1025-00001 · Client 1025 · Transaction Documents

legal-opinion-outline-draft.docx DOCUMENT Capital Markets

10 / 12 ← → ✕

Contract analysis Extract to table

CALDERWOOD & HARKNESS LLP 1301 Avenue of the Americas New York, NY 10019

Telephone: (212) 558-4000 Facsimile: (212) 558-3588

June 7, 2021

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

C&H Matter No. 1025-00001

OUTLINE OF LEGAL OPINION TO BE DELIVERED AT CLOSING

Quorum Insurance Holdings Corp.

Follow-On Offering

INTRODUCTORY PARAGRAPH

This memorandum outlines the legal opinion (the "Opinion") to be delivered by Calderwood & Harkness LLP to Greystone Harwick & Co., LLC (the "Underwriter") at the closing (the "Closing") of the follow-on public offering (the "Offering") by Quorum Insurance Holdings Corp., a Delaware corporation (the "Company"), of shares of common stock, par value $0.01 per share (the "Common Stock"). The Opinion will be addressed to the Underwriter and will be dated as of the date of the Closing (the "Closing Date").

The Offering will be conducted pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-248710; CIK: 0001784203), which was originally declared effective by the Securities and Exchange Commission (the "SEC") on September 18, 2020 (the "Registration Statement"). The Offering contemplates the issuance and sale of up to 3,000,000 shares of Common Stock (the "Firm Shares") and up to an additional 450,000 shares of Common Stock (the "Option Shares") pursuant to the Underwriter's over-allotment option, as provided in the Underwriting Agreement, dated as of the date of pricing, between the Company and Greystone Harwick & Co., LLC (the "Underwriting Agreement"). The Firm Shares and the Option Shares are collectively referred to herein as the "Shares."

In connection with the Offering, the Company will file a prospectus supplement (the "Prospectus Supplement") with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act"). The base prospectus included in the Registration Statement (the "Base Prospectus"), together with the Prospectus Supplement (and any amendments or supplements thereto), are collectively referred to herein as the "Prospectus." The Registration Statement, together with all exhibits thereto and all documents incorporated by reference therein, is collectively referred to herein as the "Registration Statement."

The Opinion is required to be delivered as a condition to the Closing pursuant to Section 4(b) of the Underwriting Agreement. This memorandum sets forth in outline form the opinions, negative assurance, assumptions, qualifications, and related matters that will be addressed in the Opinion. This outline is a working draft prepared for internal purposes and for discussion with the Company's management and the Underwriter's counsel, and it does not itself constitute a legal opinion.

I. OPINIONS

The Opinion will contain the following opinions, each of which is subject to the assumptions, qualifications, and limitations set forth in Section III below:

Opinion 1: Organization and Good Standing

The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. This opinion will be based, in part, on our review of the Company's Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware, and the Company's Amended and Restated Bylaws, as currently in effect. In rendering this opinion, we will rely in part on a certificate of good standing issued by the Secretary of State of the State of Delaware with respect to the Company, dated within five business days of the Closing Date. The Company's registered agent in the State of Delaware is CT Statutory Agent Services LLC, located at 1209 Orange Street, Wilmington, Delaware 19801.

In addition, the Opinion will confirm that the Company is qualified to do business and is in good standing as a foreign corporation in the State of Connecticut. The Company's principal executive offices are located at 200 Constitution Plaza, Suite 3100, Hartford, Connecticut 06103. In rendering this aspect of the opinion, we will rely in part on a certificate of good standing or legal existence issued by the Secretary of the State of Connecticut, dated within five business days of the Closing Date.

We note that the opinion as to good standing and qualification in the State of Connecticut is limited to the Company at the parent holding company level and does not extend to the qualification or good standing of any subsidiary of the Company in Connecticut or in any other jurisdiction.

Opinion 2: Corporate Power

The Company has the corporate power and authority to own, lease, and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus. This opinion is based on our review of the Company's Amended and Restated Certificate of Incorporation, which sets forth the corporate purposes and powers of the Company, and the descriptions of the Company's business contained in the Registration Statement and the Prospectus, including the documents incorporated by reference therein.

In addition, the Company has the corporate power and authority to execute, deliver, and perform its obligations under the Underwriting Agreement and to authorize, issue, and sell the Shares, including both the Firm Shares and the Option Shares. This aspect of the opinion is based upon our review of the Company's organizational documents, the Underwriting Agreement, and the resolutions adopted by the Board of Directors of the Company, as described more fully in Opinion 3 below.

Opinion 3: Authorization

The execution and delivery by the Company of the Underwriting Agreement, and the authorization, issuance, and sale of the Shares, have been duly authorized by all necessary corporate action on the part of the Company. In rendering this opinion, we will rely upon our review of the resolutions duly adopted by the Board of Directors of the Company (the "Board") at a meeting of the Board duly called and held on June 2, 2021, at which a quorum of directors was present and acting throughout.

The resolutions adopted by the Board on June 2, 2021, among other things:

(a) authorized the Offering and the issuance and sale of up to 3,450,000 shares of Common Stock (consisting of 3,000,000 Firm Shares and 450,000 Option Shares subject to the Underwriter's over-allotment option) in connection with the Offering;

(b) approved the form of the Underwriting Agreement between the Company and Greystone Harwick & Co., LLC;

(c) designated Martin R. Calloway (Chief Executive Officer), Diana L. Prescott (Chief Financial Officer), and Yusuf A. Okafor (General Counsel and Corporate Secretary) as authorized officers (each, an "Authorized Officer" and collectively, the "Authorized Officers"), with any one of them individually authorized to determine the final pricing of the Offering, including the public offering price and the number of Firm Shares and Option Shares, and to execute and deliver the Underwriting Agreement and any ancillary documents, agreements, or certificates on behalf of the Company in connection with the Offering; and

(d) authorized each Authorized Officer to take such further actions and execute such further documents, instruments, and certificates as any such Authorized Officer may deem necessary or advisable to consummate the Offering and the transactions contemplated thereby.

Based on the foregoing, no further corporate action on the part of the Company is required for the authorization, execution, and delivery of the Underwriting Agreement or for the authorization, issuance, sale, and delivery of the Shares. The Company's Amended and Restated Certificate of Incorporation does not require stockholder approval for the issuance of the Shares, and no provision of the Delaware General Corporation Law requires stockholder approval for the issuance of shares of authorized Common Stock in the manner contemplated by the Offering.

Opinion 4: Valid Issuance

The Shares (including both the Firm Shares and the Option Shares), when issued and delivered by the Company against payment therefor in accordance with the terms of the Underwriting Agreement, at the purchase price per share specified therein (which purchase price shall be equal to the public offering price per share less the underwriting discount of 5.50%), will be validly issued, fully paid, and non-assessable.

In rendering this opinion, we have confirmed the following matters relating to the Company's capitalization:

(a) Authorized Capital Stock. The Company's Amended and Restated Certificate of Incorporation authorizes the issuance of 100,000,000 shares of Common Stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share. As of the date of this outline, no shares of preferred stock are issued or outstanding.

(b) Issued and Outstanding Shares. As of the most recent practicable date, 38,125,000 shares of Common Stock are issued and outstanding. Upon completion of the Offering (assuming the sale of all 3,000,000 Firm Shares and no exercise of the Underwriter's over-allotment option), 41,125,000 shares of Common Stock will be issued and outstanding.

(c) Sufficient Authorized Shares. There are a sufficient number of authorized and unissued shares of Common Stock available for the issuance of all of the Shares in connection with the Offering, including both the Firm Shares and the Option Shares. We have taken into account shares reserved for issuance under the Company's equity incentive plans and any other outstanding commitments to issue shares that have been disclosed to us by the Company.

The Shares have been duly approved for listing on the Nasdaq Global Select Market under the ticker symbol "QIHC," subject to official notice of issuance. The Company's transfer agent and registrar for the Common Stock is Continental Transfer & Trust Co., located at 17 Ashbury Asset Advisors, New York, New York 10004.

Opinion 5: No Preemptive Rights

No holder of securities of the Company has preemptive rights to subscribe for or purchase the Shares arising under the Company's Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws. The Company's Amended and Restated Certificate of Incorporation expressly provides that no holder of any shares of Common Stock shall have any preemptive right to subscribe for, purchase, or otherwise acquire any shares of any class of stock of the Company, whether now or hereafter authorized.

To our knowledge, after due inquiry, no preemptive rights, rights of first refusal, or similar rights with respect to the issuance of the Shares exist under any agreement to which the Company is a party. We note that the Company's Amended and Restated Certificate of Incorporation authorizes 5,000,000 shares of preferred stock, par value $0.01 per share, of which no shares are currently issued or outstanding. No designation of any series of preferred stock currently in effect creates preemptive or similar rights with respect to issuances of Common Stock by the Company.

Opinion 6: Description of Capital Stock

The statements set forth in the Prospectus under the caption "Description of Common Stock," insofar as such statements purport to summarize or describe provisions of the Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, are accurate and complete in all material respects as a summary of the terms and provisions described therein.

In rendering this opinion, we have reviewed the relevant disclosure in the Prospectus and compared such disclosure to the provisions of the Company's organizational documents. The key attributes of the Common Stock to be confirmed in connection with this opinion include the following:

(a) Voting Rights. Each share of Common Stock entitles the holder thereof to one vote per share on all matters submitted to a vote of stockholders. The Company's Amended and Restated Certificate of Incorporation does not provide for cumulative voting.

(b) Dividend Rights. Holders of Common Stock are entitled to receive dividends, if any, as and when declared by the Board out of funds legally available therefor, subject to the rights of holders of any outstanding preferred stock.

(c) Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, holders of Common Stock are entitled to share ratably in all assets remaining after payment of all debts and liabilities and after satisfaction of the liquidation preferences of any outstanding preferred stock.

(d) No Redemption or Conversion. The shares of Common Stock are not subject to any redemption or sinking fund provisions, and there are no conversion rights attached to the Common Stock.

(e) Transfer Agent and Registrar. The transfer agent and registrar for the Common Stock is Continental Transfer & Trust Co., 17 Ashbury Asset Advisors, New York, New York 10004.

Opinion 7: No Conflicts

The execution and delivery by the Company of the Underwriting Agreement and the authorization, issuance, and sale of the Shares by the Company in accordance with the terms of the Underwriting Agreement will not:

(a) violate, conflict with, or result in a breach of any provision of the Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws of the Company;

(b) violate any applicable federal statute, law, rule, or regulation of the United States, or any statute, law, rule, or regulation of the State of New York or the State of Delaware (including the General Corporation Law of the State of Delaware), in each case known to us to be applicable to the Company or the transactions contemplated by the Offering;

(c) result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any material agreement, indenture, or instrument listed as a material contract in the Company's most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2020, or filed as an exhibit thereto; or

(d) result in a violation of any judgment, order, writ, injunction, or decree of any court, arbitral tribunal, or governmental or regulatory authority, in each case known to us to be binding upon or applicable to the Company.

In rendering the opinion set forth in clause (c) above, we have reviewed, among other agreements, the following material agreements of the Company:

(i) Revolving Credit Facility. The Company is a party to a Credit Agreement dated as of March 15, 2019, as amended, providing for a $75 million revolving credit facility, with Sycamore National Bank, N.A. acting as administrative agent and Ridgeline Commercial Lending Corp. as a participating lender. We have reviewed the Credit Agreement and its amendments and have confirmed that the Credit Agreement does not contain any restriction on the issuance of equity securities by the Company at the parent holding company level. The Credit Agreement contains customary affirmative and negative covenants applicable to the Company and its subsidiaries, including limitations on the incurrence of additional indebtedness and the granting of liens, but does not prohibit or restrict the issuance of Common Stock by the Company.

(ii) Senior Notes Indenture. The Company is the issuer of $125 million aggregate principal amount of 4.875% Senior Notes due 2028 (CUSIP: 74917R207), issued pursuant to an Indenture dated as of October 1, 2020, between the Company and National City Trust Company, N.A., as trustee. The Indenture contains incurrence-based covenants and a limitation on restricted payments; however, the Indenture does not restrict the issuance of Common Stock by the Company. The issuance of Common Stock in the Offering does not constitute a "Restricted Payment" as defined in the Indenture, and the net proceeds of the Offering will not trigger any covenant thereunder.

The opinion in clause (d) above is based solely on our review of court records, public filings, and certificates provided by officers of the Company, and is limited to judgments, orders, and decrees of which we have actual knowledge.

Opinion 8: No Consents

No consent, approval, authorization, order, registration, or qualification of or with, or filing with, any federal, state, or local governmental or regulatory authority or body is required for the valid execution and delivery by the Company of the Underwriting Agreement or the valid authorization, issuance, sale, and delivery of the Shares by the Company, except for:

(a) such consents, approvals, authorizations, registrations, qualifications, and filings as have already been obtained or made, including the effectiveness of the Registration Statement under the Securities Act;

(b) such consents, approvals, authorizations, registrations, qualifications, or filings as may be required under state securities or "Blue Sky" laws of the various states in connection with the purchase and resale of the Shares by the Underwriter; provided, however, that the Shares are "covered securities" within the meaning of Section 18(b)(1)(A) of the Securities Act by virtue of their listing on the Nasdaq Global Select Market, and accordingly no state-level registration or qualification of the Shares is required under the National Securities Markets Improvement Act of 1996;

(d) the filing of materials with the Financial Industry Regulatory Authority ("FINRA") Corporate Financing Department for review of the terms and arrangements relating to underwriting compensation in connection with the Offering.

We specifically note that the offering and sale of shares of Common Stock at the parent holding company level does not, based on our review of applicable law, require prior approval of or filing with the Connecticut Department of Insurance or the Delaware Department of Insurance. However, as set forth in Section III below, no opinion is expressed as to state insurance regulatory laws, including the insurance holding company acts of Connecticut or Delaware, or the rules, regulations, bulletins, or orders of the Connecticut Department of Insurance or the Delaware Department of Insurance, and we recommend that the Company confirm this conclusion with insurance regulatory counsel.

Opinion 9: Registration Statement

The Registration Statement on Form S-3 (File No. 333-248710; CIK: 0001784203) has been declared effective by the SEC as of September 18, 2020. As of the date of this outline, no stop order suspending the effectiveness of the Registration Statement has been issued by the SEC, and no proceedings for that purpose have been instituted or are pending before the SEC. To our knowledge, no such proceedings have been threatened by the SEC.

The Registration Statement remains effective as of the date hereof and, based on the provisions of Rule 415 under the Securities Act and the applicable instructions to Form S-3, will remain effective through September 18, 2023 (three years from the original effective date). The Company is eligible to use Form S-3 for the Offering, and the Offering is being conducted in compliance with the applicable requirements of Rule 415.

The Prospectus Supplement and any amendments or supplements thereto have been or will be filed with the SEC in accordance with Rule 424(b) under the Securities Act and the applicable requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder. The Company has complied with all conditions for the use of the Registration Statement in connection with the Offering.

Opinion 10: Investment Company Act

The Company is not, and upon consummation of the Offering and the application of the net proceeds therefrom as described in the Prospectus under the caption "Use of Proceeds" will not be, required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended (the "Investment Company Act").

This opinion is based upon our understanding that the Company is primarily engaged, directly and through its operating subsidiaries, in the business of insurance underwriting, insurance distribution, and insurance technology, and is not primarily engaged in the business of investing, reinvesting, or trading in securities. The Company's principal operating subsidiaries are engaged in the underwriting of property and casualty insurance and the development and licensing of insurance technology platforms. The Company does not hold itself out as being engaged primarily, and does not propose to engage primarily, in the business of investing, reinvesting, or trading in securities, and the Company's investment portfolio is maintained for purposes incidental to its insurance operations.

II. NEGATIVE ASSURANCE

In addition to the foregoing opinions, Calderwood & Harkness LLP will provide customary negative assurance (commonly referred to as a "10b-5 negative assurance letter" or "10b-5 letter") to the Underwriter. The negative assurance letter will be delivered concurrently with the Opinion at the Closing, as contemplated by Section 4(b) of the Underwriting Agreement.

The negative assurance will be based on the following procedures and review undertaken by Calderwood & Harkness LLP in connection with the Offering:

(a) our participation in the preparation, review, and filing of the Registration Statement and the Prospectus, including the preliminary prospectus supplement and the final Prospectus Supplement;

(b) our review of the documents incorporated by reference in the Registration Statement and the Prospectus, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021, the Company's Current Reports on Form 8-K filed during the period from January 1, 2021 through the date of the Prospectus Supplement, and the Company's most recent definitive proxy statement on Schedule 14A;

(c) our participation in due diligence sessions conducted in connection with the Offering, including a management due diligence call held on May 19, 2021, with Martin R. Calloway (Chief Executive Officer), Diana L. Prescott (Chief Financial Officer), and Yusuf A. Okafor (General Counsel and Corporate Secretary);

(d) our review of certain corporate records, including minutes of meetings of the Board of Directors and its committees, resolutions of the Board of Directors, and the Company's organizational documents;

(e) our review of certain agreements, contracts, and other instruments furnished to us by the Company and deemed relevant to the Offering; and

(f) our discussions with officers, employees, and other representatives of the Company and with representatives of Carver, Bain & Associates LLP (the Company's independent registered public accounting firm) and Trellis Peak Advisors LLC (the Company's financial advisor).

Based on the foregoing, the negative assurance letter will state that nothing has come to our attention that causes us to believe that:

(a) the Registration Statement, as of its effective date (September 18, 2020) and as of the Closing Date (giving effect to any post-effective amendments and any documents filed after the effective date and incorporated by reference therein), contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading; or

(b) the Prospectus (including the Prospectus Supplement), as of its date and as of the Closing Date, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

The negative assurance letter will be subject to the following customary qualifications and limitations:

(i) The negative assurance does not extend to the financial statements, financial schedules, and other financial and statistical data (including actuarial data, loss reserve data, and pro forma financial information) contained in or incorporated by reference in the Registration Statement or the Prospectus, all of which are the responsibility of the Company's management and, to the extent applicable, are covered by the comfort letter to be delivered by Carver, Bain & Associates LLP at the Closing.

(ii) The negative assurance does not extend to information provided by or relating to the Underwriter that was furnished in writing for inclusion in the Prospectus, including the statements set forth in the Prospectus under the caption "Underwriting" relating to stabilization activities, over-allotment arrangements, penalty bids, and similar matters.

(iii) The negative assurance does not constitute a guarantee and should not be construed as an audit, independent investigation, or independent verification of the information contained in or incorporated by reference in the Registration Statement or the Prospectus. The negative assurance is based solely on the scope of our engagement and the procedures we have undertaken in connection with the Offering, which procedures are inherently limited in nature and do not constitute an examination or investigation conducted in accordance with generally accepted auditing standards or any other professional standards applicable to the conduct of audits or examinations.

(iv) The negative assurance is rendered solely in our capacity as counsel to the Company and is based on our experience in the practice of law, our familiarity with the Company, and the scope of the review and procedures described herein, and not upon any specialized expertise in accounting, auditing, actuarial science, or any other discipline.

III. ASSUMPTIONS AND QUALIFICATIONS

A. Assumptions. The opinions set forth in Section I and the negative assurance set forth in Section II will be subject to and rendered in reliance upon the following assumptions, in each case without independent investigation or verification by us:

1. Authenticity and Conformity. All documents submitted to us as originals are authentic, and all documents submitted to us as copies conform to the originals thereof. All documents reviewed by us that purport to have been signed have been duly and validly signed by the parties indicated therein.

2. Genuineness of Signatures. The signatures on all documents reviewed by us are genuine, other than the signatures of the officers and directors of the Company (as to which we express our opinion).

3. Good Standing Certificates. We will rely upon certificates of good standing (or certificates of legal existence, as applicable) issued by the Secretary of State of the State of Delaware and the Secretary of the State of Connecticut, each dated within five business days of the Closing Date, as conclusive evidence of the good standing of the Company in such jurisdictions as of the dates of such certificates.

4. Officers' Certificates. We will rely upon customary officers' certificates to be delivered at the Closing, signed by Martin R. Calloway (Chief Executive Officer) and Diana L. Prescott (Chief Financial Officer), as to factual matters within their knowledge, including representations regarding the absence of any material adverse change in the condition (financial or otherwise) of the Company since the date of the most recent financial statements included or incorporated by reference in the Prospectus, the accuracy and completeness of the disclosure in the Registration Statement and the Prospectus, and the Company's compliance with the covenants and agreements set forth in the Underwriting Agreement.

5. Secretary's Certificate. We will rely upon the secretary's certificate of Yusuf A. Okafor, General Counsel and Corporate Secretary of the Company, to be delivered at the Closing, attaching certified copies of the Company's Amended and Restated Certificate of Incorporation (as currently in effect), the Company's Amended and Restated Bylaws (as currently in effect), and the resolutions of the Board of Directors adopted on June 2, 2021, and certifying the incumbency and specimen signatures of the officers of the Company authorized to execute and deliver the Underwriting Agreement and ancillary documents.

6. Binding Obligations of Third Parties. We have assumed that the Underwriting Agreement and each ancillary document, agreement, and instrument executed and delivered in connection with the Offering constitutes a valid, binding, and enforceable obligation of each party thereto other than the Company (the validity, binding nature, and enforceability of the Company's obligations under the Underwriting Agreement being addressed by our opinions).

7. Underwriter Compliance. We have assumed that the Underwriter will comply with all applicable federal and state laws, rules, and regulations in connection with the offer, sale, and distribution of the Shares, including all applicable provisions of the Securities Act, the Securities Exchange Act of 1934, as amended, and the rules and regulations of FINRA.

B. Qualifications and Limitations

The opinions set forth in Section I and the negative assurance set forth in Section II are subject to the following qualifications and limitations:

1. Jurisdictional Limitation. Our opinions are limited to the federal laws of the United States of America, the laws of the State of New York (excluding the choice-of-law rules thereof), and the General Corporation Law of the State of Delaware (including applicable provisions of the Delaware Constitution and reported judicial decisions interpreting such laws). We express no opinion as to the laws of any other jurisdiction, including any foreign jurisdiction.

2. Exclusion of State Insurance Regulatory Laws. Specifically, and without limiting the generality of the foregoing, no opinion is expressed as to state insurance regulatory laws, including the insurance holding company acts of Connecticut (Conn. Gen. Stat. §§ 38a-129 et seq.) or Delaware (18 Del. C. §§ 5001 et seq.), or the rules, regulations, bulletins, guidelines, or orders of the Connecticut Department of Insurance or the Delaware Department of Insurance, or any other state insurance regulatory authority. Such matters are outside the scope of this opinion, and we recommend that the Company and the Underwriter obtain a separate opinion of insurance regulatory counsel with respect to such matters.

3. Bankruptcy and Insolvency. The opinions expressed herein are subject to applicable bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent transfer, fraudulent conveyance, preferential transfer, and other similar laws of general applicability relating to or affecting creditors' rights generally, as now or hereafter in effect.

4. Equitable Principles. The opinions expressed herein are subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), including without limitation concepts of materiality, reasonableness, good faith, fair dealing, and the possible unavailability of specific performance, injunctive relief, or other equitable remedies.

5. Limitation on No-Conflicts Opinion. The opinion regarding no conflicts set forth in Opinion 7 is limited to the specific agreements identified therein and does not extend to all agreements, contracts, instruments, or arrangements to which the Company or any of its subsidiaries may be a party or by which any of them or their respective properties may be bound. We have not undertaken a comprehensive review of all contractual obligations of the Company and its subsidiaries.

6. Indemnification and Contribution. We express no opinion with respect to the enforceability of any indemnification, contribution, or exculpation provisions contained in the Underwriting Agreement or any ancillary agreement to the extent that such provisions may be limited by applicable federal or state securities laws, public policy considerations, or judicial decisions.

7. Antifraud Provisions. We express no opinion as to compliance with any antifraud provisions of the federal or state securities laws, except to the extent expressly covered by the negative assurance letter set forth in Section II above.

C. Disclosure Regarding Scope

The Opinion is being furnished solely for the benefit of Greystone Harwick & Co., LLC in its capacity as Underwriter in connection with the Offering. The Opinion may not be relied upon by any other person or entity, or for any other purpose, without the prior written consent of Calderwood & Harkness LLP. Without limiting the foregoing, the Opinion may not be quoted, cited, or referred to in any report, document, or filing, or furnished to any other party, without our prior written consent, except that a copy of the Opinion may be furnished to Duval & Pressler LLP, counsel to the Underwriter, for its review in connection with the Closing.

The Opinion will be given as of the Closing Date, and we assume no obligation to update, supplement, revise, or reaffirm the Opinion to reflect any facts, circumstances, developments, or changes in law that may hereafter come to our attention or occur after the Closing Date, whether or not such facts, circumstances, developments, or changes in law would affect the opinions or negative assurance expressed in the Opinion.

IV. DELIVERY AND FORM

The Opinion will be delivered in executed form at or prior to the Closing of the Offering, as required by Section 4(b) of the Underwriting Agreement. The Opinion will be printed on the letterhead of Calderwood & Harkness LLP and will be signed by a partner of the firm authorized to execute opinions on behalf of the firm.

The Opinion will be addressed to:

Greystone Harwick & Co., LLC 399 Park Avenue, 28th Floor New York, New York 10022

A copy of the Opinion will be furnished to underwriter's counsel:

Duval & Pressler LLP 1185 Avenue of the Americas, 34th Floor New York, New York 10036

Attention: Gregory R. Tannenbaum

The Opinion will be signed by a partner of Calderwood & Harkness LLP duly authorized to execute legal opinions on behalf of the firm. The form and substance of the Opinion will conform to the customary practices of major law firms in New York City for opinions delivered in connection with underwritten public offerings of equity securities.

V. COORDINATION WITH CLOSING DELIVERABLES

The delivery of the Opinion at the Closing is one of several conditions to the obligations of the Underwriter to purchase the Shares pursuant to Section 4 of the Underwriting Agreement. For purposes of coordination and to ensure an orderly closing process, we note that the following additional closing deliverables are required under the Underwriting Agreement and should be assembled and reviewed in advance of the Closing:

1. Officer's Certificate. A certificate signed by Martin R. Calloway (Chief Executive Officer) and Diana L. Prescott (Chief Financial Officer), on behalf of the Company, certifying as to the accuracy of the representations and warranties of the Company contained in the Underwriting Agreement, the satisfaction of the conditions to closing, the absence of any material adverse change, and such other matters as may be required by the Underwriting Agreement.

2. Secretary's Certificate. A certificate signed by Yusuf A. Okafor (General Counsel and Corporate Secretary), on behalf of the Company, attaching certified copies of the Amended and Restated Certificate of Incorporation, the Amended and Restated Bylaws, and the resolutions of the Board of Directors adopted on June 2, 2021, and certifying as to the incumbency and specimen signatures of the officers of the Company authorized to act on behalf of the Company in connection with the Offering.

3. Comfort Letter. A "comfort letter" from Carver, Bain & Associates LLP, the Company's independent registered public accounting firm, in form and substance satisfactory to the Underwriter, addressed to the Underwriter, covering financial statements and financial data included or incorporated by reference in the Registration Statement and the Prospectus, together with customary "bring-down" comfort through a date not more than two business days prior to the Closing Date. A draft of the comfort letter was received from Carver, Bain & Associates LLP on May 21, 2021. The final comfort letter will be delivered at the Closing.

4. Lock-Up Agreements. Executed lock-up agreements, in the form attached as an exhibit to the Underwriting Agreement, from all directors, executive officers, and holders of 5% or more of the outstanding shares of Common Stock of the Company, including Birchwood Capital Partners, L.P., restricting the sale, transfer, or other disposition of shares of Common Stock and securities convertible into or exercisable or exchangeable for Common Stock for a period of 90 days following the date of the final Prospectus Supplement (subject to customary exceptions).

5. Good Standing Certificates. Certificates of good standing (or certificates of legal existence, as applicable) for the Company issued by the Secretary of State of the State of Delaware and the Secretary of the State of Connecticut, each dated within five business days of the Closing Date.

6. Negative Assurance Letter. The 10b-5 negative assurance letter described in Section II above, to be delivered concurrently with the Opinion at the Closing.

7. FINRA No-Objections Letter. A letter from the FINRA Corporate Financing Department confirming that FINRA has reviewed the terms and arrangements relating to underwriting compensation in connection with the Offering and has no objection thereto, or confirming that FINRA has waived its review of such terms and arrangements.

We recommend that all closing deliverables be circulated in substantially final form no later than two business days prior to the anticipated Closing Date and that a pre-closing call be scheduled with all relevant parties, including representatives of the Company, the Underwriter, Duval & Pressler LLP (underwriter's counsel), Carver, Bain & Associates LLP, and Continental Transfer & Trust Co. (transfer agent), to confirm the readiness of all deliverables and the logistics for the Closing.

Prepared by: Robert Adeyemi / Natasha Forbes Calderwood & Harkness LLP

Note: This outline has not been finalized or delivered. The offering was paused by mutual agreement of the Company and the Underwriter on June 28, 2021, and remains dormant as of the date of this document. The opinion was never issued.

CALDERWOOD & HARKNESS LLP 1301 Avenue of the Americas New York, NY 10019
Telephone: (212) 558-4000 Facsimile: (212) 558-3588
June 7, 2021
PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
C&H Matter No. 1025-00001
OUTLINE OF LEGAL OPINION TO BE DELIVERED AT CLOSING
Quorum Insurance Holdings Corp.
Follow-On Offering
INTRODUCTORY PARAGRAPH
This memorandum outlines the legal opinion (the "Opinion") to be delivered by Calderwood & Harkness LLP to Greystone Harwick & Co., LLC (the "Underwriter") at the closing (the "Closing") of the follow-on public offering (the "Offering") by Quorum Insurance Holdings Corp., a Delaware corporation (the "Company"), of shares of common stock, par value $0.01 per share (the "Common Stock"). The Opinion will be addressed to the Underwriter and will be dated as of the date of the Closing (the "Closing Date").
The Offering will be conducted pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-248710; CIK: 0001784203), which was originally declared effective by the Securities and Exchange Commission (the "SEC") on September 18, 2020 (the "Registration Statement"). The Offering contemplates the issuance and sale of up to 3,000,000 shares of Common Stock (the "Firm Shares") and up to an additional 450,000 shares of Common Stock (the "Option Shares") pursuant to the Underwriter's over-allotment option, as provided in the Underwriting Agreement, dated as of the date of pricing, between the Company and Greystone Harwick & Co., LLC (the "Underwriting Agreement"). The Firm Shares and the Option Shares are collectively referred to herein as the "Shares."
In connection with the Offering, the Company will file a prospectus supplement (the "Prospectus Supplement") with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act"). The base prospectus included in the Registration Statement (the "Base Prospectus"), together with the Prospectus Supplement (and any amendments or supplements thereto), are collectively referred to herein as the "Prospectus." The Registration Statement, together with all exhibits thereto and all documents incorporated by reference therein, is collectively referred to herein as the "Registration Statement."
The Opinion is required to be delivered as a condition to the Closing pursuant to Section 4(b) of the Underwriting Agreement. This memorandum sets forth in outline form the opinions, negative assurance, assumptions, qualifications, and related matters that will be addressed in the Opinion. This outline is a working draft prepared for internal purposes and for discussion with the Company's management and the Underwriter's counsel, and it does not itself constitute a legal opinion.
I. OPINIONS
The Opinion will contain the following opinions, each of which is subject to the assumptions, qualifications, and limitations set forth in Section III below:
Opinion 1: Organization and Good Standing
The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. This opinion will be based, in part, on our review of the Company's Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware, and the Company's Amended and Restated Bylaws, as currently in effect. In rendering this opinion, we will rely in part on a certificate of good standing issued by the Secretary of State of the State of Delaware with respect to the Company, dated within five business days of the Closing Date. The Company's registered agent in the State of Delaware is CT Statutory Agent Services LLC, located at 1209 Orange Street, Wilmington, Delaware 19801.
In addition, the Opinion will confirm that the Company is qualified to do business and is in good standing as a foreign corporation in the State of Connecticut. The Company's principal executive offices are located at 200 Constitution Plaza, Suite 3100, Hartford, Connecticut 06103. In rendering this aspect of the opinion, we will rely in part on a certificate of good standing or legal existence issued by the Secretary of the State of Connecticut, dated within five business days of the Closing Date.
We note that the opinion as to good standing and qualification in the State of Connecticut is limited to the Company at the parent holding company level and does not extend to the qualification or good standing of any subsidiary of the Company in Connecticut or in any other jurisdiction.
Opinion 2: Corporate Power
The Company has the corporate power and authority to own, lease, and operate its properties and to conduct its business as described in the Registration Statement and the Prospectus. This opinion is based on our review of the Company's Amended and Restated Certificate of Incorporation, which sets forth the corporate purposes and powers of the Company, and the descriptions of the Company's business contained in the Registration Statement and the Prospectus, including the documents incorporated by reference therein.
In addition, the Company has the corporate power and authority to execute, deliver, and perform its obligations under the Underwriting Agreement and to authorize, issue, and sell the Shares, including both the Firm Shares and the Option Shares. This aspect of the opinion is based upon our review of the Company's organizational documents, the Underwriting Agreement, and the resolutions adopted by the Board of Directors of the Company, as described more fully in Opinion 3 below.
Opinion 3: Authorization
The execution and delivery by the Company of the Underwriting Agreement, and the authorization, issuance, and sale of the Shares, have been duly authorized by all necessary corporate action on the part of the Company. In rendering this opinion, we will rely upon our review of the resolutions duly adopted by the Board of Directors of the Company (the "Board") at a meeting of the Board duly called and held on June 2, 2021, at which a quorum of directors was present and acting throughout.
The resolutions adopted by the Board on June 2, 2021, among other things:
(a) authorized the Offering and the issuance and sale of up to 3,450,000 shares of Common Stock (consisting of 3,000,000 Firm Shares and 450,000 Option Shares subject to the Underwriter's over-allotment option) in connection with the Offering;
(b) approved the form of the Underwriting Agreement between the Company and Greystone Harwick & Co., LLC;
(c) designated Martin R. Calloway (Chief Executive Officer), Diana L. Prescott (Chief Financial Officer), and Yusuf A. Okafor (General Counsel and Corporate Secretary) as authorized officers (each, an "Authorized Officer" and collectively, the "Authorized Officers"), with any one of them individually authorized to determine the final pricing of the Offering, including the public offering price and the number of Firm Shares and Option Shares, and to execute and deliver the Underwriting Agreement and any ancillary documents, agreements, or certificates on behalf of the Company in connection with the Offering; and
(d) authorized each Authorized Officer to take such further actions and execute such further documents, instruments, and certificates as any such Authorized Officer may deem necessary or advisable to consummate the Offering and the transactions contemplated thereby.
Based on the foregoing, no further corporate action on the part of the Company is required for the authorization, execution, and delivery of the Underwriting Agreement or for the authorization, issuance, sale, and delivery of the Shares. The Company's Amended and Restated Certificate of Incorporation does not require stockholder approval for the issuance of the Shares, and no provision of the Delaware General Corporation Law requires stockholder approval for the issuance of shares of authorized Common Stock in the manner contemplated by the Offering.
Opinion 4: Valid Issuance
The Shares (including both the Firm Shares and the Option Shares), when issued and delivered by the Company against payment therefor in accordance with the terms of the Underwriting Agreement, at the purchase price per share specified therein (which purchase price shall be equal to the public offering price per share less the underwriting discount of 5.50%), will be validly issued, fully paid, and non-assessable.
In rendering this opinion, we have confirmed the following matters relating to the Company's capitalization:
(a) Authorized Capital Stock. The Company's Amended and Restated Certificate of Incorporation authorizes the issuance of 100,000,000 shares of Common Stock, par value $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share. As of the date of this outline, no shares of preferred stock are issued or outstanding.
(b) Issued and Outstanding Shares. As of the most recent practicable date, 38,125,000 shares of Common Stock are issued and outstanding. Upon completion of the Offering (assuming the sale of all 3,000,000 Firm Shares and no exercise of the Underwriter's over-allotment option), 41,125,000 shares of Common Stock will be issued and outstanding.
(c) Sufficient Authorized Shares. There are a sufficient number of authorized and unissued shares of Common Stock available for the issuance of all of the Shares in connection with the Offering, including both the Firm Shares and the Option Shares. We have taken into account shares reserved for issuance under the Company's equity incentive plans and any other outstanding commitments to issue shares that have been disclosed to us by the Company.
The Shares have been duly approved for listing on the Nasdaq Global Select Market under the ticker symbol "QIHC," subject to official notice of issuance. The Company's transfer agent and registrar for the Common Stock is Continental Transfer & Trust Co., located at 17 Ashbury Asset Advisors, New York, New York 10004.
Opinion 5: No Preemptive Rights
No holder of securities of the Company has preemptive rights to subscribe for or purchase the Shares arising under the Company's Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws. The Company's Amended and Restated Certificate of Incorporation expressly provides that no holder of any shares of Common Stock shall have any preemptive right to subscribe for, purchase, or otherwise acquire any shares of any class of stock of the Company, whether now or hereafter authorized.
To our knowledge, after due inquiry, no preemptive rights, rights of first refusal, or similar rights with respect to the issuance of the Shares exist under any agreement to which the Company is a party. We note that the Company's Amended and Restated Certificate of Incorporation authorizes 5,000,000 shares of preferred stock, par value $0.01 per share, of which no shares are currently issued or outstanding. No designation of any series of preferred stock currently in effect creates preemptive or similar rights with respect to issuances of Common Stock by the Company.
Opinion 6: Description of Capital Stock
The statements set forth in the Prospectus under the caption "Description of Common Stock," insofar as such statements purport to summarize or describe provisions of the Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, are accurate and complete in all material respects as a summary of the terms and provisions described therein.
In rendering this opinion, we have reviewed the relevant disclosure in the Prospectus and compared such disclosure to the provisions of the Company's organizational documents. The key attributes of the Common Stock to be confirmed in connection with this opinion include the following:
(a) Voting Rights. Each share of Common Stock entitles the holder thereof to one vote per share on all matters submitted to a vote of stockholders. The Company's Amended and Restated Certificate of Incorporation does not provide for cumulative voting.
(b) Dividend Rights. Holders of Common Stock are entitled to receive dividends, if any, as and when declared by the Board out of funds legally available therefor, subject to the rights of holders of any outstanding preferred stock.
(c) Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, holders of Common Stock are entitled to share ratably in all assets remaining after payment of all debts and liabilities and after satisfaction of the liquidation preferences of any outstanding preferred stock.
(d) No Redemption or Conversion. The shares of Common Stock are not subject to any redemption or sinking fund provisions, and there are no conversion rights attached to the Common Stock.
(e) Transfer Agent and Registrar. The transfer agent and registrar for the Common Stock is Continental Transfer & Trust Co., 17 Ashbury Asset Advisors, New York, New York 10004.
Opinion 7: No Conflicts
The execution and delivery by the Company of the Underwriting Agreement and the authorization, issuance, and sale of the Shares by the Company in accordance with the terms of the Underwriting Agreement will not:
(a) violate, conflict with, or result in a breach of any provision of the Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws of the Company;
(b) violate any applicable federal statute, law, rule, or regulation of the United States, or any statute, law, rule, or regulation of the State of New York or the State of Delaware (including the General Corporation Law of the State of Delaware), in each case known to us to be applicable to the Company or the transactions contemplated by the Offering;
(c) result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any material agreement, indenture, or instrument listed as a material contract in the Company's most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2020, or filed as an exhibit thereto; or
(d) result in a violation of any judgment, order, writ, injunction, or decree of any court, arbitral tribunal, or governmental or regulatory authority, in each case known to us to be binding upon or applicable to the Company.
In rendering the opinion set forth in clause (c) above, we have reviewed, among other agreements, the following material agreements of the Company:
(i) Revolving Credit Facility. The Company is a party to a Credit Agreement dated as of March 15, 2019, as amended, providing for a $75 million revolving credit facility, with Sycamore National Bank, N.A. acting as administrative agent and Ridgeline Commercial Lending Corp. as a participating lender. We have reviewed the Credit Agreement and its amendments and have confirmed that the Credit Agreement does not contain any restriction on the issuance of equity securities by the Company at the parent holding company level. The Credit Agreement contains customary affirmative and negative covenants applicable to the Company and its subsidiaries, including limitations on the incurrence of additional indebtedness and the granting of liens, but does not prohibit or restrict the issuance of Common Stock by the Company.
(ii) Senior Notes Indenture. The Company is the issuer of $125 million aggregate principal amount of 4.875% Senior Notes due 2028 (CUSIP: 74917R207), issued pursuant to an Indenture dated as of October 1, 2020, between the Company and National City Trust Company, N.A., as trustee. The Indenture contains incurrence-based covenants and a limitation on restricted payments; however, the Indenture does not restrict the issuance of Common Stock by the Company. The issuance of Common Stock in the Offering does not constitute a "Restricted Payment" as defined in the Indenture, and the net proceeds of the Offering will not trigger any covenant thereunder.
The opinion in clause (d) above is based solely on our review of court records, public filings, and certificates provided by officers of the Company, and is limited to judgments, orders, and decrees of which we have actual knowledge.
Opinion 8: No Consents
No consent, approval, authorization, order, registration, or qualification of or with, or filing with, any federal, state, or local governmental or regulatory authority or body is required for the valid execution and delivery by the Company of the Underwriting Agreement or the valid authorization, issuance, sale, and delivery of the Shares by the Company, except for:
(a) such consents, approvals, authorizations, registrations, qualifications, and filings as have already been obtained or made, including the effectiveness of the Registration Statement under the Securities Act;
(b) such consents, approvals, authorizations, registrations, qualifications, or filings as may be required under state securities or "Blue Sky" laws of the various states in connection with the purchase and resale of the Shares by the Underwriter; provided, however, that the Shares are "covered securities" within the meaning of Section 18(b)(1)(A) of the Securities Act by virtue of their listing on the Nasdaq Global Select Market, and accordingly no state-level registration or qualification of the Shares is required under the National Securities Markets Improvement Act of 1996;
(c) the filing of the Prospectus Supplement with the SEC pursuant to Rule 424(b) under the Securities Act; and
(d) the filing of materials with the Financial Industry Regulatory Authority ("FINRA") Corporate Financing Department for review of the terms and arrangements relating to underwriting compensation in connection with the Offering.
We specifically note that the offering and sale of shares of Common Stock at the parent holding company level does not, based on our review of applicable law, require prior approval of or filing with the Connecticut Department of Insurance or the Delaware Department of Insurance. However, as set forth in Section III below, no opinion is expressed as to state insurance regulatory laws, including the insurance holding company acts of Connecticut or Delaware, or the rules, regulations, bulletins, or orders of the Connecticut Department of Insurance or the Delaware Department of Insurance, and we recommend that the Company confirm this conclusion with insurance regulatory counsel.
Opinion 9: Registration Statement
The Registration Statement on Form S-3 (File No. 333-248710; CIK: 0001784203) has been declared effective by the SEC as of September 18, 2020. As of the date of this outline, no stop order suspending the effectiveness of the Registration Statement has been issued by the SEC, and no proceedings for that purpose have been instituted or are pending before the SEC. To our knowledge, no such proceedings have been threatened by the SEC.
The Registration Statement remains effective as of the date hereof and, based on the provisions of Rule 415 under the Securities Act and the applicable instructions to Form S-3, will remain effective through September 18, 2023 (three years from the original effective date). The Company is eligible to use Form S-3 for the Offering, and the Offering is being conducted in compliance with the applicable requirements of Rule 415.
The Prospectus Supplement and any amendments or supplements thereto have been or will be filed with the SEC in accordance with Rule 424(b) under the Securities Act and the applicable requirements of the Securities Act and the rules and regulations of the SEC promulgated thereunder. The Company has complied with all conditions for the use of the Registration Statement in connection with the Offering.
Opinion 10: Investment Company Act
The Company is not, and upon consummation of the Offering and the application of the net proceeds therefrom as described in the Prospectus under the caption "Use of Proceeds" will not be, required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended (the "Investment Company Act").
This opinion is based upon our understanding that the Company is primarily engaged, directly and through its operating subsidiaries, in the business of insurance underwriting, insurance distribution, and insurance technology, and is not primarily engaged in the business of investing, reinvesting, or trading in securities. The Company's principal operating subsidiaries are engaged in the underwriting of property and casualty insurance and the development and licensing of insurance technology platforms. The Company does not hold itself out as being engaged primarily, and does not propose to engage primarily, in the business of investing, reinvesting, or trading in securities, and the Company's investment portfolio is maintained for purposes incidental to its insurance operations.
II. NEGATIVE ASSURANCE
In addition to the foregoing opinions, Calderwood & Harkness LLP will provide customary negative assurance (commonly referred to as a "10b-5 negative assurance letter" or "10b-5 letter") to the Underwriter. The negative assurance letter will be delivered concurrently with the Opinion at the Closing, as contemplated by Section 4(b) of the Underwriting Agreement.
The negative assurance will be based on the following procedures and review undertaken by Calderwood & Harkness LLP in connection with the Offering:
(a) our participation in the preparation, review, and filing of the Registration Statement and the Prospectus, including the preliminary prospectus supplement and the final Prospectus Supplement;
(b) our review of the documents incorporated by reference in the Registration Statement and the Prospectus, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021, the Company's Current Reports on Form 8-K filed during the period from January 1, 2021 through the date of the Prospectus Supplement, and the Company's most recent definitive proxy statement on Schedule 14A;
(c) our participation in due diligence sessions conducted in connection with the Offering, including a management due diligence call held on May 19, 2021, with Martin R. Calloway (Chief Executive Officer), Diana L. Prescott (Chief Financial Officer), and Yusuf A. Okafor (General Counsel and Corporate Secretary);
(d) our review of certain corporate records, including minutes of meetings of the Board of Directors and its committees, resolutions of the Board of Directors, and the Company's organizational documents;
(e) our review of certain agreements, contracts, and other instruments furnished to us by the Company and deemed relevant to the Offering; and
(f) our discussions with officers, employees, and other representatives of the Company and with representatives of Carver, Bain & Associates LLP (the Company's independent registered public accounting firm) and Trellis Peak Advisors LLC (the Company's financial advisor).
Based on the foregoing, the negative assurance letter will state that nothing has come to our attention that causes us to believe that:
(a) the Registration Statement, as of its effective date (September 18, 2020) and as of the Closing Date (giving effect to any post-effective amendments and any documents filed after the effective date and incorporated by reference therein), contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading; or
(b) the Prospectus (including the Prospectus Supplement), as of its date and as of the Closing Date, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The negative assurance letter will be subject to the following customary qualifications and limitations:
(i) The negative assurance does not extend to the financial statements, financial schedules, and other financial and statistical data (including actuarial data, loss reserve data, and pro forma financial information) contained in or incorporated by reference in the Registration Statement or the Prospectus, all of which are the responsibility of the Company's management and, to the extent applicable, are covered by the comfort letter to be delivered by Carver, Bain & Associates LLP at the Closing.
(ii) The negative assurance does not extend to information provided by or relating to the Underwriter that was furnished in writing for inclusion in the Prospectus, including the statements set forth in the Prospectus under the caption "Underwriting" relating to stabilization activities, over-allotment arrangements, penalty bids, and similar matters.
(iii) The negative assurance does not constitute a guarantee and should not be construed as an audit, independent investigation, or independent verification of the information contained in or incorporated by reference in the Registration Statement or the Prospectus. The negative assurance is based solely on the scope of our engagement and the procedures we have undertaken in connection with the Offering, which procedures are inherently limited in nature and do not constitute an examination or investigation conducted in accordance with generally accepted auditing standards or any other professional standards applicable to the conduct of audits or examinations.
(iv) The negative assurance is rendered solely in our capacity as counsel to the Company and is based on our experience in the practice of law, our familiarity with the Company, and the scope of the review and procedures described herein, and not upon any specialized expertise in accounting, auditing, actuarial science, or any other discipline.
III. ASSUMPTIONS AND QUALIFICATIONS
A. Assumptions. The opinions set forth in Section I and the negative assurance set forth in Section II will be subject to and rendered in reliance upon the following assumptions, in each case without independent investigation or verification by us:
1. Authenticity and Conformity. All documents submitted to us as originals are authentic, and all documents submitted to us as copies conform to the originals thereof. All documents reviewed by us that purport to have been signed have been duly and validly signed by the parties indicated therein.
2. Genuineness of Signatures. The signatures on all documents reviewed by us are genuine, other than the signatures of the officers and directors of the Company (as to which we express our opinion).
3. Good Standing Certificates. We will rely upon certificates of good standing (or certificates of legal existence, as applicable) issued by the Secretary of State of the State of Delaware and the Secretary of the State of Connecticut, each dated within five business days of the Closing Date, as conclusive evidence of the good standing of the Company in such jurisdictions as of the dates of such certificates.
4. Officers' Certificates. We will rely upon customary officers' certificates to be delivered at the Closing, signed by Martin R. Calloway (Chief Executive Officer) and Diana L. Prescott (Chief Financial Officer), as to factual matters within their knowledge, including representations regarding the absence of any material adverse change in the condition (financial or otherwise) of the Company since the date of the most recent financial statements included or incorporated by reference in the Prospectus, the accuracy and completeness of the disclosure in the Registration Statement and the Prospectus, and the Company's compliance with the covenants and agreements set forth in the Underwriting Agreement.
5. Secretary's Certificate. We will rely upon the secretary's certificate of Yusuf A. Okafor, General Counsel and Corporate Secretary of the Company, to be delivered at the Closing, attaching certified copies of the Company's Amended and Restated Certificate of Incorporation (as currently in effect), the Company's Amended and Restated Bylaws (as currently in effect), and the resolutions of the Board of Directors adopted on June 2, 2021, and certifying the incumbency and specimen signatures of the officers of the Company authorized to execute and deliver the Underwriting Agreement and ancillary documents.
6. Binding Obligations of Third Parties. We have assumed that the Underwriting Agreement and each ancillary document, agreement, and instrument executed and delivered in connection with the Offering constitutes a valid, binding, and enforceable obligation of each party thereto other than the Company (the validity, binding nature, and enforceability of the Company's obligations under the Underwriting Agreement being addressed by our opinions).
7. Underwriter Compliance. We have assumed that the Underwriter will comply with all applicable federal and state laws, rules, and regulations in connection with the offer, sale, and distribution of the Shares, including all applicable provisions of the Securities Act, the Securities Exchange Act of 1934, as amended, and the rules and regulations of FINRA.
B. Qualifications and Limitations
The opinions set forth in Section I and the negative assurance set forth in Section II are subject to the following qualifications and limitations:
1. Jurisdictional Limitation. Our opinions are limited to the federal laws of the United States of America, the laws of the State of New York (excluding the choice-of-law rules thereof), and the General Corporation Law of the State of Delaware (including applicable provisions of the Delaware Constitution and reported judicial decisions interpreting such laws). We express no opinion as to the laws of any other jurisdiction, including any foreign jurisdiction.
2. Exclusion of State Insurance Regulatory Laws. Specifically, and without limiting the generality of the foregoing, no opinion is expressed as to state insurance regulatory laws, including the insurance holding company acts of Connecticut (Conn. Gen. Stat. §§ 38a-129 et seq.) or Delaware (18 Del. C. §§ 5001 et seq.), or the rules, regulations, bulletins, guidelines, or orders of the Connecticut Department of Insurance or the Delaware Department of Insurance, or any other state insurance regulatory authority. Such matters are outside the scope of this opinion, and we recommend that the Company and the Underwriter obtain a separate opinion of insurance regulatory counsel with respect to such matters.
3. Bankruptcy and Insolvency. The opinions expressed herein are subject to applicable bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent transfer, fraudulent conveyance, preferential transfer, and other similar laws of general applicability relating to or affecting creditors' rights generally, as now or hereafter in effect.
4. Equitable Principles. The opinions expressed herein are subject to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), including without limitation concepts of materiality, reasonableness, good faith, fair dealing, and the possible unavailability of specific performance, injunctive relief, or other equitable remedies.
5. Limitation on No-Conflicts Opinion. The opinion regarding no conflicts set forth in Opinion 7 is limited to the specific agreements identified therein and does not extend to all agreements, contracts, instruments, or arrangements to which the Company or any of its subsidiaries may be a party or by which any of them or their respective properties may be bound. We have not undertaken a comprehensive review of all contractual obligations of the Company and its subsidiaries.
6. Indemnification and Contribution. We express no opinion with respect to the enforceability of any indemnification, contribution, or exculpation provisions contained in the Underwriting Agreement or any ancillary agreement to the extent that such provisions may be limited by applicable federal or state securities laws, public policy considerations, or judicial decisions.
7. Antifraud Provisions. We express no opinion as to compliance with any antifraud provisions of the federal or state securities laws, except to the extent expressly covered by the negative assurance letter set forth in Section II above.
C. Disclosure Regarding Scope
The Opinion is being furnished solely for the benefit of Greystone Harwick & Co., LLC in its capacity as Underwriter in connection with the Offering. The Opinion may not be relied upon by any other person or entity, or for any other purpose, without the prior written consent of Calderwood & Harkness LLP. Without limiting the foregoing, the Opinion may not be quoted, cited, or referred to in any report, document, or filing, or furnished to any other party, without our prior written consent, except that a copy of the Opinion may be furnished to Duval & Pressler LLP, counsel to the Underwriter, for its review in connection with the Closing.
The Opinion will be given as of the Closing Date, and we assume no obligation to update, supplement, revise, or reaffirm the Opinion to reflect any facts, circumstances, developments, or changes in law that may hereafter come to our attention or occur after the Closing Date, whether or not such facts, circumstances, developments, or changes in law would affect the opinions or negative assurance expressed in the Opinion.
IV. DELIVERY AND FORM
The Opinion will be delivered in executed form at or prior to the Closing of the Offering, as required by Section 4(b) of the Underwriting Agreement. The Opinion will be printed on the letterhead of Calderwood & Harkness LLP and will be signed by a partner of the firm authorized to execute opinions on behalf of the firm.
The Opinion will be addressed to:
Greystone Harwick & Co., LLC 399 Park Avenue, 28th Floor New York, New York 10022
A copy of the Opinion will be furnished to underwriter's counsel:
Duval & Pressler LLP 1185 Avenue of the Americas, 34th Floor New York, New York 10036
Attention: Gregory R. Tannenbaum
The Opinion will be signed by a partner of Calderwood & Harkness LLP duly authorized to execute legal opinions on behalf of the firm. The form and substance of the Opinion will conform to the customary practices of major law firms in New York City for opinions delivered in connection with underwritten public offerings of equity securities.
V. COORDINATION WITH CLOSING DELIVERABLES
The delivery of the Opinion at the Closing is one of several conditions to the obligations of the Underwriter to purchase the Shares pursuant to Section 4 of the Underwriting Agreement. For purposes of coordination and to ensure an orderly closing process, we note that the following additional closing deliverables are required under the Underwriting Agreement and should be assembled and reviewed in advance of the Closing:
1. Officer's Certificate. A certificate signed by Martin R. Calloway (Chief Executive Officer) and Diana L. Prescott (Chief Financial Officer), on behalf of the Company, certifying as to the accuracy of the representations and warranties of the Company contained in the Underwriting Agreement, the satisfaction of the conditions to closing, the absence of any material adverse change, and such other matters as may be required by the Underwriting Agreement.
2. Secretary's Certificate. A certificate signed by Yusuf A. Okafor (General Counsel and Corporate Secretary), on behalf of the Company, attaching certified copies of the Amended and Restated Certificate of Incorporation, the Amended and Restated Bylaws, and the resolutions of the Board of Directors adopted on June 2, 2021, and certifying as to the incumbency and specimen signatures of the officers of the Company authorized to act on behalf of the Company in connection with the Offering.
3. Comfort Letter. A "comfort letter" from Carver, Bain & Associates LLP, the Company's independent registered public accounting firm, in form and substance satisfactory to the Underwriter, addressed to the Underwriter, covering financial statements and financial data included or incorporated by reference in the Registration Statement and the Prospectus, together with customary "bring-down" comfort through a date not more than two business days prior to the Closing Date. A draft of the comfort letter was received from Carver, Bain & Associates LLP on May 21, 2021. The final comfort letter will be delivered at the Closing.
4. Lock-Up Agreements. Executed lock-up agreements, in the form attached as an exhibit to the Underwriting Agreement, from all directors, executive officers, and holders of 5% or more of the outstanding shares of Common Stock of the Company, including Birchwood Capital Partners, L.P., restricting the sale, transfer, or other disposition of shares of Common Stock and securities convertible into or exercisable or exchangeable for Common Stock for a period of 90 days following the date of the final Prospectus Supplement (subject to customary exceptions).
5. Good Standing Certificates. Certificates of good standing (or certificates of legal existence, as applicable) for the Company issued by the Secretary of State of the State of Delaware and the Secretary of the State of Connecticut, each dated within five business days of the Closing Date.
6. Negative Assurance Letter. The 10b-5 negative assurance letter described in Section II above, to be delivered concurrently with the Opinion at the Closing.
7. FINRA No-Objections Letter. A letter from the FINRA Corporate Financing Department confirming that FINRA has reviewed the terms and arrangements relating to underwriting compensation in connection with the Offering and has no objection thereto, or confirming that FINRA has waived its review of such terms and arrangements.
We recommend that all closing deliverables be circulated in substantially final form no later than two business days prior to the anticipated Closing Date and that a pre-closing call be scheduled with all relevant parties, including representatives of the Company, the Underwriter, Duval & Pressler LLP (underwriter's counsel), Carver, Bain & Associates LLP, and Continental Transfer & Trust Co. (transfer agent), to confirm the readiness of all deliverables and the logistics for the Closing.
Prepared by: Robert Adeyemi / Natasha Forbes Calderwood & Harkness LLP
Note: This outline has not been finalized or delivered. The offering was paused by mutual agreement of the Company and the Underwriter on June 28, 2021, and remains dormant as of the date of this document. The opinion was never issued.

CALDERWOOD & HARKNESS LLP 1301 Avenue of the Americas New York, NY 10019

PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

OUTLINE OF LEGAL OPINION TO BE DELIVERED AT CLOSING

INTRODUCTORY PARAGRAPH

I. OPINIONS

II. NEGATIVE ASSURANCE

III. ASSUMPTIONS AND QUALIFICATIONS

IV. DELIVERY AND FORM

V. COORDINATION WITH CLOSING DELIVERABLES

Record

Parties

Dates

Amounts