1025-00007 · Quorum Insurance Holdings · Legal Opinions

draft-opinion-de-llc-formation-qrf.docx DOCUMENT M&A / Corporate

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DRAFT — FOR DISCUSSION PURPOSES ONLY — NOT FOR EXECUTION OR RELIANCE

CALDERWOOD & HARKNESS LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 455-7000 Facsimile: (212) 455-7100

October 8, 2022

Quorum Receivables Funding 2022-1 LLC c/o Quorum Insurance Holdings Corp. 400 Atlantic Street, Suite 2200 Stamford, Connecticut 06901

Calvoneth Trust Company, National Association, as Indenture Trustee 600 Travis Street, Suite 5800 Houston, Texas 77002

Ridgeline Capital Markets LLC, as Initial Purchaser 383 Madison Avenue, 14th Floor New York, New York 10179

Re: Quorum Receivables Funding 2022-1 LLC — $500,000,000 Asset-Backed Notes Issuance (Class A Notes, Class B Notes, and Class C Notes) — Delaware LLC Formation and Authorization Opinion

Ladies and Gentlemen:

1. Introduction

We have acted as counsel to Quorum Receivables Funding 2022-1 LLC, a limited liability company organized and existing under the laws of the State of Delaware (the "Issuer" or "QRF 2022-1"), in connection with the issuance by the Issuer of (a) $375,000,000 aggregate principal amount of Class A Asset-Backed Notes (preliminary CUSIP: 74892TAA3) (the "Class A Notes"), (b) $75,000,000 aggregate principal amount of Class B Asset-Backed Notes (preliminary CUSIP: 74892TAB1) (the "Class B Notes"), and (c) $35,000,000 aggregate principal amount of Class C Asset-Backed Notes (preliminary CUSIP: 74892TAC9) (the "Class C Notes" and, together with the Class A Notes and the Class B Notes, the "Notes"), representing an aggregate principal amount of $500,000,000. The Notes are to be offered and sold pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and Regulation S thereunder. This opinion letter (this "Opinion") is delivered pursuant to the requirements of the Note Purchase Agreement (as defined below) and the Indenture (as defined below), and addresses matters of Delaware law with respect to the formation and organizational status of QRF 2022-1 and the authorization of the transactions contemplated by the Transaction Documents (as defined below).

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Indenture.

2. Documents Examined

In connection with this Opinion, we have examined originals or copies (certified or otherwise identified to our satisfaction) of the following documents:

2.1 Organizational Documents

(a) The Certificate of Formation of Quorum Receivables Funding 2022-1 LLC, as filed with the Secretary of State of the State of Delaware on August 3, 2022 (DE SOS File No. 7894231) (the "Certificate of Formation");

(b) The Limited Liability Company Agreement of QRF 2022-1, dated as of August 3, 2022, entered into by Quorum Receivables Holding LLC, a Delaware limited liability company, as sole member (the "LLC Agreement"); and

(c) The Independent Manager Agreement, dated as of August 3, 2022, between QRF 2022-1 and Fortbridge Corporate Services LLC, pursuant to which Timothy R. Callan was appointed as independent manager of QRF 2022-1 (the "Independent Manager Agreement").

2.2 Transaction Documents

We have also examined the following agreements and instruments (collectively, the "Transaction Documents"):

(a) The Indenture (execution draft v4), dated as of the Closing Date (as defined therein), between QRF 2022-1, as Issuer, and Calvoneth Trust Company, National Association ("Haverford"), as Trustee (the "Indenture");

(b) The Note Purchase Agreement (execution draft v3), dated as of the Closing Date, among QRF 2022-1, Quorum Insurance Holdings Corp., a Delaware corporation ("QIH"), as Sponsor, and Ridgeline Capital Markets LLC, a Delaware limited liability company ("Ridgeline"), as Initial Purchaser (the "Note Purchase Agreement");

(c) The Receivables Transfer Agreement (execution draft v3), dated as of the Closing Date, between Quorum Receivables Holding LLC, a Delaware limited liability company ("QRH"), as Transferor, and QRF 2022-1, as Transferee (the "Receivables Transfer Agreement");

(d) The Servicing Agreement (execution draft v3), dated as of the Closing Date, among QRF 2022-1, Quorum Premium Finance LLC, a Delaware limited liability company ("QPF"), as Servicer, and Haverford, as Trustee (the "Servicing Agreement");

(e) The Back-Up Servicing Agreement (execution draft v2), dated as of the Closing Date, among QRF 2022-1, QPF, Northvane Bank, National Association ("Northvane Bank"), as Back-Up Servicer, and Haverford, as Trustee (the "Back-Up Servicing Agreement");

(f) The Administration Agreement (execution draft v2), dated as of the Closing Date, between QRF 2022-1 and QIH, as Administrator (the "Administration Agreement");

(g) The Liquidity Facility Agreement (execution draft v2), dated as of the Closing Date, between QRF 2022-1, as Borrower, and Northvane Bank, as Lender (the "Liquidity Facility Agreement");

(h) The Account Control Agreement (execution draft v2), dated as of the Closing Date, between QRF 2022-1 and Haverford, as Securities Intermediary (the "Account Control Agreement");

(i) The Custodian Agreement (draft), dated as of the Closing Date, between QRF 2022-1 and Haverford, as Custodian (the "Custodian Agreement");

(j) The Grant of Security Interest / Pledge Agreement (execution draft v2), dated as of the Closing Date, from QRF 2022-1 to Haverford, as Trustee (the "Grant of Security Interest"); and

(k) The Class A Notes, the Class B Notes, and the Class C Notes (collectively, the "Notes"), in the forms attached as exhibits to the Indenture.

2.3 Certificates and Other Documents

We have also examined or obtained and relied upon the following certificates, records, and other documents:

(a) A Certificate of Good Standing of QRF 2022-1, issued by the Secretary of State of the State of Delaware, dated on or about the Closing Date (the "Good Standing Certificate");

(b) An officer's certificate of QRF 2022-1 (draft dated October 12, 2022), executed by a duly authorized officer of QRF 2022-1, certifying as to certain factual matters relevant to the opinions expressed herein (the "Officer's Certificate");

(c) Resolutions adopted by written consent of the sole member of QRF 2022-1 (Quorum Receivables Holding LLC), together with the consent of the independent manager of QRF 2022-1 (Timothy R. Callan), authorizing the execution, delivery, and performance by QRF 2022-1 of each of the Transaction Documents to which QRF 2022-1 is a party and the issuance of the Notes (the "Authorizing Resolutions"); and

(d) Such other documents, certificates, records, and instruments as we have deemed necessary or appropriate for purposes of rendering the opinions set forth herein.

3. Assumptions

In rendering the opinions set forth in Section 4 below, we have assumed the following, without independent investigation or verification:

(a) The genuineness of all signatures on all documents examined by us (other than signatures of QRF 2022-1 or persons signing on behalf of QRF 2022-1).

(b) The authenticity of all documents submitted to us as originals and the conformity to authentic originals of all documents submitted to us as copies, whether certified, conformed, photostatic, electronic, or otherwise.

(c) That each natural person who has signed or will sign any document reviewed by us in connection with this Opinion has had, and will have, the legal capacity to do so at the time of such signing.

(d) That each party to the Transaction Documents (other than QRF 2022-1) is duly organized or formed, validly existing, and in good standing under the laws of its respective jurisdiction of organization or formation, and has full corporate, limited liability company, or other organizational power and authority to execute, deliver, and perform its respective obligations under the Transaction Documents to which it is a party.

(e) That the Transaction Documents have been or will be duly authorized, executed, and delivered by each party thereto (other than QRF 2022-1) in accordance with all applicable laws, rules, and regulations, and in accordance with the organizational or governing documents of each such party.

(f) That all necessary governmental and regulatory approvals, consents, authorizations, registrations, and filings required of parties other than QRF 2022-1 in connection with the Transaction Documents have been or will be obtained or made, and all conditions to the effectiveness thereof have been or will be satisfied.

(g) That the factual matters set forth in the Officer's Certificate are true, correct, and complete in all material respects as of the date hereof and will be true, correct, and complete in all material respects as of the Closing Date.

(h) That the Good Standing Certificate referred to in Section 2.3(a) above accurately reflects the status of QRF 2022-1 with the Secretary of State of the State of Delaware as of the date and time such certificate was issued, and that no event has occurred between the date of issuance of such certificate and the date hereof that would affect the good standing of QRF 2022-1.

(i) That the LLC Agreement remains in full force and effect and has not been amended, modified, supplemented, restated, or terminated since its execution on August 3, 2022, and that no event has occurred that would constitute a default thereunder or give rise to any right of termination thereof.

(j) That the Authorizing Resolutions have not been rescinded, modified, amended, or revoked, and remain in full force and effect as of the date hereof and will remain in full force and effect as of the Closing Date.

4. Opinions

Based upon and subject to the foregoing, and subject to the qualifications and limitations set forth in Section 5 below, we are of the opinion that:

4.1 Valid Formation and Existence

QRF 2022-1 has been duly formed and is validly existing as a limited liability company in good standing under the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.) (the "DLLCA"). The Certificate of Formation of QRF 2022-1 was duly executed, delivered, and filed with the Secretary of State of the State of Delaware on August 3, 2022, in accordance with Section 18-201 of the DLLCA, and was assigned Delaware Secretary of State File No. 7894231. The Certificate of Formation has not been amended, restated, or revoked, and no certificate of cancellation has been filed with respect thereto. Based solely upon our review of the Good Standing Certificate, QRF 2022-1 is in good standing as a limited liability company under the laws of the State of Delaware as of the date and time set forth in such Good Standing Certificate.

4.2 Power and Authority

QRF 2022-1 has full limited liability company power and authority under the DLLCA and the LLC Agreement to:

(a) execute, deliver, and perform its obligations under each of the Transaction Documents to which it is a party;

(b) issue the Notes pursuant to and in accordance with the terms and conditions set forth in the Indenture;

(c) acquire, own, hold, manage, administer, and dispose of the insurance premium finance receivables and related assets to be transferred to it pursuant to the Receivables Transfer Agreement;

(d) grant the security interests and liens contemplated by the Grant of Security Interest and the Indenture in favor of Haverford, as Trustee, for the benefit of the holders of the Notes and the other secured parties; and

(e) conduct its business as described in the LLC Agreement and the Offering Memorandum dated on or about the date hereof relating to the Notes.

We note that Section 3.01 of the LLC Agreement limits the purpose of QRF 2022-1 to acquiring and holding insurance premium finance receivables originated by QPF (and interests therein), issuing notes and other debt obligations backed by such receivables, granting security interests in the assets of QRF 2022-1 in connection therewith, and engaging in activities incidental, necessary, or appropriate to accomplish the foregoing. Based upon our review of the Transaction Documents and the LLC Agreement, we are of the opinion that the execution, delivery, and performance of the Transaction Documents and the issuance of the Notes are within the stated purpose of QRF 2022-1 as set forth in the LLC Agreement.

4.3 Due Authorization

The execution, delivery, and performance of each Transaction Document to which QRF 2022-1 is a party, and the issuance of the Notes pursuant to the Indenture, have been duly authorized by all necessary limited liability company action on the part of QRF 2022-1, including:

(a) the written consent of Quorum Receivables Holding LLC, as the sole member of QRF 2022-1, approving and authorizing the execution, delivery, and performance of each Transaction Document to which QRF 2022-1 is a party and the issuance of the Notes; and

(b) the consent of Timothy R. Callan, as the independent manager of QRF 2022-1, to the extent such consent is required by Section 5.03(b) of the LLC Agreement, specifically with respect to (i) the non-petition covenants and related bankruptcy covenants set forth in the Transaction Documents, (ii) the filing of any voluntary petition for bankruptcy, insolvency, or reorganization on behalf of QRF 2022-1, and (iii) any action that would cause QRF 2022-1 to become insolvent or to consolidate or merge with or into any other entity.

No further limited liability company action on the part of QRF 2022-1, its sole member, or its independent manager is required in connection with the execution, delivery, and performance of the Transaction Documents or the issuance of the Notes.

4.4 Execution and Delivery

Assuming that the Transaction Documents are executed on behalf of QRF 2022-1 by the persons authorized to execute such documents pursuant to the Authorizing Resolutions and the LLC Agreement, and that the Transaction Documents are delivered in accordance with their terms, such Transaction Documents will have been duly executed and delivered by QRF 2022-1.

Note: This Opinion is delivered in draft form in anticipation of the Closing Date. At closing, this paragraph 4.4 will be revised to speak to the actual execution and delivery of the Transaction Documents by QRF 2022-1 as of the Closing Date, rather than in anticipatory terms.

4.5 No Conflicts with Organizational Documents

The execution, delivery, and performance of the Transaction Documents by QRF 2022-1, and the issuance of the Notes by QRF 2022-1 pursuant to the Indenture, do not and will not:

(a) violate any provision of the Certificate of Formation of QRF 2022-1;

(b) violate any provision of the LLC Agreement of QRF 2022-1;

(c) result in a breach of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, any provision of the LLC Agreement; or

(d) result in the creation or imposition of any lien, security interest, charge, or encumbrance on any of the properties or assets of QRF 2022-1, other than the security interests, pledges, and liens expressly contemplated and created by the Grant of Security Interest, the Indenture, the Account Control Agreement, and the other Transaction Documents.

4.6 No Conflicts with Delaware Law

The execution, delivery, and performance of the Transaction Documents by QRF 2022-1, and the issuance of the Notes by QRF 2022-1 pursuant to the Indenture, do not and will not violate any provision of the DLLCA or any other statute, rule, or regulation of the State of Delaware that, in our experience, is normally applicable to transactions of the type contemplated by the Transaction Documents.

4.7 No Governmental Approvals Required under Delaware Law

No consent, approval, authorization, order, registration, qualification, or filing with any governmental authority of the State of Delaware is required for the valid execution, delivery, and performance by QRF 2022-1 of the Transaction Documents to which it is a party, or for the issuance of the Notes, other than (a) the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, which filing has been duly made, and (b) the filing of any Uniform Commercial Code financing statements with the office of the Secretary of State of the State of Delaware to perfect the security interests contemplated by the Transaction Documents.

4.8 Limited Liability

Based solely on the DLLCA, and in particular Section 18-303 thereof, the sole member of QRF 2022-1 (Quorum Receivables Holding LLC) and the independent manager of QRF 2022-1 (Timothy R. Callan) are not obligated for, and are not otherwise liable for, any debt, obligation, or liability of QRF 2022-1, whether arising in contract, tort, or otherwise, solely by reason of being a member or manager, respectively, of QRF 2022-1.

5. Qualifications and Limitations

The opinions expressed in Section 4 above are subject to the following qualifications and limitations:

5.1 Scope of Law Covered

The opinions expressed herein are limited solely to the laws of the State of Delaware, including the DLLCA and the applicable provisions of the Constitution of the State of Delaware, in each case as currently in effect. We express no opinion as to the laws of any other jurisdiction, including, without limitation, (a) the laws of the State of New York (which govern the Transaction Documents), (b) the federal laws of the United States (including, without limitation, the Securities Act, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, and the Investment Company Act of 1940, each as amended), or (c) the laws of any other state or territory of the United States or of any foreign jurisdiction. No opinion is expressed herein regarding the enforceability of the Transaction Documents, the Notes, or any provision thereof, which is the subject of a separate enforceability opinion to be delivered by this firm under New York law concurrently with the final version of this Opinion on the Closing Date. In addition, no opinion is expressed herein with respect to (i) federal or state securities laws, (ii) federal, state, or local tax laws or regulations, (iii) federal or state banking or insurance regulatory matters, (iv) the Employee Retirement Income Security Act of 1974, as amended, (v) environmental laws, or (vi) anti-money laundering, anti-terrorism, sanctions, or similar laws or regulations.

5.2 Good Standing Certificate

The opinion expressed in Section 4.1 above as to the good standing of QRF 2022-1 under the laws of the State of Delaware is based solely upon the Good Standing Certificate issued by the Secretary of State of the State of Delaware and is limited to the date and time of issuance set forth in such Good Standing Certificate. Good standing in the State of Delaware, as indicated by such certificate, is dependent only upon the payment of franchise taxes and the filing of annual reports, and the absence of a filed certificate of cancellation or judicial decree of dissolution.

5.3 Bankruptcy and Insolvency

The opinions expressed herein are subject to, and may be limited by, (a) applicable bankruptcy, insolvency, reorganization, receivership, moratorium, liquidation, conservatorship, arrangement, fraudulent transfer, fraudulent conveyance, and other similar laws relating to or affecting the rights of creditors generally, as now or hereafter in effect, (b) general principles of equity (regardless of whether such principles are considered in a proceeding in equity or at law), including, without limitation, concepts of materiality, reasonableness, good faith, and fair dealing, and (c) the possible unavailability of specific performance, injunctive relief, or other equitable remedies. We express no opinion as to whether QRF 2022-1 would or would not be substantively consolidated with QRH, QIH, QPF, or any other affiliated entity in the event of a bankruptcy or insolvency proceeding with respect to any such entity. The issue of substantive consolidation is addressed in a separate non-consolidation opinion to be delivered by this firm on the Closing Date.

5.4 Factual Reliance

In rendering the opinions expressed herein, we have relied upon the Officer's Certificate and the representations and warranties of QRF 2022-1 and its sole member (Quorum Receivables Holding LLC) set forth in the Transaction Documents, including, without limitation, the representations and warranties set forth in the Note Purchase Agreement and the Receivables Transfer Agreement, as to certain factual matters. We have not undertaken any independent investigation or verification of such factual matters, and no inference as to our knowledge of any such matters should be drawn from the fact of our representation of QRF 2022-1.

5.5 Draft Status

This Opinion is delivered in draft form for discussion purposes only. It is not intended to be relied upon by any of the addressees hereof, by any other party, or by any other person, and will not become effective, operative, or binding until it has been executed and delivered in final form on the Closing Date. The opinions expressed herein are preliminary in nature and are subject to revision, modification, supplementation, or withdrawal, in whole or in part, prior to execution and delivery of the final opinion letter. Without limiting the generality of the foregoing, the final opinion letter may contain additional, different, or modified assumptions, qualifications, limitations, and exceptions, as we deem necessary or appropriate as of the Closing Date based upon our review of the final, fully executed versions of the Transaction Documents and such other matters as we consider relevant.

6. Reliance and Benefit

This Opinion is furnished solely for the benefit of the addressees hereof — namely, (a) Quorum Receivables Funding 2022-1 LLC, (b) Calvoneth Trust Company, National Association, as Indenture Trustee under the Indenture, and (c) Ridgeline Capital Markets LLC, as Initial Purchaser under the Note Purchase Agreement — in connection with the transaction described herein.

In addition, this Opinion may be relied upon by (i) Calloway & Brandt LLP, as counsel to Ridgeline Capital Markets LLC, in connection with its rendering of legal opinions or advice in connection with the transaction, (ii) Ashfield & Greer LLP, as counsel to Calvoneth Trust Company, National Association, in connection with its rendering of legal opinions or advice in connection with the transaction, and (iii) Brindoval Ratings Inc. and Pinnacle Rating Services LLC, solely in connection with their respective ratings of the Notes.

This Opinion may not be relied upon by any other person or entity, or for any purpose other than the purpose described herein, without the prior written consent of Calderwood & Harkness LLP in each instance. Without limiting the foregoing, this Opinion may not be quoted, cited, or referred to in any document, report, offering memorandum, or other communication (other than the Transaction Documents and related closing documents), nor may copies hereof be furnished to any person or entity other than the persons and entities expressly named above, without our prior written consent.

This Opinion speaks only as of the date hereof and, when delivered in final form, will speak only as of the Closing Date. We undertake no obligation, and hereby disclaim any obligation, to update, supplement, or revise this Opinion (whether in draft or final form) to reflect any changes in fact or law that may occur after the date hereof (or, in the case of the final opinion, after the Closing Date), even though such changes may affect the opinions expressed herein.

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We trust the foregoing is responsive to your requirements. We remain available to discuss any questions or comments regarding this draft Opinion at your convenience.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

(Draft — Not for Execution)

Prepared by: Yuki Nakamura Reviewed by: Douglas Carmichael

DRAFT — October 8, 2022 — Subject to Revision Calderwood & Harkness LLP Matter No. 1025-00007

DRAFT — FOR DISCUSSION PURPOSES ONLY — NOT FOR EXECUTION OR RELIANCE
CALDERWOOD & HARKNESS LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 455-7000 Facsimile: (212) 455-7100
October 8, 2022
Quorum Receivables Funding 2022-1 LLC c/o Quorum Insurance Holdings Corp. 400 Atlantic Street, Suite 2200 Stamford, Connecticut 06901
Calvoneth Trust Company, National Association, as Indenture Trustee 600 Travis Street, Suite 5800 Houston, Texas 77002
Ridgeline Capital Markets LLC, as Initial Purchaser 383 Madison Avenue, 14th Floor New York, New York 10179
Re: Quorum Receivables Funding 2022-1 LLC — $500,000,000 Asset-Backed Notes Issuance (Class A Notes, Class B Notes, and Class C Notes) — Delaware LLC Formation and Authorization Opinion
Ladies and Gentlemen:
1. Introduction
We have acted as counsel to Quorum Receivables Funding 2022-1 LLC, a limited liability company organized and existing under the laws of the State of Delaware (the "Issuer" or "QRF 2022-1"), in connection with the issuance by the Issuer of (a) $375,000,000 aggregate principal amount of Class A Asset-Backed Notes (preliminary CUSIP: 74892TAA3) (the "Class A Notes"), (b) $75,000,000 aggregate principal amount of Class B Asset-Backed Notes (preliminary CUSIP: 74892TAB1) (the "Class B Notes"), and (c) $35,000,000 aggregate principal amount of Class C Asset-Backed Notes (preliminary CUSIP: 74892TAC9) (the "Class C Notes" and, together with the Class A Notes and the Class B Notes, the "Notes"), representing an aggregate principal amount of $500,000,000. The Notes are to be offered and sold pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and Regulation S thereunder. This opinion letter (this "Opinion") is delivered pursuant to the requirements of the Note Purchase Agreement (as defined below) and the Indenture (as defined below), and addresses matters of Delaware law with respect to the formation and organizational status of QRF 2022-1 and the authorization of the transactions contemplated by the Transaction Documents (as defined below).
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Indenture.
2. Documents Examined
In connection with this Opinion, we have examined originals or copies (certified or otherwise identified to our satisfaction) of the following documents:
2.1 Organizational Documents
(a) The Certificate of Formation of Quorum Receivables Funding 2022-1 LLC, as filed with the Secretary of State of the State of Delaware on August 3, 2022 (DE SOS File No. 7894231) (the "Certificate of Formation");
(b) The Limited Liability Company Agreement of QRF 2022-1, dated as of August 3, 2022, entered into by Quorum Receivables Holding LLC, a Delaware limited liability company, as sole member (the "LLC Agreement"); and
(c) The Independent Manager Agreement, dated as of August 3, 2022, between QRF 2022-1 and Fortbridge Corporate Services LLC, pursuant to which Timothy R. Callan was appointed as independent manager of QRF 2022-1 (the "Independent Manager Agreement").
2.2 Transaction Documents
We have also examined the following agreements and instruments (collectively, the "Transaction Documents"):
(a) The Indenture (execution draft v4), dated as of the Closing Date (as defined therein), between QRF 2022-1, as Issuer, and Calvoneth Trust Company, National Association ("Haverford"), as Trustee (the "Indenture");
(b) The Note Purchase Agreement (execution draft v3), dated as of the Closing Date, among QRF 2022-1, Quorum Insurance Holdings Corp., a Delaware corporation ("QIH"), as Sponsor, and Ridgeline Capital Markets LLC, a Delaware limited liability company ("Ridgeline"), as Initial Purchaser (the "Note Purchase Agreement");
(c) The Receivables Transfer Agreement (execution draft v3), dated as of the Closing Date, between Quorum Receivables Holding LLC, a Delaware limited liability company ("QRH"), as Transferor, and QRF 2022-1, as Transferee (the "Receivables Transfer Agreement");
(d) The Servicing Agreement (execution draft v3), dated as of the Closing Date, among QRF 2022-1, Quorum Premium Finance LLC, a Delaware limited liability company ("QPF"), as Servicer, and Haverford, as Trustee (the "Servicing Agreement");
(e) The Back-Up Servicing Agreement (execution draft v2), dated as of the Closing Date, among QRF 2022-1, QPF, Northvane Bank, National Association ("Northvane Bank"), as Back-Up Servicer, and Haverford, as Trustee (the "Back-Up Servicing Agreement");
(f) The Administration Agreement (execution draft v2), dated as of the Closing Date, between QRF 2022-1 and QIH, as Administrator (the "Administration Agreement");
(g) The Liquidity Facility Agreement (execution draft v2), dated as of the Closing Date, between QRF 2022-1, as Borrower, and Northvane Bank, as Lender (the "Liquidity Facility Agreement");
(h) The Account Control Agreement (execution draft v2), dated as of the Closing Date, between QRF 2022-1 and Haverford, as Securities Intermediary (the "Account Control Agreement");
(i) The Custodian Agreement (draft), dated as of the Closing Date, between QRF 2022-1 and Haverford, as Custodian (the "Custodian Agreement");
(j) The Grant of Security Interest / Pledge Agreement (execution draft v2), dated as of the Closing Date, from QRF 2022-1 to Haverford, as Trustee (the "Grant of Security Interest"); and
(k) The Class A Notes, the Class B Notes, and the Class C Notes (collectively, the "Notes"), in the forms attached as exhibits to the Indenture.
2.3 Certificates and Other Documents
We have also examined or obtained and relied upon the following certificates, records, and other documents:
(a) A Certificate of Good Standing of QRF 2022-1, issued by the Secretary of State of the State of Delaware, dated on or about the Closing Date (the "Good Standing Certificate");
(b) An officer's certificate of QRF 2022-1 (draft dated October 12, 2022), executed by a duly authorized officer of QRF 2022-1, certifying as to certain factual matters relevant to the opinions expressed herein (the "Officer's Certificate");
(c) Resolutions adopted by written consent of the sole member of QRF 2022-1 (Quorum Receivables Holding LLC), together with the consent of the independent manager of QRF 2022-1 (Timothy R. Callan), authorizing the execution, delivery, and performance by QRF 2022-1 of each of the Transaction Documents to which QRF 2022-1 is a party and the issuance of the Notes (the "Authorizing Resolutions"); and
(d) Such other documents, certificates, records, and instruments as we have deemed necessary or appropriate for purposes of rendering the opinions set forth herein.
3. Assumptions
In rendering the opinions set forth in Section 4 below, we have assumed the following, without independent investigation or verification:
(a) The genuineness of all signatures on all documents examined by us (other than signatures of QRF 2022-1 or persons signing on behalf of QRF 2022-1).
(b) The authenticity of all documents submitted to us as originals and the conformity to authentic originals of all documents submitted to us as copies, whether certified, conformed, photostatic, electronic, or otherwise.
(c) That each natural person who has signed or will sign any document reviewed by us in connection with this Opinion has had, and will have, the legal capacity to do so at the time of such signing.
(d) That each party to the Transaction Documents (other than QRF 2022-1) is duly organized or formed, validly existing, and in good standing under the laws of its respective jurisdiction of organization or formation, and has full corporate, limited liability company, or other organizational power and authority to execute, deliver, and perform its respective obligations under the Transaction Documents to which it is a party.
(e) That the Transaction Documents have been or will be duly authorized, executed, and delivered by each party thereto (other than QRF 2022-1) in accordance with all applicable laws, rules, and regulations, and in accordance with the organizational or governing documents of each such party.
(f) That all necessary governmental and regulatory approvals, consents, authorizations, registrations, and filings required of parties other than QRF 2022-1 in connection with the Transaction Documents have been or will be obtained or made, and all conditions to the effectiveness thereof have been or will be satisfied.
(g) That the factual matters set forth in the Officer's Certificate are true, correct, and complete in all material respects as of the date hereof and will be true, correct, and complete in all material respects as of the Closing Date.
(h) That the Good Standing Certificate referred to in Section 2.3(a) above accurately reflects the status of QRF 2022-1 with the Secretary of State of the State of Delaware as of the date and time such certificate was issued, and that no event has occurred between the date of issuance of such certificate and the date hereof that would affect the good standing of QRF 2022-1.
(i) That the LLC Agreement remains in full force and effect and has not been amended, modified, supplemented, restated, or terminated since its execution on August 3, 2022, and that no event has occurred that would constitute a default thereunder or give rise to any right of termination thereof.
(j) That the Authorizing Resolutions have not been rescinded, modified, amended, or revoked, and remain in full force and effect as of the date hereof and will remain in full force and effect as of the Closing Date.
4. Opinions
Based upon and subject to the foregoing, and subject to the qualifications and limitations set forth in Section 5 below, we are of the opinion that:
4.1 Valid Formation and Existence
QRF 2022-1 has been duly formed and is validly existing as a limited liability company in good standing under the Delaware Limited Liability Company Act (6 Del. C. § 18-101 et seq.) (the "DLLCA"). The Certificate of Formation of QRF 2022-1 was duly executed, delivered, and filed with the Secretary of State of the State of Delaware on August 3, 2022, in accordance with Section 18-201 of the DLLCA, and was assigned Delaware Secretary of State File No. 7894231. The Certificate of Formation has not been amended, restated, or revoked, and no certificate of cancellation has been filed with respect thereto. Based solely upon our review of the Good Standing Certificate, QRF 2022-1 is in good standing as a limited liability company under the laws of the State of Delaware as of the date and time set forth in such Good Standing Certificate.
4.2 Power and Authority
QRF 2022-1 has full limited liability company power and authority under the DLLCA and the LLC Agreement to:
(a) execute, deliver, and perform its obligations under each of the Transaction Documents to which it is a party;
(b) issue the Notes pursuant to and in accordance with the terms and conditions set forth in the Indenture;
(c) acquire, own, hold, manage, administer, and dispose of the insurance premium finance receivables and related assets to be transferred to it pursuant to the Receivables Transfer Agreement;
(d) grant the security interests and liens contemplated by the Grant of Security Interest and the Indenture in favor of Haverford, as Trustee, for the benefit of the holders of the Notes and the other secured parties; and
(e) conduct its business as described in the LLC Agreement and the Offering Memorandum dated on or about the date hereof relating to the Notes.
We note that Section 3.01 of the LLC Agreement limits the purpose of QRF 2022-1 to acquiring and holding insurance premium finance receivables originated by QPF (and interests therein), issuing notes and other debt obligations backed by such receivables, granting security interests in the assets of QRF 2022-1 in connection therewith, and engaging in activities incidental, necessary, or appropriate to accomplish the foregoing. Based upon our review of the Transaction Documents and the LLC Agreement, we are of the opinion that the execution, delivery, and performance of the Transaction Documents and the issuance of the Notes are within the stated purpose of QRF 2022-1 as set forth in the LLC Agreement.
4.3 Due Authorization
The execution, delivery, and performance of each Transaction Document to which QRF 2022-1 is a party, and the issuance of the Notes pursuant to the Indenture, have been duly authorized by all necessary limited liability company action on the part of QRF 2022-1, including:
(a) the written consent of Quorum Receivables Holding LLC, as the sole member of QRF 2022-1, approving and authorizing the execution, delivery, and performance of each Transaction Document to which QRF 2022-1 is a party and the issuance of the Notes; and
(b) the consent of Timothy R. Callan, as the independent manager of QRF 2022-1, to the extent such consent is required by Section 5.03(b) of the LLC Agreement, specifically with respect to (i) the non-petition covenants and related bankruptcy covenants set forth in the Transaction Documents, (ii) the filing of any voluntary petition for bankruptcy, insolvency, or reorganization on behalf of QRF 2022-1, and (iii) any action that would cause QRF 2022-1 to become insolvent or to consolidate or merge with or into any other entity.
No further limited liability company action on the part of QRF 2022-1, its sole member, or its independent manager is required in connection with the execution, delivery, and performance of the Transaction Documents or the issuance of the Notes.
4.4 Execution and Delivery
Assuming that the Transaction Documents are executed on behalf of QRF 2022-1 by the persons authorized to execute such documents pursuant to the Authorizing Resolutions and the LLC Agreement, and that the Transaction Documents are delivered in accordance with their terms, such Transaction Documents will have been duly executed and delivered by QRF 2022-1.
Note: This Opinion is delivered in draft form in anticipation of the Closing Date. At closing, this paragraph 4.4 will be revised to speak to the actual execution and delivery of the Transaction Documents by QRF 2022-1 as of the Closing Date, rather than in anticipatory terms.
4.5 No Conflicts with Organizational Documents
The execution, delivery, and performance of the Transaction Documents by QRF 2022-1, and the issuance of the Notes by QRF 2022-1 pursuant to the Indenture, do not and will not:
(a) violate any provision of the Certificate of Formation of QRF 2022-1;
(b) violate any provision of the LLC Agreement of QRF 2022-1;
(c) result in a breach of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, any provision of the LLC Agreement; or
(d) result in the creation or imposition of any lien, security interest, charge, or encumbrance on any of the properties or assets of QRF 2022-1, other than the security interests, pledges, and liens expressly contemplated and created by the Grant of Security Interest, the Indenture, the Account Control Agreement, and the other Transaction Documents.
4.6 No Conflicts with Delaware Law
The execution, delivery, and performance of the Transaction Documents by QRF 2022-1, and the issuance of the Notes by QRF 2022-1 pursuant to the Indenture, do not and will not violate any provision of the DLLCA or any other statute, rule, or regulation of the State of Delaware that, in our experience, is normally applicable to transactions of the type contemplated by the Transaction Documents.
4.7 No Governmental Approvals Required under Delaware Law
No consent, approval, authorization, order, registration, qualification, or filing with any governmental authority of the State of Delaware is required for the valid execution, delivery, and performance by QRF 2022-1 of the Transaction Documents to which it is a party, or for the issuance of the Notes, other than (a) the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, which filing has been duly made, and (b) the filing of any Uniform Commercial Code financing statements with the office of the Secretary of State of the State of Delaware to perfect the security interests contemplated by the Transaction Documents.
4.8 Limited Liability
Based solely on the DLLCA, and in particular Section 18-303 thereof, the sole member of QRF 2022-1 (Quorum Receivables Holding LLC) and the independent manager of QRF 2022-1 (Timothy R. Callan) are not obligated for, and are not otherwise liable for, any debt, obligation, or liability of QRF 2022-1, whether arising in contract, tort, or otherwise, solely by reason of being a member or manager, respectively, of QRF 2022-1.
5. Qualifications and Limitations
The opinions expressed in Section 4 above are subject to the following qualifications and limitations:
5.1 Scope of Law Covered
The opinions expressed herein are limited solely to the laws of the State of Delaware, including the DLLCA and the applicable provisions of the Constitution of the State of Delaware, in each case as currently in effect. We express no opinion as to the laws of any other jurisdiction, including, without limitation, (a) the laws of the State of New York (which govern the Transaction Documents), (b) the federal laws of the United States (including, without limitation, the Securities Act, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, and the Investment Company Act of 1940, each as amended), or (c) the laws of any other state or territory of the United States or of any foreign jurisdiction. No opinion is expressed herein regarding the enforceability of the Transaction Documents, the Notes, or any provision thereof, which is the subject of a separate enforceability opinion to be delivered by this firm under New York law concurrently with the final version of this Opinion on the Closing Date. In addition, no opinion is expressed herein with respect to (i) federal or state securities laws, (ii) federal, state, or local tax laws or regulations, (iii) federal or state banking or insurance regulatory matters, (iv) the Employee Retirement Income Security Act of 1974, as amended, (v) environmental laws, or (vi) anti-money laundering, anti-terrorism, sanctions, or similar laws or regulations.
5.2 Good Standing Certificate
The opinion expressed in Section 4.1 above as to the good standing of QRF 2022-1 under the laws of the State of Delaware is based solely upon the Good Standing Certificate issued by the Secretary of State of the State of Delaware and is limited to the date and time of issuance set forth in such Good Standing Certificate. Good standing in the State of Delaware, as indicated by such certificate, is dependent only upon the payment of franchise taxes and the filing of annual reports, and the absence of a filed certificate of cancellation or judicial decree of dissolution.
5.3 Bankruptcy and Insolvency
The opinions expressed herein are subject to, and may be limited by, (a) applicable bankruptcy, insolvency, reorganization, receivership, moratorium, liquidation, conservatorship, arrangement, fraudulent transfer, fraudulent conveyance, and other similar laws relating to or affecting the rights of creditors generally, as now or hereafter in effect, (b) general principles of equity (regardless of whether such principles are considered in a proceeding in equity or at law), including, without limitation, concepts of materiality, reasonableness, good faith, and fair dealing, and (c) the possible unavailability of specific performance, injunctive relief, or other equitable remedies. We express no opinion as to whether QRF 2022-1 would or would not be substantively consolidated with QRH, QIH, QPF, or any other affiliated entity in the event of a bankruptcy or insolvency proceeding with respect to any such entity. The issue of substantive consolidation is addressed in a separate non-consolidation opinion to be delivered by this firm on the Closing Date.
5.4 Factual Reliance
In rendering the opinions expressed herein, we have relied upon the Officer's Certificate and the representations and warranties of QRF 2022-1 and its sole member (Quorum Receivables Holding LLC) set forth in the Transaction Documents, including, without limitation, the representations and warranties set forth in the Note Purchase Agreement and the Receivables Transfer Agreement, as to certain factual matters. We have not undertaken any independent investigation or verification of such factual matters, and no inference as to our knowledge of any such matters should be drawn from the fact of our representation of QRF 2022-1.
5.5 Draft Status
This Opinion is delivered in draft form for discussion purposes only. It is not intended to be relied upon by any of the addressees hereof, by any other party, or by any other person, and will not become effective, operative, or binding until it has been executed and delivered in final form on the Closing Date. The opinions expressed herein are preliminary in nature and are subject to revision, modification, supplementation, or withdrawal, in whole or in part, prior to execution and delivery of the final opinion letter. Without limiting the generality of the foregoing, the final opinion letter may contain additional, different, or modified assumptions, qualifications, limitations, and exceptions, as we deem necessary or appropriate as of the Closing Date based upon our review of the final, fully executed versions of the Transaction Documents and such other matters as we consider relevant.
6. Reliance and Benefit
This Opinion is furnished solely for the benefit of the addressees hereof — namely, (a) Quorum Receivables Funding 2022-1 LLC, (b) Calvoneth Trust Company, National Association, as Indenture Trustee under the Indenture, and (c) Ridgeline Capital Markets LLC, as Initial Purchaser under the Note Purchase Agreement — in connection with the transaction described herein.
In addition, this Opinion may be relied upon by (i) Calloway & Brandt LLP, as counsel to Ridgeline Capital Markets LLC, in connection with its rendering of legal opinions or advice in connection with the transaction, (ii) Ashfield & Greer LLP, as counsel to Calvoneth Trust Company, National Association, in connection with its rendering of legal opinions or advice in connection with the transaction, and (iii) Brindoval Ratings Inc. and Pinnacle Rating Services LLC, solely in connection with their respective ratings of the Notes.
This Opinion may not be relied upon by any other person or entity, or for any purpose other than the purpose described herein, without the prior written consent of Calderwood & Harkness LLP in each instance. Without limiting the foregoing, this Opinion may not be quoted, cited, or referred to in any document, report, offering memorandum, or other communication (other than the Transaction Documents and related closing documents), nor may copies hereof be furnished to any person or entity other than the persons and entities expressly named above, without our prior written consent.
This Opinion speaks only as of the date hereof and, when delivered in final form, will speak only as of the Closing Date. We undertake no obligation, and hereby disclaim any obligation, to update, supplement, or revise this Opinion (whether in draft or final form) to reflect any changes in fact or law that may occur after the date hereof (or, in the case of the final opinion, after the Closing Date), even though such changes may affect the opinions expressed herein.
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We trust the foregoing is responsive to your requirements. We remain available to discuss any questions or comments regarding this draft Opinion at your convenience.
Very truly yours,
CALDERWOOD & HARKNESS LLP
CALDERWOOD & HARKNESS LLP
By: ________
(Draft — Not for Execution)
Prepared by: Yuki Nakamura Reviewed by: Douglas Carmichael
DRAFT — October 8, 2022 — Subject to Revision Calderwood & Harkness LLP Matter No. 1025-00007

DRAFT — FOR DISCUSSION PURPOSES ONLY — NOT FOR EXECUTION OR RELIANCE

CALDERWOOD & HARKNESS LLP

CALDERWOOD & HARKNESS LLP

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