1025-00007 · Quorum Insurance Holdings · Legal Opinions

draft-opinion-enforceability-indenture-notes.docx DOCUMENT M&A / Corporate

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DRAFT — October 8, 2022 FOR DISCUSSION PURPOSES ONLY — NOT FOR DELIVERY

CALDERWOOD & HARKNESS LLP Counsellors at Law 601 Lexington Avenue New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588

October 8, 2022

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

Copy to:

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

Ladies and Gentlemen:

I. Introduction and Engagement

We have acted as counsel to Quorum Receivables Funding 2022-1 LLC, a Delaware limited liability company (the "Issuer"), in connection with the issuance by the Issuer of (i) $375,000,000 aggregate principal amount of Class A Floating Rate Asset-Backed Notes (the "Class A Notes"), (ii) $75,000,000 aggregate principal amount of Class B Floating Rate Asset-Backed Notes (the "Class B Notes"), and (iii) $35,000,000 aggregate principal amount of Class C Floating Rate Asset-Backed Notes (the "Class C Notes" and, together with the Class A Notes and the Class B Notes, the "Notes"). The aggregate principal amount of the Notes is $485,000,000. In addition, the Transaction (as defined below) contemplates an additional $15,000,000 of overcollateralization and retained interests held by the Issuer or its affiliates, which is not the subject of this opinion; accordingly, the total capital structure of the Issuer aggregates $500,000,000.

The Notes are being issued pursuant to that certain Indenture (the "Indenture"), dated as of [●], 2022, between the Issuer and Calvoneth Trust Company, National Association, a national banking association organized under the laws of the United States, as indenture trustee (in such capacity, the "Trustee"). The Notes are being offered and sold to Ridgeline Capital Markets LLC, a Delaware limited liability company (the "Initial Purchaser"), pursuant to that certain Note Purchase Agreement, dated as of [●], 2022 (the "Note Purchase Agreement"), among the Issuer, Quorum Insurance Holdings Corp., a Delaware corporation ("QIH" or the "Sponsor"), and the Initial Purchaser. The offering and sale of the Notes is being conducted as a private placement pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and Regulation S promulgated thereunder. The Notes have not been and will not be registered under the Securities Act or the securities laws of any state and may not be offered or sold in the United States absent an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

This opinion is delivered in connection with the closing of the transaction contemplated by the foregoing documents (the "Transaction"). This matter is referenced internally as Calderwood & Harkness Matter Number 1025-00007.

II. Documents Reviewed

In connection with rendering the opinions set forth herein, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following documents:

1. The Indenture (execution draft v4, dated as of [●], 2022) between the Issuer and the Trustee, together with all schedules, annexes, and exhibits thereto;

2. The Class A Notes, the Class B Notes, and the Class C Notes, each in the form attached as exhibits to the Indenture;

3. The Note Purchase Agreement (execution draft, dated as of [●], 2022) among the Issuer, the Sponsor, and the Initial Purchaser;

4. The Certificate of Formation of the Issuer, as filed with the Secretary of State of the State of Delaware on August 3, 2022 (Delaware Secretary of State File No. 7894231);

5. The Limited Liability Company Agreement of the Issuer, dated as of August 3, 2022, as amended (the "LLC Agreement"), reflecting Quorum Receivables Holding LLC ("QRH") as the sole member of the Issuer and Timothy R. Callan (of Fortbridge Corporate Services LLC) as the independent manager of the Issuer;

6. The Receivables Sale Agreement (execution draft v3) between Quorum Premium Finance LLC ("QPF") and QRH;

7. The Receivables Transfer Agreement (execution draft v3) between QRH and the Issuer;

8. The Servicing Agreement (execution draft v3) among the Issuer, QPF (as Servicer), and the Trustee;

9. The Back-Up Servicing Agreement (execution draft v2) among the Issuer, QPF, Northvane Bank, National Association (as Back-Up Servicer), and the Trustee;

10. The Administration Agreement (execution draft v2) between the Issuer and QIH (as Administrator);

11. The Liquidity Facility Agreement (execution draft v2) between the Issuer and Northvane Bank, National Association;

12. The Grant of Security Interest (Pledge Agreement) (execution draft v2) from the Issuer to the Trustee;

13. The Account Control Agreement (execution draft v2) among the Issuer and the Trustee (as Securities Intermediary);

14. The Custodian Agreement (draft) between the Issuer and the Trustee (as Custodian);

15. The Performance Guaranty (execution draft v1) by QIH in favor of the Trustee;

16. The Manager's Certificate of QPF, dated July 27, 2022, certifying authorizing resolutions adopted by the managers of QPF in connection with the Transaction;

17. The Secretary's Certificate of QIH, dated July 27, 2022, certifying resolutions adopted by the Board of Directors of QIH authorizing the Transaction and the execution, delivery, and performance of the Transaction documents to which QIH is a party;

18. A good standing certificate of the Issuer issued by the Secretary of State of the State of Delaware, dated on or about the date hereof;

19. The Preliminary Offering Memorandum, dated October 12, 2022 (v3), relating to the offering and sale of the Notes (the "Offering Memorandum"); and

20. Such other documents, records, certificates, instruments, and corporate and organizational records as we have deemed necessary or appropriate for purposes of rendering the opinions expressed herein.

Items (1) through (3) above are collectively referred to herein as the "Opinion Documents." Items (1) through (20) above are collectively referred to herein as the "Reviewed Documents."

III. Assumptions

In rendering the opinions expressed herein, we have assumed, without independent investigation or verification, the following:

(a) The genuineness of all signatures on all documents submitted to us and the authenticity of all documents submitted to us as originals. We have further assumed that all signatures appearing on documents examined by us are the genuine signatures of the persons whose signatures they purport to be.

(b) The conformity to authentic originals of all documents submitted to us as copies or drafts, whether certified, conformed, facsimile, electronic, or otherwise reproduced.

(c) That the final, executed versions of the Opinion Documents will be in all material respects identical to the execution drafts reviewed by us and described in Section II above. To the extent that any material changes are made to any of the Opinion Documents between the date of our review and the date of execution and delivery thereof, we reserve the right to modify, supplement, or withdraw the opinions expressed herein.

(d) That each natural person signing any document reviewed by us had the legal capacity to do so at the time of such signing.

(e) That the Trustee, Calvoneth Trust Company, National Association, is a national banking association duly organized, validly existing, and in good standing under the laws of the United States, and has all requisite power, authority, and legal capacity under applicable federal and state banking laws to enter into and perform its obligations under the Indenture, to authenticate and deliver the Notes, and to act in the capacities contemplated by the Indenture and the other Transaction documents, including as securities intermediary and custodian.

(f) That the Initial Purchaser, Ridgeline Capital Markets LLC, is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has all requisite limited liability company power and authority to enter into and perform its obligations under the Note Purchase Agreement, and that the execution, delivery, and performance by the Initial Purchaser of the Note Purchase Agreement have been duly authorized by all necessary limited liability company action.

(g) That QIH is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to execute and deliver the Note Purchase Agreement, the Performance Guaranty, and the Administration Agreement, and to perform its obligations thereunder, and that the execution, delivery, and performance thereof have been duly authorized by all necessary corporate action of QIH.

(h) That QPF is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, with all requisite limited liability company power and authority to execute and deliver the Receivables Sale Agreement, the Servicing Agreement, and each other Transaction document to which it is a party, and to perform its obligations thereunder.

(i) That QRH is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, with all requisite limited liability company power and authority to execute and deliver the Receivables Sale Agreement, the Receivables Transfer Agreement, and each other Transaction document to which it is a party, and to perform its obligations thereunder. We further assume that QRH maintains bankruptcy-remote governance features, including that Fortbridge Corporate Services LLC (with Eleanor M. Vasquez designated as independent manager) provides independent manager services in accordance with QRH's organizational documents and industry custom.

(j) That the execution, delivery, and performance by each party (other than the Issuer) of its respective obligations under each of the Opinion Documents to which it is a party have been duly authorized by all necessary corporate, limited liability company, partnership, or other organizational action on the part of such party.

(k) That each of the Opinion Documents constitutes the valid and binding obligation of each party thereto (other than the Issuer), enforceable against such party in accordance with its respective terms, subject to customary bankruptcy, insolvency, and equitable principles qualifications.

(l) That each party to the Opinion Documents has received adequate and lawful consideration for its obligations thereunder, and that the Transaction has been entered into on arms'-length terms.

(m) That the Indenture creates, or upon execution will create, a valid trust for the benefit of the holders of the Notes (the "Noteholders") in accordance with the terms thereof and applicable law.

(n) That the receivables pool as of the cut-off date of June 30, 2022, consists of eligible receivables meeting each of the eligibility criteria set forth in the Receivables Sale Agreement and the Indenture, including criteria relating to the type, age, balance, payment terms, obligor characteristics, and geographic distribution of the underlying insurance premium finance receivables.

(o) That all conditions precedent to the issuance of the Notes set forth in the Indenture and the Note Purchase Agreement, including delivery of officer's certificates, bring-down opinions, accountant's comfort letters, and receipt of the purchase price, will have been satisfied or effectively waived at or prior to the closing of the Transaction.

IV. Opinions

Based upon and subject to the foregoing, and subject further to the qualifications, exceptions, and limitations set forth in Sections V and VI below, we are of the opinion that:

Opinion 1: Valid Formation and Good Standing of the Issuer

Quorum Receivables Funding 2022-1 LLC is a limited liability company duly formed, validly existing, and in good standing under the Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et seq. (the "DLLCA"). In rendering this opinion, we have reviewed the Certificate of Formation of the Issuer filed with the Secretary of State of the State of Delaware on August 3, 2022 (Delaware Secretary of State File No. 7894231), the LLC Agreement, as amended, and a certificate of good standing of the Issuer issued by the Secretary of State of the State of Delaware, dated on or about the date hereof. We note that the Issuer's sole member is Quorum Receivables Holding LLC, a Delaware limited liability company, and that the Issuer's independent manager is Timothy R. Callan, who serves in such capacity as a designee of Fortbridge Corporate Services LLC, a Delaware limited liability company providing independent director and manager services to special-purpose bankruptcy-remote entities.

Opinion 2: Power and Authority of the Issuer

The Issuer has all requisite limited liability company power and authority under the DLLCA and its organizational documents to (a) execute and deliver the Indenture and the Notes, (b) execute and deliver the Note Purchase Agreement, (c) execute and deliver each other Opinion Document to which it is a party, and (d) perform its obligations under each of the foregoing. The LLC Agreement of the Issuer authorizes the Issuer to engage in the activities contemplated by the Transaction, including, without limitation, the acquisition and ownership of insurance premium finance receivables and related assets, the issuance of asset-backed notes and other debt securities secured by such receivables and related assets, the granting of security interests in such receivables and related assets, the engagement of servicers, back-up servicers, administrators, and custodians, and such other activities as are incidental or related to the foregoing. The separateness covenants set forth in the LLC Agreement further define and limit the scope of the Issuer's activities in a manner consistent with the requirements of a bankruptcy-remote special-purpose entity and do not, in our opinion, prohibit or restrict the Issuer from entering into, delivering, or performing under the Opinion Documents.

Opinion 3: Due Authorization

The execution, delivery, and performance by the Issuer of each of the Opinion Documents, including the Indenture, the Notes, and the Note Purchase Agreement, have been duly authorized by all necessary limited liability company action on the part of the Issuer. In rendering this opinion, we have reviewed (i) consents and approvals given by QRH, in its capacity as sole member of the Issuer, authorizing the Issuer to enter into and perform under the Transaction documents, and (ii) the written consent of Timothy R. Callan, in his capacity as independent manager of the Issuer, to the incurrence of indebtedness and the granting of security interests contemplated by the Transaction, as required by the LLC Agreement. We note that the LLC Agreement requires the prior written consent of the independent manager for certain material actions, including the filing of a voluntary bankruptcy petition, the incurrence of debt, and the granting of liens, and that such consent has been obtained with respect to the Transaction. No further action by the Issuer, its sole member, or its independent manager is required in connection with the authorization, execution, delivery, or performance of the Opinion Documents or the consummation of the Transaction.

Opinion 4: Execution and Delivery

Upon execution and delivery by the Issuer (which has not yet occurred as of the date of this draft opinion), the Indenture, the Notes, and the Note Purchase Agreement will have been duly executed and delivered by the Issuer. We note that, as this opinion is a draft prepared for discussion purposes only, the final executed opinion will be delivered only upon the closing of the Transaction, at which time execution and delivery of the Opinion Documents will have been consummated. Any references herein to the Opinion Documents having been "duly executed and delivered" should be understood to be prospective and contingent upon the actual closing of the Transaction.

Opinion 5: Enforceability of the Indenture

The Indenture constitutes, or upon due execution and delivery thereof will constitute, a valid and legally binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms. As set forth in Section 14.06 of the Indenture, the Indenture is governed by and shall be construed and enforced in accordance with the laws of the State of New York without regard to principles of conflicts of laws that would require the application of the laws of any other jurisdiction. This opinion is subject to the qualifications and exceptions set forth in Section V below (including, without limitation, applicable bankruptcy, insolvency, and equitable principles limitations).

Opinion 6: Enforceability of the Notes

Each of the Class A Notes (in the aggregate principal amount of $375,000,000), the Class B Notes (in the aggregate principal amount of $75,000,000), and the Class C Notes (in the aggregate principal amount of $35,000,000), when duly executed by an authorized signatory of the Issuer, authenticated by the Trustee (Calvoneth Trust Company, National Association) in accordance with the authentication provisions set forth in Section 2.04 of the Indenture, and delivered to the Initial Purchaser (Ridgeline Capital Markets LLC) against payment of the applicable purchase price therefor in accordance with the terms and conditions of the Note Purchase Agreement, will constitute valid and legally binding obligations of the Issuer, enforceable against the Issuer in accordance with their respective terms and in accordance with the terms of the Indenture.

The Notes are entitled to the benefits of the Indenture, including, without limitation, the security interest granted by the Issuer to the Trustee, for the benefit of the Noteholders, pursuant to the Grant of Security Interest (Pledge Agreement), in the receivables, collections thereon, deposit accounts, securities accounts, investment property, and other collateral of the Issuer as more particularly described in the Indenture and the Grant of Security Interest (Pledge Agreement).

We note for informational purposes that the indicative coupon rates at launch (subject to finalization at pricing) are as follows: Class A Notes — SOFR plus 125 basis points; Class B Notes — SOFR plus 210 basis points; Class C Notes — SOFR plus 375 basis points. We further note that the preliminary ratings assigned to the Notes are as follows: (i) Class A Notes — AAA(cr) by Brindoval Ratings Inc. and Aaa(p) by Pinnacle Rating Services LLC; (ii) Class B Notes — A(cr) by Brindoval Ratings Inc. and A1(p) by Pinnacle Rating Services LLC; and (iii) Class C Notes — BBB(cr) by Brindoval Ratings Inc. and Baa2(p) by Pinnacle Rating Services LLC. The foregoing ratings and coupon rates are set forth for informational purposes only and are not the subject of any opinion expressed herein. The coupon rates are subject to finalization at or prior to pricing of the Notes.

This opinion is subject to the qualifications and exceptions set forth in Section V below.

Opinion 7: Enforceability of the Note Purchase Agreement

The Note Purchase Agreement constitutes, or upon due execution and delivery thereof will constitute, a valid and legally binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms. This opinion is subject to the qualifications and exceptions set forth in Section V below (including, without limitation, applicable bankruptcy, insolvency, and equitable principles limitations).

Opinion 8: No Conflicts

The execution, delivery, and performance by the Issuer of the Indenture, the Notes, and the Note Purchase Agreement, and the consummation of the transactions contemplated thereby, do not and will not:

(a) violate or conflict with, or result in any breach of, the Certificate of Formation or the LLC Agreement (as amended) of the Issuer;

(b) result in a breach of, or constitute a default (or an event that, with the giving of notice or the lapse of time, or both, would constitute a default) under, or give rise to any right of termination, cancellation, acceleration, or loss of rights under, any agreement, indenture, instrument, mortgage, lease, license, permit, or other obligation to which the Issuer is a party or by which the Issuer or any of its assets are bound, in each case limited to those agreements and instruments that have been made available to us and that we have reviewed in connection with the rendering of this opinion;

(c) violate any applicable law, rule, regulation, order, judgment, injunction, decree, or governmental requirement of the State of New York or any applicable federal law of the United States that, in our experience, is normally applicable to transactions of the type contemplated by the Opinion Documents (subject to the qualifications and limitations set forth in Section V below); or

(d) result in the creation or imposition of any lien, charge, pledge, security interest, or other encumbrance upon any property or assets of the Issuer, other than liens and security interests created pursuant to the Indenture, the Grant of Security Interest (Pledge Agreement), and the other Transaction documents in favor of the Trustee for the benefit of the Noteholders.

Opinion 9: No Consents Required

No consent, approval, authorization, order, registration, qualification, license, or filing with or of any governmental authority, regulatory body, or agency of the State of New York or under any applicable federal law of the United States is required in connection with the execution, delivery, or performance by the Issuer of the Opinion Documents or the issuance, sale, and delivery of the Notes, except:

(a) filings that may be required under state securities or "blue sky" laws in connection with the offer and sale of the Notes, as to which we express no opinion;

(b) the filing of one or more UCC financing statements with the Secretary of State of the State of Delaware to perfect the security interest of the Trustee in the collateral pledged under the Grant of Security Interest (Pledge Agreement) and the Indenture, which filings are addressed in a separate perfection opinion being delivered in connection with the closing of the Transaction; and

(c) such consents, approvals, authorizations, registrations, qualifications, or filings as have already been obtained or made and are in full force and effect as of the date hereof.

V. Qualifications and Exceptions

The opinions expressed in Section IV above are subject to the following qualifications, exceptions, and limitations:

A. Bankruptcy and Insolvency Exception

The enforceability of the Opinion Documents and the obligations of the Issuer thereunder is subject to, and may be limited by, applicable bankruptcy, insolvency, reorganization, receivership, moratorium, arrangement, assignment for the benefit of creditors, fraudulent conveyance, fraudulent transfer, preferential transfer, and other similar laws of general applicability relating to or affecting the enforcement of creditors' rights generally, whether now or hereafter in effect. Without limiting the generality of the foregoing, this qualification includes, but is not limited to, laws and principles arising under or relating to Title 11 of the United States Code (the "Bankruptcy Code"), including the automatic stay provisions of Section 362 thereof, and analogous state laws, including those of the State of New York.

B. Equitable Principles Exception

The enforceability of the Opinion Documents is subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), including, but not limited to, principles of good faith, fair dealing, reasonableness, materiality, unconscionability, estoppel, laches, waiver, and unjust enrichment, and the discretion of any court of competent jurisdiction before which a proceeding for enforcement may be brought. The availability and exercise of equitable remedies, including specific performance and injunctive relief, are subject to the discretion of the court and to requirements of equity, including that the party seeking such remedy demonstrate that legal remedies are inadequate and that the balance of hardships and equities favors the granting of such relief.

C. Specific Remedy Limitations

We express no opinion as to the availability of any particular remedy under the Opinion Documents, including, without limitation, specific performance, injunctive relief, or any other equitable remedy, or as to the enforceability of any provision of the Opinion Documents providing for liquidated damages, penalties, premium payments, or forfeitures. We express no opinion as to the enforceability of any provision of the Opinion Documents that purports to waive rights of contribution or subrogation, or that provides for exculpation, indemnification, or hold harmless protections, or that purports to release or exculpate a party from, or to indemnify or hold harmless a party against, liability for its own negligence, gross negligence, willful misconduct, bad faith, or fraud. The enforceability of such provisions may be limited by applicable law and public policy.

D. Limitations on Acceleration and Cure

The enforceability of provisions of the Indenture and the Notes providing for the acceleration of the maturity of the Notes or the imposition of late charges, default interest, or other remedies upon the occurrence of a default or event of default may be limited by requirements of commercially reasonable notice and opportunity to cure imposed by the Uniform Commercial Code as in effect in the State of New York (the "UCC") and other applicable law. Additionally, certain statutory and judicial limitations may apply to the exercise of remedies upon default, including requirements relating to notice, the commercial reasonableness of the disposition of collateral, and the application of proceeds thereof.

E. Waiver of Jury Trial

We express no opinion as to the enforceability of any provision of the Opinion Documents purporting to waive the right to a trial by jury in any action, claim, or proceeding. The enforceability of such waivers may vary by jurisdiction and may be subject to challenge under applicable state and federal constitutional and statutory provisions.

F. Choice of Law and Forum Selection

The Indenture and the Notes specify that they are governed by the laws of the State of New York. We express no opinion as to the enforceability of such choice-of-law provisions to the extent that a court of competent jurisdiction in another state or in a federal court may decline to apply the laws of the State of New York based on overriding mandatory rules or public policy considerations of the jurisdiction in which such court is located or of the jurisdiction whose law would otherwise apply in the absence of such choice-of-law provision. We express no opinion as to the enforceability or effect of any forum selection, submission-to-jurisdiction, or service-of-process provisions contained in the Opinion Documents with respect to courts other than the courts of the State of New York sitting in the Borough of Manhattan, City of New York, and the United States District Court for the Southern District of New York. We note that a court could, in its discretion, decline to exercise jurisdiction or transfer any action or proceeding notwithstanding such forum selection clauses based on grounds of forum non conveniens or other discretionary doctrines.

G. Severability. We express no opinion as to the effect of any severability provision contained in the Opinion Documents, or as to whether the invalidity or unenforceability of any particular provision of any Opinion Document would render the remaining provisions of such Opinion Document invalid or unenforceable. The determination of whether the remaining provisions of an agreement are enforceable following the severance of an invalid or unenforceable provision is a fact-intensive inquiry that depends on the significance of the severed provision to the overall bargain of the parties and other circumstances.

H. Usury. We have assumed, without independent investigation or verification, that the interest rates, fees, charges, and other amounts payable under the Notes and the Indenture do not violate applicable usury, interest rate, or similar laws or regulations of any applicable jurisdiction. We have not independently confirmed compliance with state-level usury statutes beyond those of the State of New York. New York General Obligations Law § 5-501 and New York Banking Law § 14-a, among other provisions, impose limitations on the rates of interest that may lawfully be charged, and we have assumed that the rates payable under the Notes are within permissible limits thereunder or are otherwise exempt from such limitations.

I. Trustee Qualifications

We have assumed, without independent investigation, that Calvoneth Trust Company, National Association, satisfies and will continue to satisfy all eligibility requirements for an indenture trustee as set forth in the Indenture and applicable law, including the requirements of the Trust Indenture Act of 1939 (to the extent applicable), and that no conflicts of interest exist, or will arise during the term of the Indenture, that would disqualify Calvoneth Trust Company, National Association, from serving in the capacity of Trustee under the Indenture. We express no opinion on the adequacy of the Trustee's net worth, capitalization, insurance coverage, or operational capacity.

J. Sequential Payment Waterfall

We express no opinion as to whether the sequential payment waterfall set forth in Article V of the Indenture would be enforceable in all respects in a proceeding under the Bankruptcy Code or other insolvency proceeding of the Issuer. The payment waterfall, which establishes the following priorities of payment (in order): (1) Trustee fees and expenses; (2) servicing fee payable to the Servicer (QPF); (3) interest on the Class A Notes; (4) interest on the Class B Notes; (5) interest on the Class C Notes; (6) principal on the Class A Notes; (7) principal on the Class B Notes; (8) principal on the Class C Notes; (9) overcollateralization account replenishment; and (10) residual distributions to the holders of the residual interest — may be subject to challenge, recharacterization, or avoidance in whole or in part in a bankruptcy or insolvency proceeding. We note that the treatment of subordination provisions, payment priorities, and limited-recourse structures in bankruptcy proceedings is governed by complex and evolving case law, and we express no opinion as to the outcome of any such proceeding.

VI. Limitations and Scope

The opinions expressed herein are subject to the following additional limitations:

1. This opinion is limited to the laws of the State of New York and the federal laws of the United States of America, in each case as currently in effect on the date hereof. We express no opinion as to the laws of any other jurisdiction, including, without limitation, the laws of the State of Delaware, except to the extent of our separate opinion regarding the formation and good standing of the Issuer under the DLLCA, which is based solely on our review of organizational documents and the good standing certificate described herein. We do not purport to be experts in the laws of any jurisdiction other than the State of New York and the federal laws of the United States.

2. This opinion is rendered solely in connection with the Transaction described herein and may not be relied upon for any other purpose, including, without limitation, in connection with any subsequent issuance of securities, restructuring, refinancing, or other transaction involving the Issuer, the Sponsor, or their respective affiliates.

3. This opinion is addressed to, and may be relied upon solely by, (a) the Issuer (Quorum Receivables Funding 2022-1 LLC), (b) the Trustee (Calvoneth Trust Company, National Association), (c) the Initial Purchaser (Ridgeline Capital Markets LLC), and (d) any subsequent holder of the Notes who acquires such Notes in a transaction that complies with the transfer restrictions set forth in the Indenture and the Offering Memorandum, including the restrictions on resale applicable to notes offered and sold under Rule 144A and Regulation S under the Securities Act. No other person or entity is entitled to rely on this opinion, and this opinion may not be quoted, cited, or referred to in any report, document, or other communication without our prior written consent, except as required by applicable law or regulation.

4. This opinion speaks only as of the date hereof, and we assume no obligation to update, revise, or supplement this opinion to reflect any changes in applicable law or facts, or any developments in the Transaction, occurring or coming to our attention after the date hereof, regardless of whether such changes or developments would affect the opinions expressed herein.

5. We are members of the bar of the State of New York and do not purport to be experts in, or to express any opinion on, the laws of any other jurisdiction. In rendering the opinions expressed herein, we have not examined or considered the laws of any jurisdiction other than the State of New York and the federal laws of the United States of America, except as expressly noted herein.

VII. Draft Status Notice

IMPORTANT NOTICE REGARDING DRAFT STATUS

This opinion is a DRAFT prepared for discussion purposes only in connection with Calderwood & Harkness LLP Matter No. 1025-00007. This draft has not been finalized, and it has not been delivered to any party in final form. It does not constitute a final opinion of Calderwood & Harkness LLP and should not be relied upon as such.

The delivery of a final, executed opinion letter in the form substantially consistent with this draft was contemplated to be a condition precedent to the closing of the Transaction, as set forth in Section 7.01(f) of the Note Purchase Agreement.

The Transaction was shelved on November 14, 2022, and placed in dormant status on November 18, 2022, due to adverse market conditions, including a material widening of asset-backed securities credit spreads in the fourth quarter of 2022 that rendered the proposed pricing terms commercially unfeasible. As a result, the closing of the Transaction did not occur, the Opinion Documents were never executed or delivered, the Notes were never issued, and this draft opinion was never finalized or delivered to any party.

This draft is maintained in Calderwood & Harkness LLP's files for reference purposes and is subject to the firm's document retention policies. This draft should not be relied upon as a final opinion, and no party should take any action in reliance on the opinions expressed herein. Any revival or reactivation of the Transaction would require a comprehensive re-review of all documentation, assumptions, and applicable law, and the preparation and delivery of a new opinion letter reflecting the circumstances then in effect.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Drafted by: Yuki Nakamura, Associate Reviewed by: Douglas Carmichael, Partner (Responsible Partner)

Matter No.: 1025-00007

DRAFT — October 8, 2022 — FOR DISCUSSION PURPOSES ONLY — NOT FOR DELIVERY Calderwood & Harkness LLP

DRAFT — October 8, 2022 FOR DISCUSSION PURPOSES ONLY — NOT FOR DELIVERY
CALDERWOOD & HARKNESS LLP Counsellors at Law 601 Lexington Avenue New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
October 8, 2022
Quorum Receivables Funding 2022-1 LLC c/o Quorum Insurance Holdings Corp. 400 Atlantic Street, Suite 2200 Stamford, Connecticut 06901
Copy to:
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
Ladies and Gentlemen:
I. Introduction and Engagement
We have acted as counsel to Quorum Receivables Funding 2022-1 LLC, a Delaware limited liability company (the "Issuer"), in connection with the issuance by the Issuer of (i) $375,000,000 aggregate principal amount of Class A Floating Rate Asset-Backed Notes (the "Class A Notes"), (ii) $75,000,000 aggregate principal amount of Class B Floating Rate Asset-Backed Notes (the "Class B Notes"), and (iii) $35,000,000 aggregate principal amount of Class C Floating Rate Asset-Backed Notes (the "Class C Notes" and, together with the Class A Notes and the Class B Notes, the "Notes"). The aggregate principal amount of the Notes is $485,000,000. In addition, the Transaction (as defined below) contemplates an additional $15,000,000 of overcollateralization and retained interests held by the Issuer or its affiliates, which is not the subject of this opinion; accordingly, the total capital structure of the Issuer aggregates $500,000,000.
The Notes are being issued pursuant to that certain Indenture (the "Indenture"), dated as of [●], 2022, between the Issuer and Calvoneth Trust Company, National Association, a national banking association organized under the laws of the United States, as indenture trustee (in such capacity, the "Trustee"). The Notes are being offered and sold to Ridgeline Capital Markets LLC, a Delaware limited liability company (the "Initial Purchaser"), pursuant to that certain Note Purchase Agreement, dated as of [●], 2022 (the "Note Purchase Agreement"), among the Issuer, Quorum Insurance Holdings Corp., a Delaware corporation ("QIH" or the "Sponsor"), and the Initial Purchaser. The offering and sale of the Notes is being conducted as a private placement pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and Regulation S promulgated thereunder. The Notes have not been and will not be registered under the Securities Act or the securities laws of any state and may not be offered or sold in the United States absent an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
This opinion is delivered in connection with the closing of the transaction contemplated by the foregoing documents (the "Transaction"). This matter is referenced internally as Calderwood & Harkness Matter Number 1025-00007.
II. Documents Reviewed
In connection with rendering the opinions set forth herein, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the following documents:
1.  The Indenture (execution draft v4, dated as of [●], 2022) between the Issuer and the Trustee, together with all schedules, annexes, and exhibits thereto;
2.  The Class A Notes, the Class B Notes, and the Class C Notes, each in the form attached as exhibits to the Indenture;
3.  The Note Purchase Agreement (execution draft, dated as of [●], 2022) among the Issuer, the Sponsor, and the Initial Purchaser;
4.  The Certificate of Formation of the Issuer, as filed with the Secretary of State of the State of Delaware on August 3, 2022 (Delaware Secretary of State File No. 7894231);
5.  The Limited Liability Company Agreement of the Issuer, dated as of August 3, 2022, as amended (the "LLC Agreement"), reflecting Quorum Receivables Holding LLC ("QRH") as the sole member of the Issuer and Timothy R. Callan (of Fortbridge Corporate Services LLC) as the independent manager of the Issuer;
6.  The Receivables Sale Agreement (execution draft v3) between Quorum Premium Finance LLC ("QPF") and QRH;
7.  The Receivables Transfer Agreement (execution draft v3) between QRH and the Issuer;
8.  The Servicing Agreement (execution draft v3) among the Issuer, QPF (as Servicer), and the Trustee;
9.  The Back-Up Servicing Agreement (execution draft v2) among the Issuer, QPF, Northvane Bank, National Association (as Back-Up Servicer), and the Trustee;
10.  The Administration Agreement (execution draft v2) between the Issuer and QIH (as Administrator);
11.  The Liquidity Facility Agreement (execution draft v2) between the Issuer and Northvane Bank, National Association;
12.  The Grant of Security Interest (Pledge Agreement) (execution draft v2) from the Issuer to the Trustee;
13.  The Account Control Agreement (execution draft v2) among the Issuer and the Trustee (as Securities Intermediary);
14.  The Custodian Agreement (draft) between the Issuer and the Trustee (as Custodian);
15.  The Performance Guaranty (execution draft v1) by QIH in favor of the Trustee;
16.  The Manager's Certificate of QPF, dated July 27, 2022, certifying authorizing resolutions adopted by the managers of QPF in connection with the Transaction;
17.  The Secretary's Certificate of QIH, dated July 27, 2022, certifying resolutions adopted by the Board of Directors of QIH authorizing the Transaction and the execution, delivery, and performance of the Transaction documents to which QIH is a party;
18.  A good standing certificate of the Issuer issued by the Secretary of State of the State of Delaware, dated on or about the date hereof;
19.  The Preliminary Offering Memorandum, dated October 12, 2022 (v3), relating to the offering and sale of the Notes (the "Offering Memorandum"); and
20.  Such other documents, records, certificates, instruments, and corporate and organizational records as we have deemed necessary or appropriate for purposes of rendering the opinions expressed herein.
Items (1) through (3) above are collectively referred to herein as the "Opinion Documents." Items (1) through (20) above are collectively referred to herein as the "Reviewed Documents."
III. Assumptions
In rendering the opinions expressed herein, we have assumed, without independent investigation or verification, the following:
(a) The genuineness of all signatures on all documents submitted to us and the authenticity of all documents submitted to us as originals. We have further assumed that all signatures appearing on documents examined by us are the genuine signatures of the persons whose signatures they purport to be.
(b) The conformity to authentic originals of all documents submitted to us as copies or drafts, whether certified, conformed, facsimile, electronic, or otherwise reproduced.
(c) That the final, executed versions of the Opinion Documents will be in all material respects identical to the execution drafts reviewed by us and described in Section II above. To the extent that any material changes are made to any of the Opinion Documents between the date of our review and the date of execution and delivery thereof, we reserve the right to modify, supplement, or withdraw the opinions expressed herein.
(d) That each natural person signing any document reviewed by us had the legal capacity to do so at the time of such signing.
(e) That the Trustee, Calvoneth Trust Company, National Association, is a national banking association duly organized, validly existing, and in good standing under the laws of the United States, and has all requisite power, authority, and legal capacity under applicable federal and state banking laws to enter into and perform its obligations under the Indenture, to authenticate and deliver the Notes, and to act in the capacities contemplated by the Indenture and the other Transaction documents, including as securities intermediary and custodian.
(f) That the Initial Purchaser, Ridgeline Capital Markets LLC, is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has all requisite limited liability company power and authority to enter into and perform its obligations under the Note Purchase Agreement, and that the execution, delivery, and performance by the Initial Purchaser of the Note Purchase Agreement have been duly authorized by all necessary limited liability company action.
(g) That QIH is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to execute and deliver the Note Purchase Agreement, the Performance Guaranty, and the Administration Agreement, and to perform its obligations thereunder, and that the execution, delivery, and performance thereof have been duly authorized by all necessary corporate action of QIH.
(h) That QPF is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, with all requisite limited liability company power and authority to execute and deliver the Receivables Sale Agreement, the Servicing Agreement, and each other Transaction document to which it is a party, and to perform its obligations thereunder.
(i) That QRH is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, with all requisite limited liability company power and authority to execute and deliver the Receivables Sale Agreement, the Receivables Transfer Agreement, and each other Transaction document to which it is a party, and to perform its obligations thereunder. We further assume that QRH maintains bankruptcy-remote governance features, including that Fortbridge Corporate Services LLC (with Eleanor M. Vasquez designated as independent manager) provides independent manager services in accordance with QRH's organizational documents and industry custom.
(j) That the execution, delivery, and performance by each party (other than the Issuer) of its respective obligations under each of the Opinion Documents to which it is a party have been duly authorized by all necessary corporate, limited liability company, partnership, or other organizational action on the part of such party.
(k) That each of the Opinion Documents constitutes the valid and binding obligation of each party thereto (other than the Issuer), enforceable against such party in accordance with its respective terms, subject to customary bankruptcy, insolvency, and equitable principles qualifications.
(l) That each party to the Opinion Documents has received adequate and lawful consideration for its obligations thereunder, and that the Transaction has been entered into on arms'-length terms.
(m) That the Indenture creates, or upon execution will create, a valid trust for the benefit of the holders of the Notes (the "Noteholders") in accordance with the terms thereof and applicable law.
(n) That the receivables pool as of the cut-off date of June 30, 2022, consists of eligible receivables meeting each of the eligibility criteria set forth in the Receivables Sale Agreement and the Indenture, including criteria relating to the type, age, balance, payment terms, obligor characteristics, and geographic distribution of the underlying insurance premium finance receivables.
(o) That all conditions precedent to the issuance of the Notes set forth in the Indenture and the Note Purchase Agreement, including delivery of officer's certificates, bring-down opinions, accountant's comfort letters, and receipt of the purchase price, will have been satisfied or effectively waived at or prior to the closing of the Transaction.
IV. Opinions
Based upon and subject to the foregoing, and subject further to the qualifications, exceptions, and limitations set forth in Sections V and VI below, we are of the opinion that:
Opinion 1: Valid Formation and Good Standing of the Issuer
Quorum Receivables Funding 2022-1 LLC is a limited liability company duly formed, validly existing, and in good standing under the Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et seq. (the "DLLCA"). In rendering this opinion, we have reviewed the Certificate of Formation of the Issuer filed with the Secretary of State of the State of Delaware on August 3, 2022 (Delaware Secretary of State File No. 7894231), the LLC Agreement, as amended, and a certificate of good standing of the Issuer issued by the Secretary of State of the State of Delaware, dated on or about the date hereof. We note that the Issuer's sole member is Quorum Receivables Holding LLC, a Delaware limited liability company, and that the Issuer's independent manager is Timothy R. Callan, who serves in such capacity as a designee of Fortbridge Corporate Services LLC, a Delaware limited liability company providing independent director and manager services to special-purpose bankruptcy-remote entities.
Opinion 2: Power and Authority of the Issuer
The Issuer has all requisite limited liability company power and authority under the DLLCA and its organizational documents to (a) execute and deliver the Indenture and the Notes, (b) execute and deliver the Note Purchase Agreement, (c) execute and deliver each other Opinion Document to which it is a party, and (d) perform its obligations under each of the foregoing. The LLC Agreement of the Issuer authorizes the Issuer to engage in the activities contemplated by the Transaction, including, without limitation, the acquisition and ownership of insurance premium finance receivables and related assets, the issuance of asset-backed notes and other debt securities secured by such receivables and related assets, the granting of security interests in such receivables and related assets, the engagement of servicers, back-up servicers, administrators, and custodians, and such other activities as are incidental or related to the foregoing. The separateness covenants set forth in the LLC Agreement further define and limit the scope of the Issuer's activities in a manner consistent with the requirements of a bankruptcy-remote special-purpose entity and do not, in our opinion, prohibit or restrict the Issuer from entering into, delivering, or performing under the Opinion Documents.
Opinion 3: Due Authorization
The execution, delivery, and performance by the Issuer of each of the Opinion Documents, including the Indenture, the Notes, and the Note Purchase Agreement, have been duly authorized by all necessary limited liability company action on the part of the Issuer. In rendering this opinion, we have reviewed (i) consents and approvals given by QRH, in its capacity as sole member of the Issuer, authorizing the Issuer to enter into and perform under the Transaction documents, and (ii) the written consent of Timothy R. Callan, in his capacity as independent manager of the Issuer, to the incurrence of indebtedness and the granting of security interests contemplated by the Transaction, as required by the LLC Agreement. We note that the LLC Agreement requires the prior written consent of the independent manager for certain material actions, including the filing of a voluntary bankruptcy petition, the incurrence of debt, and the granting of liens, and that such consent has been obtained with respect to the Transaction. No further action by the Issuer, its sole member, or its independent manager is required in connection with the authorization, execution, delivery, or performance of the Opinion Documents or the consummation of the Transaction.
Opinion 4: Execution and Delivery
Upon execution and delivery by the Issuer (which has not yet occurred as of the date of this draft opinion), the Indenture, the Notes, and the Note Purchase Agreement will have been duly executed and delivered by the Issuer. We note that, as this opinion is a draft prepared for discussion purposes only, the final executed opinion will be delivered only upon the closing of the Transaction, at which time execution and delivery of the Opinion Documents will have been consummated. Any references herein to the Opinion Documents having been "duly executed and delivered" should be understood to be prospective and contingent upon the actual closing of the Transaction.
Opinion 5: Enforceability of the Indenture
The Indenture constitutes, or upon due execution and delivery thereof will constitute, a valid and legally binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms. As set forth in Section 14.06 of the Indenture, the Indenture is governed by and shall be construed and enforced in accordance with the laws of the State of New York without regard to principles of conflicts of laws that would require the application of the laws of any other jurisdiction. This opinion is subject to the qualifications and exceptions set forth in Section V below (including, without limitation, applicable bankruptcy, insolvency, and equitable principles limitations).
Opinion 6: Enforceability of the Notes
Each of the Class A Notes (in the aggregate principal amount of $375,000,000), the Class B Notes (in the aggregate principal amount of $75,000,000), and the Class C Notes (in the aggregate principal amount of $35,000,000), when duly executed by an authorized signatory of the Issuer, authenticated by the Trustee (Calvoneth Trust Company, National Association) in accordance with the authentication provisions set forth in Section 2.04 of the Indenture, and delivered to the Initial Purchaser (Ridgeline Capital Markets LLC) against payment of the applicable purchase price therefor in accordance with the terms and conditions of the Note Purchase Agreement, will constitute valid and legally binding obligations of the Issuer, enforceable against the Issuer in accordance with their respective terms and in accordance with the terms of the Indenture.
The Notes are entitled to the benefits of the Indenture, including, without limitation, the security interest granted by the Issuer to the Trustee, for the benefit of the Noteholders, pursuant to the Grant of Security Interest (Pledge Agreement), in the receivables, collections thereon, deposit accounts, securities accounts, investment property, and other collateral of the Issuer as more particularly described in the Indenture and the Grant of Security Interest (Pledge Agreement).
We note for informational purposes that the indicative coupon rates at launch (subject to finalization at pricing) are as follows: Class A Notes — SOFR plus 125 basis points; Class B Notes — SOFR plus 210 basis points; Class C Notes — SOFR plus 375 basis points. We further note that the preliminary ratings assigned to the Notes are as follows: (i) Class A Notes — AAA(cr) by Brindoval Ratings Inc. and Aaa(p) by Pinnacle Rating Services LLC; (ii) Class B Notes — A(cr) by Brindoval Ratings Inc. and A1(p) by Pinnacle Rating Services LLC; and (iii) Class C Notes — BBB(cr) by Brindoval Ratings Inc. and Baa2(p) by Pinnacle Rating Services LLC. The foregoing ratings and coupon rates are set forth for informational purposes only and are not the subject of any opinion expressed herein. The coupon rates are subject to finalization at or prior to pricing of the Notes.
This opinion is subject to the qualifications and exceptions set forth in Section V below.
Opinion 7: Enforceability of the Note Purchase Agreement
The Note Purchase Agreement constitutes, or upon due execution and delivery thereof will constitute, a valid and legally binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms. This opinion is subject to the qualifications and exceptions set forth in Section V below (including, without limitation, applicable bankruptcy, insolvency, and equitable principles limitations).
Opinion 8: No Conflicts
The execution, delivery, and performance by the Issuer of the Indenture, the Notes, and the Note Purchase Agreement, and the consummation of the transactions contemplated thereby, do not and will not:
(a) violate or conflict with, or result in any breach of, the Certificate of Formation or the LLC Agreement (as amended) of the Issuer;
(b) result in a breach of, or constitute a default (or an event that, with the giving of notice or the lapse of time, or both, would constitute a default) under, or give rise to any right of termination, cancellation, acceleration, or loss of rights under, any agreement, indenture, instrument, mortgage, lease, license, permit, or other obligation to which the Issuer is a party or by which the Issuer or any of its assets are bound, in each case limited to those agreements and instruments that have been made available to us and that we have reviewed in connection with the rendering of this opinion;
(c) violate any applicable law, rule, regulation, order, judgment, injunction, decree, or governmental requirement of the State of New York or any applicable federal law of the United States that, in our experience, is normally applicable to transactions of the type contemplated by the Opinion Documents (subject to the qualifications and limitations set forth in Section V below); or
(d) result in the creation or imposition of any lien, charge, pledge, security interest, or other encumbrance upon any property or assets of the Issuer, other than liens and security interests created pursuant to the Indenture, the Grant of Security Interest (Pledge Agreement), and the other Transaction documents in favor of the Trustee for the benefit of the Noteholders.
Opinion 9: No Consents Required
No consent, approval, authorization, order, registration, qualification, license, or filing with or of any governmental authority, regulatory body, or agency of the State of New York or under any applicable federal law of the United States is required in connection with the execution, delivery, or performance by the Issuer of the Opinion Documents or the issuance, sale, and delivery of the Notes, except:
(a) filings that may be required under state securities or "blue sky" laws in connection with the offer and sale of the Notes, as to which we express no opinion;
(b) the filing of one or more UCC financing statements with the Secretary of State of the State of Delaware to perfect the security interest of the Trustee in the collateral pledged under the Grant of Security Interest (Pledge Agreement) and the Indenture, which filings are addressed in a separate perfection opinion being delivered in connection with the closing of the Transaction; and
(c) such consents, approvals, authorizations, registrations, qualifications, or filings as have already been obtained or made and are in full force and effect as of the date hereof.
V. Qualifications and Exceptions
The opinions expressed in Section IV above are subject to the following qualifications, exceptions, and limitations:
A. Bankruptcy and Insolvency Exception
The enforceability of the Opinion Documents and the obligations of the Issuer thereunder is subject to, and may be limited by, applicable bankruptcy, insolvency, reorganization, receivership, moratorium, arrangement, assignment for the benefit of creditors, fraudulent conveyance, fraudulent transfer, preferential transfer, and other similar laws of general applicability relating to or affecting the enforcement of creditors' rights generally, whether now or hereafter in effect. Without limiting the generality of the foregoing, this qualification includes, but is not limited to, laws and principles arising under or relating to Title 11 of the United States Code (the "Bankruptcy Code"), including the automatic stay provisions of Section 362 thereof, and analogous state laws, including those of the State of New York.
B. Equitable Principles Exception
The enforceability of the Opinion Documents is subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), including, but not limited to, principles of good faith, fair dealing, reasonableness, materiality, unconscionability, estoppel, laches, waiver, and unjust enrichment, and the discretion of any court of competent jurisdiction before which a proceeding for enforcement may be brought. The availability and exercise of equitable remedies, including specific performance and injunctive relief, are subject to the discretion of the court and to requirements of equity, including that the party seeking such remedy demonstrate that legal remedies are inadequate and that the balance of hardships and equities favors the granting of such relief.
C. Specific Remedy Limitations
We express no opinion as to the availability of any particular remedy under the Opinion Documents, including, without limitation, specific performance, injunctive relief, or any other equitable remedy, or as to the enforceability of any provision of the Opinion Documents providing for liquidated damages, penalties, premium payments, or forfeitures. We express no opinion as to the enforceability of any provision of the Opinion Documents that purports to waive rights of contribution or subrogation, or that provides for exculpation, indemnification, or hold harmless protections, or that purports to release or exculpate a party from, or to indemnify or hold harmless a party against, liability for its own negligence, gross negligence, willful misconduct, bad faith, or fraud. The enforceability of such provisions may be limited by applicable law and public policy.
D. Limitations on Acceleration and Cure
The enforceability of provisions of the Indenture and the Notes providing for the acceleration of the maturity of the Notes or the imposition of late charges, default interest, or other remedies upon the occurrence of a default or event of default may be limited by requirements of commercially reasonable notice and opportunity to cure imposed by the Uniform Commercial Code as in effect in the State of New York (the "UCC") and other applicable law. Additionally, certain statutory and judicial limitations may apply to the exercise of remedies upon default, including requirements relating to notice, the commercial reasonableness of the disposition of collateral, and the application of proceeds thereof.
E. Waiver of Jury Trial
We express no opinion as to the enforceability of any provision of the Opinion Documents purporting to waive the right to a trial by jury in any action, claim, or proceeding. The enforceability of such waivers may vary by jurisdiction and may be subject to challenge under applicable state and federal constitutional and statutory provisions.
F. Choice of Law and Forum Selection
The Indenture and the Notes specify that they are governed by the laws of the State of New York. We express no opinion as to the enforceability of such choice-of-law provisions to the extent that a court of competent jurisdiction in another state or in a federal court may decline to apply the laws of the State of New York based on overriding mandatory rules or public policy considerations of the jurisdiction in which such court is located or of the jurisdiction whose law would otherwise apply in the absence of such choice-of-law provision. We express no opinion as to the enforceability or effect of any forum selection, submission-to-jurisdiction, or service-of-process provisions contained in the Opinion Documents with respect to courts other than the courts of the State of New York sitting in the Borough of Manhattan, City of New York, and the United States District Court for the Southern District of New York. We note that a court could, in its discretion, decline to exercise jurisdiction or transfer any action or proceeding notwithstanding such forum selection clauses based on grounds of forum non conveniens or other discretionary doctrines.
G. Severability.  We express no opinion as to the effect of any severability provision contained in the Opinion Documents, or as to whether the invalidity or unenforceability of any particular provision of any Opinion Document would render the remaining provisions of such Opinion Document invalid or unenforceable. The determination of whether the remaining provisions of an agreement are enforceable following the severance of an invalid or unenforceable provision is a fact-intensive inquiry that depends on the significance of the severed provision to the overall bargain of the parties and other circumstances.
H. Usury.  We have assumed, without independent investigation or verification, that the interest rates, fees, charges, and other amounts payable under the Notes and the Indenture do not violate applicable usury, interest rate, or similar laws or regulations of any applicable jurisdiction. We have not independently confirmed compliance with state-level usury statutes beyond those of the State of New York. New York General Obligations Law § 5-501 and New York Banking Law § 14-a, among other provisions, impose limitations on the rates of interest that may lawfully be charged, and we have assumed that the rates payable under the Notes are within permissible limits thereunder or are otherwise exempt from such limitations.
I. Trustee Qualifications
We have assumed, without independent investigation, that Calvoneth Trust Company, National Association, satisfies and will continue to satisfy all eligibility requirements for an indenture trustee as set forth in the Indenture and applicable law, including the requirements of the Trust Indenture Act of 1939 (to the extent applicable), and that no conflicts of interest exist, or will arise during the term of the Indenture, that would disqualify Calvoneth Trust Company, National Association, from serving in the capacity of Trustee under the Indenture. We express no opinion on the adequacy of the Trustee's net worth, capitalization, insurance coverage, or operational capacity.
J. Sequential Payment Waterfall
We express no opinion as to whether the sequential payment waterfall set forth in Article V of the Indenture would be enforceable in all respects in a proceeding under the Bankruptcy Code or other insolvency proceeding of the Issuer. The payment waterfall, which establishes the following priorities of payment (in order): (1) Trustee fees and expenses; (2) servicing fee payable to the Servicer (QPF); (3) interest on the Class A Notes; (4) interest on the Class B Notes; (5) interest on the Class C Notes; (6) principal on the Class A Notes; (7) principal on the Class B Notes; (8) principal on the Class C Notes; (9) overcollateralization account replenishment; and (10) residual distributions to the holders of the residual interest — may be subject to challenge, recharacterization, or avoidance in whole or in part in a bankruptcy or insolvency proceeding. We note that the treatment of subordination provisions, payment priorities, and limited-recourse structures in bankruptcy proceedings is governed by complex and evolving case law, and we express no opinion as to the outcome of any such proceeding.
VI. Limitations and Scope
The opinions expressed herein are subject to the following additional limitations:
1.  This opinion is limited to the laws of the State of New York and the federal laws of the United States of America, in each case as currently in effect on the date hereof. We express no opinion as to the laws of any other jurisdiction, including, without limitation, the laws of the State of Delaware, except to the extent of our separate opinion regarding the formation and good standing of the Issuer under the DLLCA, which is based solely on our review of organizational documents and the good standing certificate described herein. We do not purport to be experts in the laws of any jurisdiction other than the State of New York and the federal laws of the United States.
2.  This opinion is rendered solely in connection with the Transaction described herein and may not be relied upon for any other purpose, including, without limitation, in connection with any subsequent issuance of securities, restructuring, refinancing, or other transaction involving the Issuer, the Sponsor, or their respective affiliates.
3.  This opinion is addressed to, and may be relied upon solely by, (a) the Issuer (Quorum Receivables Funding 2022-1 LLC), (b) the Trustee (Calvoneth Trust Company, National Association), (c) the Initial Purchaser (Ridgeline Capital Markets LLC), and (d) any subsequent holder of the Notes who acquires such Notes in a transaction that complies with the transfer restrictions set forth in the Indenture and the Offering Memorandum, including the restrictions on resale applicable to notes offered and sold under Rule 144A and Regulation S under the Securities Act. No other person or entity is entitled to rely on this opinion, and this opinion may not be quoted, cited, or referred to in any report, document, or other communication without our prior written consent, except as required by applicable law or regulation.
4.  This opinion speaks only as of the date hereof, and we assume no obligation to update, revise, or supplement this opinion to reflect any changes in applicable law or facts, or any developments in the Transaction, occurring or coming to our attention after the date hereof, regardless of whether such changes or developments would affect the opinions expressed herein.
5.  We are members of the bar of the State of New York and do not purport to be experts in, or to express any opinion on, the laws of any other jurisdiction. In rendering the opinions expressed herein, we have not examined or considered the laws of any jurisdiction other than the State of New York and the federal laws of the United States of America, except as expressly noted herein.
VII. Draft Status Notice
IMPORTANT NOTICE REGARDING DRAFT STATUS
This opinion is a DRAFT prepared for discussion purposes only in connection with Calderwood & Harkness LLP Matter No. 1025-00007. This draft has not been finalized, and it has not been delivered to any party in final form. It does not constitute a final opinion of Calderwood & Harkness LLP and should not be relied upon as such.
The delivery of a final, executed opinion letter in the form substantially consistent with this draft was contemplated to be a condition precedent to the closing of the Transaction, as set forth in Section 7.01(f) of the Note Purchase Agreement.
The Transaction was shelved on November 14, 2022, and placed in dormant status on November 18, 2022, due to adverse market conditions, including a material widening of asset-backed securities credit spreads in the fourth quarter of 2022 that rendered the proposed pricing terms commercially unfeasible. As a result, the closing of the Transaction did not occur, the Opinion Documents were never executed or delivered, the Notes were never issued, and this draft opinion was never finalized or delivered to any party.
This draft is maintained in Calderwood & Harkness LLP's files for reference purposes and is subject to the firm's document retention policies. This draft should not be relied upon as a final opinion, and no party should take any action in reliance on the opinions expressed herein. Any revival or reactivation of the Transaction would require a comprehensive re-review of all documentation, assumptions, and applicable law, and the preparation and delivery of a new opinion letter reflecting the circumstances then in effect.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Drafted by: Yuki Nakamura, Associate Reviewed by: Douglas Carmichael, Partner (Responsible Partner)
Matter No.: 1025-00007
DRAFT — October 8, 2022 — FOR DISCUSSION PURPOSES ONLY — NOT FOR DELIVERY Calderwood & Harkness LLP | 601 Lexington Avenue | New York, NY 10022

DRAFT — October 8, 2022 FOR DISCUSSION PURPOSES ONLY — NOT FOR DELIVERY

IMPORTANT NOTICE REGARDING DRAFT STATUS

CALDERWOOD & HARKNESS LLP

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