1025-00008 · Quorum Insurance Holdings · Correspondence

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CONFIDENTIAL

CALDERWOOD & HARKNESS LLP

Counselors at Law

425 Park Avenue New York, NY 10022

1 Landmark Square, Suite 1800 Stamford, CT 06901

Wendy Schultz Associate, intellectual Property Direct Dial: (212) 558-7142

Email: wschultz@calderwoodharkness.com

C&H Matter No.: 1025-00008

September 18, 2023

Via Email and Overnight Courier

Graham Whitley, Esq. Partner, Technology & Licensing Kessler Pruitt & Ashe LLP 1180 Peachtree Street NE, Suite 3000 Atlanta, GA 30309

Re: Quorum Insurance Holdings Corp. — Meridian Credit intelligence, Inc. Master Data License Agreement; Pricing Audit Right Proposal (Alternative to Most Favored Nation Clause)

Dear Graham:

I. Introduction and Purpose

We write on behalf of our client, Quorum Insurance Holdings Corp. ("Quorum"), in connection with the ongoing negotiation of the Master Data License Agreement (the "MDLA") between Quorum and your client, Meridian Credit intelligence, Inc. ("Meridian"). As you are aware, the parties have been actively negotiating the terms of the MDLA since the exchange of initial term sheets in September 2022. In the intervening twelve months, the negotiation teams have convened three in-person negotiation sessions — on January 18, 2023 in New York, on March 9, 2023 in Atlanta, and most recently on June 30, 2023 in New York — in addition to numerous telephonic and video conference discussions among the parties and their respective counsel.

Throughout the course of these negotiations, the most favored nation ("MFN") pricing clause proposed by Quorum has remained a principal open issue. Meridian has categorically rejected the inclusion of a full MFN clause in the MDLA on multiple occasions, most recently following Meridian's formal written rejection dated April 21, 2023 and the parties' subsequent discussions, including the May 15, 2023 CEO-to-CEO call between Quorum's Chief Executive Officer, Margaret Tierney, and Meridian's Chief Executive Officer, Vincent Halstead. Those discussions, while constructive in tone, did not result in an agreement on the substance of the pricing parity issue.

The purpose of this letter is to transmit, on behalf of Quorum, a revised fallback proposal — a limited "Pricing Audit Right" — as an alternative to the full most favored nation clause that Quorum has previously proposed. The Pricing Audit Right is intended to address Meridian's stated concerns regarding the MFN clause, including confidentiality, practicability, strategic positioning, and regulatory sensitivity, while preserving Quorum's legitimate commercial interest in ensuring that its pricing under the MDLA is not materially disadvantageous relative to comparable insurance-industry licensees. We believe this proposal represents a meaningful step toward bridging the gap between the parties' respective positions and moving the MDLA toward execution.

II. Background and Context for the Proposal

Before turning to the substance of the proposal, we believe it is useful to recapitulate the commercial context that underlies Quorum's insistence on some form of pricing protection in the MDLA.

Under the current MDLA draft, Quorum would commit to aggregate license fees of approximately $60,000,000 over the five-year initial term of the agreement, comprising $10,800,000 in Year 1 and $12,300,000 per year in Years 2 through 5. By any measure, this represents a significant financial commitment and establishes Quorum as one of Meridian's largest insurance-industry data licensees. It is therefore entirely reasonable — and, in our experience, commercially customary for transactions of this magnitude — for Quorum to seek assurances that it will not be placed at a competitive disadvantage through pricing terms that are materially less favorable than those offered by Meridian to other licensees operating in the same market segment.

Quorum's original MFN proposal was designed to accomplish this objective by ensuring parity with all U.S.-domiciled insurance carriers, managing general agents, and insurtech firms with annual premiums written of $500 million or more. This scope was deliberately calibrated to capture only those licensees that are genuinely comparable to Quorum in terms of scale, market position, and the nature and volume of data consumed. It was never intended to extend to licensees in fundamentally different industries, at fundamentally different scales of operation, or with fundamentally different data needs.

We acknowledge Meridian's stated objections to the full MFN clause, which your firm has communicated in both written and verbal form on multiple occasions. As we understand them, Meridian's principal concerns are as follows:

First, Meridian has represented that it is subject to confidentiality obligations under its agreements with other data licensees, and that compliance with a full MFN clause — particularly one requiring disclosure or comparison of specific pricing terms — would risk breaching those obligations.

Second, Meridian has argued that cross-licensee price comparisons are impracticable in the credit-data licensing market because each licensee receives a bespoke data package, tailored to its particular underwriting models, risk appetites, and regulatory requirements, making direct fee-for-fee comparisons misleading.

Third, Meridian has indicated — and this concern has been echoed by Meridian's board of directors and its financial advisors — that the inclusion of a binding MFN clause in a major license agreement could be viewed as a margin risk in connection with Meridian's ongoing strategic planning, including any potential capital markets or M&A activity.

Fourth, Meridian has raised antitrust sensitivities associated with MFN clauses in the credit-data and related data-analytics markets, particularly in light of increased regulatory scrutiny of data-industry pricing practices.

Quorum does not dismiss these concerns. We recognize that each of them carries a degree of commercial and legal weight, even where we might assess the magnitude of the risk differently than Meridian and its advisors. We would observe, however, that Quorum's independent pricing benchmark study — commissioned from Pinnacle Ridge Advisory LLC and delivered by Franklin Osei, Managing Director, on February 14, 2023 — confirmed the commercial importance of pricing protections for licensees in this market segment. That study, the findings of which were shared with your team, demonstrated meaningful dispersion in effective per-record pricing across comparable insurance-industry licensees of major credit-data providers, reinforcing the business case for the protections Quorum has sought.

Having carefully considered Meridian's stated objections and the findings of the Pinnacle Ridge study, Quorum is prepared, in a spirit of compromise, to withdraw its request for a full most favored nation automatic price-adjustment mechanism. In its place, Quorum proposes the more limited Pricing Audit Right described in Section III below. We believe this alternative addresses each of Meridian's enumerated concerns while providing Quorum with a meaningful, if more circumscribed, mechanism for verifying pricing competitiveness.

III. Summary of the Pricing Audit Right Proposal

The Pricing Audit Right is designed as a narrowly tailored alternative to a full MFN clause, intended to balance Quorum's need for pricing transparency against Meridian's legitimate confidentiality and commercial concerns. The mechanism would operate through a confidential, independent verification process and would not require Meridian to disclose the identity of any other licensee, the specific terms of any other license agreement, or any commercial information beyond what is strictly necessary for the verification to function. A clean draft of the proposed Pricing Audit Right provision, formatted for insertion into the MDLA as a standalone rider or a new section of the agreement, is enclosed with this letter for your review. The principal terms of the proposal are summarized below.

A. Annual Audit Right

Under the proposed provision, Quorum would have the right to exercise the Pricing Audit Right once per contract year during the five-year initial term of the MDLA. The exercise of this right would be at Quorum's election and would not be automatic — Quorum would be required to deliver a written exercise notice to Meridian specifying the contract year to be audited.

The audit would be conducted by an independent third-party auditor mutually approved by both Quorum and Meridian. To ensure the independence and credibility of the audit process, the proposed provision contemplates that the auditor would be an accounting firm or consulting firm with recognized expertise in data-industry pricing and licensing practices. If the parties are unable to agree upon the selection of an auditor within thirty (30) days following Quorum's delivery of an exercise notice, either party would have the right to request that a nationally recognized independent accounting firm — other than each party's respective external auditors, which we understand to be Felton Thorpe & Co. LLP (Quorum's external auditor) and Galloway Nash LLP (Meridian's external auditor) — be appointed to serve as the auditor. The enclosed draft sets forth a detailed appointment procedure, including provisions for resolving any disputes regarding auditor qualifications.

The auditor would be engaged at Quorum's sole expense, except in the circumstance where the audit reveals a material pricing disparity (as defined in the enclosed draft). In that event, the costs of the audit — including the auditor's professional fees and any reasonable out-of-pocket expenses — would shift to Meridian. This cost-allocation structure is designed to discourage frivolous or harassing use of the audit right while appropriately allocating costs in the event that a genuine pricing disparity is identified.

B. Scope of the Audit — The 110% Ceiling

The auditor would be authorized to verify whether Quorum's effective per-record rate under the MDLA exceeds 110% of the lowest effective per-record rate charged by Meridian to any comparable insurance-industry licensee during the applicable contract year. This threshold — which we refer to as the "110% Ceiling" — is a deliberate and significant concession by Quorum. It does not require dollar-for-dollar pricing parity. Rather, it provides Meridian with substantial pricing flexibility, permitting Meridian to charge Quorum a rate that is up to 10% higher than the most favorable rate offered to any comparable licensee, without triggering any remediation obligation.

For purposes of the Pricing Audit Right, the term "comparable insurance-industry licensee" would be defined as any U.S.-domiciled insurance carrier, managing general agent, or insurtech firm with annual premiums written of $500 million or more that licenses at least two of the three core Meridian data products — specifically, the MCI Consumer Credit File, MCI CommercialView, and MCI AltSignal. This definition is consistent with the scope of Quorum's original MFN proposal, with the additional refinement that the comparable licensee must license a minimum of two core data products in order to ensure an adequate basis for comparison.

The effective per-record rate — the central metric for the audit — would be calculated by dividing the total annual license fees paid by a licensee by the total number of records delivered to that licensee during the applicable contract year. This methodology provides a standardized, apples-to-apples basis for comparison that accounts for differences in data package composition and volume commitments across licensees. We recognize that no single metric can perfectly capture the full range of pricing variables in a complex data-licensing relationship, but we believe the effective per-record rate is the most practicable and reliable measure available, and one that directly addresses Meridian's concern regarding the impracticability of comparing bespoke data packages.

We wish to emphasize that the 110% threshold represents a meaningful concession on Quorum's part. Under a traditional MFN clause, Quorum would be entitled to automatic price adjustment to the level of the most favorable rate. The 110% Ceiling, by contrast, provides Meridian with a ten-percentage-point buffer within which it may differentiate pricing for legitimate commercial reasons — including, for example, volume incentives, strategic partnerships, or differences in the level of customer support provided — without triggering any obligation to adjust Quorum's pricing.

C. Confidentiality Protections

We have designed the Pricing Audit Right with particular attention to Meridian's confidentiality concerns. Under the proposed provision, the independent auditor would be bound by strict confidentiality obligations, set forth in a standalone confidentiality agreement to be executed by the auditor in favor of both Quorum and Meridian prior to the commencement of any audit. The auditor would be expressly prohibited from disclosing to Quorum — or to any other third party — the following categories of information:

(i) the identity of any other Meridian licensee;

(ii) the specific pricing terms, fee schedules, volume commitments, or other commercial terms of any other Meridian license agreement;

(iii) the aggregate number of comparable insurance-industry licensees, or any information from which the identity or number of such licensees could reasonably be inferred; and

(iv) any other information reviewed or obtained by the auditor in the course of the audit, other than the auditor's final determination as described below.

The auditor's report would be limited to a binary determination — specifically, a statement that Quorum's effective per-record rate is either (a) compliant with the 110% Ceiling or (b) non-compliant with the 110% Ceiling. In the event of a non-compliant finding, the auditor would additionally report the percentage by which the 110% Ceiling is exceeded, so as to enable the remediation mechanism described below to operate. The auditor would not disclose, and would not be permitted to disclose, the underlying data, calculations, or licensee-specific information supporting its determination.

The auditor's report would be delivered simultaneously to both Quorum and Meridian, ensuring that neither party receives an informational advantage. We believe these confidentiality protections fully address the concerns Meridian has raised regarding its obligations to other licensees, while still providing Quorum with a credible and independent mechanism for verifying pricing competitiveness.

D. Remediation Mechanism

In the event that the auditor determines that Quorum's effective per-record rate exceeds the 110% Ceiling, the proposed provision would require Meridian to take two remedial actions:

First, Meridian would be required to reduce Quorum's effective per-record rate, on a prospective basis, to a level that is at or below the 110% Ceiling. This rate reduction would take effect as of the next quarterly payment date following the delivery of the auditor's report, giving Meridian a reasonable period in which to implement the necessary billing adjustments.

Second, Meridian would be required to issue a credit to Quorum for any overpayment attributable to the pricing disparity during the contract year in which the audit was conducted. The credit would be calculated from the beginning of such contract year through the date on which the prospective rate reduction takes effect, based on the difference between the rate actually charged and the rate that would have been charged had the 110% Ceiling been observed. This credit would be applied against Quorum's next quarterly payment(s) under the MDLA until the full amount of the credit has been exhausted.

We note that this remediation mechanism is deliberately limited in scope. It provides for prospective rate adjustment plus a one-year lookback credit — not a retroactive repricing of the entire MDLA term. This represents a further concession to Meridian's concerns, as a full MFN clause would typically entitle the benefited party to retroactive adjustment dating back to the inception of the agreement. Quorum's willingness to accept a more constrained remedy underscores the extent of the compromise embedded in this proposal.

E. Exclusions from the Audit

In order to ensure that the Pricing Audit Right operates fairly and does not produce distorted or misleading results, the proposed provision includes two categories of exclusions from the comparison set:

First, the Pricing Audit Right would not apply to pricing under Meridian agreements that involve fundamentally different data products, delivery methods, or volume commitments that fall outside the definition of "comparable insurance-industry licensee" set forth above. For example, a Meridian agreement under which the licensee receives only a single niche data product through a non-standard delivery platform, or under which the volume commitment is orders of magnitude larger or smaller than Quorum's, would not be included in the auditor's comparison set.

Second, promotional or short-term trial pricing arrangements with a duration of six (6) months or less would be excluded from the comparison set. This exclusion is designed to preserve Meridian's ability to offer limited-duration promotional pricing to prospective licensees without concern that such pricing could trigger a remediation obligation under the MDLA. We believe this exclusion is commercially reasonable and reflects industry practice.

IV. Contrast with Meridian's "Most Favored Terms" Counter-Proposal

We wish to address briefly the counter-proposal that Meridian put forward during the March 9, 2023 session in Atlanta and subsequently formalized in your letter of April 3, 2023. As you will recall, Meridian proposed a "most favored terms" clause that would be limited exclusively to data-delivery service level agreements ("SLAs") and uptime commitments, explicitly excluding all pricing terms from its scope.

Quorum appreciates Meridian's willingness to offer SLA parity to Quorum, and we recognize that SLA terms are an important component of the overall MDLA relationship. However, an SLA-only approach does not address Quorum's core concern — pricing competitiveness — which is, and has always been, the substance of the most favored nation issue. Quorum is not seeking SLA parity as a substitute for pricing protections; it is seeking pricing protections themselves, albeit in a form that is sensitive to Meridian's legitimate concerns.

The Pricing Audit Right is materially and fundamentally different from the full most favored nation clause that Quorum originally proposed. We wish to highlight several important distinctions:

• The Pricing Audit Right does not create an automatic price-adjustment mechanism. It requires an affirmative exercise by Quorum, the engagement of an independent auditor, and a formal determination process before any pricing consequences arise.

• The Pricing Audit Right does not require Meridian to disclose its pricing terms to Quorum, either directly or indirectly. Quorum would receive only a binary compliant/non-compliant determination and, in the event of non-compliance, the percentage of the overage.

• The Pricing Audit Right operates through a confidential, independent verification process that fully preserves Meridian's obligations to its other licensees.

• The Pricing Audit Right provides Meridian with a 10% pricing cushion — the 110% Ceiling — within which Meridian retains full discretion to differentiate its pricing without consequence.

Quorum believes that the Pricing Audit Right represents a commercially reasonable middle ground between a full most favored nation clause and the SLA-only approach that Meridian has proposed. We respectfully urge Meridian and your team to consider the Pricing Audit Right on its merits, as a genuine effort to address Meridian's concerns while preserving the essential pricing protections that Quorum requires.

V. Relationship to Other Open Issues

We note that the MFN/pricing parity issue is one of two principal open issues in the MDLA negotiation. The other remaining open issue concerns the derived-data rights provisions under Article VII of the draft MDLA, and we understand that the parties' respective positions on that issue remain some distance apart.

Quorum's willingness to move from a full most favored nation clause — which would have entitled Quorum to automatic, retroactive price adjustment to the level of the most favorable comparable rate — to the more limited Pricing Audit Right described in this letter reflects a meaningful and substantial concession on a point of considerable commercial importance to Quorum. We would be less than candid if we did not note that Quorum expects a corresponding degree of flexibility from Meridian on the remaining open issues in the negotiation, including the derived-data rights provisions. We do not intend to negotiate the terms of a potential derived-data compromise in this letter, but we wanted to make clear that Quorum views the Pricing Audit Right as part of a broader effort to find commercially reasonable solutions across the remaining open points.

Quorum reserves all of its positions on all other open MDLA terms pending Meridian's response to this proposal. Nothing in this letter or in the enclosed draft provision is intended to modify, waive, or otherwise affect any position that Quorum has previously taken on any issue other than the MFN/pricing parity issue expressly addressed herein.

We observe, on a constructive note, that the parties have made substantial progress on many aspects of the MDLA over the course of the past year. The SLA terms, data-delivery specifications, data-security provisions, insurance requirements, and a number of other significant provisions have been negotiated to a point of substantial agreement, reflecting the good faith efforts of both sides. We are hopeful that resolution of the pricing parity and derived-data issues will enable the parties to move toward definitive documentation and closing in the near term, and we remain committed to working collaboratively with your team to that end.

VI. Enclosed Materials

Enclosed with this letter, please find a clean draft of the proposed Pricing Audit Right provision (the "Draft Provision"), formatted for insertion into the MDLA as a standalone rider or as a new section of the agreement. The Draft Provision sets forth the full text of the proposed terms summarized in Section III of this letter, including detailed definitions, procedural mechanics, confidentiality provisions, remediation procedures, cost-allocation provisions, and dispute-resolution mechanisms.

We invite you and your colleagues at Kessler Pruitt & Ashe — including Nina Chastain and Derek Fontaine, who have been actively involved in the drafting process — to review the Draft Provision and provide your comments, markup, or substantive response at your earliest convenience. We have endeavored to draft the provision in a manner that is as self-contained and internally consistent as possible, so as to minimize the need for conforming changes to the balance of the MDLA, but we recognize that some degree of integration drafting will be required and are happy to coordinate with your team on that effort.

Quorum's negotiation team — including Quorum's General Counsel and Executive Vice President, Carolyn Whitford; Chief Data Officer, Rajesh Anand; and Vice President, Legal Affairs, Gregory Stahl — is available for a call or in-person meeting to discuss the proposal at Meridian's and its counsel's convenience. We would welcome the opportunity to walk through the Draft Provision with your team and to address any questions or concerns in a collaborative setting.

VII. Request for Response and Timeline

We respectfully request that Meridian and Kessler Pruitt & Ashe provide a substantive response to the Pricing Audit Right proposal within thirty (30) days of the date of this letter — that is, by no later than October 18, 2023. We recognize that a proposal of this nature requires careful consideration by both Meridian's legal team and its business principals, and we believe that a thirty-day period provides adequate time for that review while also reflecting the shared interest of both parties in moving the negotiation forward.

As noted above, the parties have been in negotiations for over a year since the exchange of initial term sheets in September 2022. While Quorum appreciates the complexity of the issues involved and the care with which Meridian and its counsel have approached the negotiation, we believe it is in the interest of both parties to resolve the remaining open issues as expeditiously as practicable and bring the MDLA to closure. The commercial benefits that both Quorum and Meridian anticipate from this data-licensing relationship are substantial, and those benefits can only be realized once the agreement is executed and the data-delivery relationship is underway.

Quorum remains fully committed to the commercial relationship contemplated by the MDLA and values the data products and services that Meridian would provide under the agreement. This proposal is offered in that spirit — as a constructive effort to resolve the most significant remaining obstacle to the completion of the MDLA negotiation.

VIII. Reservation of Rights

This letter and the enclosed Draft Provision do not constitute a waiver of any of Quorum's rights, remedies, or positions under the MDLA negotiation or otherwise. All prior proposals, positions, term sheet provisions, and draft language previously advanced by Quorum that are not expressly modified by this letter and the enclosed Draft Provision are hereby preserved in full. Quorum's decision to propose the Pricing Audit Right as an alternative to a full most favored nation clause is without prejudice to Quorum's right to reassert its original MFN proposal or any other position in the event that the parties are unable to reach agreement on the Pricing Audit Right or on the MDLA as a whole.

We further note that the Mutual Non-Disclosure Agreement between Quorum Insurance Holdings Corp. and Meridian Credit intelligence, Inc. (Reference No. NDA-QIH-MCI-2022-001, dated August 15, 2022) remains in full force and effect with respect to all confidential information exchanged between the parties in connection with the MDLA negotiation, including the terms of this letter and the enclosed Draft Provision.

We appreciate the time and attention that you and your colleagues at Kessler Pruitt & Ashe, as well as the Meridian team, have devoted to this negotiation. We recognize that the issues addressed in this letter are commercially significant and that the Pricing Audit Right proposal will require thoughtful evaluation. We believe, however, that the proposal reflects a genuine and good faith effort to address Meridian's concerns while preserving the pricing protections that are important to Quorum, and we are hopeful that it will serve as a basis for reaching agreement on this critical issue.

We look forward to receiving Meridian's response and remain available to discuss the proposal at the earliest convenience of you and your team.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Wendy Schultz Associate, intellectual Property

cc:

Leonard Cross, Esq., Partner, Calderwood & Harkness LLP (Responsible Partner)

Patricia Heng, Esq., Senior Counsel, Technology Transactions, Calderwood & Harkness LLP

Carolyn Whitford, General Counsel & EVP, Quorum Insurance Holdings Corp.

Gregory Stahl, VP, Legal Affairs, Quorum Insurance Holdings Corp.

Encl.: Draft Pricing Audit Right Provision (Clean)

CONFIDENTIAL
CALDERWOOD & HARKNESS LLP
Counselors at Law
425 Park Avenue New York, NY 10022
1 Landmark Square, Suite 1800 Stamford, CT 06901
Wendy Schultz Associate, intellectual Property Direct Dial: (212) 558-7142
Email: wschultz@calderwoodharkness.com
C&H Matter No.: 1025-00008
September 18, 2023
Via Email and Overnight Courier
Graham Whitley, Esq. Partner, Technology & Licensing Kessler Pruitt & Ashe LLP 1180 Peachtree Street NE, Suite 3000 Atlanta, GA 30309
Re: Quorum Insurance Holdings Corp. — Meridian Credit intelligence, Inc. Master Data License Agreement; Pricing Audit Right Proposal (Alternative to Most Favored Nation Clause)
Dear Graham:
I. Introduction and Purpose
We write on behalf of our client, Quorum Insurance Holdings Corp. ("Quorum"), in connection with the ongoing negotiation of the Master Data License Agreement (the "MDLA") between Quorum and your client, Meridian Credit intelligence, Inc. ("Meridian"). As you are aware, the parties have been actively negotiating the terms of the MDLA since the exchange of initial term sheets in September 2022. In the intervening twelve months, the negotiation teams have convened three in-person negotiation sessions — on January 18, 2023 in New York, on March 9, 2023 in Atlanta, and most recently on June 30, 2023 in New York — in addition to numerous telephonic and video conference discussions among the parties and their respective counsel.
Throughout the course of these negotiations, the most favored nation ("MFN") pricing clause proposed by Quorum has remained a principal open issue. Meridian has categorically rejected the inclusion of a full MFN clause in the MDLA on multiple occasions, most recently following Meridian's formal written rejection dated April 21, 2023 and the parties' subsequent discussions, including the May 15, 2023 CEO-to-CEO call between Quorum's Chief Executive Officer, Margaret Tierney, and Meridian's Chief Executive Officer, Vincent Halstead. Those discussions, while constructive in tone, did not result in an agreement on the substance of the pricing parity issue.
The purpose of this letter is to transmit, on behalf of Quorum, a revised fallback proposal — a limited "Pricing Audit Right" — as an alternative to the full most favored nation clause that Quorum has previously proposed. The Pricing Audit Right is intended to address Meridian's stated concerns regarding the MFN clause, including confidentiality, practicability, strategic positioning, and regulatory sensitivity, while preserving Quorum's legitimate commercial interest in ensuring that its pricing under the MDLA is not materially disadvantageous relative to comparable insurance-industry licensees. We believe this proposal represents a meaningful step toward bridging the gap between the parties' respective positions and moving the MDLA toward execution.
II. Background and Context for the Proposal
Before turning to the substance of the proposal, we believe it is useful to recapitulate the commercial context that underlies Quorum's insistence on some form of pricing protection in the MDLA.
Under the current MDLA draft, Quorum would commit to aggregate license fees of approximately $60,000,000 over the five-year initial term of the agreement, comprising $10,800,000 in Year 1 and $12,300,000 per year in Years 2 through 5. By any measure, this represents a significant financial commitment and establishes Quorum as one of Meridian's largest insurance-industry data licensees. It is therefore entirely reasonable — and, in our experience, commercially customary for transactions of this magnitude — for Quorum to seek assurances that it will not be placed at a competitive disadvantage through pricing terms that are materially less favorable than those offered by Meridian to other licensees operating in the same market segment.
Quorum's original MFN proposal was designed to accomplish this objective by ensuring parity with all U.S.-domiciled insurance carriers, managing general agents, and insurtech firms with annual premiums written of $500 million or more. This scope was deliberately calibrated to capture only those licensees that are genuinely comparable to Quorum in terms of scale, market position, and the nature and volume of data consumed. It was never intended to extend to licensees in fundamentally different industries, at fundamentally different scales of operation, or with fundamentally different data needs.
We acknowledge Meridian's stated objections to the full MFN clause, which your firm has communicated in both written and verbal form on multiple occasions. As we understand them, Meridian's principal concerns are as follows:
First, Meridian has represented that it is subject to confidentiality obligations under its agreements with other data licensees, and that compliance with a full MFN clause — particularly one requiring disclosure or comparison of specific pricing terms — would risk breaching those obligations.
Second, Meridian has argued that cross-licensee price comparisons are impracticable in the credit-data licensing market because each licensee receives a bespoke data package, tailored to its particular underwriting models, risk appetites, and regulatory requirements, making direct fee-for-fee comparisons misleading.
Third, Meridian has indicated — and this concern has been echoed by Meridian's board of directors and its financial advisors — that the inclusion of a binding MFN clause in a major license agreement could be viewed as a margin risk in connection with Meridian's ongoing strategic planning, including any potential capital markets or M&A activity.
Fourth, Meridian has raised antitrust sensitivities associated with MFN clauses in the credit-data and related data-analytics markets, particularly in light of increased regulatory scrutiny of data-industry pricing practices.
Quorum does not dismiss these concerns. We recognize that each of them carries a degree of commercial and legal weight, even where we might assess the magnitude of the risk differently than Meridian and its advisors. We would observe, however, that Quorum's independent pricing benchmark study — commissioned from Pinnacle Ridge Advisory LLC and delivered by Franklin Osei, Managing Director, on February 14, 2023 — confirmed the commercial importance of pricing protections for licensees in this market segment. That study, the findings of which were shared with your team, demonstrated meaningful dispersion in effective per-record pricing across comparable insurance-industry licensees of major credit-data providers, reinforcing the business case for the protections Quorum has sought.
Having carefully considered Meridian's stated objections and the findings of the Pinnacle Ridge study, Quorum is prepared, in a spirit of compromise, to withdraw its request for a full most favored nation automatic price-adjustment mechanism. In its place, Quorum proposes the more limited Pricing Audit Right described in Section III below. We believe this alternative addresses each of Meridian's enumerated concerns while providing Quorum with a meaningful, if more circumscribed, mechanism for verifying pricing competitiveness.
III. Summary of the Pricing Audit Right Proposal
The Pricing Audit Right is designed as a narrowly tailored alternative to a full MFN clause, intended to balance Quorum's need for pricing transparency against Meridian's legitimate confidentiality and commercial concerns. The mechanism would operate through a confidential, independent verification process and would not require Meridian to disclose the identity of any other licensee, the specific terms of any other license agreement, or any commercial information beyond what is strictly necessary for the verification to function. A clean draft of the proposed Pricing Audit Right provision, formatted for insertion into the MDLA as a standalone rider or a new section of the agreement, is enclosed with this letter for your review. The principal terms of the proposal are summarized below.
A. Annual Audit Right
Under the proposed provision, Quorum would have the right to exercise the Pricing Audit Right once per contract year during the five-year initial term of the MDLA. The exercise of this right would be at Quorum's election and would not be automatic — Quorum would be required to deliver a written exercise notice to Meridian specifying the contract year to be audited.
The audit would be conducted by an independent third-party auditor mutually approved by both Quorum and Meridian. To ensure the independence and credibility of the audit process, the proposed provision contemplates that the auditor would be an accounting firm or consulting firm with recognized expertise in data-industry pricing and licensing practices. If the parties are unable to agree upon the selection of an auditor within thirty (30) days following Quorum's delivery of an exercise notice, either party would have the right to request that a nationally recognized independent accounting firm — other than each party's respective external auditors, which we understand to be Felton Thorpe & Co. LLP (Quorum's external auditor) and Galloway Nash LLP (Meridian's external auditor) — be appointed to serve as the auditor. The enclosed draft sets forth a detailed appointment procedure, including provisions for resolving any disputes regarding auditor qualifications.
The auditor would be engaged at Quorum's sole expense, except in the circumstance where the audit reveals a material pricing disparity (as defined in the enclosed draft). In that event, the costs of the audit — including the auditor's professional fees and any reasonable out-of-pocket expenses — would shift to Meridian. This cost-allocation structure is designed to discourage frivolous or harassing use of the audit right while appropriately allocating costs in the event that a genuine pricing disparity is identified.
B. Scope of the Audit — The 110% Ceiling
The auditor would be authorized to verify whether Quorum's effective per-record rate under the MDLA exceeds 110% of the lowest effective per-record rate charged by Meridian to any comparable insurance-industry licensee during the applicable contract year. This threshold — which we refer to as the "110% Ceiling" — is a deliberate and significant concession by Quorum. It does not require dollar-for-dollar pricing parity. Rather, it provides Meridian with substantial pricing flexibility, permitting Meridian to charge Quorum a rate that is up to 10% higher than the most favorable rate offered to any comparable licensee, without triggering any remediation obligation.
For purposes of the Pricing Audit Right, the term "comparable insurance-industry licensee" would be defined as any U.S.-domiciled insurance carrier, managing general agent, or insurtech firm with annual premiums written of $500 million or more that licenses at least two of the three core Meridian data products — specifically, the MCI Consumer Credit File, MCI CommercialView, and MCI AltSignal. This definition is consistent with the scope of Quorum's original MFN proposal, with the additional refinement that the comparable licensee must license a minimum of two core data products in order to ensure an adequate basis for comparison.
The effective per-record rate — the central metric for the audit — would be calculated by dividing the total annual license fees paid by a licensee by the total number of records delivered to that licensee during the applicable contract year. This methodology provides a standardized, apples-to-apples basis for comparison that accounts for differences in data package composition and volume commitments across licensees. We recognize that no single metric can perfectly capture the full range of pricing variables in a complex data-licensing relationship, but we believe the effective per-record rate is the most practicable and reliable measure available, and one that directly addresses Meridian's concern regarding the impracticability of comparing bespoke data packages.
We wish to emphasize that the 110% threshold represents a meaningful concession on Quorum's part. Under a traditional MFN clause, Quorum would be entitled to automatic price adjustment to the level of the most favorable rate. The 110% Ceiling, by contrast, provides Meridian with a ten-percentage-point buffer within which it may differentiate pricing for legitimate commercial reasons — including, for example, volume incentives, strategic partnerships, or differences in the level of customer support provided — without triggering any obligation to adjust Quorum's pricing.
C. Confidentiality Protections
We have designed the Pricing Audit Right with particular attention to Meridian's confidentiality concerns. Under the proposed provision, the independent auditor would be bound by strict confidentiality obligations, set forth in a standalone confidentiality agreement to be executed by the auditor in favor of both Quorum and Meridian prior to the commencement of any audit. The auditor would be expressly prohibited from disclosing to Quorum — or to any other third party — the following categories of information:
(i) the identity of any other Meridian licensee;
(ii) the specific pricing terms, fee schedules, volume commitments, or other commercial terms of any other Meridian license agreement;
(iii) the aggregate number of comparable insurance-industry licensees, or any information from which the identity or number of such licensees could reasonably be inferred; and
(iv) any other information reviewed or obtained by the auditor in the course of the audit, other than the auditor's final determination as described below.
The auditor's report would be limited to a binary determination — specifically, a statement that Quorum's effective per-record rate is either (a) compliant with the 110% Ceiling or (b) non-compliant with the 110% Ceiling. In the event of a non-compliant finding, the auditor would additionally report the percentage by which the 110% Ceiling is exceeded, so as to enable the remediation mechanism described below to operate. The auditor would not disclose, and would not be permitted to disclose, the underlying data, calculations, or licensee-specific information supporting its determination.
The auditor's report would be delivered simultaneously to both Quorum and Meridian, ensuring that neither party receives an informational advantage. We believe these confidentiality protections fully address the concerns Meridian has raised regarding its obligations to other licensees, while still providing Quorum with a credible and independent mechanism for verifying pricing competitiveness.
D. Remediation Mechanism
In the event that the auditor determines that Quorum's effective per-record rate exceeds the 110% Ceiling, the proposed provision would require Meridian to take two remedial actions:
First, Meridian would be required to reduce Quorum's effective per-record rate, on a prospective basis, to a level that is at or below the 110% Ceiling. This rate reduction would take effect as of the next quarterly payment date following the delivery of the auditor's report, giving Meridian a reasonable period in which to implement the necessary billing adjustments.
Second, Meridian would be required to issue a credit to Quorum for any overpayment attributable to the pricing disparity during the contract year in which the audit was conducted. The credit would be calculated from the beginning of such contract year through the date on which the prospective rate reduction takes effect, based on the difference between the rate actually charged and the rate that would have been charged had the 110% Ceiling been observed. This credit would be applied against Quorum's next quarterly payment(s) under the MDLA until the full amount of the credit has been exhausted.
We note that this remediation mechanism is deliberately limited in scope. It provides for prospective rate adjustment plus a one-year lookback credit — not a retroactive repricing of the entire MDLA term. This represents a further concession to Meridian's concerns, as a full MFN clause would typically entitle the benefited party to retroactive adjustment dating back to the inception of the agreement. Quorum's willingness to accept a more constrained remedy underscores the extent of the compromise embedded in this proposal.
E. Exclusions from the Audit
In order to ensure that the Pricing Audit Right operates fairly and does not produce distorted or misleading results, the proposed provision includes two categories of exclusions from the comparison set:
First, the Pricing Audit Right would not apply to pricing under Meridian agreements that involve fundamentally different data products, delivery methods, or volume commitments that fall outside the definition of "comparable insurance-industry licensee" set forth above. For example, a Meridian agreement under which the licensee receives only a single niche data product through a non-standard delivery platform, or under which the volume commitment is orders of magnitude larger or smaller than Quorum's, would not be included in the auditor's comparison set.
Second, promotional or short-term trial pricing arrangements with a duration of six (6) months or less would be excluded from the comparison set. This exclusion is designed to preserve Meridian's ability to offer limited-duration promotional pricing to prospective licensees without concern that such pricing could trigger a remediation obligation under the MDLA. We believe this exclusion is commercially reasonable and reflects industry practice.
IV. Contrast with Meridian's "Most Favored Terms" Counter-Proposal
We wish to address briefly the counter-proposal that Meridian put forward during the March 9, 2023 session in Atlanta and subsequently formalized in your letter of April 3, 2023. As you will recall, Meridian proposed a "most favored terms" clause that would be limited exclusively to data-delivery service level agreements ("SLAs") and uptime commitments, explicitly excluding all pricing terms from its scope.
Quorum appreciates Meridian's willingness to offer SLA parity to Quorum, and we recognize that SLA terms are an important component of the overall MDLA relationship. However, an SLA-only approach does not address Quorum's core concern — pricing competitiveness — which is, and has always been, the substance of the most favored nation issue. Quorum is not seeking SLA parity as a substitute for pricing protections; it is seeking pricing protections themselves, albeit in a form that is sensitive to Meridian's legitimate concerns.
The Pricing Audit Right is materially and fundamentally different from the full most favored nation clause that Quorum originally proposed. We wish to highlight several important distinctions:
• The Pricing Audit Right does not create an automatic price-adjustment mechanism. It requires an affirmative exercise by Quorum, the engagement of an independent auditor, and a formal determination process before any pricing consequences arise.
• The Pricing Audit Right does not require Meridian to disclose its pricing terms to Quorum, either directly or indirectly. Quorum would receive only a binary compliant/non-compliant determination and, in the event of non-compliance, the percentage of the overage.
• The Pricing Audit Right operates through a confidential, independent verification process that fully preserves Meridian's obligations to its other licensees.
• The Pricing Audit Right provides Meridian with a 10% pricing cushion — the 110% Ceiling — within which Meridian retains full discretion to differentiate its pricing without consequence.
Quorum believes that the Pricing Audit Right represents a commercially reasonable middle ground between a full most favored nation clause and the SLA-only approach that Meridian has proposed. We respectfully urge Meridian and your team to consider the Pricing Audit Right on its merits, as a genuine effort to address Meridian's concerns while preserving the essential pricing protections that Quorum requires.
V. Relationship to Other Open Issues
We note that the MFN/pricing parity issue is one of two principal open issues in the MDLA negotiation. The other remaining open issue concerns the derived-data rights provisions under Article VII of the draft MDLA, and we understand that the parties' respective positions on that issue remain some distance apart.
Quorum's willingness to move from a full most favored nation clause — which would have entitled Quorum to automatic, retroactive price adjustment to the level of the most favorable comparable rate — to the more limited Pricing Audit Right described in this letter reflects a meaningful and substantial concession on a point of considerable commercial importance to Quorum. We would be less than candid if we did not note that Quorum expects a corresponding degree of flexibility from Meridian on the remaining open issues in the negotiation, including the derived-data rights provisions. We do not intend to negotiate the terms of a potential derived-data compromise in this letter, but we wanted to make clear that Quorum views the Pricing Audit Right as part of a broader effort to find commercially reasonable solutions across the remaining open points.
Quorum reserves all of its positions on all other open MDLA terms pending Meridian's response to this proposal. Nothing in this letter or in the enclosed draft provision is intended to modify, waive, or otherwise affect any position that Quorum has previously taken on any issue other than the MFN/pricing parity issue expressly addressed herein.
We observe, on a constructive note, that the parties have made substantial progress on many aspects of the MDLA over the course of the past year. The SLA terms, data-delivery specifications, data-security provisions, insurance requirements, and a number of other significant provisions have been negotiated to a point of substantial agreement, reflecting the good faith efforts of both sides. We are hopeful that resolution of the pricing parity and derived-data issues will enable the parties to move toward definitive documentation and closing in the near term, and we remain committed to working collaboratively with your team to that end.
VI. Enclosed Materials
Enclosed with this letter, please find a clean draft of the proposed Pricing Audit Right provision (the "Draft Provision"), formatted for insertion into the MDLA as a standalone rider or as a new section of the agreement. The Draft Provision sets forth the full text of the proposed terms summarized in Section III of this letter, including detailed definitions, procedural mechanics, confidentiality provisions, remediation procedures, cost-allocation provisions, and dispute-resolution mechanisms.
We invite you and your colleagues at Kessler Pruitt & Ashe — including Nina Chastain and Derek Fontaine, who have been actively involved in the drafting process — to review the Draft Provision and provide your comments, markup, or substantive response at your earliest convenience. We have endeavored to draft the provision in a manner that is as self-contained and internally consistent as possible, so as to minimize the need for conforming changes to the balance of the MDLA, but we recognize that some degree of integration drafting will be required and are happy to coordinate with your team on that effort.
Quorum's negotiation team — including Quorum's General Counsel and Executive Vice President, Carolyn Whitford; Chief Data Officer, Rajesh Anand; and Vice President, Legal Affairs, Gregory Stahl — is available for a call or in-person meeting to discuss the proposal at Meridian's and its counsel's convenience. We would welcome the opportunity to walk through the Draft Provision with your team and to address any questions or concerns in a collaborative setting.
VII. Request for Response and Timeline
We respectfully request that Meridian and Kessler Pruitt & Ashe provide a substantive response to the Pricing Audit Right proposal within thirty (30) days of the date of this letter — that is, by no later than October 18, 2023. We recognize that a proposal of this nature requires careful consideration by both Meridian's legal team and its business principals, and we believe that a thirty-day period provides adequate time for that review while also reflecting the shared interest of both parties in moving the negotiation forward.
As noted above, the parties have been in negotiations for over a year since the exchange of initial term sheets in September 2022. While Quorum appreciates the complexity of the issues involved and the care with which Meridian and its counsel have approached the negotiation, we believe it is in the interest of both parties to resolve the remaining open issues as expeditiously as practicable and bring the MDLA to closure. The commercial benefits that both Quorum and Meridian anticipate from this data-licensing relationship are substantial, and those benefits can only be realized once the agreement is executed and the data-delivery relationship is underway.
Quorum remains fully committed to the commercial relationship contemplated by the MDLA and values the data products and services that Meridian would provide under the agreement. This proposal is offered in that spirit — as a constructive effort to resolve the most significant remaining obstacle to the completion of the MDLA negotiation.
VIII. Reservation of Rights
This letter and the enclosed Draft Provision do not constitute a waiver of any of Quorum's rights, remedies, or positions under the MDLA negotiation or otherwise. All prior proposals, positions, term sheet provisions, and draft language previously advanced by Quorum that are not expressly modified by this letter and the enclosed Draft Provision are hereby preserved in full. Quorum's decision to propose the Pricing Audit Right as an alternative to a full most favored nation clause is without prejudice to Quorum's right to reassert its original MFN proposal or any other position in the event that the parties are unable to reach agreement on the Pricing Audit Right or on the MDLA as a whole.
We further note that the Mutual Non-Disclosure Agreement between Quorum Insurance Holdings Corp. and Meridian Credit intelligence, Inc. (Reference No. NDA-QIH-MCI-2022-001, dated August 15, 2022) remains in full force and effect with respect to all confidential information exchanged between the parties in connection with the MDLA negotiation, including the terms of this letter and the enclosed Draft Provision.
We appreciate the time and attention that you and your colleagues at Kessler Pruitt & Ashe, as well as the Meridian team, have devoted to this negotiation. We recognize that the issues addressed in this letter are commercially significant and that the Pricing Audit Right proposal will require thoughtful evaluation. We believe, however, that the proposal reflects a genuine and good faith effort to address Meridian's concerns while preserving the pricing protections that are important to Quorum, and we are hopeful that it will serve as a basis for reaching agreement on this critical issue.
We look forward to receiving Meridian's response and remain available to discuss the proposal at the earliest convenience of you and your team.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Wendy Schultz Associate, intellectual Property
cc:
Leonard Cross, Esq., Partner, Calderwood & Harkness LLP (Responsible Partner)
Patricia Heng, Esq., Senior Counsel, Technology Transactions, Calderwood & Harkness LLP
Carolyn Whitford, General Counsel & EVP, Quorum Insurance Holdings Corp.
Gregory Stahl, VP, Legal Affairs, Quorum Insurance Holdings Corp.
Encl.: Draft Pricing Audit Right Provision (Clean)

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