the Payment Waterfall (priority Second). At the Initial Pool Balance of $612,000,000, the monthly

Section 9.02. Reimbursement of Expenses. The Servicer shall bear all ordinary costs and expenses incurred in connection with its servicing of the Receivables, including without limitation personnel costs, technology and systems costs, billing and collection expenses, and insurance premiums. Extraordinary expenses incurred by the Servicer, including litigation costs for enforcement actions exceeding $100,000 individua

Section 9.03. Servicing Fee Upon Termination. Upon the termination of the Servicer's appointment hereunder, the terminated Servicer shall be entitled to receive Servicing Fees accrued through, but not beyond, the effective date of termination. Any accrued but unpaid Servicing Fee as of the termination date shall be payable in accordance with the Payment Waterfall.

ARTICLE X REPRESENTATIONS AND WARRANTIES OF THE SERVICER The Servicer represents and warrants to the Issuer and the Trustee, for the benefit of the Noteholders, as of the Closing Date (and as of each date on which additional Receivables are transferred to the Issuer, other than in the case of Sections 10.01, 10.02, and 10.03, as of such date), as follows:

Section 10.01. Organization and Good Standing. The Servicer is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Servicer is duly qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership of its properties requires such qualification. The Servicer is licensed as a premium fina