Contract analysis

I. Executive Summary This memorandum analyzes potential structuring alternatives available to Quorum Insurance Holdings Corp. ("Quorum" or "QIH") to avoid or mitigate the negative covenant trigger under Section 7.12(b) of the Amended and Restated Credit Agreement, dated June 15, 2021, among Quorum Insurance Holdings Corp., the Lenders party thereto, and Standish National Bank, N.A., as Administrative Agent (the "Cred

II. Background A. The Proposed Transaction Quorum Insurance Holdings Corp. ("Quorum" or "QIH"), a Delaware corporation publicly traded on the Nasdaq Global Select Market (ticker: QIHC) and headquartered at 1200 Atlantic Street, Suite 3400, Stamford, Connecticut 06901, proposes to enter into a five-year enterprise data-licensing arrangement with Meridian Credit intelligence, Inc. ("Meridian"), a Georgia corporation he

Section 7.12(b) of the Credit Agreement provides, in pertinent part: "The Borrower shall not enter into any license, sublicense, or similar arrangement with respect to intellectual Property having an aggregate value in excess of $25,000,000 without the prior written consent of the Required Lenders." The $60,000,000 total aggregate value of the proposed MDLA exceeds the $25,000,000 threshold set forth in Section 7.12(

III. Analysis of Structuring Alternatives We have evaluated four principal structuring alternatives that Quorum could pursue in an effort to avoid or mitigate the Section 7.12(b) covenant trigger. Each alternative is analyzed below with respect to its legal defensibility, commercial feasibility, timing implications, relationship risk with Standish, and overall effectiveness. A comparative summary matrix is presented

1. Description of Structure Under this alternative, Quorum would enter into separate license agreements through two or more of its operating subsidiaries — for example, a P&C subsidiary, a life insurance subsidiary, and/or a specialty lines subsidiary — rather than executing a single enterprise-level MDLA at the Quorum Insurance Holdings Corp. parent entity level. Each subsidiary license would be sized to fall below

2. Legal Analysis The threshold legal question under this alternative is whether Section 7.12(b) of the Credit Agreement applies only to "The Borrower" — i.e., Quorum Insurance Holdings Corp. at the parent entity level — or whether it extends to Quorum's operating subsidiaries as well. The answer depends on the structure of the Credit Agreement and the related guaranty and collateral documents. In revolving credit fa

3. Commercial and Practical Considerations From a commercial and practical standpoint, the subsidiary-splitting structure presents several difficulties. First, Meridian may be unwilling or reluctant to bifurcate the license into multiple subsidiary agreements. Doing so would complicate Meridian's administration, billing, data delivery, and contract management. Meridian's sales and legal teams would need to negotiate,

4. Relationship Risk The relationship risk associated with this alternative is high. If Standish were to discover that the subsidiary-splitting structure was designed to circumvent Section 7.12(b) — and in practice, lender groups are adept at identifying such structures — it could significantly damage the banking relationship between Quorum and Standish and erode the trust that has been built with Philip Yardley and

5. Assessment. Not recommended as a primary strategy. The subsidiary-splitting structure carries a high risk of aggregation, is vulnerable to challenge on substance-over-form grounds, is commercially impractical given Meridian's expected resistance and Quorum's enterprise-level data usage, and poses unacceptable relationship risk with Standish. We would not recommend this approach under any circumstances as a primary

1. Description of Structure Under this alternative, Quorum would structure the MDLA as a base agreement with an initial committed term and value below the $25,000,000 threshold, coupled with optional renewal periods or expansion tranches that incrementally increase the aggregate value over time. The theory is that if the initial binding commitment is below $25,000,000, the covenant is not triggered at inception, and

2. Legal Analysis The key legal question under this alternative is how Section 7.12(b) measures "aggregate value" — does it look only to the initial binding commitment at the time the arrangement is entered into, or does it encompass the total potential value of the arrangement, including reasonably foreseeable optional renewals? There is a credible argument in Quorum's favor: the standard interpretation of "aggregat

3. Commercial and Practical Considerations The commercial feasibility of the phased structure is low, primarily because of Meridian's requirements and incentives. Meridian is unlikely to agree to a short initial term (one or two years) without committed revenue visibility over the full five-year period. As noted in Section II.D above, Meridian's planned IPO in the 2025–2026 timeframe requires Meridian to demonstrate

4. Assessment. The phased commitment structure has somewhat more legal defensibility than the subsidiary-splitting alternative, as it relies on a plausible (though not uncontested) interpretation of "aggregate value." However, it is commercially impractical given Meridian's requirements and Quorum's negotiating position, and it defers rather than eliminates the consent requirement. We do not recommend this approach a

1. Description of Structure Under this alternative, Quorum would take the position that the MDLA is not a "license, sublicense, or similar arrangement with respect to intellectual Property" within the meaning of Section 7.12(b), but rather a data services or data subscription agreement that falls outside the scope of the covenant entirely. The distinction rests on characterizing the transaction as a purchase of acces

2. Legal Analysis The strength of this argument depends critically on the precise language of Section 7.12(b) and, in particular, on the definition of "Intellectual Property" in the Credit Agreement. We identify several significant weaknesses: Breadth of the "Intellectual Property" Definition. Modern credit agreements — and the Credit Agreement is no exception — typically define "Intellectual Property" broadly to inc

3. Assessment. Not recommended under any circumstances without prior confirmation from Standish. The reclassification alternative represents the highest-risk option among the four alternatives evaluated. While it has the superficial appeal of requiring no structural changes to the transaction and eliminating the consent requirement entirely if accepted, the legal foundation is weak and the downside risk — an Event of

1. Description of Structure Under this alternative, rather than seeking a one-off consent or waiver specific to the Meridian MDLA, Quorum would negotiate a permanent amendment to Section 7.12(b) of the Credit Agreement. The amendment could take one of several forms: (a) Raising the $25,000,000 threshold to a higher amount — for example, $75,000,000 or $100,000,000 — that would accommodate the MDLA and provide headroo

2. Legal Analysis An amendment to Section 7.12(b) would require the consent of the Required Lenders, which is typically defined in credit agreements as lenders holding more than 50% of the total outstanding commitments and/or loans. Depending on the amendment provisions of the Credit Agreement, modifications to negative covenants may require a higher threshold — supermajority consent (e.g., 66⅔% or 75%) or even unani

3. Commercial and Practical Considerations The principal commercial concern with the amendment approach is timeline. Credit agreement amendments typically take four to eight weeks to negotiate, document, circulate among the lending syndicate, and obtain the requisite consents. This timeline could delay the execution of the MDLA beyond Quorum's target date, particularly if syndicate members are slow to respond or if s

4. Assessment. The amendment approach is worth considering as a longer-term strategic initiative but is not the right solution for the immediate MDLA timeline given the four-to-eight-week process timeline and associated costs. We recommend that Quorum consider pursuing an amendment to raise the Section 7.12(b) threshold in connection with a broader Credit Agreement amendment cycle or refinancing, which would allow th

IV. Comparison Matrix The following matrix summarizes the comparative assessment of the four structuring alternatives and the recommended direct consent approach across five key dimensions: As the matrix illustrates, the direct consent/waiver approach is the only alternative that combines high legal defensibility with high commercial feasibility, low relationship risk, and full effectiveness at eliminating the covena

V. Recommended Approach: Direct Lender Consent A. Rationale Based on the analysis set forth above, we recommend that Quorum pursue a targeted consent or waiver under Section 7.12(b) of the Credit Agreement, specific to the Meridian MDLA, from the Required Lenders through the Administrative Agent (Standish National Bank, N.A.). This approach is the most prudent path for several reasons: Complete Legal Certainty. A dir

VI. Risk of Non-Compliance For completeness, and to underscore the importance of obtaining proper consent before executing the MDLA, we briefly summarize the consequences if Quorum were to enter into the MDLA without obtaining the prior written consent of the Required Lenders as required by Section 7.12(b): Breach of Covenant. Execution of the MDLA without consent would constitute a breach of Section 7.12(b) of the C

VII. Conclusion and Recommended Next Steps Based on the foregoing analysis, we recommend that Quorum take the following steps:

1. Proceed immediately with the direct lender consent approach under Section 7.12(b) of the Credit Agreement. This is the most prudent, legally defensible, and commercially practical path to resolving the covenant issue in connection with the Meridian MDLA.

2. Finalize and submit the draft Lender Consent Request Letter to Standish National Bank, N.A. (attention: Philip Yardley, 280 Congress Street, Boston, MA 02210) at Quorum's earliest convenience. We recommend that Carolyn Whitford and Gregory Stahl review the draft letter and provide any comments within one week to allow for prompt submission.

3. Circulate the draft form of Lender Consent/Waiver to Standish's counsel for review concurrently with the consent request letter, in order to expedite the consent process.

4. Do not pursue any of the structuring alternatives — subsidiary split, phased commitment, reclassification, or amendment — as the primary path for addressing the Section 7.12(b) issue. As detailed in this memorandum, each alternative carries legal, commercial, or relationship risks that exceed the modest administrative burden of obtaining a direct consent.

5. Consider a Credit Agreement amendment to raise the $25,000,000 threshold as a longer-term initiative, to be pursued in connection with Quorum's next refinancing, facility extension, or amendment cycle. Such an amendment would provide permanent flexibility for future data-licensing transactions as Quorum's enterprise data strategy continues to expand.

6. Coordinate the consent timeline with the MDLA negotiation timeline. Quorum's comprehensive redline of the MDLA was delivered to Meridian on December 2, 2022, and principal open issues — including most favored nation pricing provisions, derived-data rights and ownership, and certain data-quality service-level commitments — remain under active negotiation with Kessler Pruitt & Ashe. The consent process can and shoul

7. Gregory Stahl to coordinate with Quorum's treasury and banking relationship teams before the consent request is submitted to Standish. This coordination ensures that the consent request is submitted in the context of a positive and productive banking relationship and that there are no concurrent issues that could complicate the process.

8. Marcus Weill and Nathaniel Bower are available to discuss this memorandum, the companion Standish Covenant Analysis Memorandum, and the draft consent documents at Quorum's convenience. Please do not hesitate to contact us at any time to schedule a call or meeting. We trust this memorandum provides a comprehensive framework for evaluating the available alternatives and supports Quorum's decision-making on the Secti

VIII. Attachments and Cross-References The following documents are referenced in or have been prepared in connection with this memorandum:

1. Draft Lender Consent Request Letter — Prepared by Marcus Weill, Calderwood & Harkness LLP, November 2022. To be signed by an authorized officer of Quorum Insurance Holdings Corp. and addressed to Philip Yardley, Standish National Bank, N.A., as Administrative Agent.

2. Draft Form of Lender Consent/Waiver — Prepared by Marcus Weill, Calderwood & Harkness LLP, December 2022. To be reviewed and executed by Standish National Bank, N.A. (as Administrative Agent) and the Required Lenders.

3. Memorandum re: Standish Credit Agreement Covenant Analysis — Section 7.12(b) — Prepared separately by Marcus Weill, Calderwood & Harkness LLP. Provides a detailed analysis of the scope, interpretation, and application of Section 7.12(b) of the Credit Agreement, including definitions of "Intellectual Property," "aggregate value," and "Required Lenders."

4. Amended and Restated Credit Agreement, dated as of June 15, 2021, among Quorum Insurance Holdings Corp. (as Borrower), the Lenders party thereto, and Standish National Bank, N.A. (as Administrative Agent).

5. Section 7.12(b) of the Credit Agreement — The specific covenant provision at issue, as excerpted and quoted in this memorandum. This memorandum is a privileged and confidential attorney-client communication and attorney work product. It is prepared solely for the use of Quorum Insurance Holdings Corp. and its authorized representatives and should not be disclosed to third parties without the prior written consent