CALDERWOOD & HARKNESS LLP 1301 Avenue of the Americas New York, NY 10019
May 10, 2021
PRIVILEGED AND CONFIDENTIAL
Mr. Yusuf A. Okafor General Counsel & Corporate Secretary Quorum Insurance Holdings Corp. 200 Constitution Plaza, Suite 3100 Hartford, CT 06103
Re: Engagement of Calderwood & Harkness LLP — Follow-On Offering of Common Stock
Dear Mr. Okafor:
We are pleased to confirm that Quorum Insurance Holdings Corp. ("Quorum" or the "Company") has engaged Calderwood & Harkness LLP ("C&H" or the "Firm") to serve as counsel to the Company in connection with a proposed registered follow-on offering (the "Offering") of shares of the Company's common stock, par value $0.01 per share (the "Common Stock"). We understand that the Offering will be made pursuant to the Company's effective shelf registration statement on Form S-3, File No. 333-248710 (the "Registration Statement"), which was declared effective by the Securities and Exchange Commission (the "SEC") on September 18, 2020. This letter sets forth the terms and conditions upon which the Firm will provide legal services to the Company in connection with the Offering.
1. Scope of Engagement
The Firm's engagement in connection with the Offering will include the following:
(a) Prospectus Supplements. Preparation, review, and filing with the SEC of the preliminary prospectus supplement and the final prospectus supplement relating to the Offering, including all exhibits, annexes, and incorporated documents thereto, in each case supplementing the base prospectus contained in the Registration Statement.
(b) Underwriting Agreement. Review, drafting, and negotiation of the underwriting agreement between the Company and Greystone Harwick & Co., LLC (the "Underwriter"), acting as sole book-running manager for the Offering, together with all schedules and exhibits thereto, including pricing-related terms, representations and warranties, conditions to closing, indemnification provisions, and such other customary provisions as may be included therein.
(c) Ancillary Transaction Documents. Preparation of ancillary transaction documents in connection with the Offering, including, without limitation, lock-up agreements to be executed by the Company's directors and executive officers, officers' certificates to be delivered at closing, board resolutions authorizing the Offering, a secretary's certificate attesting to the incumbency and authority of the Company's officers, and such other closing deliverables as may be required under the underwriting agreement.
(d) Legal Opinion and Negative Assurance Letter. Delivery at the closing of the Offering of (i) a legal opinion of the Firm addressed to the Underwriter, in customary form, regarding the valid issuance of the shares of Common Stock offered in the Offering, and (ii) a negative assurance letter (commonly referred to as a "10b-5 letter") addressed to the Underwriter, covering the Registration Statement, the prospectus, the prospectus supplement, and any documents incorporated by reference therein, in each case in form and substance customary for transactions of this nature.
(e) Coordination with Transaction Participants. Coordination and communication with the Underwriter; the Underwriter's counsel, Duval & Pressler LLP; the Company's independent registered public accounting firm, Carver, Bain & Associates LLP; the Company's financial advisor, Trellis Peak Advisors LLC; and the Company's transfer agent, Continental Transfer & Trust Co., in each case as necessary or appropriate in connection with the planning, execution, and closing of the Offering.
(f) Due Diligence. Review of due diligence materials provided by the Company and its advisors, and participation in due diligence sessions, including customary "bring-down" due diligence calls with the Company's management and auditors in connection with the delivery of the negative assurance letter referenced in subsection (d) above.
(g) Other Related Matters. Such other legal matters as may reasonably arise in connection with the Offering and as may be mutually agreed upon by the Company and the Firm.
Notwithstanding the foregoing, the scope of this engagement does not include the representation of any subsidiary or affiliate of the Company, including, without limitation, Quorum Specialty Insurance Company, Quorum National Casualty Co., or QuorumEdge Technology Solutions, Inc., in any insurance regulatory matter or any other matter before any state or federal insurance regulatory authority. Additionally, the Firm is not providing tax advice of any kind in connection with this engagement. To the extent that insurance regulatory approvals, filings, or notifications are required in connection with the Offering, or to the extent that the Company requires tax advice regarding the tax consequences of the Offering or any related transaction, the Company should engage separate counsel with the appropriate expertise in those areas.
2. Engagement Team
The following attorneys will principally staff this matter on behalf of the Firm:
Mr. Adeyemi will serve as the partner primarily responsible for overseeing the Firm's work on this engagement and will serve as the Company's principal point of contact. Ms. Kwon will be responsible for billing and fee-related matters. Ms. Forbes will serve as the lead associate and will coordinate the day-to-day work of the engagement team, with the assistance of Mr. Johannsen.
From time to time, additional attorneys or paraprofessionals may be assigned to work on this matter as the needs of the engagement require, including associates in the Firm's securities, corporate governance, or capital markets practice groups, as well as paralegals, document specialists, and EDGAR filing coordinators. The Company will be notified in advance of any material changes to the composition of the engagement team, including any change in the identity of the Responsible Partner or the Billing Partner.
3. Fees and Expenses
The Firm's fees for this engagement will be based on the time spent by attorneys and other timekeepers on the matter, billed at each timekeeper's standard hourly rate. The Firm's standard hourly rates for 2021 are as follows:
Paralegal and other paraprofessional time, if applicable, will be billed at the Firm's standard rates for such timekeepers, which currently range from $275 to $425 per hour. The Firm's standard hourly rates are subject to periodic adjustment, typically on an annual basis, and the Company will be notified in advance of any changes to the applicable rates.
Based on our current understanding of the scope and anticipated timeline of the Offering, we estimate that the aggregate legal fees for this engagement (exclusive of disbursements and out-of-pocket expenses) will not exceed One Hundred Seventy-Five Thousand Dollars ($175,000) (the "Fee Cap"). The Fee Cap is based on the assumption that the Offering will proceed on a customary timeline for a registered follow-on offering of this nature, that the underwriting agreement and related documentation will be in substantially customary form, and that no material complications, regulatory inquiries, SEC comment letters, or other unforeseen circumstances will arise that would significantly expand the scope of the Firm's work. If circumstances arise that, in the Firm's reasonable judgment, would materially alter the scope, complexity, or timeline of the Offering, the Firm will promptly advise the Company and discuss in good faith any appropriate adjustment to the Fee Cap before incurring fees in excess thereof.
In addition to fees for professional services, the Company will be responsible for reimbursement of reasonable out-of-pocket expenses and disbursements incurred by the Firm in connection with this engagement. Such expenses may include, without limitation, SEC filing fees, EDGAR conversion and filing costs, printing and reproduction costs, messenger and courier charges, travel expenses (including airfare, hotel, and ground transportation for travel undertaken at the Company's request or with the Company's prior approval), long-distance telephone charges, computerized legal research charges, and similar disbursements. The Firm will endeavor to incur such expenses in a cost-effective manner and will seek prior approval from the Company for any single expense item in excess of $2,500.
Invoices for fees and expenses will be rendered on a monthly basis and will include a reasonably detailed description of the professional services rendered and the expenses incurred during the billing period. Payment of each invoice is due within thirty (30) days of the date of such invoice. Any amounts not paid within such period may, at the Firm's discretion, accrue interest at the rate of one percent (1.0%) per month, or the maximum rate permitted by applicable law, whichever is less.
4. Matter Number
The Firm has assigned the following internal matter number to this engagement: 1025-00001. The Company is requested to reference this matter number in all correspondence, communications, and payments directed to the Firm in connection with the Offering. Inclusion of the matter number will facilitate the accurate and timely processing of all communications and the proper allocation of charges to the Company's account.
5. Conflicts and Governing Law
The Firm has conducted a conflicts check in accordance with its standard procedures and the applicable Rules of Professional Conduct and is not currently aware of any conflict of interest that would preclude or limit the Firm's representation of the Company in connection with this engagement.
The Company acknowledges that the Firm is a large, multi-practice law firm that represents numerous clients across a wide range of industries and practice areas, including clients in the insurance, financial services, and capital markets sectors. The Firm may currently represent, or may in the future represent, other clients in matters that are not substantially related to this engagement, including matters that may involve parties who are counterparties, competitors, or business partners of the Company. The Company hereby consents to such representations, provided that (i) such representations do not involve a direct adversity to the Company in connection with the Offering, and (ii) the Firm maintains appropriate information barriers and other safeguards in accordance with its professional obligations to protect the Company's confidential information.
This engagement letter, and any dispute arising out of or relating to the Firm's representation of the Company hereunder, shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law principles that would require the application of the laws of any other jurisdiction.
6. Confidentiality
The Firm recognizes the highly sensitive and confidential nature of the information that the Company will provide to the Firm in connection with this engagement. All information provided by or on behalf of the Company to the Firm in connection with this engagement, whether in written, oral, electronic, or other form, will be treated by the Firm as confidential and will be used solely for the purpose of providing legal services to the Company in connection with the Offering.
The foregoing confidentiality obligations are subject to the Firm's obligations under applicable law, rules of court, and the applicable Rules of Professional Conduct. The Firm will not disclose the Company's confidential information to any third party without the Company's prior written consent, except (i) as may be required by applicable law, regulation, subpoena, court order, or other compulsory legal process, (ii) as necessary or appropriate to perform the services contemplated by this engagement, including, without limitation, the filing of documents with the SEC, the delivery of opinions and certificates to the Underwriter, and the provision of information to transaction participants as contemplated by Section 1(e) above, or (iii) to the extent that such information becomes publicly available through no fault or act of the Firm. In the event that the Firm receives a request or demand from a third party (including any governmental authority) to disclose the Company's confidential information, the Firm will, to the extent permitted by applicable law, promptly notify the Company of such request or demand and cooperate with the Company in seeking an appropriate protective order or other remedy.
7. Termination
Either party may terminate this engagement at any time, with or without cause, upon written notice to the other party. Termination by either party shall not relieve the Company of its obligation to pay all fees and expenses that have been incurred by the Firm through the effective date of such termination, including fees for services rendered and expenses incurred prior to the Firm's receipt or delivery, as applicable, of the notice of termination.
Upon termination, the Firm will take such steps as are reasonably practicable to protect the Company's interests, including providing reasonable cooperation in the orderly transition of the matter to successor counsel, if any, designated by the Company. Such cooperation shall include the prompt transfer of relevant files, documents, and work product to successor counsel, subject to the Company's satisfaction of all outstanding fee and expense obligations to the Firm and subject to any lien rights that may be available to the Firm under applicable law. The Firm's obligations under Sections 5 and 6 of this engagement letter shall survive any termination of the engagement.
8. Document Retention
The Firm's standard document retention policies, as in effect from time to time, will apply to all materials created or received by the Firm in connection with this engagement. Client materials, including original documents provided by the Company to the Firm, will be returned to the Company upon written request, subject to the Firm's right to retain copies of such materials as may be required or permitted by applicable rules of professional conduct, the Firm's internal policies, or applicable law. The Firm may, at its discretion, store retained materials in physical or electronic format. The Company acknowledges that, following the conclusion of this engagement and the expiration of any applicable retention period, the Firm may destroy materials in its files relating to this engagement in accordance with its standard document retention and destruction policies, without further notice to the Company.
9. Limitation of Engagement
The Firm's representation of the Company under this engagement letter is limited to the specific matters described in Section 1 above. The Firm does not undertake to advise the Company with respect to any other legal matters, transactions, disputes, or proceedings unless the scope of the Firm's representation is separately expanded or a new engagement is undertaken pursuant to a separate written agreement between the Company and the Firm.
Without limiting the generality of the foregoing, the Company acknowledges and agrees that the Firm is not providing, and shall not be deemed to have provided, insurance regulatory advice, tax advice, or accounting advice of any kind in connection with this engagement. The Company is encouraged to consult with its own insurance regulatory counsel, tax advisors, and accountants with respect to any regulatory, tax, or accounting matters that may arise in connection with the Offering. Similarly, the Firm is not undertaking to advise the Company with respect to its ongoing SEC reporting obligations, corporate governance matters, or other legal matters outside the specific scope of this engagement, unless separately agreed in writing.
We are very pleased to have the opportunity to work with you and the Quorum team on this transaction. We believe the Firm's extensive experience in capital markets transactions and our familiarity with the Company will enable us to provide efficient, high-quality legal services in connection with the Offering. Should you have any questions regarding the terms of this engagement or any other matter, please do not hesitate to contact me directly.
If the foregoing terms are acceptable, please countersign this letter in the space provided below and return a copy to the undersigned. A countersigned copy may be returned by email in PDF format to radeyemi@calderwoodharkness.com, with the original to follow by mail or courier at your convenience.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Robert Adeyemi
Title: Partner
ACCEPTED AND AGREED:
QUORUM INSURANCE HOLDINGS CORP.
By: ________
Name: Yusuf A. Okafor
Title: General Counsel & Corporate Secretary
Date: May _, 2021
| Attorney | Role |
| Robert Adeyemi, Partner | Responsible Partner |
| Jennifer Kwon, Partner | Billing Partner |
| Natasha Forbes, Associate | Lead Associate |
| Eric Johannsen, Associate | Working Associate |
| Timekeeper Category | 2021 Hourly Rate |
| Partners | $1,250 per hour |
| Associates | $725 per hour |