INDEPENDENT MANAGER AGREEMENT
by and between
QUORUM RECEIVABLES FUNDING 2022-1 LLC
a Delaware limited liability company
("Company")
and
FORTBRIDGE CORPORATE SERVICES LLC
a Delaware limited liability company
("Service Provider")
Dated as of August 3, 2022
Relating to the issuance of up to $500,000,000 in asset-backed notes by Quorum Receivables Funding 2022-1 LLC
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INDEPENDENT MANAGER AGREEMENT
This INDEPENDENT MANAGER AGREEMENT (this "Agreement") is entered into as of August 3, 2022, by and between QUORUM RECEIVABLES FUNDING 2022-1 LLC, a Delaware limited liability company (the "Company"), and FORTBRIDGE CORPORATE SERVICES LLC, a Delaware limited liability company (the "Service Provider"). Certain obligations hereunder are acknowledged and agreed to by TIMOTHY R. CALLAN, an individual, as set forth on the signature page hereto.
RECITALS
A. The Company was formed as a Delaware limited liability company on August 3, 2022, pursuant to a Certificate of Formation filed with the Secretary of State of the State of Delaware (DE SOS File No. 7894231), with its registered agent being Ashgrove Services Inc., 28 Liberty Street, New York, NY 10005.
B. The Company is organized as a bankruptcy-remote special purpose entity whose sole purpose is to acquire and hold insurance premium finance receivables originated by Quorum Premium Finance LLC, a Delaware limited liability company ("QPF"), and to issue notes backed by such receivables, and to engage in activities reasonably related and incidental thereto.
C. The sole member of the Company is Quorum Receivables Holding LLC ("QRH"), a Delaware limited liability company and intermediate bankruptcy-remote special purpose vehicle, which is in turn wholly owned by QPF, which is in turn wholly owned by Quorum Insurance Holdings Corp. ("QIH"), a Delaware corporation publicly traded on the New York Stock Exchange (ticker: QIHC).
D. The Limited Liability Company Agreement of the Company dated August 3, 2022 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the "LLC Agreement") requires the appointment of at least one independent manager whose consent is required for the filing of any voluntary bankruptcy petition or the taking of certain other material actions, in order to maintain the Company's bankruptcy-remote status and to protect the interests of the Company's creditors.
E. The Company desires to engage the Service Provider to provide an individual to serve as independent manager of the Company, and the Service Provider desires to make such individual available, in each case on the terms and conditions set forth herein.
F. The individual designated by the Service Provider to serve as independent manager hereunder is Timothy R. Callan (the "Independent Manager").
G. This Agreement is being entered into in connection with a structured finance transaction (the "Transaction") pursuant to which the Company will issue Class A Notes in the aggregate principal amount of $375,000,000, Class B Notes in the aggregate principal amount of $75,000,000, and Class C Notes in the aggregate principal amount of $35,000,000, together with related overcollateralization, governed by an Indenture between the Company, as Issuer, and Calvoneth Trust Company, National Association, as indenture trustee (the "Indenture Trustee").
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the LLC Agreement or, if not defined therein, in the Indenture.
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with") means the direct or indirect possession of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or other beneficial interests, by contract, or otherwise. Without limiting the generality of the foregoing, a Person shall be deemed to control another Person if such Person (a) owns, directly or indirectly, more than 50% of the voting interests or equity interests of such other Person, or (b) has the power to appoint or remove a majority of the members of the board of directors, board of managers, or equivalent governing body of such other Person.
"Bankruptcy Action" means any of the following actions with respect to the Company: (i) filing any voluntary petition for relief under any chapter of Title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the "Bankruptcy Code"), as now in effect or as hereafter amended; (ii) filing any voluntary petition for relief under any insolvency, reorganization, arrangement, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect; (iii) seeking or consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official for the Company or for a substantial portion of its property or assets; (iv) making a general assignment for the benefit of creditors of the Company; (v) admitting in writing the Company's inability to pay its debts generally as they become due; or (vi) taking any action in furtherance of any of the foregoing, including the adoption of any resolution by the Board of Managers or the sole member of the Company authorizing any of the foregoing.
"Board" or "Board of Managers" means the board of managers of the Company as constituted from time to time under the LLC Agreement, including any Independent Manager appointed pursuant to this Agreement and serving in such capacity.
"Business Day" means any day other than a Saturday, a Sunday, or a day on which banking institutions in the State of New York, the State of Delaware, or the State of Texas are authorized or obligated by law, executive order, or governmental decree to be closed.
"Closing Date" means August 3, 2022.
"Company" has the meaning given to such term in the preamble to this Agreement.
"Eligible Independent Manager" means a natural person who, at the time of his or her designation and at all times during his or her service as Independent Manager:
(a) is not, and has not been at any time during the preceding five (5) years, a stockholder, director, officer, employee, partner, member, manager, attorney, or counsel of the Company, QRH, QPF, QIH, or any of their respective Affiliates (other than serving as an independent manager or independent director of one or more special purpose entities that are not Affiliates of each other in any capacity other than by reason of having a common independent manager or independent director provided by the same service provider);
(b) is not, and has not been at any time during the preceding five (5) years, a supplier of goods or services to, a customer of, or a creditor of, the Company, QRH, QPF, QIH, or any of their respective Affiliates (other than in the capacity of serving as an independent manager or independent director as described in clause (a) above);
(c) is not a member of the immediate family (as defined in Rule 16a-1(e) under the Securities Exchange Act of 1934, as amended) of any individual who would not qualify as an Eligible Independent Manager under clauses (a) or (b) above; and
(d) is not a Person who controls (as defined in the definition of "Affiliate" herein) any entity described in clauses (a) or (b) above.
"Indenture" means the Indenture dated as of the Closing Date between the Company, as Issuer, and Calvoneth Trust Company, National Association, as Indenture Trustee, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Indenture Trustee" means Calvoneth Trust Company, National Association, in its capacity as trustee under the Indenture, and any successor trustee appointed thereunder.
"Independent Manager" means Timothy R. Callan, or any replacement designated pursuant to Section 3.3 of this Agreement and serving in such capacity.
"LLC Agreement" means the Limited Liability Company Agreement of the Company dated August 3, 2022, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Material Action" means, with respect to the Company, any of the following: (i) any Bankruptcy Action; (ii) the dissolution or winding up of the Company; (iii) the liquidation of all or substantially all of the Company's assets; (iv) any consolidation or merger of the Company with or into any other Person; (v) any sale, transfer, or other disposition of all or substantially all of the Company's assets other than in the ordinary course of its business as contemplated by the Transaction Documents; (vi) any amendment or modification of the LLC Agreement or the Certificate of Formation in a manner that would adversely affect the bankruptcy-remote status of the Company or the rights of the Indenture Trustee or the noteholders; and (vii) any other action identified as a "Material Action" in the LLC Agreement. Notwithstanding the foregoing, the term "Material Action" shall be deemed to have the same scope and meaning as the corresponding term defined in the LLC Agreement, and in the event of any inconsistency between this definition and the definition set forth in the LLC Agreement, the LLC Agreement shall control.
"Notes" means, collectively, the Class A Notes, the Class B Notes, and the Class C Notes issued by the Company under the Indenture.
"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization, governmental authority, or other entity.
"QIH" means Quorum Insurance Holdings Corp., a Delaware corporation.
"QPF" means Quorum Premium Finance LLC, a Delaware limited liability company.
"QRH" means Quorum Receivables Holding LLC, a Delaware limited liability company.
"Service Provider" has the meaning given to such term in the preamble to this Agreement.
"Transaction" has the meaning given to such term in Recital G.
"Transaction Documents" means, collectively, the Indenture, the Receivables Transfer Agreement dated as of the Closing Date between QPF (as Originator), QRH (as Intermediate Transferor), and the Company (as Issuer), the Servicing Agreement dated as of the Closing Date among the Company, QPF (as Servicer), and the Indenture Trustee, the Back-Up Servicing Agreement dated as of the Closing Date among the Company, Northvane Bank, N.A. (as Back-Up Servicer), QPF (as Servicer), and the Indenture Trustee, the Note Purchase Agreement dated as of the Closing Date among the Company and the initial purchasers of the Notes, the Liquidity Facility Agreement dated as of the Closing Date between the Company and Northvane Bank, N.A. (as Liquidity Facility Provider), the Account Control Agreement dated as of the Closing Date among the Company, the Indenture Trustee, and the applicable deposit account banks, the Grant of Security Interest from the Company in favor of the Indenture Trustee, and all other agreements, documents, instruments, and certificates delivered in connection with the Transaction, in each case as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with their respective terms.
Section 1.2 — Rules of Construction
Unless the context otherwise requires: (a) words in the singular shall include the plural and vice versa; (b) references to any gender shall include references to all genders; (c) the words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation"; (d) references to "herein," "hereof," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement; (e) references to any Article, Section, Schedule, or Exhibit shall be references to the applicable Article, Section, Schedule, or Exhibit of this Agreement; (f) references to any agreement, document, or instrument shall mean such agreement, document, or instrument as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms; (g) references to any law, statute, or regulation shall mean such law, statute, or regulation as the same may be amended, supplemented, or otherwise modified from time to time and any successor thereto; (h) references to the Delaware Limited Liability Company Act shall mean the Delaware Limited Liability Company Act, 6 Del. C. §§ 18-101 et seq., as amended from time to time; (i) references to "$" or "dollars" shall mean lawful money of the United States of America; and (j) all references to time shall be to New York City time unless otherwise specified.
ARTICLE II — APPOINTMENT AND ACCEPTANCE
Section 2.1 — Appointment
The Company hereby appoints and engages the Service Provider to provide an individual to serve as Independent Manager of the Company on the Board of Managers, in accordance with the terms and conditions of this Agreement and the LLC Agreement. The Service Provider hereby designates Timothy R. Callan as the individual to serve as Independent Manager of the Company. Such appointment shall be effective as of August 3, 2022, and Timothy R. Callan shall serve as a member of the Board of Managers in the capacity of Independent Manager from and after such date.
The parties acknowledge that the appointment of the Independent Manager is a condition to the closing of the Transaction and to the issuance of the Notes under the Indenture. The Company represents that the appointment of the Independent Manager has been duly authorized by the Board of Managers (other than the Independent Manager) and by QRH, as sole member of the Company, in accordance with the LLC Agreement.
Section 2.2 — Acceptance
The Service Provider hereby accepts the engagement set forth in Section 2.1 and agrees to cause Timothy R. Callan to serve as Independent Manager of the Company for the term of this Agreement, subject to the terms and conditions set forth herein. Timothy R. Callan, by his execution of this Agreement on the signature page hereto, hereby accepts his appointment as Independent Manager of the Company and agrees to perform the duties and obligations set forth herein and in the LLC Agreement, and to be bound by the terms and conditions of this Agreement applicable to the Independent Manager.
The parties acknowledge that a separate Independent Manager Agreement of even date herewith has been entered into between QRH and the Service Provider, pursuant to which the Service Provider has designated Eleanor M. Vasquez as independent manager of QRH, and that this Agreement pertains solely to the Company (Quorum Receivables Funding 2022-1 LLC) and the appointment of Timothy R. Callan as Independent Manager of the Company. Nothing in this Agreement shall be construed to impose any duties or obligations on the Service Provider or Timothy R. Callan with respect to QRH or any other entity.
Section 2.3 — Qualification
The Service Provider represents and warrants to the Company that, as of the date hereof, Timothy R. Callan meets all of the requirements of an Eligible Independent Manager as defined in Section 1.1 of this Agreement. The Service Provider shall cause the Independent Manager to satisfy such requirements at all times during the term of this Agreement.
The Service Provider shall promptly (and in any event within two (2) Business Days) notify the Company and Calvoneth Trust Company, N.A. (in its capacity as Indenture Trustee) in writing if the Independent Manager ceases to satisfy, or if the Service Provider becomes aware of any facts or circumstances that would reasonably be expected to cause the Independent Manager to cease to satisfy, any of the requirements of an Eligible Independent Manager. Such notice shall describe in reasonable detail the nature of the disqualifying event or circumstance and the steps, if any, being taken by the Service Provider to remedy such disqualification or to designate a replacement Independent Manager pursuant to Section 3.3.
Section 2.4 — No Authority Over Day-to-Day Operations
The Independent Manager shall not participate in, or have authority over, the day-to-day business operations or management of the Company, other than as specifically required to consider, consent to, or vote on Material Actions as contemplated by this Agreement and the LLC Agreement. The Independent Manager shall have no authority to bind the Company, to execute any document on behalf of the Company, or to take any action on behalf of the Company, except to the extent expressly set forth in the LLC Agreement in connection with the consideration of Material Actions.
The Independent Manager's sole function is to consider, in good faith, whether any proposed Material Action (including any Bankruptcy Action) is in the best interests of the Company, including its creditors, and to vote or withhold consent accordingly. The parties acknowledge that the purpose of this limitation is to preserve the bankruptcy-remote status of the Company and to ensure that any Material Action is subject to the independent judgment of a manager who is not beholden to the Company's equity owners or their Affiliates.
ARTICLE III — DUTIES AND OBLIGATIONS
Section 3.1 — Duties of the Independent Manager
The Independent Manager shall have the following duties and obligations:
(a) Consideration of Material Actions. Prior to consenting to or voting in favor of any Material Action (including any Bankruptcy Action), the Independent Manager shall consider the interests of the Company and its creditors, including without limitation the holders of the Class A Notes, the Class B Notes, and the Class C Notes issued under the Indenture, any liquidity facility provider (including Northvane Bank, N.A.), the Indenture Trustee, and all other creditors of the Company.
(b) Standard for Consent to Bankruptcy Action. The Independent Manager shall not consent to, or vote in favor of, any Bankruptcy Action unless the Independent Manager determines, in his or her considered judgment exercised in good faith, that such action is in the best interests of the Company, giving due consideration to the interests of the Company's creditors as well as its equity holders. The Independent Manager shall not be required to consider the interests of any Person other than the Company and its creditors in making such determination, and the Independent Manager's duty shall be to act in accordance with his or her own independent judgment.
(c) Attendance at Board Meetings. The Independent Manager shall attend or participate (whether in person or by telephone, video conference, or other means of communication by which all persons participating in the meeting can hear each other) in any meeting of the Board of Managers at which a Material Action is to be considered. The Independent Manager shall be entitled to reasonable advance notice (no fewer than five (5) Business Days, except in the case of an emergency) of any such meeting and shall be provided with copies of all materials to be considered at such meeting at least three (3) Business Days prior to the meeting (or, in the case of an emergency, as promptly as practicable).
(d) Familiarity with Separateness Covenants. The Independent Manager shall review and become familiar with the separateness covenants contained in the LLC Agreement and the Indenture and shall take all reasonable steps within his or her authority to ensure compliance therewith. The Independent Manager shall not take or authorize any action that the Independent Manager knows or reasonably should know would be inconsistent with such separateness covenants.
Section 3.2 — Fiduciary Duties
To the fullest extent permitted under the Delaware Limited Liability Company Act (6 Del. C. § 18-1101(c)), the Independent Manager's fiduciary duties shall be as set forth in this Agreement and the LLC Agreement. The parties intend that the LLC Agreement modify, to the maximum extent permitted by applicable law, any fiduciary duties that the Independent Manager might otherwise owe, and the terms of the LLC Agreement shall control in the event of any conflict with common law fiduciary principles.
The Independent Manager shall owe fiduciary duties to the Company and, in connection with any Material Action, shall take into account the interests of the Company's creditors (including, without limitation, the holders of the Notes and the Indenture Trustee). The Independent Manager shall not owe fiduciary duties to QRH (as sole member of the Company), QPF, QIH, or any Affiliate thereof, except to the extent that the interests of such Affiliate are aligned with the interests of the Company. In no event shall the Independent Manager be required to act in accordance with the instructions or directions of QRH, QPF, QIH, or any of their respective Affiliates, officers, directors, employees, or agents in connection with any Material Action, and the Independent Manager shall exercise his or her own independent judgment with respect to all Material Actions.
Nothing in this Section 3.2 shall be construed to limit the Independent Manager's right to rely, in good faith, on advice of counsel, accountants, or other experts retained by or on behalf of the Company, to the extent such reliance is permitted by the Delaware Limited Liability Company Act.
Section 3.3 — Replacement of Independent Manager
The Service Provider shall have the right, and upon the occurrence of any of the events described below shall have the obligation, to designate a replacement Independent Manager who satisfies all of the requirements of an Eligible Independent Manager, upon the occurrence of any of the following events:
(a) the death or permanent incapacity of the then-serving Independent Manager;
(b) the resignation of the then-serving Independent Manager;
(c) the removal of the then-serving Independent Manager in accordance with the LLC Agreement or this Agreement; or
(d) the then-serving Independent Manager ceasing to meet, for any reason, the eligibility requirements for an Eligible Independent Manager as defined in Section 1.1.
Any replacement Independent Manager designated by the Service Provider pursuant to this Section 3.3 shall be subject to the prior written consent of Calvoneth Trust Company, N.A. (in its capacity as Indenture Trustee), which consent shall not be unreasonably withheld, conditioned, or delayed. The Service Provider shall provide the Indenture Trustee with such information regarding the proposed replacement as the Indenture Trustee may reasonably request, including a completed form of Acceptance and Certification of Independent Manager substantially in the form of Exhibit A attached hereto.
Any replacement Independent Manager must be designated within ten (10) Business Days after the occurrence of the vacancy-creating event. During any period in which no Independent Manager is serving, no Material Action may be taken by the Company. The Service Provider shall promptly notify the Company, QRH, QPF, QIH, and Calvoneth Trust Company, N.A. of the identity of any replacement Independent Manager and the date on which such replacement's service commences.
Section 3.4 — Separateness Obligations
The Independent Manager shall cooperate with the Company in maintaining the Company's separateness from QRH, QPF, QIH, and their respective Affiliates, including, without limitation, by taking such actions as are reasonably within the Independent Manager's authority to assist in ensuring that:
(a) the Company maintains its own books and records separate from those of any other Person, including QRH, QPF, and QIH;
(b) the Company holds itself out to the public under its own name as a legal entity separate and distinct from QRH, QPF, QIH, and any other Person, including by using its own stationery, invoices, and checks;
(c) the Company does not commingle its funds or assets with those of any other Person, and maintains its own bank accounts and financial records separate from those of any other Person;
(d) the Company maintains separate stationery, bank accounts, and financial statements (or, to the extent any financial statements are consolidated with those of QIH or any other Person, that such financial statements contain appropriate notes indicating the separate existence of the Company and that the Company's assets are not available to pay the creditors of any other Person);
(e) the Company observes all organizational formalities required by the Delaware Limited Liability Company Act and the LLC Agreement, including the holding of all required meetings of its Board of Managers and the maintenance of minutes or written consents reflecting all actions taken by the Board;
(f) the Company does not guarantee or become obligated for the debts of any other Person or hold out its credit as being available to satisfy the obligations of any other Person;
(g) the Company does not acquire obligations or securities of, or make loans or advances to, QRH, QPF, QIH, or any of their respective Affiliates;
(h) the Company pays its own liabilities and expenses (including the fees and expenses payable under this Agreement) only from its own funds and assets;
(i) the Company maintains adequate capital for its business, taking into account the nature and scope of its activities; and
(j) the Company corrects any known misunderstanding regarding the separate identity of the Company.
The Independent Manager acknowledges that the separateness of the Company from QRH, QPF, QIH, and their respective Affiliates is essential to the Company's bankruptcy-remote status and to the credit quality and structural integrity of the Notes, and that failure to maintain such separateness could result in the substantive consolidation of the Company's assets and liabilities with those of another Person in a bankruptcy proceeding, to the detriment of the holders of the Notes and other creditors of the Company.
ARTICLE IV — COMPENSATION AND EXPENSES
Section 4.1 — Annual Fee
In consideration of the Service Provider's obligation to make the Independent Manager available to serve in such capacity, the Company shall pay the Service Provider an annual fee (the "Annual Fee") in the amount set forth on Schedule A attached hereto, payable in advance on each anniversary of the effective date of this Agreement (or, with respect to the initial year, on the Closing Date). If this Agreement terminates on a date other than an anniversary of the effective date, the Annual Fee for the final year of service shall be prorated on a daily basis, and any unearned portion of the Annual Fee previously paid shall be refunded to the Company within thirty (30) days following the effective date of termination.
The Annual Fee shall constitute an administrative expense of the Company, payable from collections on the receivables pool in accordance with the payment waterfall set forth in the Indenture. The parties acknowledge that the Annual Fee ranks senior to distributions to the holders of the Notes and to distributions to QRH (as sole member) in such payment waterfall, subject to the terms and conditions of the Indenture.
Section 4.2 — Reimbursement of Expenses
The Company shall reimburse the Service Provider and the Independent Manager for all reasonable and documented out-of-pocket expenses incurred in connection with the performance of duties under this Agreement, including, without limitation, travel expenses (including airfare, ground transportation, hotel accommodations, and meals) for attendance at meetings of the Board of Managers, telecommunications costs, and reasonable legal fees incurred by the Independent Manager or the Service Provider in connection with the review or interpretation of this Agreement or the LLC Agreement. Requests for reimbursement shall be submitted to the Company within sixty (60) days after the expense is incurred and shall be accompanied by reasonable supporting documentation. The Company shall pay approved reimbursement amounts within thirty (30) days after receipt of a properly documented reimbursement request.
Section 4.3 — No Additional Compensation
The Independent Manager shall not receive, and the Service Provider shall not permit the Independent Manager to receive, any compensation from QPF, QRH, QIH, or any of their respective Affiliates for serving as Independent Manager of the Company, other than the compensation payable hereunder through the Service Provider. The foregoing shall not prohibit the Independent Manager from receiving compensation from the Service Provider for services provided to other clients of the Service Provider that are not Affiliates of the Company, QRH, QPF, or QIH.
ARTICLE V — TERM AND TERMINATION
Section 5.1 — Term
This Agreement shall be effective as of August 3, 2022 and shall continue in full force and effect until the earliest to occur of:
(a) the date on which no Notes remain outstanding under the Indenture, including the date on which all Notes have been paid in full or the legal final maturity date of the Notes (which is the date that is forty-two (42) months from the Closing Date of the Transaction), whichever is earlier;
(b) the date on which the Company is dissolved and its winding up is completed in accordance with the LLC Agreement and the Delaware Limited Liability Company Act; or
(c) the date on which this Agreement is terminated pursuant to Section 5.2.
Section 5.2 — Termination
This Agreement may be terminated prior to the expiration of the term set forth in Section 5.1 as follows:
(a) By the Company. The Company may terminate this Agreement, with the prior written consent of Calvoneth Trust Company, N.A. (in its capacity as Indenture Trustee), upon not less than thirty (30) days' prior written notice to the Service Provider; provided, that such termination shall not be effective until a successor service provider has been engaged and a replacement Independent Manager has been designated and has assumed his or her duties under a replacement independent manager agreement on terms substantially similar to this Agreement.
(b) By the Service Provider. The Service Provider may terminate this Agreement upon not less than sixty (60) days' prior written notice to the Company, QRH, and Calvoneth Trust Company, N.A. (in its capacity as Indenture Trustee); provided, that such termination shall not be effective until a successor Service Provider has been engaged and a replacement Independent Manager has been designated and has assumed his or her duties under a replacement independent manager agreement on terms substantially similar to this Agreement. The Service Provider shall cooperate in good faith with the Company and the Indenture Trustee to facilitate an orderly transition to a successor service provider.
(c) For Cause. The Company may terminate this Agreement immediately, without the consent of the Indenture Trustee, upon the Service Provider's material breach of any term, condition, representation, warranty, or covenant of this Agreement that remains uncured for a period of thirty (30) days after written notice thereof from the Company to the Service Provider (specifying in reasonable detail the nature of such breach); provided, that no such termination shall be effective until a successor Service Provider has been engaged and a replacement Independent Manager has been designated and has assumed his or her duties.
Upon any termination of this Agreement, the Service Provider shall cooperate in good faith with the Company and with any successor service provider to ensure an orderly transition of the Independent Manager function, including by providing to the successor service provider such information regarding the Company and the Transaction as may be reasonably requested.
Section 5.3 — Survival
The indemnification obligations set forth in Article VI, the non-petition covenant set forth in Section 8.3, and the confidentiality obligations set forth in Section 8.4 shall survive the termination or expiration of this Agreement. In addition, the provisions of this Agreement that by their nature are intended to survive termination or expiration shall so survive.
ARTICLE VI — INDEMNIFICATION AND LIABILITY
Section 6.1 — Indemnification of Independent Manager and Service Provider
The Company shall indemnify, defend, and hold harmless the Independent Manager and the Service Provider and their respective officers, directors, members, managers, employees, agents, successors, and assigns (each, an "Indemnified Party") from and against any and all claims, demands, actions, suits, proceedings, investigations, losses, damages, liabilities, judgments, fines, penalties, costs, and expenses (including reasonable and documented attorneys' fees and court costs) (collectively, "Losses") arising out of or relating to the Independent Manager's service in such capacity under this Agreement or the LLC Agreement, or the Service Provider's performance of its obligations hereunder; provided, however, that the Company shall not be obligated to indemnify any Indemnified Party to the extent that such Losses are determined by a court of competent jurisdiction, in a final and non-appealable judgment, to have resulted from the Indemnified Party's willful misconduct, bad faith, or gross negligence.
The indemnification provided under this Section 6.1 shall be in addition to, and not in limitation of, any indemnification rights that the Independent Manager or the Service Provider may have under the LLC Agreement, the Delaware Limited Liability Company Act, or any other agreement. Amounts payable under this Section 6.1 shall constitute administrative expenses of the Company payable from collections in accordance with the payment waterfall under the Indenture.
The Company shall advance to any Indemnified Party, upon request, the reasonable and documented costs and expenses (including attorneys' fees) incurred by such Indemnified Party in investigating, preparing for, or defending any claim, action, suit, or proceeding for which indemnification may be sought hereunder, upon receipt of an undertaking by or on behalf of such Indemnified Party to repay such amount if it shall be determined by a court of competent jurisdiction, in a final and non-appealable judgment, that such Indemnified Party is not entitled to indemnification under this Section 6.1.
Section 6.2 — Limitation of Liability
The Independent Manager and the Service Provider shall not be liable to the Company, QRH, QPF, QIH, Calvoneth Trust Company, N.A. (whether in its individual capacity or as Indenture Trustee), any holder of the Notes, or any other Person for any act or omission taken or suffered by the Independent Manager or the Service Provider in good faith and reasonably believed to be within the scope of authority conferred by this Agreement, the LLC Agreement, or the Transaction Documents, or for any act or omission taken or suffered in reliance upon the advice of counsel, accountants, or other experts retained by or on behalf of the Company.
In no event shall the Independent Manager or the Service Provider be liable for any consequential, indirect, incidental, special, exemplary, or punitive damages of any kind, regardless of the form of action, whether in contract, tort (including negligence), strict liability, or otherwise, and regardless of whether such damages were foreseeable.
The aggregate liability of the Service Provider under or in connection with this Agreement shall not, under any circumstances, exceed the total amount of fees actually received by the Service Provider under this Agreement during the twelve (12) month period immediately preceding the event giving rise to such liability. This limitation shall apply regardless of the number or nature of claims, actions, or causes of action asserted against the Service Provider.
Section 6.3 — No Personal Liability of Independent Manager
The Independent Manager shall not have any personal liability for any obligation or liability of the Company arising under this Agreement, the LLC Agreement, the Indenture, or any other Transaction Document, except to the extent expressly provided herein. No recourse shall be had against the Independent Manager's personal assets for satisfaction of any obligation or liability of the Company. The foregoing limitation shall not limit the personal liability of the Independent Manager for his own willful misconduct, bad faith, or gross negligence.
All Persons dealing with the Company shall look solely to the assets of the Company for the satisfaction of any claim or obligation arising out of or in connection with any act or omission of the Independent Manager taken in his capacity as Independent Manager.
ARTICLE VII — REPRESENTATIONS AND WARRANTIES
Section 7.1 — Representations of the Service Provider
The Service Provider hereby represents and warrants to the Company as of the date hereof as follows:
(a) Organization and Good Standing. The Service Provider is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, with its principal office located at 1209 Orange Street, Wilmington, DE 19801. The Service Provider has all requisite limited liability company power and authority to own, lease, and operate its properties and to carry on its business as now conducted.
(b) Authority. The Service Provider has full power and authority to enter into this Agreement and to perform its obligations hereunder. The execution, delivery, and performance of this Agreement by the Service Provider have been duly authorized by all necessary limited liability company action on the part of the Service Provider, and no further action or approval is required.
(c) Enforceability. This Agreement constitutes a legal, valid, and binding obligation of the Service Provider, enforceable against the Service Provider in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or similar laws affecting creditors' rights generally, and (ii) general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(d) No Conflicts. The execution, delivery, and performance of this Agreement by the Service Provider do not and will not (i) violate, conflict with, or result in a breach of any provision of the certificate of formation or limited liability company agreement of the Service Provider, (ii) violate any law, statute, rule, regulation, order, writ, judgment, injunction, or decree applicable to the Service Provider, or (iii) result in a breach of, or constitute a default under, any material agreement or instrument to which the Service Provider is a party or by which it is bound.
(e) Eligibility of Independent Manager. Timothy R. Callan meets all qualifications of an Eligible Independent Manager as defined in Section 1.1 of this Agreement and the LLC Agreement. To the best of the Service Provider's knowledge, after due inquiry, there are no facts or circumstances that would reasonably be expected to cause Timothy R. Callan to cease to satisfy the requirements of an Eligible Independent Manager during the term of this Agreement.
(f) No Litigation. There is no action, suit, proceeding, inquiry, or investigation pending or, to the best of the Service Provider's knowledge, threatened against the Service Provider or Timothy R. Callan before or by any court, governmental authority, or arbitral body that would reasonably be expected to materially impair the ability of the Service Provider or the Independent Manager to perform their respective obligations under this Agreement.
Section 7.2 — Representations of the Company
The Company hereby represents and warrants to the Service Provider as of the date hereof as follows:
(a) Organization and Good Standing. The Company is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware (DE SOS File No. 7894231), with its registered agent being Ashgrove Services Inc., 28 Liberty Street, New York, NY 10005. The Company has all requisite limited liability company power and authority to own, lease, and operate its properties and to carry on its business as contemplated by the LLC Agreement and the Transaction Documents.
(b) Authority. The Company has full power and authority to enter into this Agreement and to perform its obligations hereunder. The execution, delivery, and performance of this Agreement by the Company have been duly authorized by all necessary limited liability company action on the part of the Company, including by its sole member, QRH, and no further action or approval is required.
(c) Enforceability. This Agreement constitutes a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or similar laws affecting creditors' rights generally, and (ii) general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(d) No Conflicts. The execution, delivery, and performance of this Agreement by the Company do not and will not (i) violate, conflict with, or result in a breach of any provision of the Certificate of Formation or the LLC Agreement of the Company, (ii) violate any law, statute, rule, regulation, order, writ, judgment, injunction, or decree applicable to the Company, or (iii) result in a breach of, or constitute a default under, any Transaction Document or any other material agreement or instrument to which the Company is a party or by which it is bound.
(e) Tax Identification. The Company's Employer Identification Number (EIN) assigned by the Internal Revenue Service is 88-1247653.
(f) No Litigation. There is no action, suit, proceeding, inquiry, or investigation pending or, to the best of the Company's knowledge, threatened against the Company before or by any court, governmental authority, or arbitral body that would reasonably be expected to materially impair the ability of the Company to perform its obligations under this Agreement.
ARTICLE VIII — COVENANTS
Section 8.1 — Compliance with LLC Agreement and Indenture
The Service Provider shall cause the Independent Manager to comply with the terms and provisions of the LLC Agreement and, to the extent applicable, the Indenture, in the performance of his duties as Independent Manager. The Independent Manager shall not take any action, or consent to any action, that would be inconsistent with the separateness covenants, non-petition covenants, limited purpose restrictions, or other bankruptcy-remoteness provisions contained in the LLC Agreement or the Indenture.
The Service Provider shall furnish to the Independent Manager copies of the LLC Agreement and the Indenture (and any amendments, supplements, or modifications thereto) promptly upon receipt, and shall ensure that the Independent Manager has reviewed and understands such documents to the extent relevant to his duties hereunder.
Section 8.2 — Notification Obligations
The Service Provider shall promptly (and in any event within two (2) Business Days) notify the Company and Calvoneth Trust Company, N.A. (in its capacity as Indenture Trustee) in writing of:
(a) any change in the Independent Manager's eligibility status, including any event or circumstance that causes or would reasonably be expected to cause the Independent Manager to cease to satisfy the requirements of an Eligible Independent Manager;
(b) any actual or potential conflict of interest between the Independent Manager and the Company, any holder of the Notes, the Indenture Trustee, or any other party to the Transaction Documents;
(c) any legal proceedings (whether civil, criminal, administrative, or arbitral) involving the Independent Manager that could materially affect his ability to serve as Independent Manager or that would call into question his eligibility as an Eligible Independent Manager; and
(d) any resignation or proposed resignation of the Independent Manager, together with the effective date of such resignation (which shall not be earlier than thirty (30) days after such notice unless a replacement Independent Manager has been designated and has assumed his or her duties prior thereto).
Section 8.3 — Non-Petition Covenant
The Service Provider and the Independent Manager each hereby covenant and agree that they shall not, prior to the date that is one (1) year and one (1) day (or, if longer, the applicable preference period under the Bankruptcy Code plus one (1) day) after the date on which all Notes issued under the Indenture have been paid in full and no further obligations remain outstanding thereunder (the "Non-Petition Period"), institute, or join in instituting, any proceeding seeking an order for relief under the Bankruptcy Code, or any other insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation, or similar law, against the Company or with respect to any of the Company's assets. This covenant is given for the benefit of the Company and its creditors, including the holders of the Notes and the Indenture Trustee, and may be enforced by the Indenture Trustee on behalf of such creditors.
This covenant shall survive the termination or expiration of this Agreement and shall remain in full force and effect until the expiration of the Non-Petition Period, regardless of whether the Independent Manager or the Service Provider continues to serve in such capacity. The parties acknowledge that this covenant is an essential element of the structured finance framework established by the Transaction Documents and that a breach of this covenant could cause irreparable harm to the Company and the holders of the Notes.
Section 8.4 — Confidentiality
The Independent Manager and the Service Provider shall treat as confidential all non-public information regarding the Company, the Transaction, the receivables pool, and any other information received by the Independent Manager or the Service Provider in connection with the performance of duties under this Agreement (collectively, "Confidential Information"), and shall not disclose any Confidential Information to any third party without the prior written consent of the Company, except:
(a) to the extent required by applicable law, regulation, or legal process (including any subpoena, civil investigative demand, or regulatory examination), provided that the disclosing party shall, to the extent permitted by law, give the Company reasonable prior notice of such disclosure and cooperate with the Company in seeking a protective order or other appropriate remedy;
(b) to the Service Provider's officers, directors, employees, agents, and professional advisors who have a need to know such information in connection with the Service Provider's performance of its obligations under this Agreement and who are subject to confidentiality obligations no less restrictive than those contained herein;
(c) to the Indenture Trustee, to the extent necessary for the Indenture Trustee to exercise its rights or perform its obligations under the Indenture or this Agreement; and
(d) to the extent such information has become publicly available through no fault of the Independent Manager or the Service Provider.
The obligations of confidentiality set forth in this Section 8.4 shall survive the termination or expiration of this Agreement for a period of two (2) years.
ARTICLE IX — MISCELLANEOUS
Section 9.1 — Notices
All notices, requests, demands, consents, waivers, and other communications under this Agreement shall be in writing and shall be deemed duly given and received (a) when delivered by hand, (b) one (1) Business Day after being sent by nationally recognized overnight courier service (with tracking capability), (c) three (3) Business Days after being sent by certified or registered mail, return receipt requested, postage prepaid, or (d) when sent by electronic mail transmission (with confirmation of receipt by the addressee), in each case to the parties at the following addresses (or at such other address as a party may designate by notice given in accordance with this Section 9.1):
If to the Company:
Quorum Receivables Funding 2022-1 LLC c/o Quorum Insurance Holdings Corp. 400 Atlantic Street, Suite 2200 Stamford, CT 06901
Attention: Sandra Ling-Hwang, Treasurer
Email: slinghwang@quoruminsurance.com
With a copy to (which shall not constitute notice):
Calderwood & Harkness LLP 601 Lexington Avenue New York, NY 10022
Attention: Douglas Carmichael
Email: dcarmichael@calderwoodharkness.com
If to the Service Provider:
Fortbridge Corporate Services LLC 1209 Orange Street Wilmington, DE 19801
Attention: General Counsel
Email: generalcounsel@fortbridgecs.com
If to the Indenture Trustee (for informational purposes as applicable):
Calvoneth Trust Company, National Association 600 Travis Street, Suite 5800 Houston, TX 77002
Attention: Gerald K. Fontaine, Senior Trust Officer
Email: gfontaine@haverfordtrust.com
Section 9.2 — Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any principles of conflict of laws thereof that would require or permit the application of the laws of any other jurisdiction. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the courts of the State of Delaware and the United States District Court for the District of Delaware for the purpose of any action, suit, or proceeding arising out of or relating to this Agreement, and each party hereby irrevocably waives, to the fullest extent it may effectively do so, any objection that it may now or hereafter have to the laying of venue of any such action, suit, or proceeding in any such court, and any claim that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum.
Section 9.3 — Amendments
This Agreement may not be amended, modified, supplemented, or waived except by a written instrument signed by the Company and the Service Provider, and with the prior written consent of Calvoneth Trust Company, N.A. (in its capacity as Indenture Trustee) so long as any Notes remain outstanding under the Indenture. No failure or delay by any party in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.
Section 9.4 — Assignment
Neither party may assign its rights or obligations under this Agreement, in whole or in part, without the prior written consent of the other party and of Calvoneth Trust Company, N.A. (in its capacity as Indenture Trustee). Any purported assignment in violation of this Section 9.4 shall be null and void and of no force or effect. Subject to the foregoing, this Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns.
Section 9.5 — Third-Party Beneficiaries
Calvoneth Trust Company, N.A., in its capacity as Indenture Trustee for the benefit of the holders of the Notes, and the holders of the Notes, are intended third-party beneficiaries of this Agreement, particularly with respect to Articles II, III, V, VI, and VIII. Such third-party beneficiaries shall have the right to enforce their rights hereunder directly, subject to the terms and conditions of the Indenture. Northvane Bank, N.A., in its capacity as liquidity facility provider and back-up servicer under the Transaction Documents, is an intended third-party beneficiary of this Agreement to the extent its interests are affected by a Bankruptcy Action or other Material Action. Except as expressly provided in this Section 9.5, nothing in this Agreement is intended to confer upon any Person other than the parties hereto and the specified third-party beneficiaries any rights, remedies, obligations, or liabilities under or by reason of this Agreement.
Section 9.6 — Entire Agreement
This Agreement, together with the LLC Agreement and the Schedules and Exhibits hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, discussions, representations, and warranties, whether oral or written, between the parties with respect to such subject matter. No provision of this Agreement is intended to confer any rights, remedies, obligations, or liabilities upon any Person other than the parties hereto and the intended third-party beneficiaries identified in Section 9.5.
Section 9.7 — Severability
If any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law, statute, rule, or regulation, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be reformed, construed, and enforced as if such invalid, illegal, or unenforceable provision had never been contained herein. In the event of such holding, the parties shall negotiate in good faith to replace the invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that, to the greatest extent possible, achieves the intended economic, business, and legal purposes of such invalid, illegal, or unenforceable provision.
Section 9.8 — Counterparts