NOTE PURCHASE AGREEMENT

NOTE PURCHASE AGREEMENT
Dated as of [●], 2022
EXECUTION DRAFT v3 — October 12, 2022
among
QUORUM RECEIVABLES FUNDING 2022-1 LLC as Issuer
QUORUM INSURANCE HOLDINGS CORP. as Sponsor
and
RIDGELINE CAPITAL MARKETS LLC as Initial Purchaser
CONFIDENTIAL — DRAFT — Subject to Further Revision
Calderwood & Harkness LLP 601 Lexington Avenue New York, NY 10022 Issuer's Counsel
TABLE OF CONTENTS
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ARTICLE I — DEFINITIONS
Section 1.01 — Defined Terms
As used in this Note Purchase Agreement (this "Agreement"), the following terms shall have the meanings set forth below:
"Account Control Agreement" means the Account Control Agreement dated as of the Closing Date among the Issuer, Calvoneth Trust Company, N.A., as Securities Intermediary, and Calvoneth Trust Company, N.A., as Trustee, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Administration Agreement" means the Administration Agreement dated as of the Closing Date between the Issuer and QIH, as Administrator, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Amortization Period" means the twelve (12)-month period immediately following the end of the Revolving Period, during which principal collections on the Receivables shall be applied to the repayment of the Notes in accordance with the Payment Waterfall set forth in the Indenture.
"Back-Up Servicer" means Northvane Bank, N.A., a national banking association, in its capacity as back-up servicer under the Back-Up Servicing Agreement, or any successor thereto appointed in accordance with the terms of the Back-Up Servicing Agreement.
"Back-Up Servicing Agreement" means the Back-Up Servicing Agreement dated as of the Closing Date among the Issuer, QPF, as Servicer, Northvane Bank, N.A., as Back-Up Servicer, and the Trustee, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Business Day" means any day other than a Saturday, a Sunday, or a day on which banking institutions in New York, New York or Houston, Texas are authorized or obligated by law or executive order to close.
"Class A Notes" means the $375,000,000 aggregate principal amount of Floating Rate Asset-Backed Notes, Class A, issued by the Issuer pursuant to the Indenture, bearing interest at a rate of SOFR + [●] basis points per annum, with preliminary CUSIP Number 74892TAA3.
"Class A Placement Fee" has the meaning assigned to such term in Section 2.04.
"Class B Notes" means the $75,000,000 aggregate principal amount of Floating Rate Asset-Backed Notes, Class B, issued by the Issuer pursuant to the Indenture, bearing interest at a rate of SOFR + [●] basis points per annum, with preliminary CUSIP Number 74892TAB1.
"Class B Placement Fee" has the meaning assigned to such term in Section 2.04.
"Class C Notes" means the $35,000,000 aggregate principal amount of Floating Rate Asset-Backed Notes, Class C, issued by the Issuer pursuant to the Indenture, bearing interest at a rate of SOFR + [●] basis points per annum, with preliminary CUSIP Number 74892TAC9.
"Class C Placement Fee" has the meaning assigned to such term in Section 2.04.
"Closing Date" means [●], 2022, or such other date as the parties hereto may mutually agree in writing.
"Collection Account" means the account established and maintained in the name of the Issuer with Calvoneth Trust Company, N.A., as Securities Intermediary, pursuant to the Indenture and the Account Control Agreement, into which collections on the Receivables are deposited.
"Brindoval" means Brindoval Ratings Inc., a nationally recognized statistical rating organization.
"Custodian Agreement" means the Custodian Agreement dated as of the Closing Date between the Issuer and Calvoneth Trust Company, N.A., as Custodian, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Cut-Off Date" means June 30, 2022.
"Depositor" means Quorum Receivables Holding LLC, a Delaware limited liability company.
"DTC" means The Depository Trust Company, a New York-chartered limited purpose trust company.
"Early Amortization Event" has the meaning assigned to such term in the Indenture.
"Eligible Receivables" means Receivables satisfying the eligibility criteria set forth in Section 2.06 of the Receivables Sale Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FATCA" means Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended, and any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code.
"Grant of Security Interest" means the Grant of Security Interest (Pledge Agreement) dated as of the Closing Date from the Issuer to the Trustee, for the benefit of the Noteholders, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Indenture" means the Indenture dated as of the Closing Date between the Issuer and Calvoneth Trust Company, N.A., as Trustee, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Initial Pool Balance" means $612,000,000, representing the aggregate outstanding principal balance of all Receivables in the pool as of the Cut-Off Date.
"Initial Purchaser" means Ridgeline Capital Markets LLC, a Delaware limited liability company and SEC-registered broker-dealer, with its principal office at 383 Madison Avenue, 14th Floor, New York, NY 10179.
"Initial Purchaser Information" has the meaning assigned to such term in Section 3.05.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended.
"Investment Company Act" means the Investment Company Act of 1940, as amended.
"Issuer" means Quorum Receivables Funding 2022-1 LLC, a Delaware limited liability company (Delaware Secretary of State File No. 7894231).
"Legal Final Maturity Date" means the date that is forty-two (42) months from the Closing Date.
"Liquidity Facility Agreement" means the Liquidity Facility Agreement dated as of the Closing Date between the Issuer and Northvane Bank, N.A., as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Liquidity Reserve Account" means the account established and maintained in the name of the Issuer with Calvoneth Trust Company, N.A., as Securities Intermediary, pursuant to the Indenture and the Account Control Agreement, for the purpose of holding amounts available under the Liquidity Facility Agreement.
"Notes" means, collectively, the Class A Notes, the Class B Notes, and the Class C Notes.
"Noteholders" means the holders from time to time of the Notes.
"Offering Memorandum" means the Preliminary Offering Memorandum dated [●], 2022, as supplemented and amended from time to time, relating to the offering and sale of the Notes.
"Originator" means Quorum Premium Finance LLC, a Delaware limited liability company, in its capacity as originator of the Receivables.
"Overcollateralization Amount" means $15,000,000, representing 3.0% of the Total Issuance Amount.
"Payment Account" means the account established and maintained in the name of the Issuer with Calvoneth Trust Company, N.A., as Securities Intermediary, pursuant to the Indenture and the Account Control Agreement, from which distributions to Noteholders are made.
"Performance Guaranty" means the Performance Guaranty dated as of the Closing Date by the Sponsor in favor of the Trustee, for the benefit of the Noteholders, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Pinnacle" means Pinnacle Rating Services LLC, a nationally recognized statistical rating organization.
"Placement Fee" has the meaning assigned to such term in Section 2.04.
"QPF" means Quorum Premium Finance LLC, a Delaware limited liability company, in its individual capacity and, where the context requires, in its capacity as Originator and/or Servicer.
"QIH" means Quorum Insurance Holdings Corp., a Delaware corporation.
"QRF 2022-1" means Quorum Receivables Funding 2022-1 LLC, a Delaware limited liability company.
"QRH" means Quorum Receivables Holding LLC, a Delaware limited liability company.
"Qualified Institutional Buyer" or "QIB" has the meaning ascribed thereto in Rule 144A under the Securities Act.
"Rating Agencies" means, collectively, Brindoval Ratings Inc. and Pinnacle Rating Services LLC, and "Rating Agency" means either of them.
"Receivables" means insurance premium finance receivables originated by QPF in the ordinary course of business, including all scheduled payments of principal and interest payable thereunder and all rights, remedies, and obligations arising thereunder or in connection therewith.
"Receivables Sale Agreement" means the Receivables Sale Agreement dated as of the Closing Date between QPF, as Seller, and QRH, as Purchaser, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Receivables Transfer Agreement" means the Receivables Transfer Agreement dated as of the Closing Date between QRH, as Transferor, and the Issuer, as Transferee, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Reserve Account" means the account established and maintained in the name of the Issuer with Calvoneth Trust Company, N.A., as Securities Intermediary, pursuant to the Indenture and the Account Control Agreement, for the purpose of holding specified reserves.
"Revolving Period" means the twenty-four (24)-month period commencing on the Closing Date, during which principal collections on the Receivables may be used to acquire additional Eligible Receivables.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Servicer" means Quorum Premium Finance LLC, in its capacity as servicer under the Servicing Agreement, or any successor servicer appointed in accordance with the terms thereof.
"Servicing Agreement" means the Servicing Agreement dated as of the Closing Date among the Issuer, QPF, as Servicer, and the Trustee, as the same may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"SOFR" means the Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York (or a successor administrator).
"Sponsor" means Quorum Insurance Holdings Corp., a Delaware corporation (NYSE: QIHC), with its principal office at 400 Atlantic Street, Suite 2200, Stamford, CT 06901.
"Total Issuance Amount" means $500,000,000, being the aggregate principal amount of all Notes issued on the Closing Date.
"Transaction Documents" means, collectively, this Agreement, the Indenture, the Receivables Sale Agreement, the Receivables Transfer Agreement, the Servicing Agreement, the Back-Up Servicing Agreement, the Administration Agreement, the Liquidity Facility Agreement, the Account Control Agreement, the Custodian Agreement, the Grant of Security Interest, and the Performance Guaranty, together with all exhibits, schedules, annexes, and other attachments thereto, and all amendments, restatements, supplements, and other modifications thereof.
"Trustee" means Calvoneth Trust Company, N.A., a national banking association, in its capacity as indenture trustee under the Indenture, with its Corporate Trust Office at 600 Travis Street, Suite 5800, Houston, TX 77002, or any successor trustee appointed in accordance with the terms of the Indenture.
"UCC" means the Uniform Commercial Code as in effect from time to time in the applicable jurisdiction.
Section 1.02 — Rules of Construction
(a) Unless the context otherwise requires, all capitalized terms defined in this Agreement shall have the meanings assigned to them herein when used in any certificate, report, or other document made or delivered pursuant hereto. Terms defined in the UCC and not otherwise defined herein shall have the meanings ascribed to them in the UCC.
(b) The headings and captions contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement, and shall not be referred to in connection with the construction or interpretation of this Agreement.
(c) All references in this Agreement to designated "Articles," "Sections," "Schedules," "Exhibits," or "Annexes" are to the corresponding Articles, Sections, Schedules, Exhibits, or Annexes of this Agreement, unless otherwise specifically stated.
(d) All references to any agreement or instrument shall be deemed to include all amendments, restatements, supplements, and other modifications thereto, unless the context otherwise requires.
(e) Any reference in this Agreement to "Business Day" shall mean that if any action is to be taken or any right or obligation is to be exercised or performed on a day that is not a Business Day, such action, right, or obligation shall be taken, exercised, or performed on the next succeeding Business Day.
(f) The word "including" (and with correlative meaning "include" and "includes") means including, without limiting the generality of any description preceding or following such word.
(g) Words importing the singular number shall include the plural number and vice versa, and words importing any gender shall include the other genders.
(h) References to "herein," "hereof," "hereto," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(i) References to any statute, rule, or regulation shall be deemed to include any successor statute, rule, or regulation and any regulations promulgated thereunder, unless the context otherwise requires.
(j) References to "dollars" or "$" shall mean the lawful currency of the United States of America.
ARTICLE II — PURCHASE AND SALE OF NOTES
Section 2.01 — Agreement to Purchase
Subject to the terms and conditions set forth in this Agreement, the Initial Purchaser hereby agrees to purchase from the Issuer, and the Issuer hereby agrees to sell to the Initial Purchaser, on the Closing Date, the following Notes:
(a) $375,000,000 aggregate principal amount of Class A Notes;
(b) $75,000,000 aggregate principal amount of Class B Notes; and
(c) $35,000,000 aggregate principal amount of Class C Notes.
The total aggregate principal amount of Notes to be purchased by the Initial Purchaser pursuant to this Section 2.01 is $500,000,000 (the "Total Issuance Amount"), subject to adjustment for the Placement Fees as set forth in Section 2.04. The obligation of the Initial Purchaser to purchase any class of Notes is conditioned upon the simultaneous purchase of all classes of Notes.
For the avoidance of doubt, the $15,000,000 Overcollateralization Amount (representing 3.0% of the Total Issuance Amount), which constitutes the retained interest of the Sponsor, is not subject to purchase hereunder and shall be retained by the Sponsor or its designee in accordance with the risk retention requirements of Section 6.10.
Section 2.02 — Purchase Price
The purchase price to be paid by the Initial Purchaser for each class of Notes shall be as follows:
(a) Class A Notes: 100% of par ($375,000,000), minus the Class A Placement Fee of $1,125,000, for a net purchase price of $373,875,000;
(b) Class B Notes: 100% of par ($75,000,000), minus the Class B Placement Fee of $337,500, for a net purchase price of $74,662,500; and
(c) Class C Notes: 100% of par ($35,000,000), minus the Class C Placement Fee of $210,000, for a net purchase price of $34,790,000.
The aggregate net proceeds payable by the Initial Purchaser to the Issuer on the Closing Date shall be $500,000,000 minus aggregate Placement Fees of $1,672,500, for a total of $498,327,500. No accrued interest shall be payable in respect of the Notes at closing, as the Closing Date shall be the initial interest accrual date for each class of Notes.
Section 2.03 — Closing
(a) The closing of the purchase and sale of the Notes (the "Closing") shall take place on the Closing Date at the offices of Calderwood & Harkness LLP, 601 Lexington Avenue, New York, NY 10022, or at such other place as the Issuer, the Sponsor, and the Initial Purchaser may agree in writing. The Closing shall commence at 10:00 a.m. (New York City time) on the Closing Date, or at such other time as the parties may mutually agree.
(b) At the Closing, the Issuer shall deliver or cause to be delivered to the Initial Purchaser the Notes in book-entry form through the facilities of DTC. The Notes shall be registered in the name of Cede & Co., as nominee for DTC, or in such other name as DTC may direct. The Issuer shall cause the Trustee to authenticate the Notes and deliver them to DTC or its custodian for crediting to the account of the Initial Purchaser or its designee maintained at DTC.
(c) At the Closing, the Initial Purchaser shall pay the aggregate net purchase price of $498,327,500 by wire transfer of immediately available funds in United States dollars to the Collection Account maintained with Calvoneth Trust Company, N.A., in accordance with wire transfer instructions provided by the Issuer to the Initial Purchaser not less than two (2) Business Days prior to the Closing Date.
(d) Each of the parties hereto shall use commercially reasonable efforts to cause all conditions precedent to the Closing set forth in Article VII to be satisfied on or prior to the Closing Date.
Section 2.04 — Placement Fees
(a) As compensation for its services hereunder, the Issuer shall pay to the Initial Purchaser the following placement fees (each, a "Placement Fee" and, collectively, the "Placement Fees"), which shall be deducted from the applicable purchase price at the Closing:
(i) Class A Placement Fee: 0.30% of the aggregate principal amount of the Class A Notes, equal to $1,125,000 (0.30% × $375,000,000);
(ii) Class B Placement Fee: 0.45% of the aggregate principal amount of the Class B Notes, equal to $337,500 (0.45% × $75,000,000); and
(iii) Class C Placement Fee: 0.60% of the aggregate principal amount of the Class C Notes, equal to $210,000 (0.60% × $35,000,000).
(b) The total Placement Fees payable to the Initial Purchaser shall be $1,672,500. Such fees shall be payable on the Closing Date by netting against the purchase price as set forth in Section 2.02 and shall not be subject to any further invoicing, adjustment, or reconciliation.
(c) Except as expressly provided in this Agreement, the Placement Fees shall constitute the sole compensation payable to the Initial Purchaser for its services in connection with the offering and sale of the Notes. No additional placement, structuring, distribution, or advisory fee shall be payable to the Initial Purchaser.
Section 2.05 — Offering
(a) The Initial Purchaser hereby agrees that it will offer and sell the Notes only:
(i) in the United States, to persons whom the Initial Purchaser reasonably believes to be Qualified Institutional Buyers, in reliance on the exemption from the registration requirements of the Securities Act provided by Rule 144A; and
(ii) outside the United States, in offshore transactions in reliance on the exemption from the registration requirements of the Securities Act provided by Regulation S.
(b) The Initial Purchaser agrees that it has not offered and will not offer or sell the Notes by any form of general solicitation or general advertising, including but not limited to any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar medium, or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(c) The Initial Purchaser acknowledges and agrees that the Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
(d) The Initial Purchaser agrees that it will deliver to each person to whom it sells Notes a copy of the Offering Memorandum (as then supplemented or amended, if applicable) and will inform such person of the restrictions on transfer applicable to the Notes.
Section 2.06 — Denominations
(a) The Notes shall be issued in minimum denominations of $250,000 and integral multiples of $1,000 in excess thereof.
(b) The Notes shall be issued in book-entry form only and shall be represented by one or more global certificates deposited with, or on behalf of, DTC and registered in the name of Cede & Co., as nominee for DTC, or in such other name as DTC may direct. Beneficial interests in the Notes shall be evidenced by, and transfers thereof shall be effected only through, records maintained by DTC and its direct and indirect participants.
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer hereby makes the following representations and warranties to the Initial Purchaser as of the date hereof and as of the Closing Date (except where a representation or warranty is stated to be made as of a specific date, in which case such representation or warranty is made only as of such date):
Section 3.01 — Organization and Good Standing
(a) Quorum Receivables Funding 2022-1 LLC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Issuer was formed on August 3, 2022, and is registered with the Delaware Secretary of State under File No. 7894231. The Issuer's registered agent in the State of Delaware is Ashgrove Services Inc., 28 Liberty Street, New York, NY 10005.
(b) The sole member of the Issuer is Quorum Receivables Holding LLC, a Delaware limited liability company.
(c) The Issuer has all requisite limited liability company power and authority to (i) own and hold its properties and assets, (ii) conduct its business as presently conducted and as contemplated to be conducted, and (iii) execute, deliver, and perform its obligations under this Agreement and each other Transaction Document to which it is a party.
(d) The Issuer is a bankruptcy-remote special purpose entity organized solely for the purpose of acquiring and holding insurance premium finance receivables and issuing the Notes, and has not engaged in any business activity other than activities incidental to its formation and activities related to the transactions contemplated by the Transaction Documents.
Section 3.02 — Authorization; No Conflict
(a) The execution, delivery, and performance by the Issuer of this Agreement and each Transaction Document to which the Issuer is a party have been duly authorized by all necessary limited liability company action of the Issuer, including the approval of the independent manager, Timothy R. Callan of Fortbridge Corporate Services LLC, as required by the Issuer's limited liability company agreement (the "LLC Agreement").
(b) The execution, delivery, and performance by the Issuer of this Agreement and each Transaction Document to which it is a party do not and will not (i) violate or conflict with the LLC Agreement or any other organizational document of the Issuer, (ii) violate or conflict with any provision of any applicable law, rule, regulation, order, judgment, injunction, or decree of any governmental authority binding upon or applicable to the Issuer, or (iii) result in a breach of, or constitute a default under, or result in the creation or imposition of any lien (other than liens created by or contemplated under the Transaction Documents) upon any of the property or assets of the Issuer pursuant to, any agreement, contract, instrument, or other obligation to which the Issuer is a party or by which the Issuer or any of its property or assets is bound.
Section 3.03 — Enforceability
This Agreement and each Transaction Document to which the Issuer is a party constitutes a legal, valid, and binding obligation of the Issuer, enforceable against the Issuer in accordance with its respective terms, except as the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, receivership, reorganization, moratorium, or other similar laws affecting the enforcement of creditors' rights generally, and (ii) general principles of equity, including principles of commercial reasonableness, good faith, and fair dealing (regardless of whether enforcement is sought in a proceeding in equity or at law).
Section 3.04 — No Registration Required
Assuming the accuracy of the representations and warranties of the Initial Purchaser set forth in Article V hereof, the offer and sale of the Notes in the manner contemplated by this Agreement are exempt from the registration requirements of the Securities Act pursuant to Rule 144A and Regulation S. No registration of the Notes under the Securities Act and no qualification of the Indenture under the Trust Indenture Act of 1939, as amended, is required in connection with the offer and sale of the Notes as contemplated hereby. The Issuer is not required to register under the Investment Company Act of 1940, as amended, by reason of the issuance of the Notes or the consummation of the transactions contemplated by the Transaction Documents.
Section 3.05 — Offering Memorandum
(a) The Offering Memorandum, as of its date and as of the Closing Date, does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(b) Notwithstanding the foregoing, the Issuer makes no representation or warranty with respect to statements contained in or omitted from the Offering Memorandum made in reliance upon and in conformity with information furnished in writing by the Initial Purchaser expressly for use therein (collectively, the "Initial Purchaser Information"), which information is identified on Schedule C hereto.
Section 3.06 — Receivables Pool
As of the Cut-Off Date (June 30, 2022):
(a) The Initial Pool Balance was $612,000,000, comprising approximately 82,400 insurance premium finance loans, with an average loan balance of approximately $7,427.
(b) All Receivables in the pool are Eligible Receivables and satisfy each of the eligibility criteria set forth in Section 2.06 of the Receivables Sale Agreement.
(c) Each Receivable is an insurance premium finance loan originated by QPF in the ordinary course of its business as a premium finance company and in compliance with QPF's credit and collection policies in effect at the time of origination.
(d) Each Receivable is denominated in United States dollars and is secured by unearned premium refund rights from the applicable insurance carrier.
(e) No Receivable has an original term exceeding twelve (12) months.
(f) Each obligor under a Receivable is a U.S. commercial policyholder.
(g) No Receivable is in default; no payment on any Receivable is more than sixty (60) days past due at the time of its transfer to the Issuer.
(h) All Receivables comply in all material respects with applicable usury laws and licensing laws of each applicable jurisdiction in which such Receivable was originated.
(i) The pool statistics as of the Cut-Off Date are as follows:
Section 3.07 — True Sale
(a) The transfer of Receivables from QPF to QRH under the Receivables Sale Agreement constitutes a true sale of such Receivables for all purposes, including for purposes of the UCC and the United States Bankruptcy Code, and does not constitute a secured financing, a pledge, or a grant of a security interest by QPF to QRH.
(b) The transfer of Receivables from QRH to the Issuer under the Receivables Transfer Agreement constitutes a true sale of such Receivables for all purposes, including for purposes of the UCC and the United States Bankruptcy Code, and does not constitute a secured financing, a pledge, or a grant of a security interest by QRH to the Issuer.
(c) The Issuer has acquired good and marketable title to the Receivables, free and clear of all liens, encumbrances, security interests, claims, and interests of any kind, other than those created in favor of the Trustee under the Transaction Documents for the benefit of the Noteholders.
Section 3.08 — Security Interest
(a) The Grant of Security Interest creates a valid and enforceable first-priority security interest in favor of the Trustee, for the benefit of the Noteholders, in all collateral of the Issuer described therein, including all Receivables, all collections thereon, all amounts on deposit in the Collection Account, the Payment Account, the Reserve Account, and the Liquidity Reserve Account, and all proceeds and products thereof.
(b) Upon the filing of UCC-1 financing statements with the Delaware Secretary of State naming the Issuer as debtor and the Trustee as secured party, such security interest will be perfected as to all collateral in which a security interest may be perfected by the filing of a UCC-1 financing statement under the UCC.
Section 3.09 — Bankruptcy Remoteness
(a) The Issuer has complied and will continue to comply in all respects with all separateness covenants contained in its LLC Agreement, including, without limitation, maintaining its existence as a separate legal entity from any other person.
(b) The Issuer has an independent manager, Timothy R. Callan, appointed by Fortbridge Corporate Services LLC, whose affirmative vote is required for the Issuer to file any voluntary petition for bankruptcy, reorganization, or similar relief.
(c) The Issuer has not and will not commingle its assets with those of any other person, including QPF, QRH, QIH, or any other affiliate. The Issuer has maintained and will continue to maintain (i) separate books and records, (ii) separate bank accounts and financial statements, and (iii) has held itself out and will continue to hold itself out as a separate entity distinct from its sole member and its affiliates.
Section 3.10 — Tax Status
(a) The Issuer has obtained Employer Identification Number 88-1247653 from the Internal Revenue Service.
(b) The Notes are intended to be treated as debt for United States federal income tax purposes, and the Issuer has not taken and will not take any position inconsistent therewith for federal, state, or local income tax purposes.
(c) The Issuer is intended to be treated as a disregarded entity or qualifying special purpose entity for United States federal income tax purposes and not as a separate taxable entity, and the Issuer has not taken and will not take any action inconsistent with such treatment.
Section 3.11 — Compliance with Laws
The Issuer is in compliance in all material respects with all applicable federal, state, and local laws, regulations, rules, and orders material to its business and to the transactions contemplated by this Agreement and the other Transaction Documents.
Section 3.12 — No Litigation
No litigation, proceeding, investigation, or inquiry by or before any court, arbitrator, governmental body, or regulatory authority is pending or, to the knowledge of the Issuer, threatened against the Issuer, the outcome of which would reasonably be expected to (i) materially and adversely affect the transactions contemplated hereby or by any other Transaction Document, or (ii) materially and adversely affect the Issuer's ability to perform its obligations under this Agreement or any other Transaction Document to which it is a party.
Section 3.13 — ERISA
The Issuer is not and will not be an "employee benefit plan" as defined in Section 3(3) of ERISA or a "plan" as defined in Section 4975(e)(1) of the Internal Revenue Code, and none of the assets of the Issuer constitute or will constitute "plan assets" of any such plan within the meaning of the regulations issued by the United States Department of Labor at 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA.
Section 3.14 — Investment Company Act
The Issuer is not, and after giving effect to the offering and sale of the Notes and the application of the proceeds thereof as described in the Offering Memorandum, will not be required to register as an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended. The Issuer will monitor its activities and the composition of its assets to ensure continued compliance with applicable exemptions from registration under the Investment Company Act.
Section 3.15 — Solvency
After giving effect to the transactions contemplated by this Agreement and the other Transaction Documents, including the issuance of the Notes and the application of the proceeds thereof, the Issuer (i) will be solvent, (ii) will have adequate capital to carry on its business as presently conducted and as contemplated to be conducted, (iii) will not have incurred debts beyond its ability to pay such debts as they become due, and (iv) will not have unreasonably small capital for the business in which it is engaged.
Section 3.16 — Ratings
(a) Preliminary ratings have been assigned by the Rating Agencies as follows:
(b) The preliminary rating assigned by Brindoval was issued under Engagement No. CR-SF-2022-08812, and the preliminary rating assigned by Pinnacle was issued under Engagement No. PRS-2022-ABS-3347.
(c) The Issuer is not aware of any facts or circumstances that would cause either Rating Agency to downgrade, qualify, or withdraw the preliminary ratings assigned to any class of Notes prior to the Closing Date.
Section 3.17 — Accounts
The Collection Account, the Payment Account, the Reserve Account, and the Liquidity Reserve Account have each been duly established and are maintained with Calvoneth Trust Company, N.A., as Securities Intermediary, pursuant to and in accordance with the Indenture and the Account Control Agreement. Each such account is a "securities account" within the meaning of the UCC, and Calvoneth Trust Company, N.A. has agreed to act as "securities intermediary" with respect to each such account.
Section 3.18 — Absence of Certain Changes
Since the Cut-Off Date (June 30, 2022), there has been no material adverse change in the business, financial condition, operations, or prospects of the Issuer, or in the value or collectibility of the Receivables, and no event has occurred that, individually or in the aggregate, would reasonably be expected to result in such a material adverse change.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE SPONSOR
The Sponsor hereby makes the following representations and warranties to the Initial Purchaser as of the date hereof and as of the Closing Date (except where a representation or warranty is stated to be made as of a specific date, in which case such representation or warranty is made only as of such date):
Section 4.01 — Organization and Good Standing
(a) Quorum Insurance Holdings Corp. is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. QIH is publicly traded on the New York Stock Exchange under the ticker symbol "QIHC."
(b) QIH's principal office is located at 400 Atlantic Street, Suite 2200, Stamford, CT 06901.
(c) QIH's Employer Identification Number is 82-4391067.
(d) QIH has all requisite corporate power and authority to (i) own and hold its properties and assets, (ii) conduct its business as presently conducted, and (iii) execute, deliver, and perform its obligations under this Agreement, the Performance Guaranty, and each other Transaction Document to which QIH is a party.
Section 4.02 — Authorization; No Conflict
(a) The execution, delivery, and performance by QIH of this Agreement, the Performance Guaranty, and each other Transaction Document to which QIH is a party have been duly authorized by all necessary corporate action, including approval by the Board of Directors of QIH, as certified by the Secretary's Certificate dated July 27, 2022. The authorized signatories of QIH with respect to the Transaction Documents include Marcus Devereaux, Chief Executive Officer; Priya Raghavan, Chief Financial Officer; and Nolan Whitford, General Counsel.
(b) The execution, delivery, and performance by QIH of this Agreement, the Performance Guaranty, and each other Transaction Document to which QIH is a party do not and will not (i) violate or conflict with the certificate of incorporation, by-laws, or any other organizational document of QIH, (ii) violate or conflict with any provision of any applicable law, rule, regulation, order, judgment, injunction, or decree of any governmental authority binding upon or applicable to QIH, or (iii) result in a breach of, or constitute a default under, or result in the creation or imposition of any lien upon any of the property or assets of QIH pursuant to, any agreement, contract, instrument, or other obligation to which QIH is a party or by which QIH or any of its property or assets is bound, except in each case as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of QIH to perform its obligations hereunder or under any other Transaction Document to which it is a party.
Section 4.03 — Enforceability
This Agreement and each Transaction Document to which QIH is a party constitutes a legal, valid, and binding obligation of QIH, enforceable against QIH in accordance with its respective terms, except as the enforceability thereof may be limited by (i) applicable bankruptcy, insolvency, receivership, reorganization, moratorium, or other similar laws affecting the enforcement of creditors' rights generally, and (ii) general principles of equity, including principles of commercial reasonableness, good faith, and fair dealing (regardless of whether enforcement is sought in a proceeding in equity or at law).
Section 4.04 — Financial Condition
(a) QIH's consolidated revenue for the fiscal year ended December 31, 2021, was $3,800,000,000.
(b) QIH's audited consolidated financial statements, audited by Meridian Ledger LLP (PCAOB-registered; engagement partner: Robert Falcone), fairly present, in all material respects, the consolidated financial condition and results of operations of QIH and its subsidiaries as of the dates and for the periods presented therein, in conformity with United States generally accepted accounting principles applied on a consistent basis.
(c) QIH's unsecured credit ratings are as follows: BBB from Brindoval Ratings Inc. and Baa2 from Pinnacle Rating Services LLC. The Sponsor is not aware of any facts or circumstances that would cause either Rating Agency to downgrade, qualify, or withdraw such ratings.
Section 4.05 — QPF Business
(a) Quorum Premium Finance LLC is a wholly owned subsidiary of QIH, organized as a limited liability company under the laws of the State of Delaware. QPF originates and services insurance premium finance loans to commercial policyholders across all fifty (50) states of the United States.
(b) QPF's total receivables portfolio as of the date hereof is approximately $2,100,000,000, with an average loan term of nine (9) months and a portfolio weighted-average annual percentage rate of 7.85%.
(c) QPF's historical net loss rate for the three-year period from 2019 through 2021 averaged 0.42%.
(d) QPF is duly licensed as a premium finance company in all fifty (50) states of the United States and maintains all licenses, permits, and authorizations necessary for the conduct of its business as presently conducted.
(e) QPF is managed by Sandra Ling-Hwang, in her capacity as QIH Treasurer, serving as Manager of QPF. QPF's principal office is located at 400 Atlantic Street, Suite 2200, Stamford, CT 06901. QPF's Employer Identification Number is 84-2653198.
Section 4.06 — Depositor
(a) Quorum Receivables Holding LLC is a wholly owned subsidiary of QPF, organized as a limited liability company under the laws of the State of Delaware (Delaware Secretary of State File No. 7894228). QRH was formed on August 3, 2022.
(b) QRH is a bankruptcy-remote intermediate special purpose vehicle with an independent manager, Eleanor M. Vasquez of Fortbridge Corporate Services LLC, whose affirmative vote is required for QRH to file any voluntary petition for bankruptcy, reorganization, or similar relief.
(c) QRH's Employer Identification Number is 88-1247619.
(d) QRH has complied and will continue to comply with all separateness covenants contained in its LLC Agreement.
Section 4.07 — Risk Retention
(a) QIH, as Sponsor, will retain an economic interest in the securitized assets in compliance with the credit risk retention requirements of Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the implementing rules promulgated thereunder (17 C.F.R. Part 246).
(b) The Sponsor will retain a horizontal interest through the $15,000,000 Overcollateralization Amount (representing 3.0% of the Total Issuance Amount), which is unrated and is subordinate in right of payment to all classes of Notes. Such retained interest constitutes an "eligible horizontal residual interest" within the meaning of the implementing rules. The Sponsor will not sell, transfer, pledge, or hedge such retained interest except as permitted by the applicable risk retention rules.
Section 4.08 — Offering Memorandum (Sponsor Information)
All information furnished by or on behalf of QIH, QPF, or QRH for inclusion in the Offering Memorandum, including information regarding the Sponsor, the Originator/Servicer, the Receivables pool characteristics, and historical performance data, is true and correct in all material respects as of its date and as of the Closing Date and does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
Section 4.09 — No Material Adverse Change
Since December 31, 2021, there has been no material adverse change in the business, financial condition, operations, or prospects of QIH or QPF, and no event has occurred that, individually or in the aggregate, would reasonably be expected to result in such a material adverse change.
Section 4.10 — Litigation
No litigation, proceeding, investigation, or inquiry by or before any court, arbitrator, governmental body, or regulatory authority is pending or, to the knowledge of QIH, threatened against QIH or QPF, the outcome of which would reasonably be expected to materially and adversely affect the transactions contemplated hereby or the ability of QIH or QPF to perform their respective obligations under the Transaction Documents.
Section 4.11 — Compliance with Laws
QIH and QPF are in compliance in all material respects with all applicable laws, rules, regulations, and orders, including premium finance licensing requirements in all fifty (50) states, applicable usury laws, and consumer protection regulations, in each case to the extent material to the transactions contemplated hereby.
Section 4.12 — Tax Representations
(a) The transfer of Receivables from QPF to QRH under the Receivables Sale Agreement and the transfer of Receivables from QRH to the Issuer under the Receivables Transfer Agreement each constitutes a true sale for United States federal income tax purposes.
(b) QIH complies with all applicable withholding requirements under FATCA and has implemented policies and procedures designed to ensure ongoing compliance therewith.
ARTICLE V — REPRESENTATIONS AND WARRANTIES OF THE INITIAL PURCHASER
The Initial Purchaser hereby makes the following representations and warranties to the Issuer and the Sponsor as of the date hereof and as of the Closing Date:
Section 5.01 — Organization
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. Ridgeline is registered as a broker-dealer with the United States Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority. Ridgeline's principal office is located at 383 Madison Avenue, 14th Floor, New York, NY 10179.
Section 5.02 — Authorization
Ridgeline has all necessary limited liability company power and authority to execute, deliver, and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement by Ridgeline have been duly authorized by all necessary limited liability company action. This Agreement has been duly executed and delivered by Ridgeline and constitutes a legal, valid, and binding obligation of Ridgeline, enforceable against Ridgeline in accordance with its terms, subject to customary bankruptcy and equitable limitations.
Section 5.03 — Qualified Institutional Buyer Status
Ridgeline confirms that it is a Qualified Institutional Buyer within the meaning of Rule 144A under the Securities Act, or is acting for the account of one or more QIBs, and is acquiring the Notes for investment purposes and not with a view to any distribution thereof other than in compliance with the Securities Act and this Agreement.
Section 5.04 — No General Solicitation
Ridgeline has not engaged in and will not engage in any form of general solicitation or general advertising (within the meaning of Rule 502(c) under the Securities Act) in connection with the offering of the Notes, including but not limited to (i) any advertisement, article, notice, or other communication published in any newspaper, magazine, or similar medium or broadcast over television or radio, or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
Section 5.05 — Resale Restrictions
(a) Ridgeline acknowledges that the Notes have not been registered under the Securities Act and that the Notes may not be offered, sold, pledged, or otherwise transferred except in compliance with the Securities Act and applicable state securities laws.
(b) Ridgeline agrees that it will offer and resell the Notes only:
(i) to persons whom it reasonably believes to be Qualified Institutional Buyers in reliance on Rule 144A under the Securities Act; or
(ii) in offshore transactions in reliance on Regulation S under the Securities Act.
(c) Ridgeline agrees that it will require each purchaser of Notes from it to execute and deliver an investor letter acknowledging the transfer restrictions applicable to the Notes.
(d) Ridgeline acknowledges that the Notes are subject to minimum denomination requirements of $250,000 and integral multiples of $1,000 in excess thereof, and agrees not to sell or transfer any Note in a denomination less than such minimum.
Section 5.06 — Initial Purchaser Information
Ridgeline confirms that the only information furnished by it or on its behalf for inclusion in the Offering Memorandum (the "Initial Purchaser Information") consists of the paragraphs identified on Schedule C hereto, which relate solely to the Initial Purchaser's role, compensation, and stabilization activities, if any, in connection with the offering.
Section 5.07 — Independent Investigation
Ridgeline acknowledges that it has independently investigated and evaluated and is satisfied with the Receivables pool, the Issuer, the Sponsor, the Originator, the Servicer, the Transaction Documents, and the terms and conditions of the Notes. Ridgeline is not relying on the Issuer, the Sponsor, or any of their respective affiliates, directors, officers, employees, agents, or representatives for any investment advice or recommendation, and has made its own independent decision to purchase the Notes and to enter into this Agreement based on its own analysis of the merits and risks of such investment. Ridgeline acknowledges that it is experienced in the evaluation of structured finance transactions and is capable of evaluating the merits and risks of the transactions contemplated hereby.
ARTICLE VI — COVENANTS OF THE ISSUER AND THE SPONSOR
Each of the Issuer and the Sponsor hereby covenants and agrees with the Initial Purchaser as follows:
Section 6.01 — Use of Proceeds
The net proceeds from the sale of the Notes shall be used by the Issuer solely to acquire insurance premium finance receivables from QRH pursuant to the Receivables Transfer Agreement. QRH shall use the proceeds of such transfer to acquire such Receivables from QPF pursuant to the Receivables Sale Agreement. Neither the Issuer nor the Sponsor shall use, or permit the use of, any portion of the proceeds of the sale of the Notes for any other purpose.
Section 6.02 — Offering Memorandum Updates
(a) The Issuer and the Sponsor shall promptly notify the Initial Purchaser of any event occurring, or any information becoming known to the Issuer or the Sponsor, prior to the Closing Date that would cause the Offering Memorandum (as then supplemented or amended) to contain an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(b) If at any time prior to the Closing Date any event shall occur, or any condition shall exist, as a result of which the Offering Memorandum as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading, the Issuer and the Sponsor shall promptly prepare and furnish, at their own expense, either an amendment or supplement to the Offering Memorandum which will correct such statement or omission, in form and substance satisfactory to the Initial Purchaser and its counsel.
Section 6.03 — No Integration
Neither the Issuer nor the Sponsor shall, and each shall cause its respective affiliates not to, sell, offer for sale, or solicit offers to buy, or otherwise negotiate in respect of, any security (as defined in the Securities Act) that would be integrated with the sale of the Notes in a manner that would require the registration of the Notes under the Securities Act or the qualification of the Indenture under the Trust Indenture Act of 1939, as amended.
Section 6.04 — No General Solicitation
None of the Issuer, the Sponsor, or any person acting on their behalf shall engage in any form of general solicitation or general advertising (within the meaning of Rule 502(c) under the Securities Act) in connection with any offer or sale of the Notes.
Section 6.05 — DTC Eligibility
The Issuer shall cooperate with the Initial Purchaser and DTC to permit the Notes to be eligible for clearance and settlement through the facilities of DTC, including the execution and delivery of any letters of representation or other documents that may be required by DTC.
Section 6.06 — Rating Agency Confirmation
The Issuer and the Sponsor shall use commercially reasonable efforts to obtain, on or prior to the Closing Date, final ratings from each of the Rating Agencies confirming the preliminary ratings assigned to each class of Notes, as follows: Class A Notes — AAA(cr) from Brindoval and Aaa(p) from Pinnacle; Class B Notes — A(cr) from Brindoval and A1(p) from Pinnacle; and Class C Notes — BBB(cr) from Brindoval and Baa2(p) from Pinnacle. The Issuer and the Sponsor shall promptly provide to each Rating Agency all information reasonably requested by such Rating Agency in connection with the assignment and maintenance of such ratings.
Section 6.07 — Blue Sky Compliance
The Issuer shall furnish to the Initial Purchaser such information and documents as the Initial Purchaser may reasonably request for purposes of compliance with applicable state securities laws (commonly known as "Blue Sky laws"), including any filings, applications, consents, or approvals required in connection with the offering and sale of the Notes in any applicable jurisdiction. The Issuer shall cooperate with the Initial Purchaser in connection with the qualification or exemption of the Notes for offering and sale under the securities laws of such states as the Initial Purchaser may designate, and shall maintain such qualifications and exemptions in effect for so long as required for the offering and sale of the Notes.
Section 6.08 — Reporting
The Sponsor shall cause QPF, as Servicer, to furnish monthly servicer reports to the Trustee, the Initial Purchaser, the Rating Agencies, and the Noteholders in accordance with the requirements of the Servicing Agreement, including information regarding collections, delinquencies, defaults, losses, pool composition, and compliance with performance triggers and concentration limits. Such reports shall be prepared in accordance with the reporting requirements set forth in the Servicing Agreement and shall be delivered on or before the fifteenth (15th) day of each calendar month with respect to the immediately preceding collection period.
Section 6.09 — Preservation of Bankruptcy Remoteness
The Issuer and the Sponsor shall cause the Issuer and QRH to comply at all times with all separateness covenants contained in their respective LLC Agreements, including, without limitation, (i) maintaining separate bank accounts, books, records, and financial statements, (ii) refraining from commingling assets with those of any other person, (iii) maintaining adequate capitalization, (iv) conducting business in their own names, (v) observing all limited liability company formalities, (vi) paying their own liabilities from their own funds, and (vii) maintaining arm's-length relationships with affiliates.
Section 6.10 — Risk Retention
The Sponsor shall maintain its required risk retention interest, consisting of a horizontal interest in the amount of $15,000,000 (representing 3.0% of the Total Issuance Amount), in compliance with Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the implementing rules promulgated thereunder, throughout the life of the transaction. The Sponsor shall not sell, transfer, pledge, finance, or hedge such retained interest except as permitted by the applicable risk retention rules, and shall promptly notify the Initial Purchaser and the Trustee of any change in the form or amount of such retained interest.
ARTICLE VII — CONDITIONS PRECEDENT TO CLOSING
Section 7.01 — Conditions to Initial Purchaser's Obligation
The obligation of Ridgeline Capital Markets LLC to purchase the Notes on the Closing Date shall be subject to the satisfaction (or waiver in writing by the Initial Purchaser in its sole discretion) of each of the following conditions on or before the Closing Date:
(a) Representations and Warranties
All representations and warranties of the Issuer set forth in Article III and of the Sponsor set forth in Article IV shall be true and correct in all material respects on and as of the Closing Date with the same force and effect as if made on and as of the Closing Date (except to the extent that any such representation or warranty relates solely to an earlier date, in which case such representation or warranty shall have been true and correct in all material respects as of such earlier date).
(b) Performance of Covenants
The Issuer and the Sponsor shall have performed in all material respects all obligations and agreements and shall have satisfied all conditions on their respective parts required to be performed or satisfied under this Agreement on or before the Closing Date.
(c) Execution and Delivery of Transaction Documents
Each of the following Transaction Documents shall have been duly executed and delivered by all parties thereto, in form and substance satisfactory to the Initial Purchaser, and shall be in full force and effect:
(i) the Indenture, between Quorum Receivables Funding 2022-1 LLC and Calvoneth Trust Company, N.A., as Trustee;
(ii) the Receivables Sale Agreement, between Quorum Premium Finance LLC, as Seller, and Quorum Receivables Holding LLC, as Purchaser;
(iii) the Receivables Transfer Agreement, between Quorum Receivables Holding LLC, as Transferor, and Quorum Receivables Funding 2022-1 LLC, as Transferee;
(iv) the Servicing Agreement, among Quorum Receivables Funding 2022-1 LLC, Quorum Premium Finance LLC, as Servicer, and Calvoneth Trust Company, N.A., as Trustee;
(v) the Back-Up Servicing Agreement, among Quorum Receivables Funding 2022-1 LLC, Quorum Premium Finance LLC, as Servicer, Northvane Bank, N.A., as Back-Up Servicer, and Calvoneth Trust Company, N.A., as Trustee;
(vi) the Administration Agreement, between Quorum Receivables Funding 2022-1 LLC and Quorum Insurance Holdings Corp., as Administrator;
(vii) the Liquidity Facility Agreement, between Quorum Receivables Funding 2022-1 LLC and Northvane Bank, N.A., providing a $25,000,000 committed liquidity facility;
(viii) the Account Control Agreement, between Quorum Receivables Funding 2022-1 LLC and Calvoneth Trust Company, N.A., as Securities Intermediary;
(ix) the Custodian Agreement, between Quorum Receivables Funding 2022-1 LLC and Calvoneth Trust Company, N.A., as Custodian;
(x) the Grant of Security Interest (Pledge Agreement), from Quorum Receivables Funding 2022-1 LLC to Calvoneth Trust Company, N.A., as Trustee, for the benefit of the Noteholders; and
(xi) the Performance Guaranty, from Quorum Insurance Holdings Corp. in favor of Calvoneth Trust Company, N.A., as Trustee, for the benefit of the Noteholders.
(d) Legal Opinions
Delivery of the following legal opinions from Calderwood & Harkness LLP, 601 Lexington Avenue, New York, NY 10022, in form and substance satisfactory to the Initial Purchaser and its counsel, Calloway & Brandt LLP (Harrison Collier, lead partner; Megan O'Shaughnessy, senior associate; One Liberty Plaza, 165 Broadway, New York, NY 10006):
(i) True Sale Opinion regarding the transfer of Receivables from QPF to QRH under the Receivables Sale Agreement;
(ii) True Sale Opinion regarding the transfer of Receivables from QRH to QRF 2022-1 under the Receivables Transfer Agreement;
(iii) Enforceability of the Indenture and Notes Opinion, opining that the Indenture and the Notes constitute legal, valid, and binding obligations of the Issuer enforceable in accordance with their terms;
(iv) Security Interest Perfection Opinion (UCC Article 9), opining that the security interest granted by the Issuer to the Trustee in the collateral has been duly created and, upon the filing of UCC-1 financing statements, will be perfected;
(v) Tax Characterization Opinion (prepared by Sylvia Hartwell), opining that (A) the Notes will be characterized as debt for United States federal income tax purposes, and (B) QRF 2022-1 will be treated as a disregarded entity for United States federal income tax purposes;
(vi) No Registration Required Opinion, opining that the offer and sale of the Notes in the manner contemplated by this Agreement are exempt from registration under the Securities Act pursuant to Rule 144A and Regulation S;
(vii) Delaware LLC Valid Formation and Authorization Opinion regarding Quorum Receivables Funding 2022-1 LLC;
(viii) Delaware LLC Valid Formation and Authorization Opinion regarding Quorum Receivables Holding LLC;
(ix) Non-Consolidation Opinion regarding Quorum Receivables Funding 2022-1 LLC, opining that a court would not substantively consolidate the assets and liabilities of QRF 2022-1 with those of QPF, QRH, QIH, or any other affiliate in a bankruptcy, insolvency, or similar proceeding