Contract analysis

I. EXECUTIVE SUMMARY On December 2, 2022, Calderwood & Harkness LLP ("C&H") delivered Quorum Insurance Holdings Corp.'s ("Quorum") comprehensive redline of the proposed Master Data License Agreement ("MDLA") to Kessler Pruitt & Ashe LLP ("KP&A"), counsel to Meridian Credit intelligence, Inc. ("Meridian"). The redline marked up Meridian's form MDLA, which KP&A had delivered on November 4, 2022. Quorum's redline introd

II. BACKGROUND AND PROCEDURAL POSTURE A. Engagement and Timeline to Date Calderwood & Harkness was engaged to represent Quorum in connection with the MDLA negotiations on August 8, 2022. The engagement letter was executed with Carolyn Whitford, General Counsel and Executive Vice President of Quorum, and established C&H's role as lead outside counsel for the negotiation and documentation of the MDLA and all related an

III. ISSUE PRIORITIZATION FRAMEWORK Based on our analysis of Quorum's business objectives, the legal and commercial positions reflected in the competing MDLA drafts, and our assessment of Meridian's likely negotiating posture, we recommend organizing the open issues into three priority tiers. This framework will guide our allocation of negotiating time and attention, inform our sequencing strategy, and identify the i

1. Most Favored Nation Pricing Clause. Quorum must obtain meaningful pricing protection ensuring that it is not commercially disadvantaged relative to comparable insurance-industry licensees of Meridian's data products. The full MFN clause is the preferred outcome; a calibrated pricing audit right is the prepared fallback.

2. Derived-Data Ownership and Commercialization Rights (Including QuorumScore™ Protection). Quorum must retain full ownership of all Derived Data (as defined below) and the unrestricted right to commercialize such Derived Data — including QuorumScore™ — without license-back obligations, revenue-sharing arrangements, or Meridian consent or veto rights. This issue is existential for Quorum's data-monetization strategy.

1. Dispute Resolution. Quorum's preference for exclusive jurisdiction in the U.S. District Court for the Southern District of New York or the Commercial Division of the New York State Supreme Court, New York County, versus Meridian's demand for AAA binding arbitration with a three-arbitrator panel.

2. Post-Termination Treatment of Derived Data. The treatment of Derived Data upon expiration or termination of the MDLA remains disputed. Meridian's form MDLA requires the return or destruction of all Meridian raw data within 90 days of termination; however, the treatment of Derived Data created by Quorum during the term is unresolved. This issue is closely linked to the Tier 1 derived-data ownership question.

3. Limitation of Liability and Indemnification Scope. Standard commercial terms apply, but the specific structure of liability caps, indemnification obligations, and carve-outs remains under discussion.

4. Data Security Audit Rights and Sub-Processor Oversight. Quorum requires robust audit rights over Meridian's data-handling practices and timely breach notification obligations. The scope, frequency, and mechanics of these rights are still being negotiated. C. Tier 3 Issues (Tradeable Concessions) The following issues are of lower priority for Quorum and can be conceded or resolved on terms closer to Meridian's posi

1. Late Payment Interest Rate. Currently set at 1.5% per month / 18% per annum. Quorum could concede maintaining this rate at Meridian's proposed level.

2. Insurance Minimums. The parties are largely aligned: Meridian CGL at $5 million per occurrence, cyber/tech E&O at $25 million aggregate; Quorum CGL at $5 million per occurrence, cyber liability at $50 million aggregate. Minor adjustments to these thresholds can serve as concession material.

3. Force Majeure Provisions and SLA Service Credit Caps. Standard commercial terms where Quorum can demonstrate flexibility.

4. Specific Technical Delivery Details. Batch file naming conventions, API rate limits, data-refresh frequencies, and similar technical specifications can be resolved at the operational level without significant legal controversy.

5. Governing Law. Both parties appear aligned on New York law without giving effect to its conflicts-of-law principles. This item should require minimal, if any, negotiation.

IV. DETAILED ANALYSIS: MOST FAVORED NATION PRICING A. Quorum's Opening Position Quorum's redline of Article IV (Fees and Payment) introduced a comprehensive MFN pricing clause (proposed Section 4.06) that would require an automatic downward adjustment to Quorum's per-record pricing, volume discount tiers, and fee terms if Meridian, at any time during the term of the MDLA, offers any other insurance-industry licensee

1. Confidentiality Obligations to Other Licensees. Meridian will argue that the MFN clause, particularly the automatic-adjustment and annual-certification mechanisms, would effectively require Meridian to disclose (directly or indirectly) the pricing terms of its other data license agreements, in violation of confidentiality obligations owed to those counterparties. Meridian maintains hundreds of active data-licensin

2. Impracticability of Cross-Licensee Price Comparisons. Meridian will argue that no two data licenses are truly comparable, given that each license is bespoke — varying in the scope of data products covered, the volume of records accessed, the data-delivery mechanisms employed, the permitted uses and use restrictions, the geographic scope, the term length, and the ancillary services provided (such as custom data ove

3. IPO-Related Margin Concerns. This ground will not be articulated explicitly at the negotiating table, but we assess it to be the most significant driver of Meridian's resistance. Breckenridge Capital Partners and Whitmore Zanthor are acutely focused on preserving Meridian's ability to present itself to potential IPO investors as a company with strong and defensible "pricing power" — i.e., the ability to command pr

4. Antitrust Sensitivities. Meridian may also invoke antitrust concerns, arguing that MFN clauses in concentrated data markets have drawn scrutiny from the U.S. Department of Justice and the Federal Trade Commission. Meridian may cite the FTC's investigations into MFN clauses in health insurance data markets and platform economics as analogues. While we believe this argument is ultimately unpersuasive in the specific

V. DETAILED ANALYSIS: DERIVED-DATA RIGHTS A. Quorum's Opening Position Quorum's redline of Article VII (Intellectual Property) of the MDLA introduced a comprehensive derived-data provision (proposed Section 7.03) establishing the following framework: (a) Definition of Derived Data. "Derived Data" means any and all data, databases, data compilations, models, algorithms, scores, indices, insights, analytics outputs, an

1. Perpetual Royalty-Free License-Back. Section 7.04(a) grants Meridian a "perpetual, irrevocable, worldwide, royalty-free, fully paid-up, non-exclusive license to use, reproduce, modify, distribute, and create derivative works of all Derived Data for any purpose, including Meridian's internal business operations and the improvement, development, and commercialization of Meridian's data products and services." This p

2. Third-Party Commercialization Restriction. Section 7.04(b) prohibits Quorum from selling, licensing, sublicensing, or otherwise making Derived Data available to any third party unless such Derived Data is "sufficiently transformed" such that "no Meridian Licensed Data can be reverse-engineered, reconstructed, or identified from the Derived Data." Critically, Section 7.04(b) grants Meridian sole discretion to deter

3. Revenue-Sharing Arrangement. Section 7.04(c) requires Quorum to pay Meridian 15% of "net revenues" (defined as gross revenues less documented direct costs of sale) attributable to any Derived Data that is commercially exploited by Quorum to third parties. The revenue-sharing obligation continues in perpetuity, surviving termination or expiration of the MDLA, and applies regardless of the degree to which the Derive

VI. ASSESSMENT OF MERIDIAN'S NEGOTIATING DYNAMICS AND LEVERAGE A successful negotiation strategy requires a clear-eyed assessment of the counterparty's internal dynamics, institutional pressures, commercial incentives, and alternatives. The following analysis addresses each of these dimensions. A. Breckenridge Capital Partners' Influence Breckenridge Capital Partners Fund IV, L.P. ("Breckenridge Fund IV") holds a 62.

1. MFN and Margin Compression. MFN clauses visible in IPO due diligence — particularly in agreements with major licensees — could signal to potential investors that Meridian faces structural constraints on its ability to optimize pricing. In a growth-stage data company, "pricing power" is a critical valuation input. An MFN clause in the Quorum MDLA, which represents approximately 4.2% of Meridian's total revenue, cou

2. Derived-Data Rights and the "Data Moat" Narrative. Breckenridge and Whitmore Zanthor have constructed Meridian's equity story around the concept of a "proprietary data moat" — the idea that Meridian's data assets are unique, difficult to replicate, and sustainably defensible. If a major licensee like Quorum can freely extract value from Meridian's data, transform it into competing analytics products, and commercia

VII. SECONDARY ISSUES: RECOMMENDED POSITIONS AND CONCESSION STRATEGY A. Dispute Resolution Quorum's position: Exclusive jurisdiction in the United States District Court for the Southern District of New York, or, for state-law claims, the Commercial Division of the New York State Supreme Court, New York County. Quorum's preference for litigation reflects its general institutional comfort with the federal courts, the p

Section 12.04 of Meridian's form MDLA requires th