Contract analysis

I. Executive Summary Calderwood & Harkness LLP ("C&H" or the "Firm") has reviewed the initial term sheet (the "Term Sheet") delivered by Meridian Credit intelligence, Inc. ("Meridian" or "MCI") on September 12, 2022, proposing a five-year enterprise data-licensing arrangement with Quorum Insurance Holdings Corp. ("Quorum" or "QIH"). The Term Sheet was delivered by Keith Marlow, Senior Vice President, Data Licensing &

II. Background and Context A. The Proposed Transaction Quorum intends to license Meridian's consumer credit-file data, commercial credit data, and alternative-data feeds (collectively, the "Licensed Data Products") to enhance Quorum's automated underwriting models, claims-fraud detection algorithms, and customer propensity scoring capabilities across its property and casualty ("P&C"), life, and specialty insurance li

III. Summary of Key Commercial Terms Set forth below is a detailed summary of the key commercial terms proposed in the Term Sheet, together with C&H's initial observations and commentary. A. Term and Renewal The Term Sheet proposes the following term and renewal structure: Initial Term: Five (5) years, commencing on the effective date of the MDLA (the "Effective Date"). Renewal: Automatic renewal for successive one (

IV. Analysis of Key Provisions — Areas of Concern A. Derived-Data Rights and intellectual Property Ownership (Critical Issue)

1. Summary of Meridian's Proposed Position The derived-data provisions of the Term Sheet represent the most significant area of concern from Quorum's perspective and constitute what we consider a potential deal-breaker if not materially revised. The Term Sheet provides that Meridian retains all intellectual property rights in the Licensed Data Products and in any "Derived Data," which is defined broadly as: "any data

2. C&H Legal Analysis Ownership of Derived Data. Meridian's position that Derived Data constitutes a "derivative work" under federal copyright law, and is therefore subject to Meridian's underlying intellectual property rights in the Licensed Data Products, is legally aggressive and, in our view, not well-supported by applicable law. The leading Supreme Court precedent on copyright protection for factual data compila

3. C&H Recommendation Quorum should take the unequivocal position in its counter-term sheet that Quorum owns all intellectual property in Derived Data, with unrestricted rights to use, sublicense, and commercialize Derived Data without additional fees or Meridian consent. The specific recommendations are: (a) Reject the license-back in its entirety. Quorum should not grant Meridian any rights to Quorum's Derived Data

I. Exclusivity and Non-Compete Term Sheet Provision. The Term Sheet grants Quorum a non-exclusive license. The Term Sheet does not include any exclusivity, non-compete, or non-solicitation provisions. C&H Observation. A non-exclusive license is expected and typical in the credit-data industry, where data aggregators license substantially similar data products to multiple licensees. We do not object to the non-exclusi