1025-00008 · Quorum Insurance Holdings · Correspondence

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CALDERWOOD & HARKNESS LLP

Counselors at Law

425 Park Avenue New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com

November 20, 2023

BY EMAIL AND OVERNIGHT COURIER

CONFIDENTIAL

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

Copy to New York Office: 51 Madison Avenue, 22nd Floor New York, NY 10010

Re: Proposed Master Data License Agreement between Quorum Insurance Holdings Corp. and Meridian Credit intelligence, Inc. C&H Matter No. 1025-00008

Dear Graham:

1. Purpose and Context

We write on behalf of our client, Quorum Insurance Holdings Corp. ("Quorum"), a Delaware corporation with its principal executive offices at 1200 Atlantic Street, Suite 3400, Stamford, Connecticut 06901, and publicly traded on the Nasdaq Stock Market under the ticker symbol QIHC. As you know, this firm has served as outside counsel to Quorum throughout the negotiations referenced herein.

This letter is addressed to you, and to Kessler Pruitt & Ashe LLP, in your capacity as outside counsel to Meridian Credit intelligence, Inc. ("Meridian"), a Georgia corporation with its principal place of business at 3300 Peachtree Road NE, Suite 2100, Atlanta, Georgia 30326.

The purpose of this letter is to formally notify Meridian, through its counsel, that Quorum is suspending active negotiations on the proposed Master Data License Agreement (the "MDLA") between Quorum and Meridian. Quorum takes this step with genuine regret and only after extensive good-faith efforts spanning more than fourteen months since this engagement opened on August 8, 2022. Throughout this period, Quorum has invested substantial time, resources, and senior leadership attention in an effort to reach mutually acceptable terms. However, as set forth in detail below, two fundamental commercial issues remain unresolved despite repeated attempts at compromise by Quorum, and the parties' respective positions on those issues have not materially converged. In these circumstances, Quorum has concluded that a suspension of negotiations is the appropriate course of action at this time.

2. Procedural History and Negotiation Timeline

To ensure a complete and accurate record, we set forth below the principal milestones of the parties' negotiations, which we believe are consistent with your own records:

August 15, 2022. Quorum and Meridian executed a Mutual Non-Disclosure Agreement (Reference No. NDA-QIH-MCI-2022-001) establishing the framework under which the parties would exchange confidential information in connection with the evaluation and negotiation of a potential data-licensing transaction.

September 12, 2022. Meridian delivered its initial term sheet to Quorum, setting forth Meridian's proposed high-level commercial terms for the MDLA, including proposed pricing structures, data-delivery mechanisms, term and renewal provisions, and intellectual property ownership provisions.

September 30, 2022. Quorum delivered its counter-term sheet to Meridian, reflecting Quorum's principal commercial requirements and identifying areas of both alignment and divergence with respect to the Meridian term sheet.

October 17, 2022. The parties exchanged initial drafts of certain sections of the proposed MDLA, including data specifications, representations and warranties, and indemnification provisions.

November 4, 2022. Meridian delivered its form MDLA, which we understand was prepared by your firm. This draft served as the working document for subsequent negotiations and incorporated the principal positions set forth in Meridian's initial term sheet.

December 2, 2022. Calderwood & Harkness delivered Quorum's comprehensive redline of the MDLA to your firm. That redline addressed, among other things, the full scope of terms customarily negotiated in enterprise data-licensing transactions, including pricing, data-delivery specifications, service level agreements, intellectual property ownership and licensing provisions, representations and warranties, indemnification, limitation of liability, term and termination, and dispute resolution.

January 18, 2023. The first in-person negotiation session was held in New York, attended by counsel for both parties and senior business representatives from both Quorum and Meridian. During this session, the parties made meaningful progress on a number of secondary terms. However, two issues were identified as the principal unresolved matters requiring further negotiation: (i) Quorum's proposed most favored nation pricing clause, and (ii) the ownership and commercialization rights with respect to derived data.

March 9, 2023. The second in-person negotiation session was held in Atlanta at the offices of Kessler Pruitt & Ashe. The same two issues — the most favored nation pricing clause and derived-data rights — remained unresolved at the conclusion of that session. The parties exchanged further redlines in the weeks following, but those exchanges did not bridge the gap on either issue.

May 15, 2023. Margaret Tierney, Chief Executive Officer of Quorum, and Vincent Halstead, Chief Executive Officer of Meridian, participated in a direct CEO-to-CEO telephone call. Both executives expressed a desire to reach agreement on the MDLA and directed their respective teams to continue negotiations in good faith. This call reflected the significance both parties attached to the proposed transaction.

June 30, 2023. The third in-person negotiation session was held in New York. The session resulted in partial progress on service level agreement specifications, data-delivery formatting and frequency requirements, and certain ancillary terms. However, no resolution was reached on either the most favored nation pricing clause or derived-data rights.

September 15, 2023. In a further effort to bridge the impasse, Quorum proposed a fallback position in the form of a "pricing audit right" as an alternative to a full most favored nation clause. The proposed mechanism would have afforded Quorum limited visibility into comparative pricing without requiring automatic price adjustments.

October 10, 2023. Meridian delivered its counter-proposal in response to Quorum's September 15 fallback. Meridian offered a "most favored terms" provision limited exclusively to data-delivery service level agreement commitments and uptime guarantees, explicitly excluding any pricing-related protections. In the same communication, Meridian proposed a fifteen percent (15%) revenue share on Quorum's net revenues from any third-party commercialization of Derived Data (as defined in the draft MDLA).

November 17, 2023. Quorum, through this firm, advised your team that it was unable to accept Meridian's October 10 counter-proposal as a basis for continued negotiation. No substantive communication between the parties has occurred since that date.

As this timeline reflects, the parties have devoted extraordinary time and resources to the negotiation of the MDLA, including three in-person negotiation sessions (two in New York and one in Atlanta), multiple rounds of comprehensive MDLA redlines, extensive email and telephone correspondence between counsel and between business principals, and direct engagement at the chief executive officer level. Quorum has entered into these negotiations in the utmost good faith and has demonstrated its seriousness of purpose through its sustained commitment of legal, business, and executive resources over the course of more than fourteen months. We believe Meridian has likewise committed significant resources to this process, and we do not question the good faith in which Meridian has participated.

3. The Unresolved Impasse — Most Favored Nation Pricing

Despite the extensive efforts described above, the parties remain fundamentally apart on the question of pricing protection. The nature and evolution of this impasse are as follows.

From the outset of negotiations, Quorum proposed a most favored nation pricing clause designed to ensure competitive parity in Quorum's pricing for Meridian's data. Specifically, the clause would have provided that if Meridian offers any other insurance-industry licensee more favorable per-record pricing, volume discounts, fee structures, or other economic terms, Quorum's pricing under the MDLA would be automatically adjusted to match the most favorable pricing offered to any such licensee. Quorum's proposed comparator class consisted of all U.S.-domiciled insurance carriers, managing general agents, and insurtech firms with annual premiums written of five hundred million dollars ($500,000,000) or more — a commercially reasonable and objectively defined peer group reflecting the segment of the insurance industry in which Quorum competes.

Meridian categorically rejected the most favored nation clause in its entirety. The grounds Meridian advanced for this rejection included: (i) alleged confidentiality obligations to other licensees that would purportedly preclude the cross-licensee price comparisons necessary to administer the clause; (ii) the asserted impracticability of conducting meaningful price comparisons across licensees whose data packages are bespoke in scope and composition; and (iii) broader commercial concerns about the effect of an MFN commitment on Meridian's flexibility to structure future licensing transactions. While Quorum acknowledges these concerns, Quorum's position has been — and remains — that reasonable contractual mechanisms exist to address each of them, and that the absence of any pricing protection is commercially unacceptable for a transaction of this magnitude and duration.

In an effort to bridge the gap, Quorum subsequently proposed a substantially narrowed fallback in the form of a pricing audit right. Under this proposal, Quorum would be entitled to engage, once per contract year, a mutually approved independent third-party auditor to verify that Quorum's effective per-record rate does not exceed one hundred ten percent (110%) of the lowest per-record rate charged by Meridian to any comparable insurance-industry licensee during the same period. This mechanism was specifically designed to address Meridian's confidentiality and practicability concerns: the audit would be conducted by an independent third party bound by confidentiality obligations, the auditor's report to Quorum would disclose only a pass/fail determination and any required adjustment amount (not the identities or specific terms of other licensees), and the 110% threshold provided Meridian with meaningful pricing flexibility.

Meridian's October 10, 2023 counter-proposal did not engage with the pricing audit right framework. Instead, Meridian offered only a "most favored terms" clause limited to data-delivery service level agreements and uptime commitments, explicitly excluding pricing, volume discounts, fee structures, and all other economic terms. While Quorum appreciates consistency in SLA commitments, the most favored terms provision offered by Meridian does not address Quorum's core commercial concern — namely, the risk that Quorum will pay materially more for substantially comparable data than its competitors in the insurance industry. A most favored terms clause that is silent on pricing is not a substitute for pricing protection, and Quorum cannot responsibly agree to a multi-year data-licensing commitment on terms that leave it exposed to significant competitive pricing disadvantage.

The gap between the parties' positions on this issue remains fundamental and unbridged. Quorum has made multiple good-faith attempts to narrow the distance between the parties' respective positions, including by proposing the pricing audit right as a significant concession from a full MFN clause. Meridian has not reciprocated with a counter-proposal that addresses pricing protection in any form.

4. The Unresolved Impasse — Derived-Data Rights

The parties are equally unable to reach agreement on the ownership, licensing, and commercialization rights with respect to Derived Data. This issue is of critical strategic importance to Quorum and has proved as intractable as the pricing protection dispute.

Quorum's Position. Quorum's consistent position throughout the negotiations has been that Quorum should own all intellectual property in any data, models, scores, indices, analytical outputs, or other work product created by Quorum using the licensed Meridian data as an input (collectively, "Derived Data"). Quorum has further maintained that it should have unrestricted rights to use, sublicense, distribute, and commercialize such Derived Data without the payment of additional fees to Meridian, without revenue sharing, and without requiring Meridian's prior consent. This position reflects a foundational principle of data-licensing transactions: a licensee's investment of its own proprietary methodologies, analytical techniques, intellectual capital, and computational resources to transform licensed inputs into novel outputs creates independent intellectual property that belongs to the licensee, not the data supplier.

Meridian's Position. Meridian's position, which has remained substantially unchanged since the November 4, 2022 form MDLA, is materially different. Meridian insists that Derived Data incorporating, based on, or traceable to Meridian's raw data remains subject to Meridian's underlying intellectual property rights. On the basis of this assertion, Meridian demands the following:

(a) A perpetual, royalty-free, irrevocable license-back to Meridian on all Derived Data, permitting Meridian to use such Derived Data for any purpose, including Meridian's own commercial activities and licensing to third parties, including Quorum's direct competitors;

(b) A prohibition on Quorum's third-party commercialization of Derived Data unless and until the Derived Data meets a "sufficient transformation" standard — with the determination of whether such standard has been met to be made by Meridian at its sole and absolute discretion; and

(c) A fifteen percent (15%) revenue share payable to Meridian on net revenues from any approved external commercialization of Derived Data.

These demands are commercially unacceptable to Quorum, individually and collectively. The perpetual license-back would effectively require Quorum to share the fruits of its own proprietary analytical work with a data vendor that has contributed only raw inputs, creating a significant competitive risk. The "sufficient transformation" standard, as articulated by Meridian, vests a unilateral veto right in Meridian over Quorum's commercialization activities — a veto that could be exercised arbitrarily, without objective criteria, and without recourse. The fifteen percent revenue share imposes a material and ongoing economic burden on Quorum's planned business-to-business licensing activities that is wholly disproportionate to Meridian's contribution as a data supplier.

The Technical Disagreement. In addition to the commercial and legal disagreements described above, the parties have a fundamental technical disagreement that has further complicated negotiations. Specifically, the parties disagree over whether the outputs of Quorum's proprietary machine-learning models — models that are trained, among other things, on Meridian data — constitute "Derived Data" at all. Quorum's position is that only the trained model weights and parameters may arguably be considered derivative of the training data, and that live predictions, scores, and analytical outputs generated by a trained model using new, non-Meridian input data are independent outputs that bear no legally cognizable derivative relationship to the Meridian data used during the training process. Meridian takes the contrary position, asserting that any output of a model trained on Meridian data is inherently derived from and traceable to that data, regardless of the inputs used at inference time. This technical disagreement has direct and significant implications for the scope of any derived-data provisions in the MDLA.

Quorum's Compromise Proposal. In June 2023, Quorum proposed a compromise framework that represented a meaningful concession from Quorum's initial position. Under this framework: (i) intellectual property ownership of all Derived Data would vest in Quorum; (ii) the perpetual license-back demanded by Meridian would be eliminated; (iii) Quorum would be permitted to commercialize Derived Data to third parties, provided that such outputs are sufficiently de-identified and transformed in accordance with an objective, jointly agreed standard (rather than Meridian's sole discretion); and (iv) no revenue share would be payable to Meridian. Quorum's compromise framework was designed to address Meridian's legitimate interest in ensuring that its raw data is not simply resold in a thinly disguised form, while preserving Quorum's right to realize the commercial value of its own independent intellectual property.

Meridian did not accept Quorum's June 2023 compromise proposal. Instead, Meridian's October 10, 2023 counter-proposal reiterated the fifteen percent revenue share and the sole-discretion transformation standard, neither of which represents any meaningful movement from Meridian's original position.

The derived-data rights issue is of critical strategic importance to Quorum. Quorum's proprietary predictive models, analytical platforms, and planned B2B licensing activities represent a core element of Quorum's business strategy and long-term competitive positioning. Meridian's demands — particularly the license-back, the sole-discretion veto over commercialization, and the revenue share — would materially impair Quorum's ability to realize the commercial value of its own intellectual property and would create an ongoing dependency on Meridian that is neither commercially justified nor consistent with market practice for transactions of this nature.

5. Formal Suspension of Negotiations

In light of the foregoing, and after careful consideration, Quorum hereby suspends active negotiations on the proposed Master Data License Agreement effective as of the date of this letter, November 20, 2023.

We wish to be clear that this suspension is not a termination of the parties' relationship, nor is it a final rejection of the possibility of a transaction between Quorum and Meridian. Quorum continues to recognize the quality and breadth of Meridian's data assets and remains willing to resume discussions if and when Meridian's positions on the two principal unresolved issues — most favored nation pricing protection and derived-data ownership and commercialization rights — evolve in a manner that creates a commercially viable basis for renewed negotiations.

For the avoidance of doubt, and consistent with the express terms of the parties' prior correspondence and the draft MDLA itself, no binding agreement has been reached between the parties with respect to the MDLA or any of its terms, whether with respect to pricing, data specifications, service levels, intellectual property, or any other subject matter. Nothing in the course of the parties' negotiations, including any term sheet, draft agreement, redline, oral discussion, email, or other communication, shall be construed as creating any binding commitment, obligation, or liability on the part of either Quorum or Meridian. All negotiations have been conducted on a subject-to-contract basis, and no binding obligations shall arise unless and until a definitive written agreement is executed and delivered by both parties.

6. Preservation of Rights Under the Mutual NDA

The Mutual Non-Disclosure Agreement dated August 15, 2022 (Reference No. NDA-QIH-MCI-2022-001) between Quorum and Meridian remains in full force and effect in accordance with its terms, and the suspension of MDLA negotiations does not affect, modify, or diminish any provision thereof.

We respectfully remind Meridian and its counsel that all confidential information exchanged between the parties during the course of negotiations — including, without limitation, all term sheets, draft agreements, redlines, correspondence, negotiating positions, proposals, counter-proposals, financial data, pricing benchmarks, business strategies, technical specifications, and any other information disclosed pursuant to or in connection with the Mutual NDA — remains subject to the confidentiality protections and use restrictions set forth therein.

Quorum expects Meridian to continue to comply fully with its obligations under the Mutual NDA, including, without limitation, with respect to the confidentiality of Quorum's negotiating positions, proposed terms, pricing benchmarks, business strategies, proprietary analytical methodologies, and any other confidential information of Quorum disclosed during the negotiation process. The fact that negotiations have been suspended does not relieve either party of its confidentiality obligations, which survive in accordance with the terms of the Mutual NDA.

Quorum likewise will continue to honor its obligations under the Mutual NDA with respect to Meridian's confidential information.

7. Reservation of Rights

Quorum expressly reserves all of its rights, remedies, and defenses at law and in equity, whether arising under contract, statute, common law, or otherwise, without limitation. Nothing in this letter, and nothing in Quorum's decision to suspend negotiations, shall constitute or be construed as a waiver, release, or relinquishment of any right, claim, or position of Quorum, nor shall it be deemed an admission regarding any matter, whether of fact, law, or otherwise.

Without limiting the generality of the foregoing, Quorum reserves the right to pursue alternative data-licensing arrangements with other data providers during the period of suspension, and nothing in this letter or in the parties' prior negotiations shall be construed to restrict or limit Quorum's ability to do so.

8. Future Communications

Should Meridian wish to discuss the potential resumption of negotiations at any time, or should any other matter arise in connection with the proposed MDLA or the parties' relationship, we ask that all future communications be directed to:

Leonard Cross, Partner Calderwood & Harkness LLP 425 Park Avenue New York, NY 10022 Direct: (212) 558-4120

Email: lcross@calderwoodharkness.com

Wendy Schultz, Associate Calderwood & Harkness LLP 425 Park Avenue New York, NY 10022 Direct: (212) 558-4347

Email: wschultz@calderwoodharkness.com

With a copy to:

Carolyn Whitford, General Counsel & Executive Vice President Quorum Insurance Holdings Corp. 1200 Atlantic Street, Suite 3400 Stamford, CT 06901

Gregory Stahl, Vice President, Legal Affairs Quorum Insurance Holdings Corp. 1200 Atlantic Street, Suite 3400 Stamford, CT 06901

9. Closing

In closing, we wish to express Quorum's sincere appreciation for the professionalism and courtesy that you, Graham, and the entire Kessler Pruitt & Ashe team — including Nina Chastain and Derek Fontaine — have demonstrated throughout this negotiation process. The discussions have been conducted in a spirit of mutual respect, and we are grateful for the significant time and effort that your team has devoted to this matter.

Quorum values its relationship with Meridian and genuinely hopes that the parties may find a path to agreement in the future. Should Meridian's positions on the issues identified in this letter evolve, or should Meridian wish to explore creative alternatives that may bridge the remaining gap, Quorum welcomes the opportunity to re-engage.

We look forward to hearing from you should circumstances change.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Leonard Cross Partner Direct: (212) 558-4120

Email: lcross@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 Patricia Heng, Senior Counsel, Calderwood & Harkness LLP

CALDERWOOD & HARKNESS LLP
Counselors at Law
425 Park Avenue New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
November 20, 2023
BY EMAIL AND OVERNIGHT COURIER
CONFIDENTIAL
Graham Whitley, Esq. Partner, Technology & Licensing Kessler Pruitt & Ashe LLP 1180 Peachtree Street NE, Suite 3000 Atlanta, GA 30309
Copy to New York Office: 51 Madison Avenue, 22nd Floor New York, NY 10010
Re: Proposed Master Data License Agreement between Quorum Insurance Holdings Corp. and Meridian Credit intelligence, Inc. C&H Matter No. 1025-00008
Dear Graham:
1. Purpose and Context
We write on behalf of our client, Quorum Insurance Holdings Corp. ("Quorum"), a Delaware corporation with its principal executive offices at 1200 Atlantic Street, Suite 3400, Stamford, Connecticut 06901, and publicly traded on the Nasdaq Stock Market under the ticker symbol QIHC. As you know, this firm has served as outside counsel to Quorum throughout the negotiations referenced herein.
This letter is addressed to you, and to Kessler Pruitt & Ashe LLP, in your capacity as outside counsel to Meridian Credit intelligence, Inc. ("Meridian"), a Georgia corporation with its principal place of business at 3300 Peachtree Road NE, Suite 2100, Atlanta, Georgia 30326.
The purpose of this letter is to formally notify Meridian, through its counsel, that Quorum is suspending active negotiations on the proposed Master Data License Agreement (the "MDLA") between Quorum and Meridian. Quorum takes this step with genuine regret and only after extensive good-faith efforts spanning more than fourteen months since this engagement opened on August 8, 2022. Throughout this period, Quorum has invested substantial time, resources, and senior leadership attention in an effort to reach mutually acceptable terms. However, as set forth in detail below, two fundamental commercial issues remain unresolved despite repeated attempts at compromise by Quorum, and the parties' respective positions on those issues have not materially converged. In these circumstances, Quorum has concluded that a suspension of negotiations is the appropriate course of action at this time.
2. Procedural History and Negotiation Timeline
To ensure a complete and accurate record, we set forth below the principal milestones of the parties' negotiations, which we believe are consistent with your own records:
August 15, 2022. Quorum and Meridian executed a Mutual Non-Disclosure Agreement (Reference No. NDA-QIH-MCI-2022-001) establishing the framework under which the parties would exchange confidential information in connection with the evaluation and negotiation of a potential data-licensing transaction.
September 12, 2022. Meridian delivered its initial term sheet to Quorum, setting forth Meridian's proposed high-level commercial terms for the MDLA, including proposed pricing structures, data-delivery mechanisms, term and renewal provisions, and intellectual property ownership provisions.
September 30, 2022. Quorum delivered its counter-term sheet to Meridian, reflecting Quorum's principal commercial requirements and identifying areas of both alignment and divergence with respect to the Meridian term sheet.
October 17, 2022. The parties exchanged initial drafts of certain sections of the proposed MDLA, including data specifications, representations and warranties, and indemnification provisions.
November 4, 2022. Meridian delivered its form MDLA, which we understand was prepared by your firm. This draft served as the working document for subsequent negotiations and incorporated the principal positions set forth in Meridian's initial term sheet.
December 2, 2022. Calderwood & Harkness delivered Quorum's comprehensive redline of the MDLA to your firm. That redline addressed, among other things, the full scope of terms customarily negotiated in enterprise data-licensing transactions, including pricing, data-delivery specifications, service level agreements, intellectual property ownership and licensing provisions, representations and warranties, indemnification, limitation of liability, term and termination, and dispute resolution.
January 18, 2023. The first in-person negotiation session was held in New York, attended by counsel for both parties and senior business representatives from both Quorum and Meridian. During this session, the parties made meaningful progress on a number of secondary terms. However, two issues were identified as the principal unresolved matters requiring further negotiation: (i) Quorum's proposed most favored nation pricing clause, and (ii) the ownership and commercialization rights with respect to derived data.
March 9, 2023. The second in-person negotiation session was held in Atlanta at the offices of Kessler Pruitt & Ashe. The same two issues — the most favored nation pricing clause and derived-data rights — remained unresolved at the conclusion of that session. The parties exchanged further redlines in the weeks following, but those exchanges did not bridge the gap on either issue.
May 15, 2023. Margaret Tierney, Chief Executive Officer of Quorum, and Vincent Halstead, Chief Executive Officer of Meridian, participated in a direct CEO-to-CEO telephone call. Both executives expressed a desire to reach agreement on the MDLA and directed their respective teams to continue negotiations in good faith. This call reflected the significance both parties attached to the proposed transaction.
June 30, 2023. The third in-person negotiation session was held in New York. The session resulted in partial progress on service level agreement specifications, data-delivery formatting and frequency requirements, and certain ancillary terms. However, no resolution was reached on either the most favored nation pricing clause or derived-data rights.
September 15, 2023. In a further effort to bridge the impasse, Quorum proposed a fallback position in the form of a "pricing audit right" as an alternative to a full most favored nation clause. The proposed mechanism would have afforded Quorum limited visibility into comparative pricing without requiring automatic price adjustments.
October 10, 2023. Meridian delivered its counter-proposal in response to Quorum's September 15 fallback. Meridian offered a "most favored terms" provision limited exclusively to data-delivery service level agreement commitments and uptime guarantees, explicitly excluding any pricing-related protections. In the same communication, Meridian proposed a fifteen percent (15%) revenue share on Quorum's net revenues from any third-party commercialization of Derived Data (as defined in the draft MDLA).
November 17, 2023. Quorum, through this firm, advised your team that it was unable to accept Meridian's October 10 counter-proposal as a basis for continued negotiation. No substantive communication between the parties has occurred since that date.
As this timeline reflects, the parties have devoted extraordinary time and resources to the negotiation of the MDLA, including three in-person negotiation sessions (two in New York and one in Atlanta), multiple rounds of comprehensive MDLA redlines, extensive email and telephone correspondence between counsel and between business principals, and direct engagement at the chief executive officer level. Quorum has entered into these negotiations in the utmost good faith and has demonstrated its seriousness of purpose through its sustained commitment of legal, business, and executive resources over the course of more than fourteen months. We believe Meridian has likewise committed significant resources to this process, and we do not question the good faith in which Meridian has participated.
3. The Unresolved Impasse — Most Favored Nation Pricing
Despite the extensive efforts described above, the parties remain fundamentally apart on the question of pricing protection. The nature and evolution of this impasse are as follows.
From the outset of negotiations, Quorum proposed a most favored nation pricing clause designed to ensure competitive parity in Quorum's pricing for Meridian's data. Specifically, the clause would have provided that if Meridian offers any other insurance-industry licensee more favorable per-record pricing, volume discounts, fee structures, or other economic terms, Quorum's pricing under the MDLA would be automatically adjusted to match the most favorable pricing offered to any such licensee. Quorum's proposed comparator class consisted of all U.S.-domiciled insurance carriers, managing general agents, and insurtech firms with annual premiums written of five hundred million dollars ($500,000,000) or more — a commercially reasonable and objectively defined peer group reflecting the segment of the insurance industry in which Quorum competes.
Meridian categorically rejected the most favored nation clause in its entirety. The grounds Meridian advanced for this rejection included: (i) alleged confidentiality obligations to other licensees that would purportedly preclude the cross-licensee price comparisons necessary to administer the clause; (ii) the asserted impracticability of conducting meaningful price comparisons across licensees whose data packages are bespoke in scope and composition; and (iii) broader commercial concerns about the effect of an MFN commitment on Meridian's flexibility to structure future licensing transactions. While Quorum acknowledges these concerns, Quorum's position has been — and remains — that reasonable contractual mechanisms exist to address each of them, and that the absence of any pricing protection is commercially unacceptable for a transaction of this magnitude and duration.
In an effort to bridge the gap, Quorum subsequently proposed a substantially narrowed fallback in the form of a pricing audit right. Under this proposal, Quorum would be entitled to engage, once per contract year, a mutually approved independent third-party auditor to verify that Quorum's effective per-record rate does not exceed one hundred ten percent (110%) of the lowest per-record rate charged by Meridian to any comparable insurance-industry licensee during the same period. This mechanism was specifically designed to address Meridian's confidentiality and practicability concerns: the audit would be conducted by an independent third party bound by confidentiality obligations, the auditor's report to Quorum would disclose only a pass/fail determination and any required adjustment amount (not the identities or specific terms of other licensees), and the 110% threshold provided Meridian with meaningful pricing flexibility.
Meridian's October 10, 2023 counter-proposal did not engage with the pricing audit right framework. Instead, Meridian offered only a "most favored terms" clause limited to data-delivery service level agreements and uptime commitments, explicitly excluding pricing, volume discounts, fee structures, and all other economic terms. While Quorum appreciates consistency in SLA commitments, the most favored terms provision offered by Meridian does not address Quorum's core commercial concern — namely, the risk that Quorum will pay materially more for substantially comparable data than its competitors in the insurance industry. A most favored terms clause that is silent on pricing is not a substitute for pricing protection, and Quorum cannot responsibly agree to a multi-year data-licensing commitment on terms that leave it exposed to significant competitive pricing disadvantage.
The gap between the parties' positions on this issue remains fundamental and unbridged. Quorum has made multiple good-faith attempts to narrow the distance between the parties' respective positions, including by proposing the pricing audit right as a significant concession from a full MFN clause. Meridian has not reciprocated with a counter-proposal that addresses pricing protection in any form.
4. The Unresolved Impasse — Derived-Data Rights
The parties are equally unable to reach agreement on the ownership, licensing, and commercialization rights with respect to Derived Data. This issue is of critical strategic importance to Quorum and has proved as intractable as the pricing protection dispute.
Quorum's Position. Quorum's consistent position throughout the negotiations has been that Quorum should own all intellectual property in any data, models, scores, indices, analytical outputs, or other work product created by Quorum using the licensed Meridian data as an input (collectively, "Derived Data"). Quorum has further maintained that it should have unrestricted rights to use, sublicense, distribute, and commercialize such Derived Data without the payment of additional fees to Meridian, without revenue sharing, and without requiring Meridian's prior consent. This position reflects a foundational principle of data-licensing transactions: a licensee's investment of its own proprietary methodologies, analytical techniques, intellectual capital, and computational resources to transform licensed inputs into novel outputs creates independent intellectual property that belongs to the licensee, not the data supplier.
Meridian's Position. Meridian's position, which has remained substantially unchanged since the November 4, 2022 form MDLA, is materially different. Meridian insists that Derived Data incorporating, based on, or traceable to Meridian's raw data remains subject to Meridian's underlying intellectual property rights. On the basis of this assertion, Meridian demands the following:
(a) A perpetual, royalty-free, irrevocable license-back to Meridian on all Derived Data, permitting Meridian to use such Derived Data for any purpose, including Meridian's own commercial activities and licensing to third parties, including Quorum's direct competitors;
(b) A prohibition on Quorum's third-party commercialization of Derived Data unless and until the Derived Data meets a "sufficient transformation" standard — with the determination of whether such standard has been met to be made by Meridian at its sole and absolute discretion; and
(c) A fifteen percent (15%) revenue share payable to Meridian on net revenues from any approved external commercialization of Derived Data.
These demands are commercially unacceptable to Quorum, individually and collectively. The perpetual license-back would effectively require Quorum to share the fruits of its own proprietary analytical work with a data vendor that has contributed only raw inputs, creating a significant competitive risk. The "sufficient transformation" standard, as articulated by Meridian, vests a unilateral veto right in Meridian over Quorum's commercialization activities — a veto that could be exercised arbitrarily, without objective criteria, and without recourse. The fifteen percent revenue share imposes a material and ongoing economic burden on Quorum's planned business-to-business licensing activities that is wholly disproportionate to Meridian's contribution as a data supplier.
The Technical Disagreement. In addition to the commercial and legal disagreements described above, the parties have a fundamental technical disagreement that has further complicated negotiations. Specifically, the parties disagree over whether the outputs of Quorum's proprietary machine-learning models — models that are trained, among other things, on Meridian data — constitute "Derived Data" at all. Quorum's position is that only the trained model weights and parameters may arguably be considered derivative of the training data, and that live predictions, scores, and analytical outputs generated by a trained model using new, non-Meridian input data are independent outputs that bear no legally cognizable derivative relationship to the Meridian data used during the training process. Meridian takes the contrary position, asserting that any output of a model trained on Meridian data is inherently derived from and traceable to that data, regardless of the inputs used at inference time. This technical disagreement has direct and significant implications for the scope of any derived-data provisions in the MDLA.
Quorum's Compromise Proposal. In June 2023, Quorum proposed a compromise framework that represented a meaningful concession from Quorum's initial position. Under this framework: (i) intellectual property ownership of all Derived Data would vest in Quorum; (ii) the perpetual license-back demanded by Meridian would be eliminated; (iii) Quorum would be permitted to commercialize Derived Data to third parties, provided that such outputs are sufficiently de-identified and transformed in accordance with an objective, jointly agreed standard (rather than Meridian's sole discretion); and (iv) no revenue share would be payable to Meridian. Quorum's compromise framework was designed to address Meridian's legitimate interest in ensuring that its raw data is not simply resold in a thinly disguised form, while preserving Quorum's right to realize the commercial value of its own independent intellectual property.
Meridian did not accept Quorum's June 2023 compromise proposal. Instead, Meridian's October 10, 2023 counter-proposal reiterated the fifteen percent revenue share and the sole-discretion transformation standard, neither of which represents any meaningful movement from Meridian's original position.
The derived-data rights issue is of critical strategic importance to Quorum. Quorum's proprietary predictive models, analytical platforms, and planned B2B licensing activities represent a core element of Quorum's business strategy and long-term competitive positioning. Meridian's demands — particularly the license-back, the sole-discretion veto over commercialization, and the revenue share — would materially impair Quorum's ability to realize the commercial value of its own intellectual property and would create an ongoing dependency on Meridian that is neither commercially justified nor consistent with market practice for transactions of this nature.
5. Formal Suspension of Negotiations
In light of the foregoing, and after careful consideration, Quorum hereby suspends active negotiations on the proposed Master Data License Agreement effective as of the date of this letter, November 20, 2023.
We wish to be clear that this suspension is not a termination of the parties' relationship, nor is it a final rejection of the possibility of a transaction between Quorum and Meridian. Quorum continues to recognize the quality and breadth of Meridian's data assets and remains willing to resume discussions if and when Meridian's positions on the two principal unresolved issues — most favored nation pricing protection and derived-data ownership and commercialization rights — evolve in a manner that creates a commercially viable basis for renewed negotiations.
For the avoidance of doubt, and consistent with the express terms of the parties' prior correspondence and the draft MDLA itself, no binding agreement has been reached between the parties with respect to the MDLA or any of its terms, whether with respect to pricing, data specifications, service levels, intellectual property, or any other subject matter. Nothing in the course of the parties' negotiations, including any term sheet, draft agreement, redline, oral discussion, email, or other communication, shall be construed as creating any binding commitment, obligation, or liability on the part of either Quorum or Meridian. All negotiations have been conducted on a subject-to-contract basis, and no binding obligations shall arise unless and until a definitive written agreement is executed and delivered by both parties.
6. Preservation of Rights Under the Mutual NDA
The Mutual Non-Disclosure Agreement dated August 15, 2022 (Reference No. NDA-QIH-MCI-2022-001) between Quorum and Meridian remains in full force and effect in accordance with its terms, and the suspension of MDLA negotiations does not affect, modify, or diminish any provision thereof.
We respectfully remind Meridian and its counsel that all confidential information exchanged between the parties during the course of negotiations — including, without limitation, all term sheets, draft agreements, redlines, correspondence, negotiating positions, proposals, counter-proposals, financial data, pricing benchmarks, business strategies, technical specifications, and any other information disclosed pursuant to or in connection with the Mutual NDA — remains subject to the confidentiality protections and use restrictions set forth therein.
Quorum expects Meridian to continue to comply fully with its obligations under the Mutual NDA, including, without limitation, with respect to the confidentiality of Quorum's negotiating positions, proposed terms, pricing benchmarks, business strategies, proprietary analytical methodologies, and any other confidential information of Quorum disclosed during the negotiation process. The fact that negotiations have been suspended does not relieve either party of its confidentiality obligations, which survive in accordance with the terms of the Mutual NDA.
Quorum likewise will continue to honor its obligations under the Mutual NDA with respect to Meridian's confidential information.
7. Reservation of Rights
Quorum expressly reserves all of its rights, remedies, and defenses at law and in equity, whether arising under contract, statute, common law, or otherwise, without limitation. Nothing in this letter, and nothing in Quorum's decision to suspend negotiations, shall constitute or be construed as a waiver, release, or relinquishment of any right, claim, or position of Quorum, nor shall it be deemed an admission regarding any matter, whether of fact, law, or otherwise.
Without limiting the generality of the foregoing, Quorum reserves the right to pursue alternative data-licensing arrangements with other data providers during the period of suspension, and nothing in this letter or in the parties' prior negotiations shall be construed to restrict or limit Quorum's ability to do so.
8. Future Communications
Should Meridian wish to discuss the potential resumption of negotiations at any time, or should any other matter arise in connection with the proposed MDLA or the parties' relationship, we ask that all future communications be directed to:
Leonard Cross, Partner Calderwood & Harkness LLP 425 Park Avenue New York, NY 10022 Direct: (212) 558-4120
Email: lcross@calderwoodharkness.com
Wendy Schultz, Associate Calderwood & Harkness LLP 425 Park Avenue New York, NY 10022 Direct: (212) 558-4347
Email: wschultz@calderwoodharkness.com
With a copy to:
Carolyn Whitford, General Counsel & Executive Vice President Quorum Insurance Holdings Corp. 1200 Atlantic Street, Suite 3400 Stamford, CT 06901
Gregory Stahl, Vice President, Legal Affairs Quorum Insurance Holdings Corp. 1200 Atlantic Street, Suite 3400 Stamford, CT 06901
9. Closing
In closing, we wish to express Quorum's sincere appreciation for the professionalism and courtesy that you, Graham, and the entire Kessler Pruitt & Ashe team — including Nina Chastain and Derek Fontaine — have demonstrated throughout this negotiation process. The discussions have been conducted in a spirit of mutual respect, and we are grateful for the significant time and effort that your team has devoted to this matter.
Quorum values its relationship with Meridian and genuinely hopes that the parties may find a path to agreement in the future. Should Meridian's positions on the issues identified in this letter evolve, or should Meridian wish to explore creative alternatives that may bridge the remaining gap, Quorum welcomes the opportunity to re-engage.
We look forward to hearing from you should circumstances change.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Leonard Cross Partner Direct: (212) 558-4120
Email: lcross@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 Patricia Heng, Senior Counsel, Calderwood & Harkness LLP

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