CALDERWOOD & HARKNESS LLP Attorneys at Law
1585 Broadway, 34th Floor New York, New York 10036
Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com
September 5, 2025
Dennis R. Okonkwo, Esq. General Counsel & Corporate Secretary Quorum Insurance Holdings Corp. 280 Asylum Street, Suite 2200 Hartford, CT 06103
Re: Engagement of Calderwood & Harkness LLP — Committee Charter and Delegation-of-Authority Overhaul Engagement Number: 1025-00005
Dear Mr. Okonkwo:
1. Introduction and Engagement Overview
Calderwood & Harkness LLP ("C&H" or the "Firm") is pleased to confirm its engagement by Quorum Insurance Holdings Corp., a Delaware corporation ("Quorum," "QIH," or the "Company," NYSE: QIHC), to serve as outside counsel in connection with a comprehensive overhaul of the Company's board committee charters and delegation-of-authority framework (the "Engagement"). This Engagement Letter sets forth the terms and conditions upon which the Firm will provide legal services to the Company and is intended to memorialize the mutual understanding of the parties with respect to the scope, staffing, timing, and economics of the Engagement.
This Engagement Letter is issued in response to the Company's request for proposal dated August 15, 2025, and the subsequent discussions between the Firm and the Company, including a telephonic conference among the undersigned, Mr. Okonkwo, and Ivan D. Pruett, the Company's Chief Compliance Officer, held on August 22, 2025, and an in-person meeting at the Company's headquarters on August 28, 2025, at which the scope, deliverables, and anticipated timeline of the Engagement were discussed in detail.
The Company maintains its principal executive offices at 280 Asylum Street, Suite 2200, Hartford, Connecticut 06103. The Company is incorporated in the State of Delaware (Delaware Division of Corporations File Number 4927361; Employer Identification Number 27-4831956), with its registered agent being Capitol Registered Agents, Inc., located at 1209 Orange Street, Wilmington, Delaware 19801.
The Company is a publicly traded multi-line insurance holding company listed on the New York Stock Exchange under the ticker symbol "QIHC," with a current market capitalization of approximately $4.8 billion. For the fiscal year ended December 31, 2024, the Company reported consolidated annual revenue of approximately $3.12 billion and total assets of approximately $18.7 billion. The Company employs approximately 6,400 individuals across its holding company and operating subsidiaries. Given the Company's size, complexity, and publicly traded status, the governance overhaul that is the subject of this Engagement is a matter of considerable importance to the Company, its Board of Directors, its shareholders, and its regulators.
The Engagement was authorized by the QIH Board of Directors at its regular meeting held on July 22, 2025, as reflected in the minutes of such meeting, a copy of which the Company has provided to the Firm. The Board authorized the General Counsel to engage outside counsel to undertake a comprehensive review and modernization of the Company's governance documentation, and the Nominating & Corporate Governance Committee of the Board has been designated as the committee with primary oversight responsibility for the governance overhaul project.
2. Background
The Company's existing governance documentation was originally developed and adopted over a multi-year period and has been subject to periodic, but not comprehensive, review and amendment. The following background is relevant to understanding the need for and scope of the Engagement.
Committee Charters. The Company currently maintains five standing board committee charters: (i) the Audit Committee Charter; (ii) the Compensation & Human Capital Committee Charter; (iii) the Nominating & Corporate Governance Committee Charter; (iv) the Risk Committee Charter; and (v) the Investment Committee Charter. These charters were originally adopted by the Board of Directors on February 12, 2016, in connection with the Company's corporate restructuring and initial public offering preparation. The charters were subject to targeted amendments on March 20, 2019, principally to conform to then-recent amendments to the NYSE Listed Company Manual, and again on June 14, 2021, principally to address enhancements to the Compensation & Human Capital Committee's oversight of human capital management matters. No comprehensive review or restatement of the charters has been conducted since their original adoption in 2016.
Delegation of Authority Matrix. The Company's Delegation of Authority Matrix (the "DOA Matrix") is the governing document that establishes the dollar thresholds, approval chains, and authority levels for key corporate decisions, including capital expenditures, claims payments, investment transactions, policy issuance limits, vendor contracting, and executive hiring. The DOA Matrix was last comprehensively updated on October 6, 2017, in connection with the Company's integration of the Lone Star Specialty Insurance Company following its acquisition. An interim amendment to claims-payment authority thresholds was adopted on April 22, 2020, in response to the significant increase in claims volume and severity associated with the COVID-19 pandemic and related business interruption claims. Beyond this interim amendment, the DOA Matrix has not been revisited in a systematic manner.
Auditor Observations. The Company's independent registered public accounting firm, Garrett & Whitfield LLP, issued a management letter dated March 14, 2025, in connection with its audit of the Company's consolidated financial statements for the fiscal year ended December 31, 2024. The management letter identified the following observations relevant to this Engagement:
(1) Inconsistent dollar thresholds exist between the parent-level DOA Matrix and the subsidiary-level authority matrices maintained by certain operating subsidiaries, creating ambiguity regarding the appropriate approval chain for transactions that span multiple entities within the corporate group.
(2) The Company does not maintain a formal Technology & Information Security Committee charter, despite the increasing significance of technology risk and cybersecurity oversight as a matter of corporate governance, and notwithstanding that the SEC's cybersecurity disclosure rules adopted in 2023 (17 C.F.R. §§ 229.106, 249.220f) contemplate board-level oversight of cybersecurity risk management.
(3) Certain claims-settlement authorities exercised by Lone Star Specialty Insurance Company during fiscal years 2023 and 2024 exceeded the board-approved thresholds set forth in the parent-level DOA Matrix, and no documented board or committee ratification of such excess authority was identified in the Company's corporate records.
Garrett & Whitfield LLP did not characterize these observations as material weaknesses or significant deficiencies in internal control over financial reporting, but noted that remediation of these governance gaps would strengthen the Company's control environment and should be addressed in a timely manner.
Proxy Advisory Firm Benchmarking. Apex Proxy Advisors, Inc. delivered a governance benchmarking report to the Company on June 30, 2025 (the "Apex Report"), comparing the Company's governance documentation and practices to those of a peer group of fourteen (14) publicly traded insurance holding companies, including Ashgrove Enterprises, Markel Group, Inc., Bramwell & Co., and Granite Harbor Corporation, among others. The Apex Report identified several areas in which the Company's governance documentation lagged behind peer practices, including: the absence of a standalone technology or cybersecurity oversight committee; the lack of a formal director skills matrix incorporated into the Nominating & Corporate Governance Committee Charter; the absence of explicit ESG oversight responsibility in any committee charter; and the age and limited specificity of the DOA Matrix relative to peer comparators.
Shareholder Engagement. Veltrano Institutional Partners, LP, the Company's largest institutional shareholder with an ownership interest of approximately 8.3% of the Company's outstanding common stock, submitted a letter to the Board of Directors dated June 18, 2025 (the "Veltrano Letter"), urging enhanced governance documentation and disclosure. The Veltrano Letter specifically requested that the Board: (a) establish a dedicated technology and cybersecurity oversight committee; (b) undertake a comprehensive review of delegation-of-authority practices; (c) enhance proxy statement disclosures regarding committee composition, expertise, and oversight activities; and (d) publish updated governance documents on the Company's investor relations website in a timely manner. The Board discussed the Veltrano Letter at its meeting on July 22, 2025, and views the governance overhaul as responsive, in part, to the concerns raised therein.
Subsidiary Structure. The Company's subsidiary structure is relevant to the scope of the Engagement because the DOA Matrix overhaul must account for authority delegations across multiple entities, including regulated insurance operating companies. The Company's subsidiary structure includes the following:
(a) Quorum Property & Casualty Insurance Company — a Connecticut-domiciled property and casualty insurance company (NAIC Code 38472), regulated by the Connecticut Insurance Department.
(b) Lone Star Specialty Insurance Company — a Texas-domiciled specialty lines insurance company (NAIC Code 41359), regulated by the Texas Department of Insurance.
(c) Great Lakes Surety & Indemnity Co. — an Ohio-domiciled surety and indemnity insurance company (NAIC Code 29814), regulated by the Ohio Department of Insurance.
(d) Quorum MGA Services, LLC — a Delaware limited liability company serving as the Company's managing general agency platform.
(e) Vantage Digital Insurance Solutions, Inc. — a Delaware corporation serving as the Company's digital distribution and insurtech subsidiary.
The regulated insurance operating companies are each subject to state insurance holding company act requirements, including prior approval or notice requirements for certain intercompany transactions and changes in control. The governance overhaul must be designed with sensitivity to these regulatory frameworks.
3. Scope of Work
The Firm will provide the following legal services in connection with the Engagement. The scope of work is organized by workstream and reflects the deliverables discussed and agreed upon during the Firm's preliminary discussions with the Company.
3.1 Review and Restatement of Existing Committee Charters
The Firm will conduct a comprehensive review and restatement of all five existing standing committee charters currently maintained by the Company:
(a) Audit Committee Charter — including a thorough review of the charter's consistency with the requirements of Section 10A of the Securities Exchange Act of 1934, as amended, SEC Rule 10A-3, NYSE Listed Company Manual Section 303A.07, and applicable PCAOB standards, as well as current best practices regarding audit committee oversight of internal audit, enterprise risk management, whistleblower procedures, related-party transactions, and non-audit services pre-approval.
(b) Compensation & Human Capital Committee Charter — including a review of the charter's consistency with NYSE Listed Company Manual Sections 303A.05 and 303A.02, SEC Rule 10C-1 and Exchange Act Section 10C, the requirements of the SEC's pay-versus-performance disclosure rules (Item 402(v) of Regulation S-K), clawback policy administration requirements under SEC Rule 10D-1 and NYSE Rule 303A.14, and evolving practices regarding compensation committee oversight of human capital management, diversity and inclusion, pay equity, and workforce planning.
(c) Nominating & Corporate Governance Committee Charter — including a review of the charter's consistency with NYSE Listed Company Manual Section 303A.04, current practices regarding director qualifications and skills matrices, board refreshment and succession planning, overboarding policies, mandatory retirement age provisions, environmental and social governance oversight, shareholder engagement protocols, and director education and onboarding programs.
(d) Risk Committee Charter — including a review of the charter's scope of risk oversight responsibilities, coordination with the Audit Committee and the proposed Technology & Cybersecurity Oversight Committee, emerging risk categories (including climate risk, AI/machine learning risk, and geopolitical risk), risk appetite framework governance, and enterprise risk management reporting.
(e) Investment Committee Charter — including a review of the charter's oversight of the Company's approximately $12.3 billion investment portfolio, investment policy statement governance, asset-liability management, derivatives usage approval, counterparty risk limits, and ESG investment considerations.
For each charter, the Firm will prepare a full redline/tracked-changes comparison document showing all proposed modifications against the currently effective version of the charter, enabling the Board and each committee to clearly identify the nature and extent of all proposed changes.
In connection with the charter restatement, the Firm will analyze each charter against: (i) current NYSE Listed Company Manual Sections 303A.01 through 303A.14, including the 2024 amendments thereto; (ii) the Delaware General Corporation Law ("DGCL"), including Sections 141(a) and 141(c); (iii) SEC Rule 10D-1 (clawback policy requirements); (iv) the governance benchmarking observations contained in the Apex Report; and (v) applicable governance best practices as reflected in leading governance publications and peer company disclosures.
3.2 Drafting of New Technology & Cybersecurity Oversight Committee Charter
The Firm will prepare a charter for a new sixth standing board committee: the Technology & Cybersecurity Oversight Committee. This workstream is responsive to the observations in the Garrett & Whitfield LLP management letter, the recommendations in the Apex Report, and the requests in the Veltrano Letter.
The charter will address, at a minimum, the following elements:
(a) Committee composition requirements, including the recommended number of members, independence requirements, and criteria for determining that one or more members possess technology or cybersecurity expertise.
(b) Expertise qualifications for committee members, including a description of the types of professional experience, certifications (e.g., CISSP, CISM, CISA), or educational background that would qualify a director as having technology or cybersecurity expertise.
(c) The committee's oversight responsibilities, including oversight of the Company's information security program, incident response planning, technology strategy, digital transformation initiatives, data privacy compliance, third-party technology risk, and artificial intelligence governance.
(d) Reporting structures, including the committee's reporting relationship to the full Board, coordination with the Chief Information Officer, Chief Information Security Officer, and Chief Technology Officer, and the committee's authority to engage independent advisors.
(e) Inter-committee coordination protocols, including protocols for coordinating with the Audit Committee (regarding technology-related internal controls), the Risk Committee (regarding technology and cyber risk within the enterprise risk management framework), and the Compensation & Human Capital Committee (regarding technology talent acquisition and retention).
3.3 Overhaul of Delegation of Authority Matrix
The Firm will undertake a comprehensive revision of the Company's DOA Matrix. This workstream is among the most complex elements of the Engagement, given the need to align authority delegations across the holding company and its multiple operating subsidiaries. The Firm's work will include the following:
(a) Parent/Holding Company DOA Matrix. A comprehensive revision of the Company's DOA Matrix at the parent/holding-company level, addressing authority thresholds and approval chains for all key decision categories, including capital expenditures, operating expenditures, claims settlement, investment transactions, policyholder obligations, vendor and supplier contracts, real estate transactions, intercompany transactions, executive compensation decisions, legal settlements, charitable and political contributions, and public communications and disclosures.
(b) Subsidiary DOA Matrix Template. Development of a model subsidiary DOA Matrix template suitable for adoption by each of the Company's operating subsidiaries, designed to ensure consistency between parent-level and subsidiary-level authority delegations while accommodating the specific regulatory and operational requirements of each subsidiary.
(c) Comparison Document and Benchmarking. Preparation of a current-versus-proposed comparison document with a threshold-change summary highlighting all material changes in dollar thresholds and approval authority, together with peer benchmarking references drawn from publicly available governance disclosures of the peer group identified in the Apex Report.
(d) Consistency Analysis. A detailed analysis of the consistency between parent-level and subsidiary-level authority delegations, identifying any gaps, overlaps, or ambiguities, and recommending conforming changes to ensure a coherent and integrated authority framework across the corporate group.
3.4 Corporate Governance Guidelines Amendments
The Firm will prepare Amended & Restated Corporate Governance Guidelines incorporating updated provisions as directed by the Board and the Nominating & Corporate Governance Committee. Areas anticipated to be addressed include director qualification standards, board diversity expectations, board size and composition, director tenure and retirement policies, director stock ownership requirements, lead independent director responsibilities, executive sessions, shareholder engagement, and ESG oversight.
The Firm will also prepare a redline/tracked-changes comparison document showing all proposed modifications against the currently effective Corporate Governance Guidelines.
3.5 Bylaw Amendments
The Firm will prepare conforming amendments to the Company's Amended and Restated Bylaws as necessary to reflect the expanded committee structure and updated officer authority provisions. The amendments are anticipated to principally affect Articles III (Board of Directors) and IV (Officers) of the Bylaws, and may include:
(a) Amendment to the Bylaws to authorize the establishment of the Technology & Cybersecurity Oversight Committee as a standing committee and to provide for the committee's composition, powers, and procedures.
(b) Updates to the provisions governing committee formation, membership, and delegation of authority to reflect the updated governance framework.
(c) Revisions to officer authority provisions, as appropriate, to conform to the revised DOA Matrix.
In addition, the Firm will prepare: (i) a draft board resolution authorizing the adoption of such bylaw amendments; and (ii) a redline/tracked-changes comparison of all affected bylaw provisions against the currently effective Bylaws.
3.6 Delaware Law Analysis
The Firm will prepare a legal memorandum analyzing the scope and limits of board delegation of authority under the Delaware General Corporation Law. The memorandum will address:
(a) The general authority of the board of directors to manage the business and affairs of the corporation under DGCL § 141(a).
(b) The authority of the board to delegate powers to committees under DGCL § 141(c), including the composition requirements for committees, the types of actions that may be delegated to committees, and the limitations on committee authority (including the non-delegable actions enumerated in § 141(c)(2)).
(c) The authority of the board to appoint officers and delegate authority to officers under DGCL § 142.
(d) Permissible committee powers and the distinction between advisory committees and committees exercising board authority.
(e) Fiduciary duties in the delegation context, including the duty of care applicable to a board's decision to delegate authority and the duty of oversight (Caremark monitoring obligations) as interpreted in In re Caremark International Inc. Derivative Litigation, 698 A.2d 959 (Del. Ch. 1996), and its progeny, including Marchand v. Barnhill, 212 A.3d 805 (Del. 2019), and In re McDonald's Corporation Stockholder Derivative Litigation, 291 A.3d 652 (Del. Ch. 2023).
(f) Best practices for structuring delegations to minimize fiduciary risk, including the importance of clear documentation, periodic review, reporting requirements, and reservation of authority provisions.
3.7 NYSE Listing-Rule Compliance Advice
The Firm will prepare a memorandum analyzing the Company's compliance with applicable requirements of the NYSE Listed Company Manual as they relate to board committee composition, charter content, independence standards, financial-expert qualifications, and clawback-policy administration. The memorandum will address:
(a) The composition requirements for the Audit Committee, Compensation Committee, and Nominating/Corporate Governance Committee under NYSE Listed Company Manual Sections 303A.04, 303A.05, and 303A.07.
(b) The charter content requirements for each required committee, including the minimum responsibilities that must be enumerated in each charter.
(c) The independence standards applicable to committee members under NYSE Listed Company Manual Section 303A.02, including the enhanced independence requirements for audit committee and compensation committee members.
(d) The financial-expert qualifications for audit committee members under SEC Regulation S-K, Item 407(d)(5).
(e) The clawback-policy administration requirements under NYSE Rule 303A.14 and SEC Rule 10D-1, including the requirement that the listed company adopt and comply with a written clawback policy, file the policy as an exhibit to its annual report, and include applicable check-box disclosures.
3.8 Board Memorandum and Meeting Materials
The Firm will prepare a comprehensive set of materials to support the Board's consideration and adoption of the governance overhaul package:
(a) Board Memorandum. A comprehensive memorandum summarizing the governance overhaul package, including an executive summary, a description of the key changes to each committee charter, a summary of the DOA Matrix revisions and their rationale, a description of the Corporate Governance Guidelines and Bylaw amendments, a summary of the key findings of the Delaware law and NYSE compliance memoranda, and the Firm's recommendations.
(b) Board Presentation Deck. A board meeting presentation deck in a format suitable for use by the General Counsel or the Firm's attorneys in presenting the governance overhaul package to the Board.
(c) Omnibus Board Resolution. An omnibus board resolution for adoption at the December 11, 2025, board meeting, providing for the approval and adoption of all governance deliverables, including the restated committee charters, the new Technology & Cybersecurity Oversight Committee charter, the revised DOA Matrix, the Amended & Restated Corporate Governance Guidelines, and the Bylaw amendments.
(d) Written Consent Alternative. In the event that the Board determines to act by written consent in lieu of a meeting, or to supplement the board meeting with a written consent for procedural purposes, the Firm will prepare an alternative written consent of the Board of Directors suitable for execution by all directors.
3.9 Regulatory Filing Guidance
The Firm will provide advisory guidance regarding the regulatory implications of the governance overhaul, including:
(a) State Insurance Regulatory Implications. Advisory guidance regarding the potential state insurance regulatory implications of revised authority delegations for the Company's regulated subsidiaries domiciled in Connecticut, Texas, and Ohio, including whether any changes to authority delegations or governance structures could implicate holding company act filing requirements, prior approval requirements for intercompany service agreements, or examination or regulatory reporting considerations under the applicable state insurance codes. The Firm notes that this guidance will be advisory in nature and that the Company will rely on Broadleaf Insurance Regulatory Consultants, LLC for substantive state insurance regulatory law analysis.
(b) Coordination with Broadleaf. Coordination with the Company's regulatory advisor, Broadleaf Insurance Regulatory Consultants, LLC (Harold J. Emmerich, Managing Director), on holding company act filing requirements, including Form A, Form B, Form D, and Form E filings under the applicable state insurance holding company acts, as may be triggered by changes to the governance framework.
(c) SEC and NYSE Disclosure and Filing Obligations. Advisory guidance regarding the Company's obligations to disclose the adoption of the governance overhaul under applicable SEC and NYSE rules, including: (i) the obligation to file a Current Report on Form 8-K (Item 5.05 — Amendments to the Registrant's Code of Ethics, or Other Items) or to furnish a Form 8-K reporting other events material to security holders; (ii) the requirement to post updated committee charters and corporate governance documents on the Company's investor relations website pursuant to NYSE Listed Company Manual Section 303A.09; and (iii) any implications for the Chief Executive Officer's annual NYSE listing compliance certification.
3.10 Limitations of Scope
The scope of this Engagement is limited to the legal services described in Sections 3.1 through 3.9 above. The Engagement does not include, and the Firm has not been retained to provide, the following:
(a) Representation of the Company or any of its subsidiaries, directors, officers, employees, or shareholders in any litigation, arbitration, regulatory examination, or enforcement proceeding.
(b) Tax advice of any kind, including federal, state, or local income tax, franchise tax, premium tax, or excise tax analysis.
(c) Actuarial analysis or advice regarding insurance reserves, loss development, or claims valuation.
(d) Preparation of SEC periodic reports (Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, or Current Reports on Form 8-K), beyond advisory guidance regarding voluntary disclosure of the governance overhaul as described in Section 3.9(c).
(e) Preparation, filing, or submission of state insurance regulatory filings, holding company act filings, or annual statement filings.
(f) Accounting advice, including advice regarding the application of generally accepted accounting principles or Statutory Accounting Principles.
The Firm's legal advice in connection with this Engagement is limited to matters of Delaware corporate law and federal securities law / NYSE listing standards. To the extent that analysis of Connecticut, Texas, or Ohio state insurance regulatory law is required in connection with the governance overhaul, the Company will rely on Broadleaf Insurance Regulatory Consultants, LLC for such analysis, and the Firm's role will be limited to coordination with Broadleaf as directed by the Company.
4. Engagement Team
The following attorneys are assigned to the Engagement and will be responsible for performing the legal services described herein:
Ms. Forsythe will serve as the Responsible Partner with overall responsibility for the quality, timeliness, and strategic direction of the Engagement. Ms. Forsythe will be the primary point of contact for the Company on all substantive matters relating to the Engagement and will participate directly in committee workshops and presentations to the Board. Ms. Forsythe is a partner in the Firm's Corporate Governance & Securities practice group and has over twenty-two years of experience advising publicly traded companies on governance matters, including board committee charters, delegation-of-authority frameworks, SEC reporting, and NYSE listing compliance.
Mr. Bellamy will serve as the Billing Partner with responsibility for billing, fee administration, and financial aspects of the Engagement. Mr. Bellamy is a partner in the Firm's Corporate Governance & Securities practice group and will also provide substantive input on Delaware law and fiduciary duty matters.
Ms. Forbes will serve as the Lead Associate and will be principally responsible for the day-to-day execution of the Engagement, including the drafting of all deliverables, the preparation of research memoranda, and the coordination of internal and external review cycles.
Mr. Johannsen will serve as a Working Associate and will assist Ms. Forbes with legal research, benchmarking analysis, document review, and drafting support.
Additional attorneys or paraprofessionals, including associates, counsel, or legal assistants, may be assigned to the Engagement as needed to ensure timely delivery of all work product. The Firm will provide notice to the Company of any additional team members assigned to the Engagement, together with their applicable hourly rates, which will be at then-prevailing Firm rates for individuals of comparable experience and seniority.
The Firm reserves the right to adjust its standard hourly rates on an annual basis, consistent with the Firm's general rate-adjustment practices; provided, however, that the hourly rates for the attorneys assigned to this Engagement as set forth in the table above will remain fixed through the anticipated closing date of December 19, 2025, and will not be subject to any mid-engagement rate adjustment.
5. Estimated Fees and Expenses
5.1 Professional Fees
All professional fees for legal services rendered in connection with this Engagement will be charged on an hourly basis at the rates specified in Section 4 above. Fees will be calculated based on the actual time spent by each attorney on the Engagement, recorded in increments of one-tenth (0.1) of an hour.
The Firm estimates that total professional fees for the Engagement will be in the range of $385,000 to $450,000. This estimate is based on the scope of work described in Section 3, the anticipated timeline described in Section 7, and the following assumptions:
(a) The Company will provide all existing governance documents, including current committee charters, the DOA Matrix, Corporate Governance Guidelines, Bylaws, board and committee minutes, and related materials, to the Firm in a timely and organized manner.
(b) The Company's officers, directors, and committee members will be reasonably available for consultations, workshops, and review cycles within the timeline contemplated by Section 7.
(c) The Engagement will involve no more than two (2) substantive revision cycles for each major deliverable (i.e., an initial draft and a revised draft incorporating feedback).
(d) No material changes to the scope of work will be required as a result of unanticipated legal or regulatory developments, significant changes in the Company's corporate structure, or other unforeseen circumstances.
The fee estimate set forth herein is not a cap, ceiling, or fixed fee. Actual fees may vary depending on a number of factors, including the complexity of issues encountered during the course of the Engagement, changes to the scope of work, the number and extent of revision cycles requested by the Company or its committees, the degree of inter-committee negotiation or disagreement regarding governance provisions, and other factors that cannot be predicted with certainty at the outset of the Engagement. In the event that the Firm determines that actual fees are likely to materially exceed the upper end of the estimated range, the Firm will promptly notify the Company and discuss the reasons for the variance and any available options for managing costs.
5.2 Disbursements and Expenses
In addition to professional fees, the Company will reimburse the Firm for reasonable out-of-pocket disbursements incurred in connection with the Engagement, including but not limited to the following:
(a) Legal research database charges (Westmark Data Systems, Calderon Systems, Cascade Services Inc.).
(b) Travel expenses incurred in connection with in-person meetings, committee workshops, and board presentations at the Company's offices in Hartford, Connecticut, including airfare, ground transportation, lodging, and meals, in each case in accordance with the Company's travel and expense reimbursement policies as communicated to the Firm.
(c) Document production, printing, and binding costs, including the preparation of bound governance overhaul packages for distribution to directors.
(d) Messenger, courier, and overnight delivery charges.
(e) Filing fees, if applicable.
The Firm estimates total disbursements for the Engagement to be approximately $8,500. The Firm will endeavor to use commercially reasonable efforts to minimize disbursements.
5.3 Total Estimated Engagement Cost
Based on the foregoing, the total estimated cost of the Engagement (professional fees plus disbursements) is in the range of $393,500 to $458,500.
6. Billing and Payment Terms
6.1 Invoicing. The Firm will render invoices on a monthly basis, generally within fifteen (15) business days following the end of each calendar month. Each invoice will contain: (a) a summary of professional time by attorney, including the name of the attorney, the date on which services were performed, a narrative description of the services rendered, the time spent, and the applicable hourly rate; (b) a description of the work performed during the billing period, organized by workstream where practicable; and (c) an itemization of all disbursements incurred during the billing period.
6.2 Payment Terms
All invoices are payable within thirty (30) days of the invoice date ("Net-30"). The Firm expects prompt payment of its invoices. Late payments may be subject to interest at the rate of 1.0% per month (12% per annum) on the outstanding balance, calculated from the due date of the invoice until the date of receipt of payment in full. The Firm reserves the right, in its discretion, to waive late-payment interest in appropriate circumstances. In the event that any invoice remains unpaid for more than sixty (60) days, the Firm reserves the right to suspend work on the Engagement until all outstanding amounts have been brought current, upon reasonable prior written notice to the Company.
6.3 Billing Address
Invoices will be directed to:
Dennis R. Okonkwo, Esq. General Counsel & Corporate Secretary Quorum Insurance Holdings Corp. 280 Asylum Street, Suite 2200 Hartford, CT 06103
The Company may designate an alternative billing address or contact at any time by providing written notice to the Firm.
7. Anticipated Timeline
The Firm anticipates the following target milestones for the Engagement. The timeline has been developed in consultation with the Company and is designed to permit adoption of the governance overhaul package at the Board of Directors' regularly scheduled December meeting.
The timeline set forth above is subject to adjustment based on the Company's availability, the scheduling of committee meetings and workshops, the scope and nature of committee feedback, the number of revision cycles required, and the complexity of issues that may arise during the course of the Engagement. The Firm will work closely with the Company to manage the timeline and to identify and address any potential delays as early as practicable. In the event that it becomes apparent that the December 11, 2025, board meeting target cannot be achieved, the Firm will promptly advise the Company and discuss alternative scheduling options.
8. Client Identification and Responsibilities
8.1 Client. The Firm's client in this Engagement is Quorum Insurance Holdings Corp. only. The Firm does not represent, and is not engaged by, any individual director, officer, employee, or shareholder of the Company, nor does the Firm represent any subsidiary of the Company (including Quorum Property & Casualty Insurance Company, Lone Star Specialty Insurance Company, Great Lakes Surety & Indemnity Co., Quorum MGA Services, LLC, or Vantage Digital Insurance Solutions, Inc.), in connection with this Engagement. The Firm's advice is provided for the benefit of the Company's Board of Directors and management in their official capacities, and not in any personal or individual capacity.
8.2 Client Responsibilities
The Company agrees to cooperate with the Firm in the performance of the Engagement and to fulfill the following responsibilities:
(a) Provide timely access to all existing governance documents, including current committee charters, the DOA Matrix (including any subsidiary-level authority matrices), Corporate Governance Guidelines, Amended and Restated Bylaws, Amended and Restated Certificate of Incorporation, board and committee minutes, board resolutions, and related materials as the Firm may reasonably request.
(b) Make available Dennis R. Okonkwo, General Counsel & Corporate Secretary; Ivan D. Pruett, Chief Compliance Officer; Renata M. Vásquez, Chief Audit Executive; and other officers and directors of the Company as may be reasonably necessary for consultation, interviews, workshops, and review of draft deliverables.
(c) Facilitate the scheduling of committee workshops with members of the Audit Committee, Risk Committee, Compensation & Human Capital Committee, Investment Committee, and Nominating & Corporate Governance Committee, as contemplated by the timeline set forth in Section 7.
(d) Provide timely feedback on draft deliverables within the timeframes contemplated by the project timeline, it being understood that delays in the Company's review and feedback may result in corresponding delays to subsequent milestones and the overall project schedule.
8.3 Coordination with Other Advisors
The Company has advised the Firm that the following other advisors are relevant to the Engagement:
(a) Prescott, Henley & Gage LLP served as the Company's outside corporate counsel for the original adoption of the committee charters and DOA Matrix in 2016 and for the targeted amendments in 2019 and 2021. Prescott, Henley & Gage LLP is not engaged for the current governance overhaul, but the Company has indicated that the firm may be consulted informally regarding historical context, prior drafting decisions, and the rationale for certain provisions in the existing governance documents.
(b) Broadleaf Insurance Regulatory Consultants, LLC (Harold J. Emmerich, Managing Director) has been retained by the Company to advise on state insurance regulatory implications of the governance overhaul, including holding company act filing requirements in Connecticut, Texas, and Ohio.
(c) Apex Proxy Advisors, Inc. has delivered the governance benchmarking report described in Section 2 above, which will inform the scope of this Engagement and provide peer comparison data.
(d) Garrett & Whitfield LLP (Roland S. Brewer, Lead Engagement Partner) serves as the Company's independent registered public accounting firm and is the author of the management letter described in Section 2 above.
The Firm will coordinate with the foregoing advisors as reasonably directed by the Company. Such coordination may include sharing draft deliverables with Broadleaf for regulatory review, discussing benchmarking data with the Company's internal team and Apex, and responding to questions from Garrett & Whitfield LLP regarding the governance overhaul in connection with the firm's future audit procedures. Any such coordination will be subject to the Company's direction and the confidentiality and privilege protections described in Sections 9 and 10 below.
9. Confidentiality
The Firm will maintain the confidentiality of all non-public information received from the Company in connection with this Engagement, in accordance with the applicable rules of professional conduct, including the New York Rules of Professional Conduct, Rule 1.6 (Confidentiality of Information). The Firm's obligations of confidentiality apply to all information relating to the representation, regardless of the source of the information, and extend to all partners, associates, counsel, legal assistants, and other Firm personnel who have access to such information.
The Firm may share confidential information received from the Company with Firm personnel on a need-to-know basis in connection with performing the Engagement, including attorneys and paraprofessionals assigned to the Engagement, the Firm's conflicts department, and the Firm's information technology and document management staff. All such Firm personnel are bound by the Firm's confidentiality obligations.
Nothing in this Section restricts the Company's ability to disclose the Firm's work product to its officers, directors, auditors, or other advisors in connection with the governance overhaul, subject to the privilege considerations described in Section 10 below. The Company should exercise appropriate judgment in determining the scope of any such disclosures and should consult with the Firm if there is any question regarding whether a particular disclosure could adversely affect the confidentiality of the information or the applicability of the attorney-client privilege.
10. Attorney-Client Privilege and Work Product
Communications between the Firm and the Company in connection with this Engagement are intended to be protected by the attorney-client privilege and the work-product doctrine to the fullest extent permitted by applicable law. The attorney-client privilege attaches to confidential communications made between the Firm and the Company for the purpose of seeking or providing legal advice. The work-product doctrine protects documents and tangible things prepared by the Firm in anticipation of litigation or in connection with the rendering of legal services.
The Company should take care to mark privileged communications as such (e.g., by including an appropriate legend such as "PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION") and to limit distribution of such communications to those individuals within the Company who have a need to know the information in connection with their responsibilities relating to the governance overhaul. Overly broad distribution of privileged communications within the Company may, in certain circumstances, increase the risk of an inadvertent waiver of the privilege.
Disclosure of privileged communications or attorney work product to third parties may waive the attorney-client privilege and/or the work-product protection. Such waiver may, depending on the circumstances, extend beyond the specific communication disclosed and may operate as a subject-matter waiver. The Company should consult with the Firm before making any disclosures of privileged communications or work product to third parties, including to the Company's auditors, regulatory advisors, or proxy advisory firms, to allow the Firm to advise on appropriate measures to preserve applicable privileges.
11. Conflicts of Interest
The Firm has conducted a conflict-of-interest check in accordance with its standard conflict-clearance procedures and with the requirements of the New York Rules of Professional Conduct, Rules 1.7 (Conflict of Interest: Current Clients) and 1.9 (Duties to Former Clients). Based on the results of this conflict check, the Firm has not identified any conflicts of interest that would prevent the Firm from undertaking this Engagement.
The conflict check covered the following persons and entities: the Company; all identified subsidiaries of the Company (Quorum Property & Casualty Insurance Company, Lone Star Specialty Insurance Company, Great Lakes Surety & Indemnity Co., Quorum MGA Services, LLC, and Vantage Digital Insurance Solutions, Inc.); current members of the Company's Board of Directors; current executive officers of the Company; and known significant shareholders of the Company, including Veltrano Institutional Partners, LP and Westbrook Fiduciary Trust Company.
In the event that a conflict of interest arises during the course of the Engagement, the Firm will promptly notify the Company and take appropriate steps to address the conflict in accordance with the applicable rules of professional responsibility, including, where appropriate, seeking informed consent from the affected parties or, if necessary, withdrawing from the representation.
12. Document Retention
Upon completion of the Engagement, the Firm will retain copies of all documents and work product generated in connection with the Engagement in accordance with the Firm's standard document-retention policies. The Firm's current retention period for closed matter files is ten (10) years from the date of matter closing, after which time the Firm may dispose of such files without further notice to the Company, unless the Company has requested in writing that the files be preserved for a longer period.
Original documents provided by the Company to the Firm in connection with the Engagement will be returned to the Company upon request at any time during the Engagement, or at the conclusion of the Engagement. The Firm may retain copies of such documents for its files, subject to the confidentiality obligations set forth in Section 9.
13. Termination
Either party may terminate this Engagement upon thirty (30) days' prior written notice to the other party. Such notice shall be delivered in accordance with the notice provisions set forth herein. Termination of the Engagement shall not affect the Company's obligation to pay for all fees incurred and disbursements made through the effective date of termination.
In the event of termination, the Company will remain responsible for payment of all professional fees and disbursements incurred through the effective date of termination, including fees for work in progress that has been performed but not yet invoiced.
Upon termination, the Firm will take reasonable steps to protect the Company's interests, including: (a) cooperating in the orderly transition of the matter to successor counsel designated by the Company; (b) providing successor counsel with all relevant files, documents, and work product generated in connection with the Engagement; and (c) taking such other steps as may be required by the applicable rules of professional conduct governing withdrawal from representation. The Firm's obligations of confidentiality shall survive the termination of the Engagement.
14. Limitation of Liability
The Firm's aggregate liability to the Company in connection with this Engagement, whether based on contract, tort, negligence, strict liability, or any other theory of liability, shall not exceed the total amount of professional fees actually paid by the Company to the Firm for the Engagement.
In no event shall the Firm be liable to the Company for any consequential, incidental, indirect, special, exemplary, or punitive damages arising out of or in connection with this Engagement, regardless of whether such damages are foreseeable and regardless of whether the Firm has been advised of the possibility of such damages. This limitation shall apply to the fullest extent permitted by applicable law.
15. Governing Law and Dispute Resolution
This Engagement Letter shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its conflict-of-law principles. The application of Delaware law is appropriate given that the Company is incorporated in Delaware and the substantive legal work performed under this Engagement is principally governed by the Delaware General Corporation Law.
Any dispute, controversy, or claim arising out of or relating to this Engagement Letter, the Firm's services hereunder, or the breach, termination, or validity of this Engagement Letter shall be resolved by binding arbitration in New York, New York, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. The arbitration shall be conducted by a single arbitrator selected in accordance with such rules. The arbitrator's award shall be final and binding and may be entered as a judgment in any court of competent jurisdiction. Each party shall bear its own costs and expenses of the arbitration, including attorneys' fees, unless the arbitrator determines that the circumstances warrant a different allocation.
16. Entire Agreement; Amendments
This Engagement Letter constitutes the entire agreement between the Firm and the Company with respect to the subject matter of the Engagement and supersedes all prior and contemporaneous negotiations, representations, agreements, and understandings, whether oral or written, relating to the Engagement. Neither party has relied on any representation or warranty not expressly set forth in this Engagement Letter.
This Engagement Letter may be amended, modified, or supplemented only by a written instrument signed by an authorized representative of both the Firm and the Company. No waiver of any provision of this Engagement Letter shall be effective unless made in writing and signed by the waiving party. A waiver of any provision on one occasion shall not be deemed a waiver of such provision on any subsequent occasion.
17. Acceptance
We are delighted at the prospect of working with you and the Quorum team on this important governance initiative. We are confident that the governance overhaul will position the Company at the forefront of best practices among its peers and will be well received by the Company's shareholders, regulators, and other stakeholders.
Please confirm the Company's acceptance of the terms and conditions of this Engagement Letter by executing the enclosed duplicate original in the space provided below and returning it to the undersigned at your earliest convenience. The Firm will not commence work on the Engagement until the executed copy of this Engagement Letter has been received, and the Engagement will not be deemed to have commenced until such execution and return. We ask that the executed copy be returned no later than September 12, 2025, to permit work to commence in accordance with the anticipated timeline.
If you have any questions regarding this Engagement Letter or the terms described herein, please do not hesitate to contact me directly at (212) 554-7150 or eforsythe@calderwoodharkness.com.
We look forward to working with you.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Elaine Forsythe
Title: Partner
Date: September 5, 2025
Calderwood & Harkness LLP 1585 Broadway, 34th Floor New York, NY 10036 Telephone: (212) 554-7150
Email: eforsythe@calderwoodharkness.com
ACKNOWLEDGED AND ACCEPTED:
QUORUM INSURANCE HOLDINGS CORP.
By: ________
Name: Dennis R. Okonkwo
Title: General Counsel & Corporate Secretary
Date: ________