PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT This memorandum is a privileged and confidential communication protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressees identified herein. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.
MEMORANDUM
FROM: Wendy Schultz, Associate, intellectual Property, Calderwood & Harkness LLP
TO: Carolyn Whitford, General Counsel & EVP, Quorum Insurance Holdings Corp. Gregory Stahl, VP, Legal Affairs, Quorum Insurance Holdings Corp.
CC: Leonard Cross, Partner (Responsible Partner), Calderwood & Harkness LLP Patricia Heng, Senior Counsel, Technology Transactions, Calderwood & Harkness LLP
DATE: January 23, 2023
RE: Post-Session Debrief — First In-Person Negotiation Session, January 18, 2023 (New York)
MATTER NO.: C&H Matter No. 1025-00008
SUBJECT: Quorum Insurance Holdings Corp. / Meridian Credit intelligence, Inc. — Master Data License Agreement Negotiation
I. Executive Summary
This memorandum provides a comprehensive debrief of the first in-person negotiation session between Quorum Insurance Holdings Corp. ("Quorum") and Meridian Credit intelligence, Inc. ("Meridian") held on January 18, 2023, at the offices of Calderwood & Harkness LLP, 425 Park Avenue, New York, NY 10022. The session ran approximately seven hours, commencing at 9:30 a.m. and concluding at approximately 4:45 p.m. Eastern.
The primary purpose of the session was to review and negotiate the key provisions of Quorum's December 2, 2022 comprehensive redline of Meridian's November 4, 2022 form Master Data License Agreement (the "MDLA"), which Meridian's outside counsel, Kessler Pruitt & Ashe LLP ("KP&A"), prepared. The session also afforded both negotiating teams their first opportunity to engage substantively in person on the commercial and technical dimensions of the proposed data-licensing arrangement.
The session yielded substantial progress on a number of secondary provisions, including data delivery mechanics, certain service level agreement parameters, insurance minimums, and the general framework for pricing and payment terms. However, two principal unresolved issues were formally identified and flagged during the session, and both remain intractable as of the date of this memorandum:
(1) Most Favored Nation ("MFN") Pricing Clause. Quorum continues to demand a most favored nation clause that would ensure pricing parity with other insurance-industry licensees. Meridian has categorically refused any MFN provision that encompasses pricing, citing confidentiality obligations, comparability difficulties, antitrust concerns, and — most significantly — the objections of its majority owner, Breckenridge Capital Partners Fund IV, L.P., and its investment bank, Whitmore Zanthor & Co., in connection with Meridian's planned 2025–2026 initial public offering.
(2) Derived Data Ownership and Commercialization Rights. The parties hold deeply divergent positions on the ownership, use, sublicensing, and commercialization of data, models, scores, indices, and analytics outputs created by Quorum using licensed Meridian data as an input. Meridian demands a perpetual license-back, sole-discretion veto power over commercialization based on a "sufficient transformation" standard, and a fifteen percent (15%) revenue share on any approved commercialized Derived Data. Quorum's position is that it should own all such intellectual property outright and without encumbrance.
These two disputes are the defining issues of this negotiation. Both sides have recognized the need for further sessions and, in all likelihood, engagement at the C-suite level to reach resolution. The parties agreed to schedule a second negotiation session, tentatively to be held in Atlanta, Georgia, in early March 2023.
This memorandum details the session proceedings, summarizes the positions taken by each side, identifies areas of agreement and disagreement, and sets forth Calderwood & Harkness's recommended next steps.
II. Attendees
The following individuals participated in the January 18, 2023 negotiation session. Certain individuals participated in specific breakout sessions only, as noted below.
A. Quorum Insurance Holdings Corp.
B. Calderwood & Harkness LLP (Outside Counsel for Quorum)
C. Meridian Credit intelligence, Inc.
D. Kessler Pruitt & Ashe LLP (Outside Counsel for Meridian)
III. Session Format and Agenda
The session was organized into four segments, designed to allow both plenary-level strategic discussion and targeted breakout work on technical and commercial matters.
Morning Plenary Session (9:30 a.m. – approximately 11:00 a.m.). The session opened with a full-group plenary to review the landscape of open issues arising from the December 2, 2022 redline and the October 2022 annotated term-sheet comparison. Leonard Cross and Graham Whitley co-moderated the initial discussion, walking through the MDLA's key articles and identifying provisions where the parties had reached preliminary alignment in writing versus those requiring in-person discussion. The parties jointly confirmed that the MFN clause and derived-data rights were the two most significant unresolved issues and agreed to reserve extended discussion of those topics for the afternoon plenary. This initial plenary also served to establish the scope of the two breakout tracks.
Mid-Morning Breakout Sessions (approximately 11:15 a.m. – 12:45 p.m.). The attendees divided into two parallel working groups:
(a) Commercial/Pricing Track. This group addressed pricing structure, payment terms, volume tiers, and related commercial provisions. Quorum participants included Thomas Ng, Diane Lowell, and Carolyn Whitford. Meridian participants included Keith Marlow, Jordan Prescott, and Arthur Pennington. Leonard Cross and Graham Whitley also attended portions of this breakout.
(b) Technical/Data Track. This group addressed data delivery mechanics, API specifications, batch delivery protocols, data format standards, and data security and privacy provisions. Quorum participants included Priya Nair, Rajesh Anand, and Omar Siddiqui. Meridian participants included Ben Overstreet, Derek Fontaine, and Lena Vasquez. Patricia Heng also joined this breakout for the SLA-related components.
Afternoon Plenary Session (approximately 1:30 p.m. – 3:45 p.m.). After a working lunch, the full group reconvened for a substantive discussion of the two critical open issues — the MFN clause and derived-data rights. This was the most consequential segment of the day and consumed the majority of the afternoon. The parties also addressed the remaining open points on dispute resolution, term and termination, and certain SLA items that had not been fully resolved in the breakout.
Late Afternoon Wrap-Up (approximately 3:45 p.m. – 4:45 p.m.). The session concluded with a summary of the points on which the parties had reached agreement or tentative agreement, a compilation of remaining open items, and scheduling discussions for the next session. Nina Chastain (KP&A) and Wendy Schultz were designated as the primary scheduling coordinators.
IV. Summary of Issues Addressed and Outcomes
A. Most Favored Nation Pricing Clause — OPEN / UNRESOLVED
The MFN pricing clause remains the most contentious pricing-related issue in the negotiation. The parties dedicated approximately forty-five minutes of the afternoon plenary to this topic, and the discussion was vigorous. The positions are summarized below.
1. Quorum's Position Presented
Quorum reiterated its demand for a most favored nation clause to be included in the MDLA. As presented by Carolyn Whitford and Thomas Ng, the proposed clause would provide that if Meridian offers any other insurance-industry licensee more favorable per-record pricing, volume discounts, or fee terms during the term of the MDLA, Quorum's pricing would be automatically adjusted downward to match those more favorable terms. Quorum has advanced this position consistently since the October 2022 term-sheet discussions, and it was a central element of the December 2, 2022 redline.
Quorum defined the proposed MFN comparator class as follows: all U.S.-domiciled insurance carriers, managing general agents ("MGAs"), and insurtech firms with annual premiums written of five hundred million dollars ($500,000,000) or more. Thomas Ng explained the rationale for this definition, noting that it encompasses the class of licensees most similarly situated to Quorum in terms of data consumption patterns, use cases, and bargaining leverage, while excluding smaller or non-insurance licensees whose pricing dynamics would not be reasonably comparable.
In support of its MFN demand, Quorum emphasized the significant volume commitment represented by the proposed transaction. The aggregate five-year license value is sixty million dollars ($60,000,000), comprising ten million eight hundred thousand dollars ($10,800,000) in Year 1 (reflecting a six-month implementation and ramp period) and twelve million three hundred thousand dollars ($12,300,000) per year in Years 2 through 5. Carolyn Whitford characterized this commitment as among the largest single data-licensing commitments in Quorum's history and argued that a commitment of this magnitude warrants pricing protection to ensure that Quorum is not disadvantaged relative to competitors who may negotiate with Meridian at a later date.
Additionally, Quorum noted that the Pinnacle Ridge Advisory LLC pricing benchmark study, which is currently in progress and expected to be delivered on or about February 14, 2023, will provide independent, third-party market data supporting Quorum's position. The study is being led by Franklin Osei, Managing Director at Pinnacle Ridge Advisory LLC, and will analyze pricing terms across comparable credit-data licensing transactions in the insurance industry. Quorum expressed confidence that the Pinnacle Ridge data will demonstrate that MFN protection is both warranted and consistent with market practice for transactions of this scale.
2. Meridian's Position Stated
Arthur Pennington and Graham Whitley stated in unambiguous terms that Meridian will not agree to any MFN pricing clause. Their refusal was categorical and was supported by four distinct rationales, each of which was articulated in some detail during the afternoon plenary:
(a) Confidentiality Obligations. Meridian argued that the audit and verification mechanisms necessarily associated with an MFN clause — i.e., the requirement that Meridian either disclose other licensees' pricing or submit to independent audits comparing pricing across its customer base — would compromise Meridian's confidentiality obligations to its existing licensees. Arthur Pennington noted that virtually all of Meridian's enterprise data-licensing agreements contain strict pricing-confidentiality provisions and that an MFN audit mechanism would be inconsistent with those commitments.
(b) Comparability Challenges. Meridian contended that cross-licensee price comparisons are impracticable given the bespoke nature of its data packages. Each licensee's arrangement varies by product mix, data volume, use-case restrictions, geographic scope, API access levels, and integration complexity. Graham Whitley argued that a meaningful "Apples-to-apples" comparison is effectively impossible and that any MFN clause would generate continuous disputes over whether a particular licensee's arrangement is truly comparable to Quorum's.
(c) IPO-Related Concerns. This rationale appeared to carry the most weight on Meridian's side. Arthur Pennington disclosed that Meridian's majority owner, Breckenridge Capital Partners Fund IV, L.P. (which holds a sixty-two and one-half percent (62.5%) equity interest in Meridian, with Caleb Rourke serving as Breckenridge's board representative), and Meridian's investment bank, Whitmore Zanthor & Co. (Rachel Ng-Castillo, Managing Director), have both raised concerns that an MFN clause in a significant licensing agreement would be viewed as a material margin risk during due diligence for Meridian's planned 2025–2026 initial public offering. Pennington explained that an MFN would introduce downward pricing pressure that IPO underwriters and prospective public-market investors would likely view unfavorably, as it could constrain Meridian's ability to maintain and expand margins across its licensee base.
(d) Antitrust Sensitivities. Meridian also raised antitrust concerns, suggesting that an MFN clause in the credit-data market could attract regulatory scrutiny, particularly in light of the FTC's and DOJ's heightened attention to data-market competition and pricing practices. Graham Whitley referenced recent enforcement activity in adjacent data markets, though he did not cite specific actions or precedent in detail.
As a partial concession, Meridian offered a "most favored terms" provision that would be limited to data-delivery service level agreements and uptime commitments only, explicitly and expressly excluding any pricing terms. Under this offer, if Meridian provides any other insurance-industry licensee with more favorable SLA terms (e.g., higher uptime commitments, shorter batch-delivery windows, more stringent latency standards), Quorum would be entitled to receive the same SLA terms. Arthur Pennington characterized this as a "meaningful" concession, though Quorum's team did not respond favorably to it at the session.
Keith Marlow, speaking from a commercial perspective, stated plainly that Meridian views its pricing power as central to its valuation narrative and to Breckenridge's investment thesis. He characterized any MFN on pricing as a "red line" for the Meridian board and for Breckenridge. This language was used deliberately and repeatedly throughout the discussion, and it is our assessment that this characterization accurately reflects the Meridian board's current posture.
3. Assessment and Observations
The parties remain far apart on the MFN issue. The gap is not merely a function of commercial disagreement but is driven by Meridian's strategic considerations that extend well beyond this particular transaction. Meridian's negotiating position on MFN appears to be significantly influenced — and perhaps constrained — by the concerns of Breckenridge Capital Partners and Whitmore Zanthor regarding IPO positioning and valuation. The explicit references to the Breckenridge board representative, Caleb Rourke, and to Whitmore Zanthor' managing director, Rachel Ng-Castillo, suggest that Meridian's negotiating team may have limited authority to move on the MFN issue without board-level engagement or, at a minimum, explicit board authorization.
Quorum's fallback position — a pricing audit right, pursuant to which an independent auditor would periodically verify that Quorum's pricing is within a specified range (e.g., 110%) of pricing offered to comparable licensees — was discussed informally among the Quorum team but was not formally tabled during the January 18 session. We recommend reserving this fallback for a future session, after the Pinnacle Ridge Advisory LLC pricing benchmark study is available. The Pinnacle Ridge deliverable, expected on or about February 14, 2023, will provide the empirical foundation necessary to support either a renewed push for a full MFN or a calibrated presentation of the pricing audit alternative. Tabling the audit-right fallback prematurely — before Quorum has third-party market data to support its position — could weaken Quorum's leverage and signal willingness to concede on the MFN before Meridian has made any meaningful counter-movement.
We also note that Meridian's offered concession — the SLA-only "most favored terms" provision — has some value, particularly in light of the parties' ongoing disagreement over specific SLA parameters (as discussed in Section IV.E below). However, it does not address Quorum's fundamental concern, which is pricing parity.
B. Derived-Data Rights — OPEN / UNRESOLVED
The derived-data issue consumed the largest portion of the afternoon plenary and generated the most vigorous debate of the day. The parties' positions are fundamentally opposed, and this issue is of critical commercial importance to Quorum given the central role of the QuorumScore™ predictive underwriting model in Quorum's business strategy. This section provides a detailed summary of the positions taken, the technical sub-issue that emerged, and our assessment.
1. Quorum's Position Presented
Quorum asserted that it should own all intellectual property in any data, models, scores, indices, or analytics outputs created by Quorum using the licensed Meridian data as an input (collectively, "Derived Data"), with unrestricted rights to use, sublicense, and commercialize such Derived Data — including to third parties outside Quorum's corporate group — without additional fees, royalties, or the requirement of Meridian's consent.
Rajesh Anand, Quorum's Chief Data Officer, presented the business case for Quorum's position in substantial detail. He explained that Quorum's data-science team has developed the proprietary QuorumScore™ predictive underwriting model, for which a U.S. patent application is currently pending before the U.S. Patent and Trademark Office (Serial No. 97/482,116). QuorumScore blends Meridian credit data with Quorum's own first-party claims data, policy data, and telematics data through a series of proprietary machine-learning algorithms. The model produces a composite risk score that Quorum uses for automated underwriting decisions across its property and casualty, life, and specialty insurance lines. Mr. Anand emphasized that QuorumScore is central to Quorum's underwriting competitive advantage and that Quorum has made significant investments in developing the model, including dedicated data-science headcount, computational infrastructure, and proprietary training data curation.
Beyond its internal use, QuorumScore is also the foundation of a planned business-to-business ("B2B") licensing revenue line. Mr. Anand noted that Quorum's internal projections — which were shared with the Quorum team but not disclosed to Meridian — estimate that the QuorumScore B2B licensing business could generate forty to fifty million dollars ($40,000,000 to $50,000,000) in annual revenue by 2027. This projection reflects Quorum's intent to license QuorumScore to other insurance carriers, reinsurers, and insurtech companies as a standalone underwriting analytics product.
Diane Lowell, SVP of Underwriting Analytics, reinforced this point by describing the breadth of QuorumScore's application within Quorum's business. She explained that QuorumScore outputs are used across all three of Quorum's major insurance segments — P&C, life, and specialty — and that any license-back or revenue-sharing arrangement that would give Meridian access to QuorumScore outputs, or that would require Quorum to share a portion of its QuorumScore commercialization revenues, would be commercially devastating and would fundamentally alter the economics of the proposed transaction.
Quorum's proposed Article VII of the MDLA, as drafted by Calderwood & Harkness and transmitted to KP&A on December 2, 2022, vests all Derived Data intellectual property in Quorum, free and clear of any Meridian claims. This position was reiterated firmly during the afternoon plenary.
2. Meridian's Position Stated
Graham Whitley and Arthur Pennington articulated Meridian's position with equal firmness. Meridian's core legal argument is that any Derived Data incorporating, based on, or traceable to Meridian's raw data constitutes a "derivative work" within the meaning of the U.S. Copyright Act (17 U.S.C. § 101 et seq.) and that, accordingly, Meridian retains underlying intellectual property rights in such Derived Data. Graham Whitley argued that the creation of Derived Data does not extinguish or diminish Meridian's proprietary interest in the raw data from which the Derived Data was produced or derived, and that Quorum's rights in Derived Data must be understood as layered on top of Meridian's continuing rights in the underlying data.
Building on this legal framework, Meridian demanded the following three conditions as non-negotiable elements of any derived-data provision in the MDLA:
(a) Perpetual Royalty-Free License-Back. Meridian demands a perpetual, irrevocable, royalty-free, worldwide license-back on all Derived Data, granting Meridian the right to use such Derived Data for Meridian's own internal purposes, including but not limited to product development, data analytics, and improvement of Meridian's own data products. This license-back would survive termination or expiration of the MDLA.
(b) Commercialization Restriction Based on "Sufficient Transformation" Standard. Meridian demands that Quorum be prohibited from selling, sublicensing, distributing, or otherwise making available any Derived Data to any third party unless the Derived Data has been "sufficiently transformed" such that no Meridian raw data can be reverse-engineered, reconstructed, or otherwise derived from it. Under Meridian's proposal, Meridian would have sole and absolute discretion to determine whether any particular Derived Data satisfies the "sufficient transformation" standard. There would be no independent adjudication, no objective criteria, and no appeal mechanism.
(c) Revenue-Sharing Arrangement. If Quorum commercializes Derived Data that Meridian has approved as sufficiently transformed, Meridian demands a revenue-sharing arrangement pursuant to which Meridian would receive fifteen percent (15%) of the net revenues attributable to such Derived Data.
Keith Marlow framed Meridian's demands in strategic terms, describing the derived-data issue as a matter of protecting Meridian's "data moat" — a term he used repeatedly throughout the discussion. Mr. Marlow explained that Breckenridge Capital Partners and Whitmore Zanthor view unfettered derived-data rights as a direct threat to Meridian's proprietary data positioning. From Meridian's perspective, granting Quorum the unrestricted ability to create, own, and commercialize products built on Meridian data would effectively allow Quorum to monetize Meridian's data in competition with Meridian itself. Marlow characterized this as an existential concern for Meridian's IPO narrative, arguing that prospective public-market investors would be alarmed by licensing arrangements that allow licensees to freely build and commercialize competing data products using Meridian's data as a foundation.
3. Technical Dispute: ML Model Outputs
A significant technical and legal sub-issue emerged during the derived-data discussion, and it has the potential to shape the entire derived-data negotiation. The parties disagree on whether outputs of Quorum's machine-learning models — which are trained on (among other things) Meridian data — constitute "Derived Data" at all.
Quorum's Position. Rajesh Anand, with support from Omar Siddiqui, presented Quorum's position that a critical distinction must be drawn between (i) the machine-learning model itself (including its trained weights and parameters), which may arguably be influenced by Meridian training data, and (ii) the live predictions and outputs generated by the trained model when it is applied to new, non-Meridian input data in production. In Quorum's view, only the trained model weights and parameters are potentially derivative of Meridian data, and even that characterization is debatable. Live predictions generated by the trained model using new, non-Meridian inputs at inference time are independent outputs — they are not copies or derivatives of Meridian's data, and they should not be classified as Derived Data under the MDLA. Mr. Anand provided a technical overview of how QuorumScore operates in production, emphasizing that the model's real-time scoring function processes live consumer-application data, telematics feeds, and claims-history data that are entirely independent of Meridian's dataset. The fact that the model was trained in part using Meridian data does not, in Quorum's view, make every output of the model a derivative work of that training data.
Meridian's Position. Graham Whitley presented a contrary view: any model trained using Meridian data produces outputs that are inherently derived from and dependent on Meridian's data contribution. Mr. Whitley argued that the trained model itself is a derivative work — its weights, parameters, and learned representations are a mathematical expression of the patterns and correlations present in Meridian's data. Therefore, the model's outputs necessarily carry forward the derivative character of the model itself. Under this view, every QuorumScore prediction is traceable, at least in part, to Meridian's data, and every such prediction falls within the scope of Derived Data. Mr. Whitley did not cite specific case law or legal authority for this proposition during the session, but he indicated that KP&A would be prepared to provide a more detailed legal analysis at the next session.
Significance for Quorum. This technical and legal distinction is of critical commercial importance for QuorumScore. If Meridian's position were accepted, virtually every output of QuorumScore — every risk score, every underwriting recommendation, every pricing adjustment — would be classified as Derived Data, subjecting it to the license-back, the "sufficient transformation" veto, and the fifteen percent revenue share. This would effectively render the QuorumScore B2B licensing business nonviable in its current form.
We recommend that Calderwood & Harkness prepare a detailed legal memorandum analyzing the copyright and trade-secret treatment of machine-learning model outputs. Wendy Schultz and Omar Siddiqui will lead the preparation of this memorandum, with a target completion date in early February 2023. The memorandum should address, among other things: (i) the current state of U.S. copyright law as applied to machine-learning model outputs, including any relevant case law or Copyright Office guidance; (ii) the distinction between derivative works and independent works under 17 U.S.C. § 103; (iii) the applicability of the "idea/expression" dichotomy to trained model weights; (iv) trade-secret protection considerations; and (v) the practical implications of these legal frameworks for the QuorumScore business case. This memorandum will serve as a foundation for Quorum's position in future negotiation sessions and will be essential if the derived-data dispute escalates.
4. Assessment and Observations
Meridian's three-part demand — the perpetual license-back, the "sufficient transformation" veto with Meridian sole discretion, and the fifteen percent revenue share — is commercially unacceptable to Quorum. Based on our preliminary assessment of market practice, these demands are also outside the range of norms for enterprise data licensing transactions of this type. While license-back provisions are not uncommon in certain categories of data agreements, the combination of a license-back plus a sole-discretion commercialization veto plus a double-digit revenue share represents an unusually aggressive position.
We highlight the following specific concerns with each element of Meridian's demand:
License-Back Provision. The proposed perpetual, royalty-free license-back would give Meridian access to Quorum's proprietary analytics — including QuorumScore and all of its outputs — at no cost and without temporal limitation. This effectively allows Meridian to free-ride on Quorum's substantial investment in data science, model development, and proprietary first-party data. The license-back would survive termination of the MDLA, meaning that even after the data-licensing relationship ends, Meridian would retain the right to use QuorumScore-derived outputs in perpetuity. This is deeply problematic from both a competitive and an intellectual property perspective.
"Sufficient Transformation" Standard. The "sufficient transformation" standard with Meridian sole discretion is the most problematic element of Meridian's proposal. In practical terms, it gives Meridian unilateral veto power over Quorum's commercialization of its own models and analytics products. There are no objective criteria, no independent review mechanism, and no obligation on Meridian to act reasonably or in good faith. Meridian could, in theory, use this provision to block any QuorumScore commercialization that it viewed as competitive with Meridian's own products, regardless of the actual degree of transformation applied to the underlying data. This creates an untenable business dependency.
Revenue Share. The fifteen percent revenue share on approved Derived Data commercialization is an additional cost layer that would significantly reduce the profitability of the QuorumScore B2B licensing business. Combined with the "sufficient transformation" approval requirement, this revenue share effectively gives Meridian both a veto and a toll on Quorum's data analytics commercialization.
We recommend that Calderwood & Harkness prepare a market-survey memorandum analyzing the prevalence and typical structure of license-back provisions in comparable enterprise data-licensing agreements. This memorandum will help establish an evidentiary basis for Quorum's position that Meridian's demands exceed market norms.
Additionally, the ML model output issue requires a standalone legal analysis, as discussed above. This is a novel and commercially significant question that will shape the remainder of the derived-data negotiation and has implications beyond this transaction for Quorum's broader data strategy.
C. Pricing and Payment Terms — SUBSTANTIALLY AGREED
Notwithstanding the unresolved MFN dispute, the parties achieved substantial agreement on the core pricing structure and payment terms during the commercial/pricing breakout and the subsequent plenary discussions. The agreed pricing framework is summarized below.
Annual License Fees:
Payment Terms:
•  Quarterly-in-advance payment schedule
•  Year 1 quarterly installments: $2,700,000 per quarter
•  Years 2–5 quarterly installments: $3,075,000 per quarter
•  Late payment interest: 1.5% per month (18% per annum) on overdue amounts — agreed
Implementation Fee:
•  One-time implementation and integration fee: $1,500,000
•  This fee covers Meridian's costs associated with initial system integration, data-pipeline configuration, and onboarding support
•  Billed separately from the annual license fees and not included in the $60,000,000 aggregate license value — agreed
Data-Volume Tiers:
•  Base tier: up to 500,000,000 (five hundred million) records per month (consumer and commercial combined)
•  Current estimated monthly volume for Quorum: approximately 437,000,000 records (approximately 87.4% of the base tier)
•  Overage rate: $0.003 per record above the 500,000,000-record base tier — agreed
The MFN issue (discussed in Section IV.A above) remains the sole outstanding pricing-related dispute. All other elements of the pricing and payment structure were confirmed by both sides and will be reflected in the next markup of the MDLA.
D. Data Products and Scope — AGREED IN PRINCIPLE
The parties confirmed the three Meridian data products to be licensed under the MDLA, along with their key parameters:
1. MCI Consumer Credit File™
•  Approximately 310,000,000 consumer records
•  Daily batch refresh plus real-time API access
•  Delivered via SFTP batch and REST API
2. MCI CommercialView™
•  Approximately 42,000,000 business records
•  Weekly batch refresh
•  Delivered via SFTP batch
3. MCI AltSignal™
•  Approximately 85,000,000 consumer alternative-data records, encompassing utility payment data, telecommunications payment data, and rental payment data
•  Daily batch refresh
•  Delivered via SFTP batch
Quorum confirmed its intended uses for the licensed data: automated underwriting models, claims-fraud detection algorithms, and customer propensity scoring across Quorum's property and casualty, life, and specialty insurance lines. These use-case descriptions will be reflected in the MDLA's permitted-use provisions.
The detailed Technical Schedule A — specifying data field definitions, record formats, delivery protocols, refresh schedules, API endpoint specifications, authentication requirements, and other technical parameters — will be finalized at the working level between Priya Nair (Quorum) and Derek Fontaine / Ben Overstreet (Meridian/KP&A). The parties agreed to proceed with technical-level exchanges in the weeks following the session to advance this schedule toward finalization before the second negotiation session.
E. Service Level Agreement — PARTIAL PROGRESS
Patricia Heng led the SLA discussion during both the technical breakout and the afternoon plenary, using Calderwood & Harkness's January 2023 proposed SLA schedule as the baseline document.
The parties achieved tentative agreement on the general framework for uptime commitments and the service-credit methodology, including the principle that service credits should be calculated as a percentage of the applicable monthly license fee and should escalate based on the duration and severity of any downtime event. However, the specific parameters — including the uptime percentage commitment, measurement windows, exclusion categories, and service-credit caps — remain subject to further negotiation. The key points of disagreement are:
•  Uptime Commitment. Meridian proposed a 99.5% monthly uptime commitment for the API access component. Quorum is seeking 99.9% monthly uptime. This represents a meaningful difference in permitted downtime: 99.5% uptime allows for approximately 3.6 hours of downtime per month, while 99.9% allows for only approximately 43 minutes per month. Given Quorum's real-time API dependency for automated underwriting decisions, the higher standard is commercially important to Quorum.
•  API Latency Standards. The parties discussed acceptable latency ranges for the REST API component of the MCI Consumer Credit File delivery. Priya Nair provided Quorum's technical requirements during the breakout session, specifying target p95 and p99 latency thresholds. These are under review by Meridian's technical team.
•  Batch-Delivery Windows. The daily and weekly batch-delivery windows — including the time of day by which batch files must be available for download via SFTP — are under discussion. Quorum requires batch availability by 6:00 a.m. Eastern to support its overnight batch-processing cycles.
•  Force Majeure. Force majeure provisions as they apply to SLA obligations were discussed but not resolved. The parties hold different views on the scope of force majeure events that should excuse SLA compliance, particularly with respect to cybersecurity incidents and third-party cloud infrastructure outages.
Both sides agreed to exchange revised SLA markups before the next negotiation session, incorporating the points of tentative agreement reached on January 18 and identifying remaining open items for in-person discussion.
F. Data Security and Privacy — PARTIAL PROGRESS
Data security and privacy provisions were addressed primarily during the technical/data breakout session. The discussion was informed by ongoing work-product from David Cartwright and Lisa Johannsen at Calderwood & Harkness, who have been preparing the Data Security Addendum. David Cartwright was not present in person but was consulted by phone during the breakout. Their draft work on the Data Security Addendum was referenced as a baseline.
Security Certifications. Both parties confirmed their respective security certifications:
•  Meridian holds SOC 2 Type II certification, with the most recent audit report issued by Galloway Nash LLP covering the period ending March 31, 2023. Meridian also holds ISO 27001 certification.
•  Quorum holds SOC 2 Type II certification, with the most recent audit report issued by Felton Thorpe & Co. LLP covering the period ending December 31, 2023.
Data-Breach Notification. Both parties agreed in principle to a forty-eight (48) hour data-breach notification window, measured from the time of discovery of a breach or suspected breach involving the other party's data. This timeframe and the associated notification procedures will be formalized in the Data Security Addendum.
FCRA Compliance. The framework for FCRA permissible purpose certification was agreed at a high level. Because certain of the Meridian data products constitute "consumer reports" under the Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), Quorum is required to certify the permissible purpose for which it will access and use such data. Quorum will prepare and submit a draft schedule specifying the applicable permissible purpose categories, which are expected to include insurance underwriting (15 U.S.C. § 1681b(a)(3)(C)) and account review (15 U.S.C. § 1681b(a)(3)(F)(ii)). This schedule will be appended to the MDLA as a dedicated exhibit.
Privacy and Regulatory Compliance. Provisions addressing compliance with the California Consumer Privacy Act ("CCPA"), the California Privacy Rights Act ("CPRA"), the Gramm-Leach-Bliley Act ("GLBA"), and applicable state insurance data-security regulations were discussed at a high level. Lena Vasquez, Meridian's Chief Privacy Officer, and Claudia Reeves, Quorum's VP of Regulatory & Compliance (who participated by phone), agreed to schedule a working-level call to align on the specifics of these provisions, including in particular the requirements of the New York Department of Financial Services Cybersecurity Regulation (23 NYCRR 500), which imposes detailed cybersecurity requirements on covered entities, including insurance companies regulated by NY DFS.
Post-Termination Data Treatment. The parties agreed in principle that, upon termination or expiration of the MDLA, Quorum will return or destroy all raw Meridian data within ninety (90) days. However, the post-termination treatment of Derived Data remains unresolved and is inextricably tied to the broader derived-data ownership dispute discussed in Section IV.B above. Until the parties reach agreement on the definition, ownership, and commercialization rights for Derived Data, the post-termination treatment of such data cannot be finalized.
G. Insurance Minimums — AGREED
The parties confirmed the following insurance requirements, which will be reflected in the insurance provisions of the MDLA. These terms are fully agreed:
No further negotiation is anticipated on this point.
H. Dispute Resolution — OPEN
The dispute resolution provision was discussed briefly during the late afternoon segment. The parties hold divergent positions:
Quorum's Position: Exclusive jurisdiction in the United States District Court for the Southern District of New York or, in the alternative, the Commercial Division of the New York Supreme Court, New York County. Quorum prefers federal or state court litigation, with its attendant discovery rights, appellate review mechanisms, and public accountability.
Meridian's Position: Binding arbitration under the American Arbitration Association ("AAA") Commercial Arbitration Rules, seated in New York, New York, with a three-arbitrator panel. Meridian favors arbitration for its confidentiality, efficiency, and finality.
Both sides reserved their positions after a brief exchange. This issue was not identified as a priority for resolution at this session, and neither side indicated a willingness to move. We anticipate that this will be addressed more fully at a subsequent session.
The parties did, however, reach agreement on governing law: the MDLA will be governed by the laws of the State of New York, without regard to conflicts-of-law principles. This point is confirmed and agreed.
I. Term and Termination — SUBSTANTIALLY AGREED
The five-year initial term of the MDLA was confirmed by both parties. The term will commence upon the effective date of the MDLA and continue for sixty (60) months thereafter.
Renewal provisions were discussed at a general level. Both parties expressed interest in a mutual renewal option, and the general framework — likely involving one or more successive renewal terms with advance notice requirements and pricing adjustment mechanisms — was discussed. However, the specific renewal mechanics (including renewal term length, notice periods, and pricing escalation or renegotiation provisions) were deferred to future markup exchanges.
Termination-for-cause triggers and cure periods were discussed at a high level. The parties acknowledged that the MDLA should include standard termination provisions for material breach (subject to a cure period), insolvency, and change of control. The specific definitions, cure periods, and procedures will be finalized in the next round of markups.
V. Standish National Bank Covenant — Internal Update
This section is provided for internal client awareness only. The subject matter addressed herein was not discussed with Meridian or its counsel at the January 18 session and should not be disclosed to any party outside of Quorum and its counsel.
The aggregate license value of the proposed MDLA — sixty million dollars ($60,000,000) over a five-year term — exceeds the twenty-five million dollar ($25,000,000) threshold set forth in Section 7.12(b) of the Amended and Restated Credit Agreement, dated June 15, 2021, between Quorum Insurance Holdings Corp. (as Borrower) and Standish National Bank, N.A. (as Administrative Agent), by thirty-five million dollars ($35,000,000), representing approximately 240% of the contractual threshold. Accordingly, Quorum is required to obtain lender consent from Standish National Bank prior to entering into the MDLA.
Marcus Weill, working with the Quorum finance team, prepared and transmitted a draft lender consent request letter in November 2022 to Philip Yardley, Standish National Bank's Relationship Manager for the Quorum credit facility. A follow-up communication is planned for February 2023 to check on the status of the consent request and to provide Standish with any additional information that may be required.
Obtaining lender consent remains a condition precedent to the execution and closing of the MDLA. The timeline for obtaining lender consent should be carefully coordinated with the progress of the MDLA negotiation to avoid a situation in which the MDLA negotiation reaches closure before lender consent has been obtained, potentially creating execution delay or deal risk. We recommend that Carolyn Whitford and Gregory Stahl engage Philip Yardley proactively in the coming weeks to ensure that the consent process is advancing in parallel with the negotiation.
VI. Coordination with Caldwell & Strauss LLP
Angela Firth, Partner at Caldwell & Strauss LLP, located at 100 Pearl Street, Hartford, CT 06103, serves as Quorum's longstanding outside intellectual property counsel. Ms. Firth and her team have been providing background guidance to Quorum's in-house legal team on the implications of Quorum's existing IP portfolio for the MDLA negotiation, particularly as it relates to the derived-data dispute.
Caldwell & Strauss is not billing on the MDLA matter and is not serving as counsel of record for the negotiation. However, Ms. Firth has shared analysis relevant to the IP protection of QuorumScore in the context of the derived-data negotiation, including observations regarding the scope of Quorum's pending patent application (USPTO Serial No. 97/482,116) and the trade-secret protections applicable to QuorumScore's training data, model architecture, and hyperparameter configurations.
Wendy Schultz recommends that Calderwood & Harkness schedule a coordination call with Angela Firth before the next negotiation session to ensure alignment on Quorum's derived-data IP ownership positions. It is important that Quorum present a consistent and well-supported IP narrative at the second negotiation session, and input from Caldwell & Strauss — which has deeper institutional knowledge of Quorum's broader IP portfolio — will be valuable in achieving this alignment. We will coordinate with Gregory Stahl to arrange this call at a mutually convenient time.
VII. Recommended Next Steps
Based on the outcomes of the January 18 session, Calderwood & Harkness recommends the following next steps.
A. Legal Memoranda to Prepare
The following legal memoranda should be prepared in advance of the second negotiation session:
1. Memorandum re: Ownership of ML Model Outputs — Copyright & Trade Secret Analysis. This memorandum will analyze the legal treatment of machine-learning model outputs under U.S. copyright and trade-secret law, with particular focus on whether live predictions generated by a model trained in part on third-party data constitute "derivative works" of that training data. The memorandum will address the distinction between trained model weights/parameters and inference-time outputs, survey relevant case law and scholarly commentary, and provide practical recommendations for Quorum's negotiating position. Lead authors: Wendy Schultz and Omar Siddiqui. Target completion: early February 2023.
2. Memorandum re: License-Back Provisions in Data Licensing — Market Survey. This memorandum will survey the prevalence, structure, and typical terms of license-back provisions in comparable enterprise data-licensing agreements, drawing on publicly available information, industry publications, and C&H's institutional experience. The memorandum will provide an evidentiary basis for Quorum's position that Meridian's license-back demand exceeds market norms. Lead author: Omar Siddiqui. Target completion: March/April 2023.
3. Memorandum re: "Sufficient Transformation" Standard — Critique and Alternative Frameworks. This memorandum will critically analyze Meridian's proposed "sufficient transformation" standard, highlighting the operational, legal, and competitive risks of a standard governed by Meridian's sole discretion. The memorandum will also propose alternative frameworks (e.g., objective technical criteria, independent expert determination, safe-harbor categories). This memorandum will be prepared once Meridian provides further detail on its proposed standard, which we anticipate receiving in a future markup or at the second negotiation session. Lead author: Wendy Schultz.
B. Pinnacle Ridge Advisory Benchmark Study
Franklin Osei, Managing Director at Pinnacle Ridge Advisory LLC, is expected to deliver the pricing benchmark study on or about February 14, 2023. This study will analyze pricing terms across comparable credit-data licensing transactions in the insurance industry and will provide the independent, third-party market data necessary to support Quorum's MFN position.
The Pinnacle Ridge study will be critical in one of two ways: (i) if the data supports the conclusion that MFN protection is standard or prevalent in transactions of comparable scale, it will strengthen Quorum's argument for a full MFN clause; or (ii) if the data suggests that full MFN clauses are relatively uncommon, it may nonetheless support a calibrated fallback position, such as a pricing audit right with a ceiling — for example, requiring that Quorum's pricing remain within 110% of the most favorable pricing offered to comparable licensees, as verified by an independent auditor.
We recommend that Calderwood & Harkness and the Quorum business team review the Pinnacle Ridge study immediately upon receipt and schedule a strategy call to incorporate the findings into Quorum's negotiation approach for the second session. Leonard Cross and Thomas Ng should lead this review.
C. Second Negotiation Session
Both parties agreed to hold a second in-person negotiation session, tentatively scheduled for early March 2023. The session is expected to be held in Atlanta, Georgia, either at Meridian's offices or at Kessler Pruitt & Ashe LLP's Atlanta headquarters, located at 1180 Peachtree Street NE, Suite 3000, Atlanta, GA 30309.
The proposed agenda for the second session is as follows:
(a) Continued discussion of the MFN clause, incorporating the Pinnacle Ridge Advisory benchmark data;
(b) Detailed discussion of derived-data frameworks, including the ML model output issue, with reference to the C&H legal memorandum on that topic;
(c) Finalization of SLA terms, including uptime commitments, latency standards, batch-delivery windows, and service-credit parameters;
(d) Technical Schedule A walkthrough and finalization (working-level, led by Priya Nair and Derek Fontaine / Ben Overstreet).
Nina Chastain (KP&A) and Wendy Schultz have been designated as the primary scheduling coordinators and will work to confirm dates, location, and logistics in the coming weeks.
D. Revised MDLA Markup
Calderwood & Harkness will prepare a second-round markup of the MDLA incorporating the agreements reached at the January 18 session. This markup will reflect the confirmed pricing and payment terms (Section IV.C), the data products and scope (Section IV.D), the insurance minimums (Section IV.G), the governing-law provision (Section IV.H), and the initial-term confirmation (Section IV.I), among other points of agreement or tentative agreement. The second-round markup will be circulated to KP&A in advance of the second negotiation session to facilitate productive in-person discussion of the remaining open items.
E. Data Security and Privacy Addendum
Several work streams are required to advance the data security and privacy provisions:
•  David Cartwright and Lisa Johannsen will circulate the revised Data Security Addendum redline, responding to any comments received from KP&A, by mid-February 2023.
•  Lisa Johannsen will finalize the draft FCRA Permissible Purpose Certification schedule for Quorum's review and submission.
•  The working-level call between Lena Vasquez (Meridian CPO) and Claudia Reeves (Quorum VP, Regulatory & Compliance) should be scheduled promptly to align on CCPA/CPRA, GLBA, and state insurance regulatory compliance provisions, including the specific requirements of NY DFS 23 NYCRR 500. Calderwood & Harkness should participate in or be briefed on this call.
F. Client Decision Points
In advance of the second negotiation session, Quorum's leadership team should consider and, where possible, resolve the following strategic decision points:
1. Minimum Acceptable Outcome on Derived Data. Quorum should determine its minimum acceptable position on the derived-data issue before the second session. Specifically, Quorum's leadership should determine whether Quorum can accept any form of commercialization restriction on QuorumScore outputs, or whether unrestricted ownership and commercialization rights remain a firm requirement. If some degree of restriction is acceptable, the parameters of that restriction — e.g., a prohibition on sublicensing raw data but not model outputs, an objective transformation standard with independent adjudication, a de minimis revenue share below 15% — should be defined. This determination will shape Calderwood & Harkness's negotiation strategy.
2. Pricing Audit Right Fallback. Quorum should consider whether to signal the pricing audit right as a fallback to the full MFN at the second session, or whether to reserve this alternative for a later negotiation round. The timing of this signal will depend in part on the Pinnacle Ridge benchmark data and on Quorum's assessment of the likelihood of achieving a full MFN. Premature tabling of the fallback could weaken leverage; too-late tabling could limit its effectiveness as a bridge.
3. CEO-to-CEO Engagement. Quorum should assess whether CEO-to-CEO engagement — specifically, a direct conversation between Meg Tierney (Quorum CEO) and Vince Halstead (Meridian CEO) — is warranted if the second session does not produce meaningful movement on either the MFN or derived-data issues. Given that Meridian's positions appear to be driven significantly by board-level and investor-level considerations (Breckenridge Capital Partners, Whitmore Zanthor), it may be necessary to elevate the negotiation above the working level to create the conditions for a resolution. The timing and framing of any such engagement should be carefully considered.
VIII. Conclusion
The January 18, 2023 session was productive with respect to secondary matters and succeeded in narrowing the field of open issues. The parties reached agreement or substantial agreement on pricing and payment terms (excluding MFN), data products and scope, insurance minimums, governing law, and the five-year initial term. Progress was also made on the SLA framework, data security and privacy provisions, and the general structure for post-termination data treatment of raw Meridian data.
However, the session confirmed that the most favored nation pricing clause and the derived-data ownership and commercialization rights are the two defining disputes in this negotiation. These issues are complex, commercially significant, and deeply entrenched on both sides. Meridian's positions on both matters appear to be driven significantly by the strategic concerns of Breckenridge Capital Partners Fund IV, L.P. and Whitmore Zanthor & Co. in connection with Meridian's planned 2025–2026 initial public offering. This dynamic may materially limit Meridian's negotiating flexibility at the working level and suggests that resolution of these issues will ultimately require engagement above the level of general counsel and outside counsel.
Calderwood & Harkness will proceed promptly to prepare the recommended legal memoranda, coordinate with Pinnacle Ridge Advisory LLC on the pricing benchmark study, and develop refined negotiation positions for the second session. We will also prepare and circulate the second-round MDLA markup and coordinate with Caldwell & Strauss LLP on derived-data IP strategy.
We are available to discuss this debrief and recommended next steps at the client's convenience. Please do not hesitate to contact Wendy Schultz at Calderwood & Harkness's New York office (direct line and email on file) or Leonard Cross.
End of Memorandum
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT Calderwood & Harkness LLP | 425 Park Avenue, New York, NY 10022 C&H Matter No. 1025-00008
Name | Title | Participation
Carolyn Whitford | General Counsel & EVP | Full session; commercial/pricing breakout
Gregory Stahl | VP, Legal Affairs | Full session
Rajesh Anand | Chief Data Officer | Full session; technical/data breakout
Diane Lowell | SVP, Underwriting Analytics | Full session; commercial/pricing breakout
Thomas Ng | VP, Enterprise Procurement | Full session; commercial/pricing breakout
Priya Nair | Director, Data Engineering | Technical/data breakout session
Name | Title | Participation
Leonard Cross | Partner (Responsible Partner) | Full session
Wendy Schultz | Associate, intellectual Property (Lead Associate) | Full session
Patricia Heng | Senior Counsel, Technology Transactions | Full session; led SLA discussion
Omar Siddiqui | Associate, intellectual Property | Full session; technical/data breakout
Name | Title | Participation
Arthur Pennington | General Counsel | Full session; commercial/pricing breakout
Keith Marlow | SVP, Data Licensing & Partnerships | Full session; commercial/pricing breakout
Jordan Prescott | VP, Enterprise Sales | Full session; commercial/pricing breakout
Ben Overstreet | VP, Legal Affairs | Full session; technical/data breakout
Lena Vasquez | Chief Privacy Officer | Privacy/security breakout session
Name | Title | Participation
Graham Whitley | Partner, Technology & Licensing | Full session
Nina Chastain | Associate | Full session
Derek Fontaine | Associate | Full session; technical/data breakout
Period | Annual Fee | Notes
Year 1 | $10,800,000 | Reflects 6-month implementation/ramp period; effective monthly rate of $900,000
Year 2 | $12,300,000 | Effective monthly rate of $1,025,000
Year 3 | $12,300,000 | Effective monthly rate of $1,025,000
Year 4 | $12,300,000 | Effective monthly rate of $1,025,000
Year 5 | $12,300,000 | Effective monthly rate of $1,025,000
Total (5-Year Aggregate) | $60,000,000
Party | Coverage Type | Amount
Meridian | Commercial General Liability | $5,000,000 per occurrence
Meridian | Cyber / Technology Errors & Omissions | $25,000,000 aggregate
Quorum | Commercial General Liability | $5,000,000 per occurrence
Quorum | Cyber Liability | $50,000,000 aggregate