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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Carolyn Whitford, General Counsel & Executive Vice President, Quorum Insurance Holdings Corp.

CC: Gregory Stahl, Vice President, Legal Affairs, Quorum Insurance Holdings Corp.

FROM: Wendy Schultz, Associate, and Leonard Cross, Partner, Calderwood & Harkness LLP

DATE: September 5, 2023

RE: Analysis of Meridian Credit intelligence, Inc. Board Resolution Dated August 22, 2023 — Implications for MDLA Negotiations

MATTER NO.: C&H Matter No. 1025-00008

I. Executive Summary

On August 22, 2023, the Board of Directors of Meridian Credit intelligence, Inc. ("Meridian") adopted a formal resolution (the "Resolution") that (a) categorically rejects granting any most favored nation ("MFN") pricing provision to Quorum Insurance Holdings Corp. ("Quorum") or to any other licensee in connection with the proposed Master Data License Agreement (the "MDLA"), and (b) prohibits Meridian management from agreeing to unrestricted derived-data commercialization rights for Quorum — specifically declining to permit Quorum to sell, sublicense, or externally exploit Derived Data (as defined in the draft MDLA) without Meridian's prior consent, a license-back to Meridian, and a revenue-sharing arrangement of no less than fifteen percent (15%) of net revenues from any approved third-party commercialization.

The Resolution was adopted at the urging of Breckenridge Capital Partners Fund IV, L.P. ("Breckenridge"), Meridian's 62.5% majority equity holder, which is represented on the Meridian board by Caleb Rourke, a partner at Breckenridge Capital Management LLC, the fund's general partner. The Resolution also reflects concerns raised by Whitmore Zanthor & Co. ("Whitmore Zanthor"), the investment bank retained by Meridian and Breckenridge to advise on a planned initial public offering ("IPO") targeted for 2025–2026. Rachel Ng-Castillo, Managing Director at Whitmore Zanthor, has been advising Meridian that both MFN clauses and broad derived-data commercialization rights create valuation risks that would be closely scrutinized in IPO due diligence and could depress valuation multiples.

This memorandum analyzes the Resolution's substance, its practical effect on the ongoing MDLA negotiation — which has been stalled since the third negotiation session on June 30, 2023 — and Quorum's strategic options for restarting and potentially concluding the $60,000,000 five-year data-licensing transaction with Meridian.

Bottom line: The Resolution materially hardens Meridian's negotiating position and narrows the zone of possible agreement. However, it does not foreclose all paths to a deal. We recommend a recalibrated approach focused on three elements:

(i) a limited pricing audit right as a substitute for the full MFN clause, structured to avoid triggering the Resolution's prohibition on "MFN pricing provisions, price-matching mechanisms, or comparable price-protection clauses";

(ii) a tiered derived-data framework that protects QuorumScore™ — Quorum's proprietary predictive underwriting model — while offering Meridian objective safeguards through jointly defined transformation criteria, a narrow consent mechanism, and a modest revenue share applicable only to insufficiently transformed outputs; and

(iii) leveraging Meridian's IPO timeline as a motivation for Meridian to close the license on commercially reasonable terms before entering a quiet period, given that a $60 million committed-revenue contract with a Nasdaq-listed, $8.9 billion market-cap insurance company would be a valuable addition to Meridian's IPO prospectus.

We believe this recalibrated approach offers a realistic path to agreement, though the probability of a flat rejection remains meaningful (we estimate 30–40%). We recommend discussing this analysis with your team later this week, prior to transmitting any formal proposals to Meridian's counsel.

II. Background

A. Transaction Overview

Quorum Insurance Holdings Corp. (a Delaware corporation; Nasdaq: QIHC; headquartered at 1200 Atlantic Street, Suite 3400, Stamford, CT 06901) is negotiating a five-year enterprise data-licensing arrangement with Meridian Credit intelligence, Inc. (a Georgia corporation; headquartered at 3300 Peachtree Road NE, Suite 2100, Atlanta, GA 30326). Quorum is a multi-line insurance holding company with approximately $4.18 billion in annual revenue and a market capitalization of approximately $8.9 billion. Meridian is a leading provider of consumer and commercial credit data, alternative data analytics, and related data products, with annual revenue of approximately $1.42 billion and EBITDA of approximately $438 million in fiscal year 2023.

The proposed MDLA contemplates a total deal value of $60,000,000 over the five-year initial term, structured as follows:

• Year 1 Annual Fee: $10,800,000, reflecting a six-month implementation and ramp period during which Quorum will integrate Meridian's data feeds into its internal systems and begin model calibration. Payable quarterly in advance in four installments of $2,700,000 per quarter.

• Years 2–5 Annual Fee: $12,300,000 per year, reflecting the full-production data consumption rate anticipated after implementation. Payable quarterly in advance in four installments of $3,075,000 per quarter.

• Implementation/Integration Fee: A separate one-time fee of $1,500,000, payable upon execution of the MDLA, to cover Meridian's costs associated with API provisioning, data-delivery configuration, dedicated integration engineering support, and initial data-quality validation.

The MDLA would grant Quorum an enterprise license to three of Meridian's core data products:

• MCI Consumer Credit File™: Approximately 310 million consumer records, delivered via daily batch and real-time API access. This is Meridian's flagship credit-data product and represents the primary input for Quorum's underwriting and risk-assessment models.

• MCI CommercialView™: Approximately 42 million business entity records, delivered via weekly batch. This product supports Quorum's commercial-lines underwriting and small-business risk assessment.

• MCI AltSignal™: Approximately 85 million consumer alternative-data records (including utility payment history, rental data, and non-traditional credit signals), delivered via daily batch. This product is a key input for Quorum's efforts to expand coverage in underserved and thin-file segments.

Estimated monthly data consumption across all three products is approximately 437 million records per month, against a base-tier cap of 500 million records per month. The draft MDLA provides for an overage charge of $0.003 per record for consumption exceeding the monthly cap.

The business purpose underlying the MDLA is critical to Quorum's strategic plan. Quorum intends to use Meridian's data products to enhance its automated underwriting models, claims-fraud detection algorithms, and customer propensity scoring across its property and casualty, life, and specialty lines of business. Most critically, the Meridian data will fuel QuorumScore™ — Quorum's proprietary predictive underwriting model, for which a patent application is currently pending before the United States Patent and Trademark Office (Serial No. 97/482,116). QuorumScore™ is a multi-factor blended risk-scoring model that integrates Meridian credit and alt-data inputs with Quorum's own first-party claims history, policy data, and telematics data to generate a composite risk score that Quorum projects will significantly outperform existing industry-standard underwriting models. Quorum's strategic plan projects that QuorumScore™ will generate $40–50 million in B2B licensing revenue by 2027 through third-party licensing to other carriers, managing general agents, and insurtech platforms. The derived-data rights dispute is therefore not a peripheral issue — it goes directly to the commercial viability and revenue potential of one of Quorum's most strategically important assets.

B. Negotiation History and the Two Core Impasses

Calderwood & Harkness LLP was engaged by Quorum to provide legal counsel in connection with the Meridian data-licensing transaction on August 8, 2022. The parties executed a mutual non-disclosure agreement (NDA-QIH-MCI-2022-001) on August 15, 2022, which governs the exchange of confidential information in connection with the negotiation.

The negotiation has proceeded through several phases over the past thirteen months:

• Initial Term Sheets: Meridian delivered its initial term sheet to Quorum on September 12, 2022, setting forth Meridian's proposed pricing, licensing scope, and key commercial terms. Quorum delivered a counter-term sheet on September 30, 2022, identifying points of divergence, including Quorum's request for MFN pricing and broad derived-data commercialization rights.

• Draft Agreement Exchange: Meridian's outside counsel, Kessler Pruitt & Ashe LLP ("KP&A"), with Graham Whitley serving as lead partner, delivered Meridian's form MDLA on November 4, 2022. Calderwood & Harkness delivered Quorum's comprehensive redline of the form MDLA on December 2, 2022, reflecting approximately 180 substantive comments and proposed revisions across all articles.

• In-Person Negotiation Sessions: Three in-person negotiation sessions have taken place: January 18, 2023 (at Calderwood & Harkness's offices in New York), March 9, 2023 (at KP&A's offices in Atlanta), and June 30, 2023 (at Calderwood & Harkness's offices in New York).

Meaningful progress has been achieved on a number of important contractual provisions. The parties have reached substantial agreement on service-level agreements (SLAs), including uptime commitments (99.95% for real-time API; 99.9% for batch delivery), latency specifications, incident response and escalation procedures, and service-level credits. Data-delivery specifications, including format standards (JSON for API; CSV/Parquet for batch), refresh frequencies, and data-field mapping, are largely resolved. The parties have agreed on insurance requirements, including $5 million in commercial general liability coverage per occurrence for both parties, $25 million in cyber and technology errors and omissions coverage in the aggregate for Meridian, and $50 million in cyber liability coverage in the aggregate for Quorum. Data-security provisions — including mutual requirements for SOC 2 Type II certification, 48-hour breach notification obligations, encryption standards, and access controls — are also substantially resolved.

Despite this progress, two issues remain completely unresolved, and these are the issues that the August 22 Resolution directly addresses:

Most Favored Nation Pricing. Quorum has demanded the inclusion of an MFN clause ensuring that if Meridian offers any other U.S. insurance-industry licensee — defined to include carriers, managing general agents, and insurtech firms with annual premiums written of $500 million or greater — more favorable per-record pricing than Quorum receives under the MDLA, Quorum's pricing would automatically adjust to match the more favorable rate. This demand is grounded in Quorum's concern, supported by the Pinnacle Ridge pricing benchmark study (discussed below), that Meridian may offer preferential pricing to other large insurance-industry consumers of its data, placing Quorum at a competitive disadvantage.

Meridian has categorically refused the MFN on four grounds: (i) confidentiality obligations to other licensees prohibit disclosure of their pricing terms, even to an auditor; (ii) cross-licensee price comparison is impracticable given that each licensing arrangement involves a bespoke combination of data products, volume tiers, delivery methods, and ancillary services, making apples-to-apples comparison of per-record rates inherently misleading; (iii) antitrust sensitivities arise from any mechanism that could facilitate price coordination or information exchange among horizontal competitors in the insurance industry; and (iv) an MFN clause in a $60 million contract with a major licensee creates margin-compression risk that would be scrutinized in IPO due diligence and depresses valuation multiples.

Derived-Data Rights. Quorum asserts full ownership of all intellectual property in Derived Data — defined in the draft MDLA as blended risk scores, propensity models, enriched datasets, and other analytical outputs created using Meridian data as an input — with unrestricted rights to commercialize such Derived Data to third parties without Meridian's consent, without any license-back to Meridian, and without any revenue-sharing obligation. This position is essential to Quorum's QuorumScore™ business plan.

Meridian has taken the position that Derived Data constitutes a "derivative work" subject to Meridian's underlying intellectual property rights in the input data, and has demanded: (i) a perpetual, royalty-free license-back to Meridian on all Derived Data; (ii) a prohibition on third-party commercialization of Derived Data unless Meridian, in its sole discretion, determines that the Derived Data reflects "sufficient transformation" from the underlying Meridian data inputs; and (iii) a revenue share to Meridian of no less than 15% of net revenues on any approved Derived Data commercialization.

These positions were formally joined at the March 9, 2023 negotiation session and have not moved. On April 21, 2023, KP&A transmitted a letter on behalf of Meridian formally rejecting the MFN and reaffirming Meridian's derived-data position. Quorum escalated the dispute to the CEO level. A CEO-to-CEO call between Quorum CEO Meg Tierney and Meridian CEO Vince Halstead took place on May 15, 2023. While the call resulted in an agreement to continue negotiating in good faith, no substantive concessions were made by either side. Negotiations have been dormant since the June 30, 2023 session.

As additional context, Pinnacle Ridge Advisory LLC, an independent pricing analytics firm, delivered a pricing benchmark study to Quorum on February 14, 2023, prepared under the direction of Franklin Osei, Managing Director. The Pinnacle Ridge study analyzed publicly available and proprietary data on credit-data licensing transactions in the U.S. insurance market and concluded that Quorum's proposed per-record pricing under the MDLA is within the upper quartile of comparable transactions, supporting Quorum's view that an MFN or, at minimum, a pricing audit mechanism is commercially justified to ensure that Quorum is not paying a premium relative to similarly situated licensees.

C. The Role of Breckenridge and Whitmore Zanthor

Understanding the motivations and influence of Breckenridge Capital Partners and Whitmore Zanthor & Co. is essential to assessing the significance of the Resolution and to formulating an effective negotiating strategy.

Breckenridge Capital Partners Fund IV, L.P. holds a 62.5% majority equity stake in Meridian. Breckenridge is a private equity fund managed by Breckenridge Capital Management LLC, the fund's general partner, headquartered at 600 Lexington Avenue, 28th Floor, New York, NY 10022. Elaine Drummond, Managing Partner of Breckenridge Capital Management, oversees the firm's strategic direction and has been actively involved in setting Meridian's commercial strategy in the lead-up to a potential IPO. Caleb Rourke, a partner at Breckenridge Capital Management, serves on Meridian's board of directors and was the principal proponent of the Resolution, as communicated to us by KP&A.

Breckenridge acquired its majority stake in Meridian in 2019 through a leveraged buyout transaction, and a public exit via IPO has been a core element of Breckenridge's investment thesis from inception. The IPO timing, currently targeted for 2025–2026, creates a specific set of incentives that directly shape Breckenridge's posture on the MDLA negotiation. Breckenridge is focused on maximizing Meridian's enterprise value at the time of IPO, and any contractual provision that could be characterized as limiting Meridian's pricing flexibility, compressing margins, or diluting the proprietary value of Meridian's data assets is likely to be viewed with skepticism.

Whitmore Zanthor & Co. has been retained as Meridian's investment bank to advise on the potential IPO. Rachel Ng-Castillo, Managing Director at Whitmore Zanthor (headquartered at 383 Madison Avenue, New York, NY 10179), leads the engagement. Whitmore Zanthor has been advising Meridian and Breckenridge that:

(a) MFN clauses create margin-compression risk. An MFN provision in a $60 million contract with a large, sophisticated counterparty would be flagged in sell-side due diligence and by prospective investors as a constraint on Meridian's pricing power. Whitmore Zanthor's advice is that such provisions depress comparable-company valuation multiples, particularly for data-analytics businesses where pricing power and revenue predictability are key valuation drivers. The concern is not merely theoretical — Whitmore Zanthor has reportedly cited specific examples of data-analytics companies whose IPO valuations were discounted due to MFN provisions in material customer contracts.

(b) Broad derived-data commercialization rights threaten the "proprietary data moat" narrative. A central element of Meridian's IPO equity story is that its data assets are proprietary, non-replicable, and constitute a durable competitive advantage — a "data moat" that justifies premium valuation multiples. If a major licensee like Quorum — a Nasdaq-listed company with an $8.9 billion market capitalization and $4.18 billion in revenue — were granted unrestricted rights to commercialize Derived Data built on Meridian inputs, it would undermine this narrative. Prospective investors and analysts would question whether Meridian's data is truly proprietary if its licensees can freely create and distribute derivative products that compete with or substitute for Meridian's own offerings.

These advisory perspectives are commercially reasonable from Breckenridge's and Whitmore Zanthor's standpoint, even though they create significant obstacles for Quorum. Recognizing the commercial logic behind the Resolution — rather than dismissing it as mere negotiating posturing — is essential to crafting a proposal that Meridian's board and its sponsors can accept.

III. Analysis of the August 22, 2023 Board Resolution

A. Substance of the Resolution

Based on information obtained through counsel-to-counsel communications between Calderwood & Harkness and Kessler Pruitt & Ashe (Graham Whitley, lead partner), the Resolution adopted by the Meridian board of directors on August 22, 2023 provides as follows:

1. MFN Prohibition. Meridian's management is directed not to agree to any most favored nation pricing provision, price-matching mechanism, or comparable price-protection clause in the Quorum MDLA or in any other data-licensing agreement, effective immediately and continuing through the conclusion of any potential public offering of Meridian's securities. The prohibition is framed broadly and is not limited to the Quorum transaction — it applies to all current and future data-licensing negotiations. The Resolution does not define the phrase "comparable price-protection clause," which introduces some ambiguity that may be relevant to Quorum's proposed pricing audit right (discussed in Section V.A below).

2. Derived-Data Restrictions. Meridian's management is directed to maintain the following positions in the MDLA negotiation, and these positions are characterized as non-negotiable absent a superseding board resolution:

(a) A perpetual, royalty-free license-back to Meridian on all Derived Data is a non-negotiable term of the MDLA;

(b) No third-party commercialization of Derived Data shall be permitted without Meridian's prior written consent, with Meridian retaining discretion to withhold such consent in its sole judgment; and

(c) Any approved third-party commercialization of Derived Data must include a revenue share to Meridian of no less than fifteen percent (15%) of net revenues derived from such commercialization.

3. Board Rationale. The Resolution recites that the foregoing restrictions are adopted to protect Meridian's competitive positioning, pricing integrity, and valuation in connection with a potential public offering of Meridian's securities. The Resolution further recites that the board considered and relied upon the recommendations of Whitmore Zanthor & Co., acting as Meridian's investment bank, and Breckenridge Capital Management LLC, acting through its board representative Caleb Rourke, in adopting the Resolution.

We note that we have not obtained a copy of the Resolution itself; the foregoing summary is based on a detailed description provided by Graham Whitley in a telephone conversation with Leonard Cross on August 29, 2023. We have no reason to doubt the accuracy of Mr. Whitley's characterization, but we cannot independently verify the precise language of the Resolution. Should Quorum wish to request a copy of the Resolution directly, we can evaluate the advisability and mechanism for doing so.

B. Legal Significance

The legal and practical significance of the Resolution should not be underestimated. A formal board resolution is a governance-level action that binds Meridian's management team — including Arthur Pennington (General Counsel), Keith Marlow (Senior Vice President, Data Licensing & Partnerships), and Sandra Ellison (President & Chief Operating Officer) — and removes their discretion to agree to Quorum's MFN or unrestricted derived-data positions without returning to the board for a superseding resolution. As a practical matter, this means that even if Quorum were to persuade Meridian's management team at the negotiating table that Quorum's positions are commercially reasonable, management would lack the authority to agree without obtaining board approval.

The Resolution effectively converts what were previously management-level negotiating positions — adopted as a matter of business judgment and potentially subject to compromise as part of a broader give-and-take negotiation — into governance-level mandates backed by the formal authority of the board. This significantly increases the political cost for any Meridian representative to deviate from these terms. A member of Meridian's management team who agreed to an MFN or to unrestricted derived-data rights in contravention of the Resolution would be acting outside the scope of her or his authority and could face personal accountability to the board and, ultimately, to Breckenridge as the controlling shareholder.

However, it is important to recognize that a board resolution is not immutable. The Meridian board retains the authority to adopt a new resolution amending, modifying, or superseding the August 22 Resolution at any time, if circumstances warrant. For example, if Quorum were to propose terms on the MFN and derived-data issues that the board (and, critically, Breckenridge and Whitmore Zanthor) found commercially acceptable — terms that address the underlying concerns about margin compression, pricing precedent, and the proprietary data-moat narrative — the board could adopt a superseding resolution authorizing management to agree to those terms. Similarly, if the IPO timeline shifts or if Meridian's competitive landscape changes in a way that makes the Quorum deal more strategically important, the board could revisit the Resolution.

The key takeaway is that the Resolution raises the bar for agreement but does not erect a permanent wall. Quorum's task is to craft a proposal that gives the Meridian board a commercially defensible basis for adopting a superseding resolution.

C. Breckenridge's Influence and Motivations

Given Breckenridge's 62.5% ownership stake, it is virtually certain that Breckenridge exercises effective control over Meridian's board actions, either through formal voting power or through the influence that a controlling shareholder naturally commands. The Resolution almost certainly reflects Breckenridge's priorities and risk management calculus as much as — or more than — Meridian's independent business judgment. Understanding Breckenridge's motivations is therefore essential to understanding the Resolution and to crafting a responsive strategy.

Breckenridge's core concerns, as we understand them, fall into three categories:

(i) Protecting EBITDA Margins Ahead of IPO. Meridian's EBITDA margins are strong — approximately $438 million on $1.42 billion in revenue in fiscal year 2023, representing a margin of approximately 30.8%. This level of profitability is a key element of the IPO valuation thesis. An MFN clause that could force downward adjustments to pricing in a $60 million contract (and that could be invoked as precedent by other licensees) represents a tangible risk to margin stability. Breckenridge's concern is not merely about the direct financial impact of a Quorum MFN — which would be manageable in isolation — but about the signaling effect: if Meridian grants an MFN to Quorum, other large licensees will demand the same, creating a cascading margin-compression risk that could materially erode Meridian's profitability profile ahead of the IPO.

(ii) Preserving the Proprietary Data-Moat Narrative. Breckenridge's investment thesis for Meridian is built in significant part on the proposition that Meridian's data assets are proprietary, non-replicable, and constitute a durable competitive "moat." This narrative would be undermined if a major licensee like Quorum were granted unrestricted rights to commercialize Derived Data built on Meridian inputs. From Breckenridge's perspective, allowing Quorum to freely create and sell products like QuorumScore™ — which blends Meridian data with Quorum's own data — without any Meridian consent, license-back, or revenue share would effectively allow Quorum to monetize Meridian's data assets through a downstream channel over which Meridian has no control. Even if QuorumScore™ reflects substantial transformation and independent value-add by Quorum, Breckenridge and Whitmore Zanthor are likely to view any unrestricted commercialization right as a dilution of the data-moat narrative.

(iii) Avoiding Precedent-Setting Terms. Quorum is a large, sophisticated counterparty. Any concession made to Quorum will almost certainly be demanded by other licensees, either through formal MFN mechanisms or through the informal pressure of market knowledge. Breckenridge is acutely aware that the terms of the Quorum MDLA — which, at $60 million over five years, will be one of Meridian's most significant licensing arrangements — will set a benchmark for Meridian's licensing program as a whole. This precedent concern amplifies the significance of every material term.

Whitmore Zanthor's influence reinforces these concerns from a capital-markets perspective. Investment bankers advising on an IPO routinely flag contractual provisions that could reduce valuation. An MFN clause in a $60 million contract with a large, publicly traded counterparty like Quorum would be a prominent item in sell-side due diligence, would likely be disclosed in the IPO prospectus (or at minimum discussed in management presentations to prospective investors), and could prompt buy-side analysts to model margin-compression scenarios that depress comparable-company valuation multiples. Similarly, broad derived-data rights granted to a major licensee could prompt analysts to question the durability of Meridian's competitive position — the very heart of the growth premium that Breckenridge is seeking to capture through the IPO.

IV. Impact on Quorum's Negotiating Position

A. MFN Pricing

The Resolution formally closes the door on a full most favored nation clause for the foreseeable future — at minimum through the conclusion of any potential public offering of Meridian's securities, which, based on the current timeline, would not occur until 2025–2026. Quorum should recognize that continuing to demand a comprehensive MFN is no longer a productive negotiating tactic with Meridian in its current governance posture. The MFN has been elevated from a management-level objection to a board-level prohibition, and no member of Meridian's negotiating team has the authority to agree to it.

The Resolution may not, however, preclude more limited pricing protections. The "pricing audit right" fallback — which Quorum has contemplated proposing but has not yet formally submitted to Meridian (initial submission was targeted for mid-September 2023) — was not specifically addressed in the Resolution as described to us by KP&A. The Resolution prohibits "most favored nation pricing provisions, price-matching mechanisms, or comparable price-protection clauses," but a carefully scoped pricing audit right that does not function as an automatic price-matching or price-adjustment mechanism may fall outside the scope of this prohibition.

The distinction is meaningful. A true MFN clause operates mechanically: if a triggering event occurs (Meridian offers a lower rate to another licensee), Quorum's pricing automatically adjusts — a self-executing price-protection mechanism. By contrast, a pricing audit right merely provides transparency: an independent auditor verifies, on an annual basis, whether Quorum's effective per-record rate falls within a reasonable range relative to comparable licensees. The audit produces a pass/fail result, not an automatic price adjustment. If the audit reveals a discrepancy, the parties would negotiate in good faith to address it — but there is no mechanical price-matching. This distinction, if properly framed, may allow Meridian's management and board to accept a pricing audit right without contravening the Resolution.

That said, there is a meaningful risk that Meridian's counsel will interpret the Resolution broadly to capture any pricing transparency, benchmarking, or audit mechanism that has the practical effect of constraining Meridian's pricing discretion. The phrase "comparable price-protection clause" in the Resolution is undefined and potentially capacious. Quorum should expect initial resistance from KP&A even to the audit-right proposal and should be prepared to frame it carefully — as a data-integrity and governance measure designed to ensure the commercial reasonableness of a long-term, high-value contract, rather than as a price-protection device.

We have prepared a detailed analysis of the pricing audit right proposal, including suggested drafting language, which we will circulate separately for Quorum's internal review.

B. Derived-Data Rights

The Resolution entrenches three specific requirements on the derived-data issue, each of which presents a direct and significant conflict with Quorum's strategic objectives:

License-Back. The requirement for a perpetual, royalty-free license-back on all Derived Data is deeply problematic for Quorum. A license-back would give Meridian — which is itself a data-analytics company and a potential competitor to Quorum in the provision of risk-scoring and analytics products — access to Quorum's proprietary blended models, analytical methodologies, and enriched datasets. This creates two categories of risk. First, Meridian could incorporate Quorum's analytical innovations into its own products, effectively free-riding on Quorum's R&D investment. Second, Meridian could make Quorum's Derived Data available (directly or indirectly) to Quorum's competitors in the insurance industry, eroding Quorum's competitive advantage. Even if the license-back were subject to use restrictions and confidentiality obligations, the practical risk of competitive leakage is significant given the nature of Meridian's business.

Sole-Discretion Consent for Commercialization. Meridian's insistence that no third-party commercialization of Derived Data be permitted without Meridian's prior written consent — with Meridian retaining sole discretion to determine whether "sufficient transformation" has occurred — functions as a commercial kill switch over Quorum's B2B licensing program. Under this framework, Meridian would have an effective veto over Quorum's ability to license QuorumScore™ and related products to third parties. This is not merely a theoretical concern. Quorum's strategic plan projects $40–50 million in B2B licensing revenue from QuorumScore™ by 2027. Subjecting this revenue stream to Meridian's sole-discretion approval — which could be exercised or withheld for any reason, including competitive reasons — introduces an unacceptable level of business risk. Even if Meridian were to approve commercialization in the ordinary course, the existence of the veto right would create uncertainty that could chill investment in QuorumScore™ development and complicate Quorum's own disclosures to investors and analysts.

15% Revenue Share. The revenue-sharing requirement, applied to QuorumScore™ B2B licensing revenues, would impose a significant financial burden. At projected 2027 revenues of $40–50 million from QuorumScore™ B2B licensing, a 15% revenue share would cost Quorum approximately $6–7.5 million annually. This is a material margin impact, particularly given that Quorum's own investment in developing QuorumScore™ — including model development, data-science talent, technology infrastructure, and patent prosecution — has been substantial. Moreover, the revenue share would apply to the full net revenue from QuorumScore™ licensing, not merely to the portion of value attributable to Meridian's data inputs, which is fundamentally disproportionate given that QuorumScore™ blends Meridian data with Quorum's own first-party claims, policy, and telematics data.

Taken together, these three requirements would effectively transform Quorum's relationship with Meridian from a data-licensing arrangement into something approaching a joint venture — one in which Meridian shares in the upside of Quorum's innovation without bearing any of the cost, risk, or developmental effort. This outcome is commercially unacceptable to Quorum.

C. Effect on Overall Deal Dynamics

The Resolution sends a clear signal about Meridian's willingness to trade: Meridian (and, more precisely, Breckenridge) is prepared to lose the Quorum deal rather than concede on MFN or derived-data rights, at least while the IPO remains on the horizon. This assessment is supported by the fact that the deal's $60 million total value represents approximately 4.2% of Meridian's fiscal year 2023 revenue of $1.42 billion. While $60 million is undeniably material, it is not indispensable for Meridian. Meridian has a diversified licensee base across financial services, insurance, healthcare, and government sectors, and the loss of any single licensee — even one as significant as Quorum — would not fundamentally alter Meridian's financial profile or IPO readiness.

This asymmetry in walk-away leverage shifts the negotiating balance in Meridian's favor. Quorum must therefore make a strategic assessment: is the value of Meridian's data products — including the depth, breadth, and uniqueness of the Consumer Credit File, CommercialView, and AltSignal datasets — sufficient to justify meaningful concessions on the MFN and derived-data issues? Or should Quorum explore alternative data sources and accept the delays and switching costs that would entail?

We believe the answer is that Meridian's data products are sufficiently valuable and strategically important to Quorum that walking away should be a last resort. However, Quorum must also avoid making concessions that would compromise the commercial viability of QuorumScore™ or establish unfavorable precedent for future data-licensing arrangements. The challenge — and the objective of our recommended approach — is to find the narrow band of terms that meets both parties' core needs.

V. Strategic Options for Quorum

We have identified four strategic options for Quorum's consideration. For the reasons set forth below, we recommend Option 1 — a recalibrated deal framework — as the preferred approach, with elements of Option 3 available as a further fallback.

A. Option 1: Propose a Recalibrated Deal Framework (Recommended)

This option involves formally proposing a revised set of terms on both the MFN and derived-data issues that is specifically designed to address the concerns underlying the Resolution while preserving Quorum's core commercial objectives. The proposal has three components.

1. MFN Substitute — Limited Pricing Audit Right

We recommend that Quorum formally propose the "pricing audit right" fallback as a substitute for the comprehensive MFN clause. The pricing audit right would be structured as follows:

(a) Annual Audit Right. Quorum would have the right, exercisable no more than once per contract year, to engage an independent third-party auditor — to be mutually agreed upon by both parties from a pre-approved list of nationally recognized accounting firms (e.g., Morriven Ashford CPAs LLP, Marlowe Buchanan CPAs LLP, Rowan Whitfield CPAs LLP, or Kraft Renwick CPAs LLP) — to conduct a confidential review of Meridian's pricing arrangements with comparable insurance-industry licensees.

(b) Comparable Licensees. For purposes of the audit, "comparable insurance-industry licensees" would be defined as U.S.-domiciled insurance carriers, managing general agents, or insurance technology companies with annual gross written premiums of $500 million or more that license substantially similar data products (i.e., at least two of the three Licensed Products or their functional equivalents) at comparable volume levels (within 25% of Quorum's monthly volume).

(c) Audit Scope and Methodology. The auditor would review Meridian's pricing records for comparable licensees and determine whether Quorum's effective per-record rate exceeds 110% of the lowest effective per-record rate charged to any comparable insurance-industry licensee during the same contract year. The 110% threshold provides a reasonable tolerance band that accounts for bespoke differences in licensing arrangements.

(d) Pass/Fail Reporting. To address Meridian's confidentiality concerns, the auditor would report only a binary pass/fail result to both parties — i.e., whether Quorum's effective per-record rate does or does not exceed 110% of the lowest comparable rate. The auditor would not disclose the identity, pricing, or any other terms of any other licensee's agreement.

(e) Good-Faith Adjustment. In the event of a "fail" result, the parties would negotiate in good faith for a period of sixty (60) days to agree on an appropriate pricing adjustment. If the parties are unable to agree, the dispute would be referred to the contractual dispute-resolution mechanism (which the parties have tentatively agreed would be binding arbitration under the AAA Commercial Arbitration Rules).

(f) Cost Allocation. Quorum would bear the cost of the audit unless the audit reveals that Quorum's effective per-record rate exceeds 110% of the lowest comparable rate, in which case Meridian would reimburse Quorum's audit costs.

The framing of this proposal is critical. Quorum should present the pricing audit right as a market-fairness and governance measure — a standard commercial practice in long-term, high-value procurement relationships — rather than as a price-protection or MFN mechanism. The proposal should emphasize the following points:

• The audit right does not create an automatic price-adjustment mechanism. It merely provides a structured process for assessing pricing reasonableness.

• The audit is conducted by an independent, mutually approved third party subject to strict confidentiality obligations, which protects Meridian's pricing information and its confidentiality obligations to other licensees.

• The 110% threshold provides a meaningful tolerance band that respects Meridian's right to price different arrangements differently based on scope, volume, and other bespoke factors.

• The pass/fail reporting structure ensures that Quorum receives no competitively sensitive information about other licensees.

We acknowledge the risk that KP&A may interpret the Resolution broadly and argue that the pricing audit right constitutes a "comparable price-protection clause" within the scope of the board's prohibition. Quorum should be prepared for this pushback and should anticipate the need to engage in a substantive dialogue — possibly including a direct discussion between Leonard Cross and Graham Whitley — about the distinction between a pricing audit right and a true MFN or price-matching mechanism.

2. Derived-Data Framework — Tiered Approach

We recommend that Quorum propose a tiered derived-data framework that replaces the binary dispute (unrestricted commercialization vs. Meridian sole-discretion consent) with a structured, multi-tier system that differentiates among categories of Derived Data use based on the degree of transformation and the nature of the intended exploitation. The framework would be structured as follows:

Tier 1 — Internal Use. Quorum would own all intellectual property in Derived Data that is used solely within Quorum's corporate group (including wholly owned subsidiaries and controlled affiliates) for internal underwriting, claims management, fraud detection, risk assessment, and other internal business purposes. No license-back to Meridian. No revenue share. No Meridian consent required. This tier reflects the fundamental proposition that when Quorum uses Meridian data as an input to its own internal decision-making processes, the outputs of those processes belong to Quorum.

Tier 2 — External Commercialization of Sufficiently Transformed Derived Data. Quorum would have the right to commercialize Derived Data to third parties, provided that the Derived Data meets objective, jointly defined transformation and de-identification criteria. These criteria would be set forth in a Derived Data Commercialization Protocol (the "DDCP") attached to the MDLA as an exhibit and developed collaboratively by the parties' respective data-science and legal teams. The DDCP would establish quantitative and qualitative standards for determining whether Derived Data is "Sufficiently Transformed" — for example, requiring that the Derived Data incorporates at least two independent data sources in addition to Meridian data, that no individual Meridian data element is recoverable from the output, and that the output reflects material independent analytical value-add by Quorum. For Tier 2 Derived Data: no license-back, no revenue share, no Meridian prior consent. Disputes about whether specific outputs meet the DDCP criteria would be resolved through an expedited expert-determination process (e.g., a jointly appointed independent data-science expert).

Tier 3 — External Commercialization of Insufficiently Transformed Derived Data. For Derived Data outputs that do not meet the objective transformation criteria set forth in the DDCP, Quorum would obtain Meridian's prior written consent before commercializing such outputs to third parties. However, Meridian's consent would not be subject to sole discretion — rather, it would be subject to a "not to be unreasonably withheld, conditioned, or delayed" standard, with specific examples of reasonable and unreasonable bases for withholding consent set forth in the MDLA. Approved Tier 3 commercialization would be subject to a revenue share of five percent (5%) of net revenues — significantly below Meridian's demand of 15%. No license-back would apply even at Tier 3.

QuorumScore™ Carve-Out. As a critical element of the tiered framework, Quorum should propose an explicit carve-out for QuorumScore™ and its outputs. The carve-out would provide that all outputs generated by the QuorumScore™ model — including composite risk scores, propensity indices, and related analytical products — are categorically treated as Tier 2 Sufficiently Transformed Derived Data, regardless of the degree to which Meridian data inputs are incorporated. The basis for this carve-out is that QuorumScore™ blends Meridian data with Quorum's own substantial first-party data assets — including historical claims data, policy data, telematics data, and proprietary behavioral models — and reflects years of investment in model development, data-science talent, and technology infrastructure. QuorumScore™ is an independently valuable intellectual property asset, as evidenced by Quorum's pending patent application (USPTO Serial No. 97/482,116), and should not be subject to Meridian's consent, license-back, or revenue-share requirements.

This tiered framework is designed to thread the needle between Quorum's need to commercialize QuorumScore™ without restriction and Meridian's legitimate concern about protecting its proprietary data assets. By offering Meridian meaningful protections at Tier 3 — including a consent right (albeit subject to a reasonableness standard) and a revenue share — Quorum provides the Meridian board with a commercially defensible basis for adopting a superseding resolution that permits a more nuanced approach to derived-data rights.

We recommend referencing our June 2023 revised Article VII drafting and the Draft Derived Data Commercialization Protocol as the starting point for this proposal. Those documents have already been circulated internally within Quorum and reflect input from Rajesh Anand's data-science team and Diane Lowell's underwriting analytics group.

3. IPO Timeline Leverage

The Meridian IPO timeline, while the primary driver of the Resolution's restrictive posture, also creates a significant motivator for Meridian to close the MDLA on acceptable terms. Specifically:

• Meridian and Breckenridge have a strong interest in completing material commercial agreements before the IPO quiet period. A $60 million five-year license with a Nasdaq-listed, $8.9 billion market-cap insurance company is a valuable revenue-backlog item for Meridian's IPO prospectus. Committed, multi-year revenue from a blue-chip counterparty enhances revenue visibility, demonstrates the commercial value of Meridian's data products, and supports the growth narrative that is central to Meridian's IPO equity story.

• Conversely, an unclosed negotiation with a major prospective licensee — or, worse, a publicly traded counterparty that walked away from a $60 million deal — could raise questions during IPO due diligence about the commercial attractiveness of Meridian's licensing terms.

• The IPO timeline creates a natural deadline: if the IPO is targeted for 2025–2026, Meridian would ideally have the Quorum MDLA executed and in-force well before the commencement of the IPO marketing process. Working backward from a hypothetical Q2 2025 S-1 filing, Meridian would want the MDLA executed by Q4 2024 at the latest — giving the parties approximately twelve to fourteen months to reach agreement and close.

Quorum should leverage this dynamic by signaling its willingness to close the transaction in a timeframe that supports the IPO if Meridian will negotiate in good faith on the two remaining open issues. This signal should be communicated at both the working level (through counsel-to-counsel communications) and the principal level (through CEO-to-CEO engagement).

We recommend that CEO Meg Tierney communicate directly to CEO Vince Halstead — ideally in a brief telephone conversation, followed by a written letter — that Quorum remains committed to the partnership, recognizes the strategic importance of the transaction for both parties, and is prepared to close on commercially reasonable terms that address both companies' legitimate concerns. Ms. Tierney should convey that Quorum understands Meridian's pre-IPO priorities and is prepared to work constructively within those constraints, but that Quorum also has its own strategic imperatives — including the protection of QuorumScore™ — that must be respected. This combination of empathy and firmness is likely to resonate more effectively than a purely positional approach.

B. Option 2: Pause and Explore Alternative Data Sources

As an alternative to the recalibrated deal framework, Quorum could pause the Meridian negotiation and explore alternative credit-data providers — including the major credit bureaus (Harborview Enterprises, Penrose Group, Penmark Enterprises), specialty data providers (e.g., Harborview Software, Kestrel Enterprises, Dunmore Enterprises), and emerging alternative-data platforms — as a competitive lever. The objective would be twofold: to determine whether adequate substitutes for Meridian's data products exist, and to signal to Meridian that Quorum has alternatives and is not captive to the Meridian relationship.

However, this option carries significant risks and limitations:

• Limited Alternatives. The U.S. credit-data market is highly concentrated, and Meridian's particular combination of consumer credit, commercial, and alternative data — integrated through a single licensing relationship — is difficult to replicate through alternative providers. While each of the major credit bureaus offers consumer credit data, and various specialty providers offer commercial or alternative data, assembling a comparable multi-source data stack would require multiple licensing arrangements, significant integration work, and potentially higher aggregate costs.

• Switching Costs. Quorum has already invested substantial resources in evaluating Meridian's data products, designing integration architectures, calibrating preliminary models, and negotiating the MDLA. Switching to an alternative provider would require Quorum to repeat much of this work from scratch, including data-integration engineering, model retraining and recalibration, and a new negotiation cycle with different legal and commercial terms.

• Timeline Impact. Any pause in the Meridian negotiation — particularly if accompanied by a pivot to alternative providers — would delay the QuorumScore™ development timeline by twelve to eighteen months or more, potentially costing Quorum competitive position in the rapidly evolving insurtech landscape.

We assess that this option is more valuable as a credible threat than as an actual strategy. If Quorum can credibly signal to Meridian that it has viable alternatives and is prepared to explore them, this may create additional motivation for Meridian to negotiate constructively on Quorum's recalibrated proposals. However, Quorum should avoid actually pausing the negotiation unless Option 1 is definitively rejected.

C. Option 3: Accept Meridian's Terms with Modifications

As a further fallback, Quorum could accept certain elements of Meridian's derived-data position — specifically, agreeing in principle to a license-back and revenue share on Derived Data other than QuorumScore™ — provided Meridian agrees to meaningful modifications:

(i) A narrower license-back limited to aggregated, anonymized, and de-identified insights derived from the Derived Data, rather than a full license-back on the Derived Data itself. This would give Meridian access to high-level market trends and analytical patterns without exposing Quorum's proprietary models, methodologies, or granular output data.

(ii) An explicit QuorumScore™ carve-out from the license-back, consent, and revenue-share requirements, consistent with the approach described in Option 1.

(iii) A reduced revenue-share rate — we would propose 5% of net revenues, down from Meridian's demand of 15%, applicable only to non-QuorumScore™ Derived Data that is commercialized to third parties.

This approach has the advantage of giving Meridian something tangible to present to its board — a license-back (albeit narrower) and a revenue share (albeit lower) — while protecting Quorum's crown jewel, QuorumScore™. It demonstrates good faith and commercial flexibility on Quorum's part, which may be important in a negotiation where the other side has formalized its positions through a board resolution.

The downside of this approach is that even a narrow license-back creates precedent and introduces risk. Once Meridian has a license to any form of Quorum's Derived Data — even aggregated and anonymized — Meridian could use those insights competitively, either by incorporating them into Meridian's own analytics products or by using the insights to inform Meridian's product-development roadmap. The scope and enforceability of use restrictions in a license-back are inherently limited, and Quorum should carefully weigh this risk before agreeing to any form of license-back.

We view Option 3 as a viable fallback if Option 1 does not generate a productive response from Meridian, but we recommend pursuing Option 1 first.

D. Option 4: Walk Away

Quorum could terminate negotiations entirely and pursue data relationships with alternative providers, effectively ending the Meridian opportunity. While this option preserves Quorum's negotiating purity and avoids any compromise on its core positions, it carries the highest strategic cost.

Given the depth, breadth, and uniqueness of Meridian's data products — 310 million consumer records in the Consumer Credit File, 42 million business records in CommercialView, and 85 million alternative-data records in AltSignal — there is no single alternative provider that can replicate the full scope of the proposed MDLA. Walking away would force Quorum to pursue a multi-vendor strategy with higher aggregate costs, greater integration complexity, and significant delays to the QuorumScore™ development timeline.

This option should be reserved as a last resort, to be considered only if Meridian categorically rejects the recalibrated proposals under Options 1 and 3, and if CEO-level escalation fails to produce a path to agreement.

VI. Standish National Bank Covenant Considerations

Regardless of which strategic option Quorum pursues, Quorum must obtain lender consent or a waiver from Standish National Bank, N.A. ("Standish") in connection with the execution of the MDLA. Section 7.12(b) of the Amended and Restated Credit Agreement, dated June 15, 2021, by and among Quorum, Standish (as administrative agent and lead lender), and the syndicate banks party thereto, prohibits Quorum from entering into any single commercial contract or series of related contracts with an aggregate value exceeding $25,000,000 without the prior written consent of the Required Lenders (as defined in the Credit Agreement).

The MDLA's aggregate deal value of $60,000,000 over the five-year initial term exceeds the $25,000,000 threshold by $35,000,000 — representing 240% of the threshold — and therefore clearly triggers the consent requirement. The one-time implementation fee of $1,500,000 further increases the aggregate commitment, though the precise treatment of this fee under the covenant will depend on whether it is characterized as a separate obligation or as part of the MDLA's aggregate value.

The lender consent request was initially drafted by Quorum's treasury team in November 2022, and a follow-up letter was transmitted to Philip Yardley, Standish's Relationship Manager for the Quorum account, in February 2023. Given the dormancy of the MDLA negotiations since June 2023, the consent process has stalled, and we understand from Marcus Weill (Quorum's Senior Vice President and Treasurer) that no substantive response has been received from Standish since February 2023.

Upon restarting negotiations with Meridian, Marcus Weill and Nathaniel Bower (Quorum's Associate General Counsel, Corporate & Finance) should reengage Standish promptly to ensure that the lender consent does not become a critical-path bottleneck at the time of MDLA execution. The consent process typically requires thirty to sixty days from formal submission to approval, and delays are common if the lender's credit committee requires updated financial analysis or supplemental documentation.

We note that structuring alternatives previously analyzed by Marcus Weill's team and Calderwood & Harkness — including splitting the MDLA across two or more Quorum subsidiaries to bring each individual contract below the $25,000,000 threshold, or phasing Quorum's commitment over multiple contract periods — were evaluated and deemed inferior to a direct consent approach. The subsidiary-split structure raises questions about allocation of licensed rights and could complicate the derived-data ownership analysis. The phased-commitment approach would weaken Quorum's negotiating position on pricing and would not deliver the committed-revenue certainty that Meridian values.

VII. Recommended Next Steps and Timeline

Based on the foregoing analysis, we recommend the following timeline for action:

1. Week of September 11, 2023: Quorum's General Counsel office and Calderwood & Harkness finalize the pricing audit right proposal and the recalibrated derived-data tiered framework, including the QuorumScore™ carve-out and the Draft Derived Data Commercialization Protocol. The finalized proposals should be circulated internally for review and sign-off by Rajesh Anand (Chief Data Officer), Diane Lowell (Senior Vice President, Underwriting Analytics), and Thomas Ng (Vice President, Enterprise Procurement) to ensure alignment with Quorum's technical, business, and procurement requirements.

2. September 15, 2023: Calderwood & Harkness formally transmits the pricing audit right proposal to Kessler Pruitt & Ashe (Graham Whitley) via letter, accompanied by a cover memorandum framing the proposal as a market-fairness and governance mechanism. The letter should request Meridian's response within three weeks.

3. Late September 2023 (target: September 25–29, 2023): Calderwood & Harkness transmits the tiered derived-data framework proposal, including the QuorumScore™ carve-out and the Draft Derived Data Commercialization Protocol, to KP&A. The sequencing of the two proposals — pricing audit right first, derived-data framework second — is deliberate: we want Meridian to evaluate the pricing audit right on its own merits before introducing the more complex derived-data framework, and we want to avoid the perception that Quorum is making demands on both issues simultaneously.

4. October 2023: Request a fourth negotiation session (virtual or in-person) focused exclusively on the two remaining open issues — pricing protection and derived-data rights — with the objective of reaching a heads-of-terms agreement or, at minimum, substantially narrowing the gap. The negotiation session should include decision-makers from both sides with authority to make commercial commitments (subject to board-level confirmation on the Meridian side).

5. Parallel Track — Lender Consent: Marcus Weill to reengage Philip Yardley at Standish National Bank to restart the lender consent process. Target obtaining the consent or waiver by Q1 2024, well in advance of the anticipated MDLA execution timeline. Nathaniel Bower should coordinate with Calderwood & Harkness to update the consent request package to reflect any changes in the MDLA terms since the initial November 2022 submission.

6. Parallel Track — Quorum Board Authorization: Prepare an updated Quorum board resolution for review and approval by Harrison Kimble, Chair of the Quorum board of directors, authorizing execution of the MDLA once final terms are agreed. The resolution should be drafted with sufficient flexibility to cover the range of outcomes contemplated by Options 1 and 3, so that Quorum does not need to return to its own board if the final negotiated terms differ in detail from the recommended approach.

7. Coordination with Caldwell & Strauss LLP: Angela Firth, Quorum's outside patent counsel at Caldwell & Strauss LLP, should be briefed on the current derived-data intellectual property posture — including the tiered framework and QuorumScore™ carve-out — to ensure alignment with Quorum's broader IP portfolio strategy and the pending QuorumScore™ patent applicati

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Carolyn Whitford, General Counsel & Executive Vice President, Quorum Insurance Holdings Corp.
CC: Gregory Stahl, Vice President, Legal Affairs, Quorum Insurance Holdings Corp.
FROM: Wendy Schultz, Associate, and Leonard Cross, Partner, Calderwood & Harkness LLP
DATE: September 5, 2023
RE: Analysis of Meridian Credit intelligence, Inc. Board Resolution Dated August 22, 2023 — Implications for MDLA Negotiations
MATTER NO.: C&H Matter No. 1025-00008
I. Executive Summary
On August 22, 2023, the Board of Directors of Meridian Credit intelligence, Inc. ("Meridian") adopted a formal resolution (the "Resolution") that (a) categorically rejects granting any most favored nation ("MFN") pricing provision to Quorum Insurance Holdings Corp. ("Quorum") or to any other licensee in connection with the proposed Master Data License Agreement (the "MDLA"), and (b) prohibits Meridian management from agreeing to unrestricted derived-data commercialization rights for Quorum — specifically declining to permit Quorum to sell, sublicense, or externally exploit Derived Data (as defined in the draft MDLA) without Meridian's prior consent, a license-back to Meridian, and a revenue-sharing arrangement of no less than fifteen percent (15%) of net revenues from any approved third-party commercialization.
The Resolution was adopted at the urging of Breckenridge Capital Partners Fund IV, L.P. ("Breckenridge"), Meridian's 62.5% majority equity holder, which is represented on the Meridian board by Caleb Rourke, a partner at Breckenridge Capital Management LLC, the fund's general partner. The Resolution also reflects concerns raised by Whitmore Zanthor & Co. ("Whitmore Zanthor"), the investment bank retained by Meridian and Breckenridge to advise on a planned initial public offering ("IPO") targeted for 2025–2026. Rachel Ng-Castillo, Managing Director at Whitmore Zanthor, has been advising Meridian that both MFN clauses and broad derived-data commercialization rights create valuation risks that would be closely scrutinized in IPO due diligence and could depress valuation multiples.
This memorandum analyzes the Resolution's substance, its practical effect on the ongoing MDLA negotiation — which has been stalled since the third negotiation session on June 30, 2023 — and Quorum's strategic options for restarting and potentially concluding the $60,000,000 five-year data-licensing transaction with Meridian.
Bottom line: The Resolution materially hardens Meridian's negotiating position and narrows the zone of possible agreement. However, it does not foreclose all paths to a deal. We recommend a recalibrated approach focused on three elements:
(i) a limited pricing audit right as a substitute for the full MFN clause, structured to avoid triggering the Resolution's prohibition on "MFN pricing provisions, price-matching mechanisms, or comparable price-protection clauses";
(ii) a tiered derived-data framework that protects QuorumScore™ — Quorum's proprietary predictive underwriting model — while offering Meridian objective safeguards through jointly defined transformation criteria, a narrow consent mechanism, and a modest revenue share applicable only to insufficiently transformed outputs; and
(iii) leveraging Meridian's IPO timeline as a motivation for Meridian to close the license on commercially reasonable terms before entering a quiet period, given that a $60 million committed-revenue contract with a Nasdaq-listed, $8.9 billion market-cap insurance company would be a valuable addition to Meridian's IPO prospectus.
We believe this recalibrated approach offers a realistic path to agreement, though the probability of a flat rejection remains meaningful (we estimate 30–40%). We recommend discussing this analysis with your team later this week, prior to transmitting any formal proposals to Meridian's counsel.
II. Background
A. Transaction Overview
Quorum Insurance Holdings Corp. (a Delaware corporation; Nasdaq: QIHC; headquartered at 1200 Atlantic Street, Suite 3400, Stamford, CT 06901) is negotiating a five-year enterprise data-licensing arrangement with Meridian Credit intelligence, Inc. (a Georgia corporation; headquartered at 3300 Peachtree Road NE, Suite 2100, Atlanta, GA 30326). Quorum is a multi-line insurance holding company with approximately $4.18 billion in annual revenue and a market capitalization of approximately $8.9 billion. Meridian is a leading provider of consumer and commercial credit data, alternative data analytics, and related data products, with annual revenue of approximately $1.42 billion and EBITDA of approximately $438 million in fiscal year 2023.
The proposed MDLA contemplates a total deal value of $60,000,000 over the five-year initial term, structured as follows:
• Year 1 Annual Fee: $10,800,000, reflecting a six-month implementation and ramp period during which Quorum will integrate Meridian's data feeds into its internal systems and begin model calibration. Payable quarterly in advance in four installments of $2,700,000 per quarter.
• Years 2–5 Annual Fee: $12,300,000 per year, reflecting the full-production data consumption rate anticipated after implementation. Payable quarterly in advance in four installments of $3,075,000 per quarter.
• Implementation/Integration Fee: A separate one-time fee of $1,500,000, payable upon execution of the MDLA, to cover Meridian's costs associated with API provisioning, data-delivery configuration, dedicated integration engineering support, and initial data-quality validation.
The MDLA would grant Quorum an enterprise license to three of Meridian's core data products:
• MCI Consumer Credit File™: Approximately 310 million consumer records, delivered via daily batch and real-time API access. This is Meridian's flagship credit-data product and represents the primary input for Quorum's underwriting and risk-assessment models.
• MCI CommercialView™: Approximately 42 million business entity records, delivered via weekly batch. This product supports Quorum's commercial-lines underwriting and small-business risk assessment.
• MCI AltSignal™: Approximately 85 million consumer alternative-data records (including utility payment history, rental data, and non-traditional credit signals), delivered via daily batch. This product is a key input for Quorum's efforts to expand coverage in underserved and thin-file segments.
Estimated monthly data consumption across all three products is approximately 437 million records per month, against a base-tier cap of 500 million records per month. The draft MDLA provides for an overage charge of $0.003 per record for consumption exceeding the monthly cap.
The business purpose underlying the MDLA is critical to Quorum's strategic plan. Quorum intends to use Meridian's data products to enhance its automated underwriting models, claims-fraud detection algorithms, and customer propensity scoring across its property and casualty, life, and specialty lines of business. Most critically, the Meridian data will fuel QuorumScore™ — Quorum's proprietary predictive underwriting model, for which a patent application is currently pending before the United States Patent and Trademark Office (Serial No. 97/482,116). QuorumScore™ is a multi-factor blended risk-scoring model that integrates Meridian credit and alt-data inputs with Quorum's own first-party claims history, policy data, and telematics data to generate a composite risk score that Quorum projects will significantly outperform existing industry-standard underwriting models. Quorum's strategic plan projects that QuorumScore™ will generate $40–50 million in B2B licensing revenue by 2027 through third-party licensing to other carriers, managing general agents, and insurtech platforms. The derived-data rights dispute is therefore not a peripheral issue — it goes directly to the commercial viability and revenue potential of one of Quorum's most strategically important assets.
B. Negotiation History and the Two Core Impasses
Calderwood & Harkness LLP was engaged by Quorum to provide legal counsel in connection with the Meridian data-licensing transaction on August 8, 2022. The parties executed a mutual non-disclosure agreement (NDA-QIH-MCI-2022-001) on August 15, 2022, which governs the exchange of confidential information in connection with the negotiation.
The negotiation has proceeded through several phases over the past thirteen months:
• Initial Term Sheets: Meridian delivered its initial term sheet to Quorum on September 12, 2022, setting forth Meridian's proposed pricing, licensing scope, and key commercial terms. Quorum delivered a counter-term sheet on September 30, 2022, identifying points of divergence, including Quorum's request for MFN pricing and broad derived-data commercialization rights.
• Draft Agreement Exchange: Meridian's outside counsel, Kessler Pruitt & Ashe LLP ("KP&A"), with Graham Whitley serving as lead partner, delivered Meridian's form MDLA on November 4, 2022. Calderwood & Harkness delivered Quorum's comprehensive redline of the form MDLA on December 2, 2022, reflecting approximately 180 substantive comments and proposed revisions across all articles.
• In-Person Negotiation Sessions: Three in-person negotiation sessions have taken place: January 18, 2023 (at Calderwood & Harkness's offices in New York), March 9, 2023 (at KP&A's offices in Atlanta), and June 30, 2023 (at Calderwood & Harkness's offices in New York).
Meaningful progress has been achieved on a number of important contractual provisions. The parties have reached substantial agreement on service-level agreements (SLAs), including uptime commitments (99.95% for real-time API; 99.9% for batch delivery), latency specifications, incident response and escalation procedures, and service-level credits. Data-delivery specifications, including format standards (JSON for API; CSV/Parquet for batch), refresh frequencies, and data-field mapping, are largely resolved. The parties have agreed on insurance requirements, including $5 million in commercial general liability coverage per occurrence for both parties, $25 million in cyber and technology errors and omissions coverage in the aggregate for Meridian, and $50 million in cyber liability coverage in the aggregate for Quorum. Data-security provisions — including mutual requirements for SOC 2 Type II certification, 48-hour breach notification obligations, encryption standards, and access controls — are also substantially resolved.
Despite this progress, two issues remain completely unresolved, and these are the issues that the August 22 Resolution directly addresses:
Most Favored Nation Pricing. Quorum has demanded the inclusion of an MFN clause ensuring that if Meridian offers any other U.S. insurance-industry licensee — defined to include carriers, managing general agents, and insurtech firms with annual premiums written of $500 million or greater — more favorable per-record pricing than Quorum receives under the MDLA, Quorum's pricing would automatically adjust to match the more favorable rate. This demand is grounded in Quorum's concern, supported by the Pinnacle Ridge pricing benchmark study (discussed below), that Meridian may offer preferential pricing to other large insurance-industry consumers of its data, placing Quorum at a competitive disadvantage.
Meridian has categorically refused the MFN on four grounds: (i) confidentiality obligations to other licensees prohibit disclosure of their pricing terms, even to an auditor; (ii) cross-licensee price comparison is impracticable given that each licensing arrangement involves a bespoke combination of data products, volume tiers, delivery methods, and ancillary services, making apples-to-apples comparison of per-record rates inherently misleading; (iii) antitrust sensitivities arise from any mechanism that could facilitate price coordination or information exchange among horizontal competitors in the insurance industry; and (iv) an MFN clause in a $60 million contract with a major licensee creates margin-compression risk that would be scrutinized in IPO due diligence and depresses valuation multiples.
Derived-Data Rights. Quorum asserts full ownership of all intellectual property in Derived Data — defined in the draft MDLA as blended risk scores, propensity models, enriched datasets, and other analytical outputs created using Meridian data as an input — with unrestricted rights to commercialize such Derived Data to third parties without Meridian's consent, without any license-back to Meridian, and without any revenue-sharing obligation. This position is essential to Quorum's QuorumScore™ business plan.
Meridian has taken the position that Derived Data constitutes a "derivative work" subject to Meridian's underlying intellectual property rights in the input data, and has demanded: (i) a perpetual, royalty-free license-back to Meridian on all Derived Data; (ii) a prohibition on third-party commercialization of Derived Data unless Meridian, in its sole discretion, determines that the Derived Data reflects "sufficient transformation" from the underlying Meridian data inputs; and (iii) a revenue share to Meridian of no less than 15% of net revenues on any approved Derived Data commercialization.
These positions were formally joined at the March 9, 2023 negotiation session and have not moved. On April 21, 2023, KP&A transmitted a letter on behalf of Meridian formally rejecting the MFN and reaffirming Meridian's derived-data position. Quorum escalated the dispute to the CEO level. A CEO-to-CEO call between Quorum CEO Meg Tierney and Meridian CEO Vince Halstead took place on May 15, 2023. While the call resulted in an agreement to continue negotiating in good faith, no substantive concessions were made by either side. Negotiations have been dormant since the June 30, 2023 session.
As additional context, Pinnacle Ridge Advisory LLC, an independent pricing analytics firm, delivered a pricing benchmark study to Quorum on February 14, 2023, prepared under the direction of Franklin Osei, Managing Director. The Pinnacle Ridge study analyzed publicly available and proprietary data on credit-data licensing transactions in the U.S. insurance market and concluded that Quorum's proposed per-record pricing under the MDLA is within the upper quartile of comparable transactions, supporting Quorum's view that an MFN or, at minimum, a pricing audit mechanism is commercially justified to ensure that Quorum is not paying a premium relative to similarly situated licensees.
C. The Role of Breckenridge and Whitmore Zanthor
Understanding the motivations and influence of Breckenridge Capital Partners and Whitmore Zanthor & Co. is essential to assessing the significance of the Resolution and to formulating an effective negotiating strategy.
Breckenridge Capital Partners Fund IV, L.P. holds a 62.5% majority equity stake in Meridian. Breckenridge is a private equity fund managed by Breckenridge Capital Management LLC, the fund's general partner, headquartered at 600 Lexington Avenue, 28th Floor, New York, NY 10022. Elaine Drummond, Managing Partner of Breckenridge Capital Management, oversees the firm's strategic direction and has been actively involved in setting Meridian's commercial strategy in the lead-up to a potential IPO. Caleb Rourke, a partner at Breckenridge Capital Management, serves on Meridian's board of directors and was the principal proponent of the Resolution, as communicated to us by KP&A.
Breckenridge acquired its majority stake in Meridian in 2019 through a leveraged buyout transaction, and a public exit via IPO has been a core element of Breckenridge's investment thesis from inception. The IPO timing, currently targeted for 2025–2026, creates a specific set of incentives that directly shape Breckenridge's posture on the MDLA negotiation. Breckenridge is focused on maximizing Meridian's enterprise value at the time of IPO, and any contractual provision that could be characterized as limiting Meridian's pricing flexibility, compressing margins, or diluting the proprietary value of Meridian's data assets is likely to be viewed with skepticism.
Whitmore Zanthor & Co. has been retained as Meridian's investment bank to advise on the potential IPO. Rachel Ng-Castillo, Managing Director at Whitmore Zanthor (headquartered at 383 Madison Avenue, New York, NY 10179), leads the engagement. Whitmore Zanthor has been advising Meridian and Breckenridge that:
(a) MFN clauses create margin-compression risk. An MFN provision in a $60 million contract with a large, sophisticated counterparty would be flagged in sell-side due diligence and by prospective investors as a constraint on Meridian's pricing power. Whitmore Zanthor's advice is that such provisions depress comparable-company valuation multiples, particularly for data-analytics businesses where pricing power and revenue predictability are key valuation drivers. The concern is not merely theoretical — Whitmore Zanthor has reportedly cited specific examples of data-analytics companies whose IPO valuations were discounted due to MFN provisions in material customer contracts.
(b) Broad derived-data commercialization rights threaten the "proprietary data moat" narrative. A central element of Meridian's IPO equity story is that its data assets are proprietary, non-replicable, and constitute a durable competitive advantage — a "data moat" that justifies premium valuation multiples. If a major licensee like Quorum — a Nasdaq-listed company with an $8.9 billion market capitalization and $4.18 billion in revenue — were granted unrestricted rights to commercialize Derived Data built on Meridian inputs, it would undermine this narrative. Prospective investors and analysts would question whether Meridian's data is truly proprietary if its licensees can freely create and distribute derivative products that compete with or substitute for Meridian's own offerings.
These advisory perspectives are commercially reasonable from Breckenridge's and Whitmore Zanthor's standpoint, even though they create significant obstacles for Quorum. Recognizing the commercial logic behind the Resolution — rather than dismissing it as mere negotiating posturing — is essential to crafting a proposal that Meridian's board and its sponsors can accept.
III. Analysis of the August 22, 2023 Board Resolution
A. Substance of the Resolution
Based on information obtained through counsel-to-counsel communications between Calderwood & Harkness and Kessler Pruitt & Ashe (Graham Whitley, lead partner), the Resolution adopted by the Meridian board of directors on August 22, 2023 provides as follows:
1. MFN Prohibition. Meridian's management is directed not to agree to any most favored nation pricing provision, price-matching mechanism, or comparable price-protection clause in the Quorum MDLA or in any other data-licensing agreement, effective immediately and continuing through the conclusion of any potential public offering of Meridian's securities. The prohibition is framed broadly and is not limited to the Quorum transaction — it applies to all current and future data-licensing negotiations. The Resolution does not define the phrase "comparable price-protection clause," which introduces some ambiguity that may be relevant to Quorum's proposed pricing audit right (discussed in Section V.A below).
2. Derived-Data Restrictions. Meridian's management is directed to maintain the following positions in the MDLA negotiation, and these positions are characterized as non-negotiable absent a superseding board resolution:
(a) A perpetual, royalty-free license-back to Meridian on all Derived Data is a non-negotiable term of the MDLA;
(b) No third-party commercialization of Derived Data shall be permitted without Meridian's prior written consent, with Meridian retaining discretion to withhold such consent in its sole judgment; and
(c) Any approved third-party commercialization of Derived Data must include a revenue share to Meridian of no less than fifteen percent (15%) of net revenues derived from such commercialization.
3. Board Rationale. The Resolution recites that the foregoing restrictions are adopted to protect Meridian's competitive positioning, pricing integrity, and valuation in connection with a potential public offering of Meridian's securities. The Resolution further recites that the board considered and relied upon the recommendations of Whitmore Zanthor & Co., acting as Meridian's investment bank, and Breckenridge Capital Management LLC, acting through its board representative Caleb Rourke, in adopting the Resolution.
We note that we have not obtained a copy of the Resolution itself; the foregoing summary is based on a detailed description provided by Graham Whitley in a telephone conversation with Leonard Cross on August 29, 2023. We have no reason to doubt the accuracy of Mr. Whitley's characterization, but we cannot independently verify the precise language of the Resolution. Should Quorum wish to request a copy of the Resolution directly, we can evaluate the advisability and mechanism for doing so.
B. Legal Significance
The legal and practical significance of the Resolution should not be underestimated. A formal board resolution is a governance-level action that binds Meridian's management team — including Arthur Pennington (General Counsel), Keith Marlow (Senior Vice President, Data Licensing & Partnerships), and Sandra Ellison (President & Chief Operating Officer) — and removes their discretion to agree to Quorum's MFN or unrestricted derived-data positions without returning to the board for a superseding resolution. As a practical matter, this means that even if Quorum were to persuade Meridian's management team at the negotiating table that Quorum's positions are commercially reasonable, management would lack the authority to agree without obtaining board approval.
The Resolution effectively converts what were previously management-level negotiating positions — adopted as a matter of business judgment and potentially subject to compromise as part of a broader give-and-take negotiation — into governance-level mandates backed by the formal authority of the board. This significantly increases the political cost for any Meridian representative to deviate from these terms. A member of Meridian's management team who agreed to an MFN or to unrestricted derived-data rights in contravention of the Resolution would be acting outside the scope of her or his authority and could face personal accountability to the board and, ultimately, to Breckenridge as the controlling shareholder.
However, it is important to recognize that a board resolution is not immutable. The Meridian board retains the authority to adopt a new resolution amending, modifying, or superseding the August 22 Resolution at any time, if circumstances warrant. For example, if Quorum were to propose terms on the MFN and derived-data issues that the board (and, critically, Breckenridge and Whitmore Zanthor) found commercially acceptable — terms that address the underlying concerns about margin compression, pricing precedent, and the proprietary data-moat narrative — the board could adopt a superseding resolution authorizing management to agree to those terms. Similarly, if the IPO timeline shifts or if Meridian's competitive landscape changes in a way that makes the Quorum deal more strategically important, the board could revisit the Resolution.
The key takeaway is that the Resolution raises the bar for agreement but does not erect a permanent wall. Quorum's task is to craft a proposal that gives the Meridian board a commercially defensible basis for adopting a superseding resolution.
C. Breckenridge's Influence and Motivations
Given Breckenridge's 62.5% ownership stake, it is virtually certain that Breckenridge exercises effective control over Meridian's board actions, either through formal voting power or through the influence that a controlling shareholder naturally commands. The Resolution almost certainly reflects Breckenridge's priorities and risk management calculus as much as — or more than — Meridian's independent business judgment. Understanding Breckenridge's motivations is therefore essential to understanding the Resolution and to crafting a responsive strategy.
Breckenridge's core concerns, as we understand them, fall into three categories:
(i) Protecting EBITDA Margins Ahead of IPO. Meridian's EBITDA margins are strong — approximately $438 million on $1.42 billion in revenue in fiscal year 2023, representing a margin of approximately 30.8%. This level of profitability is a key element of the IPO valuation thesis. An MFN clause that could force downward adjustments to pricing in a $60 million contract (and that could be invoked as precedent by other licensees) represents a tangible risk to margin stability. Breckenridge's concern is not merely about the direct financial impact of a Quorum MFN — which would be manageable in isolation — but about the signaling effect: if Meridian grants an MFN to Quorum, other large licensees will demand the same, creating a cascading margin-compression risk that could materially erode Meridian's profitability profile ahead of the IPO.
(ii) Preserving the Proprietary Data-Moat Narrative. Breckenridge's investment thesis for Meridian is built in significant part on the proposition that Meridian's data assets are proprietary, non-replicable, and constitute a durable competitive "moat." This narrative would be undermined if a major licensee like Quorum were granted unrestricted rights to commercialize Derived Data built on Meridian inputs. From Breckenridge's perspective, allowing Quorum to freely create and sell products like QuorumScore™ — which blends Meridian data with Quorum's own data — without any Meridian consent, license-back, or revenue share would effectively allow Quorum to monetize Meridian's data assets through a downstream channel over which Meridian has no control. Even if QuorumScore™ reflects substantial transformation and independent value-add by Quorum, Breckenridge and Whitmore Zanthor are likely to view any unrestricted commercialization right as a dilution of the data-moat narrative.
(iii) Avoiding Precedent-Setting Terms. Quorum is a large, sophisticated counterparty. Any concession made to Quorum will almost certainly be demanded by other licensees, either through formal MFN mechanisms or through the informal pressure of market knowledge. Breckenridge is acutely aware that the terms of the Quorum MDLA — which, at $60 million over five years, will be one of Meridian's most significant licensing arrangements — will set a benchmark for Meridian's licensing program as a whole. This precedent concern amplifies the significance of every material term.
Whitmore Zanthor's influence reinforces these concerns from a capital-markets perspective. Investment bankers advising on an IPO routinely flag contractual provisions that could reduce valuation. An MFN clause in a $60 million contract with a large, publicly traded counterparty like Quorum would be a prominent item in sell-side due diligence, would likely be disclosed in the IPO prospectus (or at minimum discussed in management presentations to prospective investors), and could prompt buy-side analysts to model margin-compression scenarios that depress comparable-company valuation multiples. Similarly, broad derived-data rights granted to a major licensee could prompt analysts to question the durability of Meridian's competitive position — the very heart of the growth premium that Breckenridge is seeking to capture through the IPO.
IV. Impact on Quorum's Negotiating Position
A. MFN Pricing
The Resolution formally closes the door on a full most favored nation clause for the foreseeable future — at minimum through the conclusion of any potential public offering of Meridian's securities, which, based on the current timeline, would not occur until 2025–2026. Quorum should recognize that continuing to demand a comprehensive MFN is no longer a productive negotiating tactic with Meridian in its current governance posture. The MFN has been elevated from a management-level objection to a board-level prohibition, and no member of Meridian's negotiating team has the authority to agree to it.
The Resolution may not, however, preclude more limited pricing protections. The "pricing audit right" fallback — which Quorum has contemplated proposing but has not yet formally submitted to Meridian (initial submission was targeted for mid-September 2023) — was not specifically addressed in the Resolution as described to us by KP&A. The Resolution prohibits "most favored nation pricing provisions, price-matching mechanisms, or comparable price-protection clauses," but a carefully scoped pricing audit right that does not function as an automatic price-matching or price-adjustment mechanism may fall outside the scope of this prohibition.
The distinction is meaningful. A true MFN clause operates mechanically: if a triggering event occurs (Meridian offers a lower rate to another licensee), Quorum's pricing automatically adjusts — a self-executing price-protection mechanism. By contrast, a pricing audit right merely provides transparency: an independent auditor verifies, on an annual basis, whether Quorum's effective per-record rate falls within a reasonable range relative to comparable licensees. The audit produces a pass/fail result, not an automatic price adjustment. If the audit reveals a discrepancy, the parties would negotiate in good faith to address it — but there is no mechanical price-matching. This distinction, if properly framed, may allow Meridian's management and board to accept a pricing audit right without contravening the Resolution.
That said, there is a meaningful risk that Meridian's counsel will interpret the Resolution broadly to capture any pricing transparency, benchmarking, or audit mechanism that has the practical effect of constraining Meridian's pricing discretion. The phrase "comparable price-protection clause" in the Resolution is undefined and potentially capacious. Quorum should expect initial resistance from KP&A even to the audit-right proposal and should be prepared to frame it carefully — as a data-integrity and governance measure designed to ensure the commercial reasonableness of a long-term, high-value contract, rather than as a price-protection device.
We have prepared a detailed analysis of the pricing audit right proposal, including suggested drafting language, which we will circulate separately for Quorum's internal review.
B. Derived-Data Rights
The Resolution entrenches three specific requirements on the derived-data issue, each of which presents a direct and significant conflict with Quorum's strategic objectives:
License-Back. The requirement for a perpetual, royalty-free license-back on all Derived Data is deeply problematic for Quorum. A license-back would give Meridian — which is itself a data-analytics company and a potential competitor to Quorum in the provision of risk-scoring and analytics products — access to Quorum's proprietary blended models, analytical methodologies, and enriched datasets. This creates two categories of risk. First, Meridian could incorporate Quorum's analytical innovations into its own products, effectively free-riding on Quorum's R&D investment. Second, Meridian could make Quorum's Derived Data available (directly or indirectly) to Quorum's competitors in the insurance industry, eroding Quorum's competitive advantage. Even if the license-back were subject to use restrictions and confidentiality obligations, the practical risk of competitive leakage is significant given the nature of Meridian's business.
Sole-Discretion Consent for Commercialization. Meridian's insistence that no third-party commercialization of Derived Data be permitted without Meridian's prior written consent — with Meridian retaining sole discretion to determine whether "sufficient transformation" has occurred — functions as a commercial kill switch over Quorum's B2B licensing program. Under this framework, Meridian would have an effective veto over Quorum's ability to license QuorumScore™ and related products to third parties. This is not merely a theoretical concern. Quorum's strategic plan projects $40–50 million in B2B licensing revenue from QuorumScore™ by 2027. Subjecting this revenue stream to Meridian's sole-discretion approval — which could be exercised or withheld for any reason, including competitive reasons — introduces an unacceptable level of business risk. Even if Meridian were to approve commercialization in the ordinary course, the existence of the veto right would create uncertainty that could chill investment in QuorumScore™ development and complicate Quorum's own disclosures to investors and analysts.
15% Revenue Share. The revenue-sharing requirement, applied to QuorumScore™ B2B licensing revenues, would impose a significant financial burden. At projected 2027 revenues of $40–50 million from QuorumScore™ B2B licensing, a 15% revenue share would cost Quorum approximately $6–7.5 million annually. This is a material margin impact, particularly given that Quorum's own investment in developing QuorumScore™ — including model development, data-science talent, technology infrastructure, and patent prosecution — has been substantial. Moreover, the revenue share would apply to the full net revenue from QuorumScore™ licensing, not merely to the portion of value attributable to Meridian's data inputs, which is fundamentally disproportionate given that QuorumScore™ blends Meridian data with Quorum's own first-party claims, policy, and telematics data.
Taken together, these three requirements would effectively transform Quorum's relationship with Meridian from a data-licensing arrangement into something approaching a joint venture — one in which Meridian shares in the upside of Quorum's innovation without bearing any of the cost, risk, or developmental effort. This outcome is commercially unacceptable to Quorum.
C. Effect on Overall Deal Dynamics
The Resolution sends a clear signal about Meridian's willingness to trade: Meridian (and, more precisely, Breckenridge) is prepared to lose the Quorum deal rather than concede on MFN or derived-data rights, at least while the IPO remains on the horizon. This assessment is supported by the fact that the deal's $60 million total value represents approximately 4.2% of Meridian's fiscal year 2023 revenue of $1.42 billion. While $60 million is undeniably material, it is not indispensable for Meridian. Meridian has a diversified licensee base across financial services, insurance, healthcare, and government sectors, and the loss of any single licensee — even one as significant as Quorum — would not fundamentally alter Meridian's financial profile or IPO readiness.
This asymmetry in walk-away leverage shifts the negotiating balance in Meridian's favor. Quorum must therefore make a strategic assessment: is the value of Meridian's data products — including the depth, breadth, and uniqueness of the Consumer Credit File, CommercialView, and AltSignal datasets — sufficient to justify meaningful concessions on the MFN and derived-data issues? Or should Quorum explore alternative data sources and accept the delays and switching costs that would entail?
We believe the answer is that Meridian's data products are sufficiently valuable and strategically important to Quorum that walking away should be a last resort. However, Quorum must also avoid making concessions that would compromise the commercial viability of QuorumScore™ or establish unfavorable precedent for future data-licensing arrangements. The challenge — and the objective of our recommended approach — is to find the narrow band of terms that meets both parties' core needs.
V. Strategic Options for Quorum
We have identified four strategic options for Quorum's consideration. For the reasons set forth below, we recommend Option 1 — a recalibrated deal framework — as the preferred approach, with elements of Option 3 available as a further fallback.
A. Option 1: Propose a Recalibrated Deal Framework (Recommended)
This option involves formally proposing a revised set of terms on both the MFN and derived-data issues that is specifically designed to address the concerns underlying the Resolution while preserving Quorum's core commercial objectives. The proposal has three components.
1. MFN Substitute — Limited Pricing Audit Right
We recommend that Quorum formally propose the "pricing audit right" fallback as a substitute for the comprehensive MFN clause. The pricing audit right would be structured as follows:
(a) Annual Audit Right. Quorum would have the right, exercisable no more than once per contract year, to engage an independent third-party auditor — to be mutually agreed upon by both parties from a pre-approved list of nationally recognized accounting firms (e.g., Morriven Ashford CPAs LLP, Marlowe Buchanan CPAs LLP, Rowan Whitfield CPAs LLP, or Kraft Renwick CPAs LLP) — to conduct a confidential review of Meridian's pricing arrangements with comparable insurance-industry licensees.
(b) Comparable Licensees. For purposes of the audit, "comparable insurance-industry licensees" would be defined as U.S.-domiciled insurance carriers, managing general agents, or insurance technology companies with annual gross written premiums of $500 million or more that license substantially similar data products (i.e., at least two of the three Licensed Products or their functional equivalents) at comparable volume levels (within 25% of Quorum's monthly volume).
(c) Audit Scope and Methodology. The auditor would review Meridian's pricing records for comparable licensees and determine whether Quorum's effective per-record rate exceeds 110% of the lowest effective per-record rate charged to any comparable insurance-industry licensee during the same contract year. The 110% threshold provides a reasonable tolerance band that accounts for bespoke differences in licensing arrangements.
(d) Pass/Fail Reporting. To address Meridian's confidentiality concerns, the auditor would report only a binary pass/fail result to both parties — i.e., whether Quorum's effective per-record rate does or does not exceed 110% of the lowest comparable rate. The auditor would not disclose the identity, pricing, or any other terms of any other licensee's agreement.
(e) Good-Faith Adjustment. In the event of a "fail" result, the parties would negotiate in good faith for a period of sixty (60) days to agree on an appropriate pricing adjustment. If the parties are unable to agree, the dispute would be referred to the contractual dispute-resolution mechanism (which the parties have tentatively agreed would be binding arbitration under the AAA Commercial Arbitration Rules).
(f) Cost Allocation. Quorum would bear the cost of the audit unless the audit reveals that Quorum's effective per-record rate exceeds 110% of the lowest comparable rate, in which case Meridian would reimburse Quorum's audit costs.
The framing of this proposal is critical. Quorum should present the pricing audit right as a market-fairness and governance measure — a standard commercial practice in long-term, high-value procurement relationships — rather than as a price-protection or MFN mechanism. The proposal should emphasize the following points:
• The audit right does not create an automatic price-adjustment mechanism. It merely provides a structured process for assessing pricing reasonableness.
• The audit is conducted by an independent, mutually approved third party subject to strict confidentiality obligations, which protects Meridian's pricing information and its confidentiality obligations to other licensees.
• The 110% threshold provides a meaningful tolerance band that respects Meridian's right to price different arrangements differently based on scope, volume, and other bespoke factors.
• The pass/fail reporting structure ensures that Quorum receives no competitively sensitive information about other licensees.
We acknowledge the risk that KP&A may interpret the Resolution broadly and argue that the pricing audit right constitutes a "comparable price-protection clause" within the scope of the board's prohibition. Quorum should be prepared for this pushback and should anticipate the need to engage in a substantive dialogue — possibly including a direct discussion between Leonard Cross and Graham Whitley — about the distinction between a pricing audit right and a true MFN or price-matching mechanism.
2. Derived-Data Framework — Tiered Approach
We recommend that Quorum propose a tiered derived-data framework that replaces the binary dispute (unrestricted commercialization vs. Meridian sole-discretion consent) with a structured, multi-tier system that differentiates among categories of Derived Data use based on the degree of transformation and the nature of the intended exploitation. The framework would be structured as follows:
Tier 1 — Internal Use. Quorum would own all intellectual property in Derived Data that is used solely within Quorum's corporate group (including wholly owned subsidiaries and controlled affiliates) for internal underwriting, claims management, fraud detection, risk assessment, and other internal business purposes. No license-back to Meridian. No revenue share. No Meridian consent required. This tier reflects the fundamental proposition that when Quorum uses Meridian data as an input to its own internal decision-making processes, the outputs of those processes belong to Quorum.
Tier 2 — External Commercialization of Sufficiently Transformed Derived Data. Quorum would have the right to commercialize Derived Data to third parties, provided that the Derived Data meets objective, jointly defined transformation and de-identification criteria. These criteria would be set forth in a Derived Data Commercialization Protocol (the "DDCP") attached to the MDLA as an exhibit and developed collaboratively by the parties' respective data-science and legal teams. The DDCP would establish quantitative and qualitative standards for determining whether Derived Data is "Sufficiently Transformed" — for example, requiring that the Derived Data incorporates at least two independent data sources in addition to Meridian data, that no individual Meridian data element is recoverable from the output, and that the output reflects material independent analytical value-add by Quorum. For Tier 2 Derived Data: no license-back, no revenue share, no Meridian prior consent. Disputes about whether specific outputs meet the DDCP criteria would be resolved through an expedited expert-determination process (e.g., a jointly appointed independent data-science expert).
Tier 3 — External Commercialization of Insufficiently Transformed Derived Data. For Derived Data outputs that do not meet the objective transformation criteria set forth in the DDCP, Quorum would obtain Meridian's prior written consent before commercializing such outputs to third parties. However, Meridian's consent would not be subject to sole discretion — rather, it would be subject to a "not to be unreasonably withheld, conditioned, or delayed" standard, with specific examples of reasonable and unreasonable bases for withholding consent set forth in the MDLA. Approved Tier 3 commercialization would be subject to a revenue share of five percent (5%) of net revenues — significantly below Meridian's demand of 15%. No license-back would apply even at Tier 3.
QuorumScore™ Carve-Out. As a critical element of the tiered framework, Quorum should propose an explicit carve-out for QuorumScore™ and its outputs. The carve-out would provide that all outputs generated by the QuorumScore™ model — including composite risk scores, propensity indices, and related analytical products — are categorically treated as Tier 2 Sufficiently Transformed Derived Data, regardless of the degree to which Meridian data inputs are incorporated. The basis for this carve-out is that QuorumScore™ blends Meridian data with Quorum's own substantial first-party data assets — including historical claims data, policy data, telematics data, and proprietary behavioral models — and reflects years of investment in model development, data-science talent, and technology infrastructure. QuorumScore™ is an independently valuable intellectual property asset, as evidenced by Quorum's pending patent application (USPTO Serial No. 97/482,116), and should not be subject to Meridian's consent, license-back, or revenue-share requirements.
This tiered framework is designed to thread the needle between Quorum's need to commercialize QuorumScore™ without restriction and Meridian's legitimate concern about protecting its proprietary data assets. By offering Meridian meaningful protections at Tier 3 — including a consent right (albeit subject to a reasonableness standard) and a revenue share — Quorum provides the Meridian board with a commercially defensible basis for adopting a superseding resolution that permits a more nuanced approach to derived-data rights.
We recommend referencing our June 2023 revised Article VII drafting and the Draft Derived Data Commercialization Protocol as the starting point for this proposal. Those documents have already been circulated internally within Quorum and reflect input from Rajesh Anand's data-science team and Diane Lowell's underwriting analytics group.
3. IPO Timeline Leverage
The Meridian IPO timeline, while the primary driver of the Resolution's restrictive posture, also creates a significant motivator for Meridian to close the MDLA on acceptable terms. Specifically:
• Meridian and Breckenridge have a strong interest in completing material commercial agreements before the IPO quiet period. A $60 million five-year license with a Nasdaq-listed, $8.9 billion market-cap insurance company is a valuable revenue-backlog item for Meridian's IPO prospectus. Committed, multi-year revenue from a blue-chip counterparty enhances revenue visibility, demonstrates the commercial value of Meridian's data products, and supports the growth narrative that is central to Meridian's IPO equity story.
• Conversely, an unclosed negotiation with a major prospective licensee — or, worse, a publicly traded counterparty that walked away from a $60 million deal — could raise questions during IPO due diligence about the commercial attractiveness of Meridian's licensing terms.
• The IPO timeline creates a natural deadline: if the IPO is targeted for 2025–2026, Meridian would ideally have the Quorum MDLA executed and in-force well before the commencement of the IPO marketing process. Working backward from a hypothetical Q2 2025 S-1 filing, Meridian would want the MDLA executed by Q4 2024 at the latest — giving the parties approximately twelve to fourteen months to reach agreement and close.
Quorum should leverage this dynamic by signaling its willingness to close the transaction in a timeframe that supports the IPO if Meridian will negotiate in good faith on the two remaining open issues. This signal should be communicated at both the working level (through counsel-to-counsel communications) and the principal level (through CEO-to-CEO engagement).
We recommend that CEO Meg Tierney communicate directly to CEO Vince Halstead — ideally in a brief telephone conversation, followed by a written letter — that Quorum remains committed to the partnership, recognizes the strategic importance of the transaction for both parties, and is prepared to close on commercially reasonable terms that address both companies' legitimate concerns. Ms. Tierney should convey that Quorum understands Meridian's pre-IPO priorities and is prepared to work constructively within those constraints, but that Quorum also has its own strategic imperatives — including the protection of QuorumScore™ — that must be respected. This combination of empathy and firmness is likely to resonate more effectively than a purely positional approach.
B. Option 2: Pause and Explore Alternative Data Sources
As an alternative to the recalibrated deal framework, Quorum could pause the Meridian negotiation and explore alternative credit-data providers — including the major credit bureaus (Harborview Enterprises, Penrose Group, Penmark Enterprises), specialty data providers (e.g., Harborview Software, Kestrel Enterprises, Dunmore Enterprises), and emerging alternative-data platforms — as a competitive lever. The objective would be twofold: to determine whether adequate substitutes for Meridian's data products exist, and to signal to Meridian that Quorum has alternatives and is not captive to the Meridian relationship.
However, this option carries significant risks and limitations:
• Limited Alternatives. The U.S. credit-data market is highly concentrated, and Meridian's particular combination of consumer credit, commercial, and alternative data — integrated through a single licensing relationship — is difficult to replicate through alternative providers. While each of the major credit bureaus offers consumer credit data, and various specialty providers offer commercial or alternative data, assembling a comparable multi-source data stack would require multiple licensing arrangements, significant integration work, and potentially higher aggregate costs.
• Switching Costs. Quorum has already invested substantial resources in evaluating Meridian's data products, designing integration architectures, calibrating preliminary models, and negotiating the MDLA. Switching to an alternative provider would require Quorum to repeat much of this work from scratch, including data-integration engineering, model retraining and recalibration, and a new negotiation cycle with different legal and commercial terms.
• Timeline Impact. Any pause in the Meridian negotiation — particularly if accompanied by a pivot to alternative providers — would delay the QuorumScore™ development timeline by twelve to eighteen months or more, potentially costing Quorum competitive position in the rapidly evolving insurtech landscape.
We assess that this option is more valuable as a credible threat than as an actual strategy. If Quorum can credibly signal to Meridian that it has viable alternatives and is prepared to explore them, this may create additional motivation for Meridian to negotiate constructively on Quorum's recalibrated proposals. However, Quorum should avoid actually pausing the negotiation unless Option 1 is definitively rejected.
C. Option 3: Accept Meridian's Terms with Modifications
As a further fallback, Quorum could accept certain elements of Meridian's derived-data position — specifically, agreeing in principle to a license-back and revenue share on Derived Data other than QuorumScore™ — provided Meridian agrees to meaningful modifications:
(i) A narrower license-back limited to aggregated, anonymized, and de-identified insights derived from the Derived Data, rather than a full license-back on the Derived Data itself. This would give Meridian access to high-level market trends and analytical patterns without exposing Quorum's proprietary models, methodologies, or granular output data.
(ii) An explicit QuorumScore™ carve-out from the license-back, consent, and revenue-share requirements, consistent with the approach described in Option 1.
(iii) A reduced revenue-share rate — we would propose 5% of net revenues, down from Meridian's demand of 15%, applicable only to non-QuorumScore™ Derived Data that is commercialized to third parties.
This approach has the advantage of giving Meridian something tangible to present to its board — a license-back (albeit narrower) and a revenue share (albeit lower) — while protecting Quorum's crown jewel, QuorumScore™. It demonstrates good faith and commercial flexibility on Quorum's part, which may be important in a negotiation where the other side has formalized its positions through a board resolution.
The downside of this approach is that even a narrow license-back creates precedent and introduces risk. Once Meridian has a license to any form of Quorum's Derived Data — even aggregated and anonymized — Meridian could use those insights competitively, either by incorporating them into Meridian's own analytics products or by using the insights to inform Meridian's product-development roadmap. The scope and enforceability of use restrictions in a license-back are inherently limited, and Quorum should carefully weigh this risk before agreeing to any form of license-back.
We view Option 3 as a viable fallback if Option 1 does not generate a productive response from Meridian, but we recommend pursuing Option 1 first.
D. Option 4: Walk Away
Quorum could terminate negotiations entirely and pursue data relationships with alternative providers, effectively ending the Meridian opportunity. While this option preserves Quorum's negotiating purity and avoids any compromise on its core positions, it carries the highest strategic cost.
Given the depth, breadth, and uniqueness of Meridian's data products — 310 million consumer records in the Consumer Credit File, 42 million business records in CommercialView, and 85 million alternative-data records in AltSignal — there is no single alternative provider that can replicate the full scope of the proposed MDLA. Walking away would force Quorum to pursue a multi-vendor strategy with higher aggregate costs, greater integration complexity, and significant delays to the QuorumScore™ development timeline.
This option should be reserved as a last resort, to be considered only if Meridian categorically rejects the recalibrated proposals under Options 1 and 3, and if CEO-level escalation fails to produce a path to agreement.
VI. Standish National Bank Covenant Considerations
Regardless of which strategic option Quorum pursues, Quorum must obtain lender consent or a waiver from Standish National Bank, N.A. ("Standish") in connection with the execution of the MDLA. Section 7.12(b) of the Amended and Restated Credit Agreement, dated June 15, 2021, by and among Quorum, Standish (as administrative agent and lead lender), and the syndicate banks party thereto, prohibits Quorum from entering into any single commercial contract or series of related contracts with an aggregate value exceeding $25,000,000 without the prior written consent of the Required Lenders (as defined in the Credit Agreement).
The MDLA's aggregate deal value of $60,000,000 over the five-year initial term exceeds the $25,000,000 threshold by $35,000,000 — representing 240% of the threshold — and therefore clearly triggers the consent requirement. The one-time implementation fee of $1,500,000 further increases the aggregate commitment, though the precise treatment of this fee under the covenant will depend on whether it is characterized as a separate obligation or as part of the MDLA's aggregate value.
The lender consent request was initially drafted by Quorum's treasury team in November 2022, and a follow-up letter was transmitted to Philip Yardley, Standish's Relationship Manager for the Quorum account, in February 2023. Given the dormancy of the MDLA negotiations since June 2023, the consent process has stalled, and we understand from Marcus Weill (Quorum's Senior Vice President and Treasurer) that no substantive response has been received from Standish since February 2023.
Upon restarting negotiations with Meridian, Marcus Weill and Nathaniel Bower (Quorum's Associate General Counsel, Corporate & Finance) should reengage Standish promptly to ensure that the lender consent does not become a critical-path bottleneck at the time of MDLA execution. The consent process typically requires thirty to sixty days from formal submission to approval, and delays are common if the lender's credit committee requires updated financial analysis or supplemental documentation.
We note that structuring alternatives previously analyzed by Marcus Weill's team and Calderwood & Harkness — including splitting the MDLA across two or more Quorum subsidiaries to bring each individual contract below the $25,000,000 threshold, or phasing Quorum's commitment over multiple contract periods — were evaluated and deemed inferior to a direct consent approach. The subsidiary-split structure raises questions about allocation of licensed rights and could complicate the derived-data ownership analysis. The phased-commitment approach would weaken Quorum's negotiating position on pricing and would not deliver the committed-revenue certainty that Meridian values.
VII. Recommended Next Steps and Timeline
Based on the foregoing analysis, we recommend the following timeline for action:
1. Week of September 11, 2023: Quorum's General Counsel office and Calderwood & Harkness finalize the pricing audit right proposal and the recalibrated derived-data tiered framework, including the QuorumScore™ carve-out and the Draft Derived Data Commercialization Protocol. The finalized proposals should be circulated internally for review and sign-off by Rajesh Anand (Chief Data Officer), Diane Lowell (Senior Vice President, Underwriting Analytics), and Thomas Ng (Vice President, Enterprise Procurement) to ensure alignment with Quorum's technical, business, and procurement requirements.
2. September 15, 2023: Calderwood & Harkness formally transmits the pricing audit right proposal to Kessler Pruitt & Ashe (Graham Whitley) via letter, accompanied by a cover memorandum framing the proposal as a market-fairness and governance mechanism. The letter should request Meridian's response within three weeks.
3. Late September 2023 (target: September 25–29, 2023): Calderwood & Harkness transmits the tiered derived-data framework proposal, including the QuorumScore™ carve-out and the Draft Derived Data Commercialization Protocol, to KP&A. The sequencing of the two proposals — pricing audit right first, derived-data framework second — is deliberate: we want Meridian to evaluate the pricing audit right on its own merits before introducing the more complex derived-data framework, and we want to avoid the perception that Quorum is making demands on both issues simultaneously.
4. October 2023: Request a fourth negotiation session (virtual or in-person) focused exclusively on the two remaining open issues — pricing protection and derived-data rights — with the objective of reaching a heads-of-terms agreement or, at minimum, substantially narrowing the gap. The negotiation session should include decision-makers from both sides with authority to make commercial commitments (subject to board-level confirmation on the Meridian side).
5. Parallel Track — Lender Consent: Marcus Weill to reengage Philip Yardley at Standish National Bank to restart the lender consent process. Target obtaining the consent or waiver by Q1 2024, well in advance of the anticipated MDLA execution timeline. Nathaniel Bower should coordinate with Calderwood & Harkness to update the consent request package to reflect any changes in the MDLA terms since the initial November 2022 submission.
6. Parallel Track — Quorum Board Authorization: Prepare an updated Quorum board resolution for review and approval by Harrison Kimble, Chair of the Quorum board of directors, authorizing execution of the MDLA once final terms are agreed. The resolution should be drafted with sufficient flexibility to cover the range of outcomes contemplated by Options 1 and 3, so that Quorum does not need to return to its own board if the final negotiated terms differ in detail from the recommended approach.
7. Coordination with Caldwell & Strauss LLP: Angela Firth, Quorum's outside patent counsel at Caldwell & Strauss LLP, should be briefed on the current derived-data intellectual property posture — including the tiered framework and QuorumScore™ carve-out — to ensure alignment with Quorum's broader IP portfolio strategy and the pending QuorumScore™ patent applicati

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