CALDERWOOD & HARKNESS LLP Attorneys at Law
425 Park Avenue New York, NY 10022
Telephone: (212) 546-8000 Facsimile: (212) 546-8001 www.calderwoodharkness.com
New York
August 18, 2022
VIA EMAIL
Graham Whitley, Esq. Partner, Technology & Licensing Kessler Pruitt & Ashe LLP 1180 Peachtree Street NE, Suite 3000 Atlanta, GA 30309
Re: Enterprise Data Licensing Arrangement — Quorum Insurance Holdings Corp. / Meridian Credit intelligence, Inc. C&H Matter No. 1025-00008
Dear Mr. Whitley:
We write on behalf of our client, Quorum Insurance Holdings Corp., a Delaware corporation headquartered at 1200 Atlantic Street, Suite 3400, Stamford, Connecticut 06901 (Nasdaq: QIHC) ("Quorum"). Calderwood & Harkness LLP ("C&H") has been engaged by Quorum to represent it in connection with the negotiation and documentation of a proposed enterprise data-licensing arrangement (the "Proposed Transaction") with Meridian Credit intelligence, Inc., a Georgia corporation headquartered at 3300 Peachtree Road NE, Suite 2100, Atlanta, Georgia 30326 ("Meridian"). As you are aware, the Mutual Non-Disclosure Agreement between Quorum and Meridian, bearing Reference No. NDA-QIH-MCI-2022-001, was duly executed by the parties on August 15, 2022 (the "Mutual NDA"), and is now in full force and effect. The terms and restrictions of the Mutual NDA govern the exchange of confidential information in connection with this matter, and we expect all communications and documents exchanged in furtherance of the Proposed Transaction to be treated in accordance with its provisions.
It is our understanding that your firm, Kessler Pruitt & Ashe LLP ("KP&A"), has been retained by Meridian to represent it in this matter. The purpose of this letter is to introduce the Calderwood & Harkness engagement team that will be working on the Proposed Transaction, to identify the principal client-side contacts at Quorum, to establish communication protocols between our respective firms, and to express Quorum's strong interest in proceeding expeditiously toward the exchange of term sheets and, ultimately, the negotiation and execution of definitive documentation.
Calderwood & Harkness Engagement Team
Calderwood & Harkness has assembled a multi-disciplinary team of professionals with deep experience in technology licensing, intellectual property, data privacy and cybersecurity, and corporate/commercial matters to represent Quorum in this engagement. Set forth below are the names, roles, practice-group affiliations, and contact information for each member of the C&H engagement team:
1. Leonard Cross — Responsible Partner
Mr. Cross is a partner in C&H's Tax Practice Group and will serve as the Responsible Partner and primary senior point of contact for this engagement. All escalation matters, strategic decisions, and formal transmittals of key documents should be directed to or coordinated through Mr. Cross. Mr. Cross is based in our New York office.
• Office: 425 Park Avenue, New York, NY 10022
• Direct Telephone: (212) 546-8112
• Email: leonard.cross@calderwoodharkness.com
2. Wendy Schultz — Lead Associate
Ms. Schultz is an associate in C&H's intellectual Property Practice Group and will serve as the day-to-day lead for all aspects of this engagement, including drafting, redlining, and negotiation sessions. Ms. Schultz will also serve as the primary day-to-day contact for scheduling, document exchange, and routine correspondence. She is based in our New York office.
• Office: 425 Park Avenue, New York, NY 10022
• Direct Telephone: (212) 546-8247
• Email: wendy.schultz@calderwoodharkness.com
3. Omar Siddiqui — Working Associate
Mr. Siddiqui is an associate in C&H's intellectual Property Practice Group. He will support Ms. Schultz on all intellectual property matters, with a particular focus on derived-data rights, technical schedule drafting, and related IP issues. Mr. Siddiqui is based in our New York office.
• Office: 425 Park Avenue, New York, NY 10022
• Direct Telephone: (212) 546-8319
• Email: omar.siddiqui@calderwoodharkness.com
4. Patricia Heng — Senior Counsel, Technology Transactions
Ms. Heng is Senior Counsel in C&H's Technology Transactions practice and will serve as the subject-matter advisor on technology licensing, service level agreements, and commercial terms applicable to the Proposed Transaction. Ms. Heng is based in our Stamford office and frequently works with members of the Quorum in-house team given her proximity to Quorum's headquarters.
• Office: 1 Landmark Square, Suite 1800, Stamford, CT 06901
• Direct Telephone: (203) 721-4455
• Email: patricia.heng@calderwoodharkness.com
5. David Cartwright — Partner, Data Privacy & Cybersecurity
Mr. Cartwright is a partner in C&H's Data Privacy & Cybersecurity Practice Group. He will advise on the privacy and regulatory overlay applicable to this engagement, including, without limitation, compliance with the Fair Credit Reporting Act ("FCRA"), the Gramm-Leach-Bliley Act ("GLBA"), the California Consumer Privacy Act and the California Privacy Rights Act ("CCPA/CPRA"), and the New York Department of Financial Services Cybersecurity Regulation (23 NYCRR Part 500). Mr. Cartwright is based in our New York office.
• Office: 425 Park Avenue, New York, NY 10022
• Direct Telephone: (212) 546-8508
• Email: david.cartwright@calderwoodharkness.com
6. Lisa Johannsen — Associate, Data Privacy & Cybersecurity
Ms. Johannsen is an associate in C&H's Data Privacy & Cybersecurity Practice Group. She will support Mr. Cartwright on all privacy and data-security documentation, including the negotiation of the Data Security Addendum and related schedules. Ms. Johannsen is based in our New York office.
• Office: 425 Park Avenue, New York, NY 10022
• Direct Telephone: (212) 546-8614
• Email: lisa.johannsen@calderwoodharkness.com
7. Marcus Weill — Associate, Corporate/Commercial
Mr. Weill is an associate in C&H's Corporate/Commercial Practice Group. He will handle ancillary corporate matters in connection with the Proposed Transaction, including any lender consent requirements under Quorum's existing credit facilities and the preparation or review of corporate authorizations (board resolutions, officer's certificates, and the like). Mr. Weill is based in our New York office.
• Office: 425 Park Avenue, New York, NY 10022
• Direct Telephone: (212) 546-8731
• Email: marcus.weill@calderwoodharkness.com
We also note for your records that Nathaniel Bower, a partner in C&H's Bankruptcy & Restructuring Practice Group, serves as the Billing Partner on C&H Matter No. 1025-00008. Mr. Bower will not, however, be a primary contact for substantive negotiations or day-to-day communications in connection with this matter.
Quorum Client Contacts
In addition to the Calderwood & Harkness team described above, the following Quorum personnel may participate in negotiations, attend working sessions, or otherwise be involved in communications with KP&A and Meridian in connection with the Proposed Transaction. We identify them here so that KP&A is aware of the principal business and legal contacts on the Quorum side:
1. Carolyn Whitford — General Counsel & Executive Vice President, Quorum Insurance Holdings Corp.
Ms. Whitford has overall client-side supervision and executive responsibility for Quorum's participation in the Proposed Transaction. Ms. Whitford may participate in certain senior-level discussions and will review key documents and milestones. Her contact information is as follows:
• Direct Telephone: (203) 448-2200
• Email: cwhitford@quoruminsurance.com
2. Gregory Stahl — Vice President, Legal Affairs, Quorum Insurance Holdings Corp.
Mr. Stahl is the primary day-to-day legal contact on the client side and will coordinate directly with Calderwood & Harkness on scheduling, document flow, and substantive legal matters. We anticipate that Mr. Stahl will be the most frequent Quorum participant in working sessions and counsel calls. His contact information is as follows:
• Direct Telephone: (203) 448-2215
• Email: gstahl@quoruminsurance.com
3. Rajesh Anand — Chief Data Officer, Quorum Insurance Holdings Corp.
Mr. Anand may participate in discussions concerning the scope and specification of data products, technical specifications, derived-data strategy, and related matters where his expertise as Quorum's Chief Data Officer is relevant.
• Direct Telephone: (203) 448-2340
• Email: ranand@quoruminsurance.com
4. Thomas Ng — Vice President, Enterprise Procurement, Quorum Insurance Holdings Corp.
Mr. Ng may participate in discussions related to commercial and pricing terms, volume commitments, and procurement processes.
• Direct Telephone: (203) 448-2410
• Email: tng@quoruminsurance.com
5. Priya Nair — Director, Data Engineering, Quorum Insurance Holdings Corp.
Ms. Nair serves as the technical integration lead within Quorum's data engineering organization and may participate in discussions relating to data delivery specifications, API integration requirements, and technical schedules.
• Direct Telephone: (203) 448-2527
• Email: pnair@quoruminsurance.com
We also wish to note that Quorum engages Caldwell & Strauss LLP, located in Hartford, Connecticut, as its regular outside intellectual property counsel. The partner contact at Caldwell & Strauss is Angela Firth. We anticipate that Caldwell & Strauss may coordinate with Calderwood & Harkness on certain background intellectual property matters as they may arise in connection with the Proposed Transaction; however, Calderwood & Harkness serves as lead outside counsel on this transaction, and all substantive correspondence regarding the Proposed Transaction should be directed to C&H as described herein.
Communication Protocols
In the interest of ensuring an efficient and well-organized workflow between our respective firms, we propose the following communication protocols for the duration of this engagement. We welcome your input and are happy to adjust these protocols to accommodate KP&A's preferences.
Primary Day-to-Day Contacts. We propose that Wendy Schultz (C&H) and a designated counterpart at KP&A serve as the primary day-to-day contacts for routine correspondence, document exchange, scheduling of negotiation sessions and working calls, and the transmission of comments and redlines. We would appreciate it if you would identify the individual or individuals at KP&A — whether associates or otherwise — who will serve in this capacity, along with their direct telephone numbers and email addresses.
Senior-Level Correspondence. We propose that senior-level correspondence, including formal transmittals of key documents (such as term sheets, drafts of the Master Data License Agreement, and formal position letters), as well as escalation of strategic matters, be directed between Leonard Cross (C&H) and Graham Whitley (KP&A). We anticipate that this channel will be used selectively and that the bulk of the working-level communications will flow through the day-to-day contacts identified above.
Document Exchange Format. We propose that all drafts and redlines of transaction documents be exchanged in Microsoft Word format (.docx) with tracked changes enabled, in order to facilitate efficient review, commentary, and negotiation. Execution versions of documents and formal correspondence should be exchanged in Adobe Portable Document Format (.pdf). Unless the parties mutually agree to utilize a secure document-sharing platform (such as a virtual data room or cloud-based collaboration tool) for the exchange of documents, we propose that all documents be transmitted via email to the designated contacts at each firm.
Confidentiality. We remind the parties that all communications, documents, and information exchanged in connection with the Proposed Transaction are subject to the terms and conditions of the Mutual NDA (Reference No. NDA-QIH-MCI-2022-001, dated August 15, 2022). We request that all documents and communications be marked in accordance with the confidentiality provisions of the Mutual NDA, including with the legend "CONFIDENTIAL — SUBJECT TO MUTUAL NDA" or similar appropriate designation.
Attorney-Client Privilege and Work-Product Protection. We note that communications between counsel in connection with this engagement may be subject to the attorney-client privilege, the work-product doctrine, and/or other applicable protections. We request that privileged and work-product communications be appropriately labeled as such. Nothing in this letter or in any communication exchanged between our firms is intended to waive any privilege or protection that may attach to any communication, document, or information.
Copy Distribution. We request that all substantive correspondence and document transmittals from KP&A to C&H copy both Leonard Cross (leonard.cross@calderwoodharkness.com) and Wendy Schultz (wendy.schultz@calderwoodharkness.com). We would appreciate it if you would advise us as to whom at KP&A should receive copies of correspondence and document transmittals from C&H, in addition to yourself.
Anticipated Next Steps and Timeline
We understand that Quorum and Meridian have been engaged in preliminary commercial discussions regarding the Proposed Transaction over the past several months, and that those discussions have reached a stage at which the parties are prepared to formalize the terms of the proposed arrangement. We acknowledge that those preliminary discussions have been conducted directly between the respective business teams and that the engagement of outside counsel reflects the parties' mutual intent to move toward the negotiation and execution of binding definitive documentation.
We understand that Quorum anticipates that Meridian will deliver an initial term sheet reflecting Meridian's proposed commercial terms in the near term, and that Quorum intends to respond promptly with a counter-term sheet setting forth its own positions and proposed modifications. Following the exchange and alignment of term sheets, Quorum is eager to move expeditiously toward the drafting, negotiation, and execution of definitive documentation, which we expect will include, at a minimum, the following:
(a) a Master Data License Agreement (the "MDLA"), setting forth the principal licensing terms, intellectual property provisions, and commercial framework;
(b) a Data Security Addendum (the "DSA"), addressing data security obligations, incident response procedures, and compliance with applicable privacy and cybersecurity regulations;
(c) a Service Level Agreement (the "SLA"), establishing data delivery standards, uptime commitments, latency requirements, and remedies for service-level failures; and
(d) related schedules, exhibits, and ancillary documents as may be necessary or appropriate, including technical specifications, pricing schedules, and data product descriptions.
Calderwood & Harkness is prepared to engage in negotiation sessions at mutually convenient times, and we are flexible as to format and location. We are happy to conduct sessions in person at our New York office, at KP&A's Atlanta office, or at any other mutually agreed-upon location. We are equally prepared to conduct sessions by videoconference as the parties' schedules and preferences may dictate. We anticipate that a combination of in-person and remote sessions will be most efficient given the geographic distribution of the respective teams.
We invite you to propose dates and times for an initial counsel-to-counsel call between the C&H and KP&A engagement teams. The purpose of this introductory call would be to discuss the anticipated process and timeline, identify any preliminary matters that should be addressed at the outset, and ensure that both teams are aligned on the procedural framework for the negotiation. Ms. Schultz is available to coordinate scheduling with your designated day-to-day contact at your earliest convenience.
Scope of the Proposed Transaction — Brief Overview
For purposes of counsel alignment and to ensure that both legal teams share a common baseline understanding of the Proposed Transaction, we set forth below a brief, high-level overview of the contemplated arrangement. We emphasize that this overview is provided solely for contextual purposes and does not limit, define, or otherwise circumscribe the scope of the Proposed Transaction, which will be set forth exclusively in the definitive agreements negotiated and executed by the parties.
The Proposed Transaction contemplates a five-year enterprise data-licensing arrangement under which Meridian would license to Quorum certain proprietary data products and services. Based on our current understanding of the preliminary commercial discussions, the principal data products to be licensed include:
(i) the MCI Consumer Credit File™, a comprehensive consumer credit data product covering approximately 310 million consumer records;
(ii) MCI CommercialView™, a commercial credit and business data product covering approximately 42 million business entity records; and
(iii) MCI AltSignal™, an alternative data feed product incorporating non-traditional data sources and covering approximately 85 million consumer records.
Quorum's intended use of the licensed data products encompasses the enhancement of Quorum's automated underwriting models, the development and refinement of claims-fraud detection algorithms, and the implementation of customer propensity scoring capabilities across Quorum's property and casualty, life, and specialty insurance business lines. These use cases are central to Quorum's broader data and analytics strategy and are expected to generate significant operational and commercial benefits for Quorum's insurance operations.
Based on our preliminary review of the parties' business objectives and the nature of the data products involved, we anticipate that the following areas, among others, will require focused negotiation during the course of the transaction:
• Pricing Structure and Protections: Including fee structures, volume-based pricing tiers, annual escalation mechanisms, most-favored-nation provisions, and audit rights.
• intellectual Property Ownership and Derived Data: Including the allocation of intellectual property rights in data models, scores, insights, and other outputs derived by Quorum from the licensed data, as well as restrictions on the creation and use of derived data products.
• Data Security and Privacy Compliance: Including compliance with applicable federal and state data privacy and security regulations (FCRA, GLBA, CCPA/CPRA, 23 NYCRR Part 500, and others), data handling and storage requirements, breach notification obligations, and audit and certification rights.
• Service Levels: Including data delivery timelines, system availability commitments, data quality and accuracy standards, and remedies (including service credits) for failures to meet agreed-upon service levels.
• Dispute Resolution: Including the mechanism for resolving disputes arising under the definitive agreements, whether through negotiation, mediation, arbitration, or litigation, and the selection of governing law and forum.
We look forward to engaging with KP&A and Meridian's legal team on these and all other issues that may arise as the transaction progresses.
Closing
Calderwood & Harkness looks forward to a productive and professional working relationship with Kessler Pruitt & Ashe in connection with this matter. We recognize that a cooperative and transparent approach between outside counsel will be essential to achieving an efficient and successful outcome for both parties, and we are committed to engaging constructively throughout the negotiation process.
We are happy to accommodate KP&A's preferred communication and scheduling practices to the extent they differ from the protocols proposed above, and we welcome any suggestions you may have regarding the organization and conduct of the negotiation.
We respectfully request that you confirm receipt of this letter at your earliest convenience and provide us with the names, titles, practice-group affiliations, and contact information (direct telephone numbers and email addresses) of the KP&A team members who will be working on this matter. In particular, we would appreciate identification of the individual who will serve as the day-to-day contact at KP&A for routine correspondence and scheduling.
Please do not hesitate to contact Leonard Cross at (212) 546-8112 or leonard.cross@calderwoodharkness.com, or Wendy Schultz at (212) 546-8247 or wendy.schultz@calderwoodharkness.com, at any time to discuss this matter or any questions you may have.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Leonard Cross Partner Calderwood & Harkness LLP 425 Park Avenue New York, NY 10022 Direct: (212) 546-8112
Email: leonard.cross@calderwoodharkness.com
cc: Carolyn Whitford, General Counsel & Executive Vice President, Quorum Insurance Holdings Corp. Gregory Stahl, Vice President, Legal Affairs, Quorum Insurance Holdings Corp. Wendy Schultz, Associate, Calderwood & Harkness LLP Omar Siddiqui, Associate, Calderwood & Harkness LLP Patricia Heng, Senior Counsel, Calderwood & Harkness LLP David Cartwright, Partner, Calderwood & Harkness LLP
Enclosures: None. (The Mutual Non-Disclosure Agreement, Reference No. NDA-QIH-MCI-2022-001, was previously circulated separately.)