Contract analysis

I. Executive Summary This memorandum presents the results of a market survey of license-back provisions in enterprise data-licensing transactions, prepared in connection with Calderwood & Harkness LLP's representation of Quorum Insurance Holdings Corp. ("Quorum") in its ongoing negotiation of the proposed Master Data License Agreement ("MDLA") with Meridian Credit intelligence, Inc. ("Meridian"). The survey focuses s

II. Scope and Methodology A. Scope of Survey This survey examined approximately thirty-five (35) enterprise data-licensing agreements spanning the credit-data, financial-data, consumer-data, and analytics sectors. The agreements were sourced from a combination of publicly available materials and proprietary research, including: • Agreements filed as exhibits to SEC registration statements, annual reports, and current

III. Overview of Meridian's Proposed License-Back and Revenue-Share Terms A. The Three Components Meridian's proposed license-back and revenue-share package, as set forth in Meridian's redline of Article VII of the draft MDLA (circulated by Graham Whitley of Kessler Pruitt & Ashe LLP on March 8, 2023), consists of three interlocking components:

1. Perpetual, Royalty-Free License-Back. Under proposed Section 7.2(a) of the MDLA, Meridian would receive a perpetual, irrevocable, royalty-free, non-exclusive, worldwide license to use, reproduce, distribute, display, perform, and create derivative works from all Derived Data for Meridian's own internal and commercial purposes. The license-back is not limited to any particular use case, product line, or business un

2. Commercialization Gating with Sole Discretion. Under proposed Section 7.3(b), Quorum would be prohibited from selling, sublicensing, distributing, or otherwise making available any Derived Data to any third party unless and until the Derived Data has been "sufficiently transformed" such that "no Meridian Licensed Data can be reverse-engineered, reconstructed, or otherwise derived" from the output. The critical fea

IV. Market Survey Findings — License-Back Provisions A. Prevalence of License-Back Provisions Of the approximately thirty-five (35) enterprise data-licensing agreements surveyed, approximately twelve (12) — roughly 34% — contained any form of license-back provision relating to licensee-created derived data. The remaining approximately twenty-three (23) agreements (66%) contained no license-back whatsoever. In those a

1. Narrow, Internal-Use-Only License-Backs (8 of 12 Agreements) The predominant form of license-back — found in eight (8) of the twelve (12) agreements containing any license-back — was a narrow, internal-use-only license limited in scope, purpose, and duration. These provisions shared the following common characteristics: • Limited Subject Matter. The licensor received a non-exclusive, non-transferable license to us

2. Broader License-Backs (4 of 12 Agreements) Four (4) of the twelve (12) agreements containing license-back provisions included broader license-back grants that permitted the licensor to use licensee-created derived outputs for commercial purposes (not limited to internal use). However, even in these agreements — which represent the outer boundary of observed market practice — the license-back was subject to signifi

V. Market Survey Findings — Revenue-Sharing Arrangements A. Prevalence Revenue-sharing provisions tied to the licensee's commercialization of derived data were a minority feature in the surveyed agreements. Approximately six (6) of the thirty-five (35) agreements surveyed — roughly 17% — included any form of revenue-sharing mechanism. The remaining twenty-nine (29) agreements (83%) allocated all commercial value from

VI. Market Survey Findings — Post-Termination Treatment of Derived Data A. Observed Approaches The treatment of licensee-created Derived Data upon termination or expiration of the data-licensing agreement is a critical commercial term and is currently a disputed point in the Quorum-Meridian MDLA negotiation. Our survey identified three approaches, with varying frequency: Most Common Approach — Licensee Retains Derive

VII. Analytical Framework — Factors Driving License-Back Terms The market survey findings reveal that the presence, scope, and terms of license-back provisions in enterprise data-licensing agreements are influenced by several identifiable factors. Understanding these factors provides context for assessing the reasonableness of Meridian's demands and for positioning Quorum's negotiating arguments. A. Relative Contribu

VIII. Comparative Analysis — Meridian's Proposal vs. Market Practice A. Summary Comparison Table The following table summarizes the comparison between Meridian's proposed license-back and revenue-share terms and the market practice observed in the survey: B. Narrative Assessment The comparative analysis confirms that Meridian's proposed license-back package is materially outside market norms, both in each individual

IX. Recommendations Based on the market survey findings and comparative analysis set forth above, we recommend the following negotiating positions for Quorum, structured as a primary position and two fallback positions in order of preference. A. Primary Position: No License-Back, No Revenue Share Consistent with the majority market practice observed in our survey — in which 66% of agreements contain no license-back a

1. Adequate Compensation Through Base License Fee. Meridian is adequately compensated for its contribution of raw credit data through the base license fee of $60,000,000 over the five-year term of the MDLA ($10.8 million in Year 1 and $12.3 million in each of Years 2 through 5). The base license fee reflects the market value of Meridian's data and represents full consideration for all rights granted to Quorum under t

2. Quorum's Substantial Independent Contribution. Quorum contributes substantial independent proprietary data (claims, policy, and telematics data accumulated over more than two decades), proprietary machine learning models and algorithms developed by Quorum's internal data science team, and significant development resources to the creation of Derived Data products, including QuorumScore™. This independent contributi

3. Market-Practice Support. The primary position is the majority-practice position in the surveyed market, adopted by approximately two-thirds of comparable agreements. It is the presumptive norm in enterprise data licensing, not an aggressive or outlier position.

4. Protection of QuorumScore™. The primary position protects Quorum's ability to develop, commercialize, and license QuorumScore™ outputs without restriction, preserving the projected $40–50 million B2B revenue line and the value of Quorum's pending trademark application (USPTO Serial No. 97/482,116). B. Fallback Position: Narrow, Time-Limited License-Back Without Revenue Share If a license-back is commercially neces