1025-00008 · Quorum Insurance Holdings · Transaction Documents/MDLA

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 425 Park Avenue New York, NY 10022

C&H Matter No. 1025-00008

MEMORANDUM

November 2023

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

FROM: Wendy Schultz, Associate, intellectual Property Group, Calderwood & Harkness LLP

RE: Annotated Summary of Unresolved Issues in Master Data License Agreement Between Quorum Insurance Holdings Corp. and Meridian Credit intelligence, Inc.

COPIES: Leonard Cross (Responsible Partner, Calderwood & Harkness LLP) Patricia Heng (Senior Counsel, Technology Transactions, Calderwood & Harkness LLP) Omar Siddiqui (Working Associate, Calderwood & Harkness LLP)

This memorandum is a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the use of the named recipients and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.

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I. Executive Summary

This memorandum provides a comprehensive annotated summary of all material unresolved issues in the proposed Master Data License Agreement (the "MDLA") between Quorum Insurance Holdings Corp. ("Quorum" or the "Company") and Meridian Credit intelligence, Inc. ("Meridian" or "MCI"), as negotiations entered dormancy on November 17, 2023. The memorandum is prepared at the direction of Carolyn Whitford, General Counsel, to serve as a reference document in the event that Quorum elects to restart negotiations in early 2024, and to ensure that all members of the deal team — both internal and external — have a unified understanding of the current state of play on each open issue.

Background. Calderwood & Harkness's engagement on this matter was opened on August 8, 2022, with Nathaniel Bower designated as billing partner and a soft fee cap of $1,800,000 established for the negotiation and documentation phase. Meridian's form MDLA was delivered by its outside counsel, Kessler Pruitt & Ashe LLP ("KP&A"), on November 4, 2022. Calderwood & Harkness, on behalf of Quorum, delivered a comprehensive redline of that form MDLA on December 2, 2022. Since that exchange, the parties have conducted three in-person negotiation sessions: January 18, 2023 (New York), March 9, 2023 (Atlanta), and June 30, 2023 (New York). In addition, Quorum CEO Margaret Tierney and Meridian CEO Vincent Halstead held a principal-to-principal telephone call on May 15, 2023, during which they agreed that negotiations should continue and instructed their respective teams to seek resolution on the outstanding issues. Notwithstanding that instruction, the parties have been unable to close the gap on several fundamental commercial and legal terms.

Transaction Overview. The proposed MDLA contemplates a five-year enterprise data-licensing arrangement with an aggregate value of $60,000,000 in license fees. The fee structure consists of $10,800,000 in Year 1, escalating to $12,300,000 per year in Years 2 through 5, plus a one-time implementation and integration fee of $1,500,000. The MDLA would provide Quorum with enterprise-wide access to three core Meridian data products: the MCI Consumer Credit File™ (encompassing approximately 310 million consumer records), MCI CommercialView™ (encompassing approximately 42 million business records), and MCI AltSignal™ (encompassing approximately 85 million consumer alternative-data records). These data products are central to Quorum's underwriting, claims management, and predictive analytics capabilities, including the Company's proprietary QuorumScore™ predictive underwriting model.

Current Status. As of the date of this memorandum, negotiations are DORMANT. On October 10, 2023, Meridian delivered a counter-proposal that failed to address Quorum's core concerns on most favored nation pricing protection and derived-data ownership and commercialization rights. On November 17, 2023, Quorum formally rejected that counter-proposal. No substantive communication between the parties or their respective counsel has occurred since that date. Carolyn Whitford has indicated that she expects to determine in early 2024 whether to restart negotiations.

Summary of Unresolved Issues. This memorandum identifies and analyzes four categories of material unresolved issues:

1. Most Favored Nation Pricing (Section III) — Quorum's demand for pricing parity with comparable insurance-industry licensees, and the parties' alternative proposals regarding a pricing audit right;

2. Derived-Data Rights and IP Ownership (Section IV) — The fundamental disagreement over ownership and commercialization rights with respect to data, models, scores, and analytics outputs created by Quorum using licensed Meridian data as an input;

3. Dispute Resolution (Section V) — Quorum's preference for exclusive court jurisdiction versus Meridian's insistence on binding arbitration; and

4. Post-Termination Treatment of Derived Data (Section VI) — Whether Quorum retains perpetual rights to Derived Data following termination or expiration of the MDLA.

In addition, Section VII addresses several secondary unresolved items, including late payment interest compounding methodology, data-volume overage true-up payment terms, additional insured status on cyber liability insurance, indemnification scope and caps, limitation of liability with respect to consequential damages, and term and renewal mechanics.

Ancillary Matters. We note that the Standish National Bank, N.A. lender consent required under Section 7.12(b) of the Amended and Restated Credit Agreement dated June 15, 2021, remains outstanding. The $60,000,000 aggregate license value of the MDLA exceeds the $25,000,000 intellectual property license covenant threshold contained in that agreement by $35,000,000 (representing 240% of the threshold amount). As discussed in Section IX below, this consent must be obtained prior to execution of the MDLA, and re-engagement with Standish should be initiated promptly once a decision to restart negotiations has been made.

II. Procedural History and Negotiation Chronology

The following section sets forth a detailed chronology of the negotiation process, organized by phase, to provide context for the substantive issues discussed in Sections III through VII. This chronology is based on Calderwood & Harkness's contemporaneous records, correspondence files, session notes, and the internal deal tracker maintained by Omar Siddiqui.

A. Pre-Negotiation Phase (August–October 2022)

The engagement of Calderwood & Harkness on this matter was formalized on August 8, 2022, when Quorum executed an engagement letter designating Nathaniel Bower as billing partner. The engagement letter established a soft fee cap of $1,800,000 for the negotiation and documentation phase of the MDLA transaction, exclusive of out-of-pocket expenses and any litigation or regulatory matters that might arise in connection with the transaction. Leonard Cross was designated as the responsible partner, with Patricia Heng (Senior Counsel, Technology Transactions) and the undersigned (Wendy Schultz, Associate, intellectual Property Group) serving as the primary working team. Omar Siddiqui was brought onto the matter as a working associate in September 2022.

On August 15, 2022, the parties executed a mutual nondisclosure agreement (Reference NDA-QIH-MCI-2022-001), which governs the exchange of confidential information in connection with the MDLA negotiations. The NDA contains standard terms, including a two-year confidentiality period, mutual obligations, and customary carve-outs for information independently developed, publicly available, or disclosed pursuant to legal process.

Following execution of the NDA, the parties commenced a preliminary exchange of commercial terms. On September 12, 2022, Meridian delivered an initial term sheet outlining the proposed scope, pricing, and key commercial parameters of the data-licensing arrangement. Calderwood & Harkness, in consultation with Quorum's internal business and legal teams, prepared a counter-term sheet that was delivered to Meridian on September 30, 2022. The counter-term sheet incorporated several provisions not present in Meridian's initial proposal, including most favored nation pricing protections, enhanced derived-data ownership provisions, and Quorum's preferred dispute resolution framework. These provisions would become the central points of contention in the ensuing months.

On October 17, 2022, the parties exchanged initial MDLA drafts. Meridian's draft was based on its standard form data license agreement, which has historically served as the starting point for Meridian's enterprise licensing transactions. Quorum's draft, prepared by Calderwood & Harkness, was a marked-up version of Meridian's form reflecting Quorum's positions on all material terms.

B. MDLA Drafting and Initial Exchange (November–December 2022)

On November 4, 2022, Kessler Pruitt & Ashe LLP delivered Meridian's formal MDLA draft. The KP&A team on this matter is led by Graham Whitley (lead partner), with associates Nina Chastain and Derek Fontaine handling day-to-day drafting and negotiation. The Meridian form MDLA is a comprehensive agreement consisting of a main body of 14 articles and numerous schedules, exhibits, and addenda, including a Technical Schedule A (data delivery specifications), a Service Level Agreement, a Data Security Addendum, a Data Processing Agreement (addressing CCPA/CPRA compliance), and an FCRA Permissible Purpose Certification. The Meridian form MDLA reflected Meridian's standard positions on intellectual property ownership, derived-data restrictions, indemnification, and dispute resolution, among other terms.

Calderwood & Harkness conducted a thorough review of the Meridian form MDLA and, in consultation with the Quorum internal team, prepared Quorum's comprehensive redline. This redline was delivered to KP&A on December 2, 2022. The key insertions and modifications in Quorum's comprehensive redline included the following:

• Most Favored Nation Pricing Clause: A new Section 4.7 providing for automatic price adjustment if Meridian offers more favorable per-record pricing or fee terms to any comparable insurance-industry licensee;

• Revised Article VII (Derived Data and IP Ownership): A complete rewrite of the derived-data and intellectual property provisions to establish Quorum's exclusive ownership of all Derived Data, unrestricted commercialization rights, and elimination of any license-back to Meridian;

• Court Jurisdiction for Dispute Resolution: Replacement of Meridian's binding arbitration clause with a provision for exclusive jurisdiction in the U.S. District Court for the Southern District of New York or the Commercial Division of the New York Supreme Court, New York County;

• Enhanced Data Security and Breach Notification Provisions: More stringent data security obligations, including a 48-hour breach notification window (reduced from Meridian's proposed 72 hours), annual audit rights, and specific reference to SOC 2 Type II and ISO 27001 compliance standards; and

• Indemnification and Liability Provisions: Expanded indemnification obligations and carve-outs from limitations on liability for intellectual property infringement, data breaches, and confidentiality breaches.

C. Negotiation Sessions (January–June 2023)

Following delivery of Quorum's comprehensive redline, the parties scheduled and conducted three in-person negotiation sessions. Each session is summarized below.

January 18, 2023 — First Session (New York). The first in-person negotiation session was held at Calderwood & Harkness's offices in New York. The Quorum team was represented by Gregory Stahl (VP, Legal Affairs), the undersigned, Patricia Heng, and Omar Siddiqui. The Meridian team was represented by James Cavanaugh (VP, Enterprise Licensing), Graham Whitley, and Nina Chastain. During this session, the parties reviewed the comprehensive redline on an article-by-article basis and identified the principal areas of disagreement. Most favored nation pricing and derived-data rights and IP ownership were formally flagged as the two principal open issues requiring resolution at a senior level. The parties made progress on several ancillary provisions, including data delivery specifications, certain SLA parameters, and the framework for the Data Security Addendum. An issues list was compiled and distributed following the session.

February 14, 2023 — Pricing Benchmark Study. Between sessions, Quorum engaged Pinnacle Ridge Advisory LLC ("Pinnacle Ridge"), a specialized data-economics consulting firm, to prepare an independent pricing benchmark study. The study, delivered on February 14, 2023, was prepared by Franklin Osei, Managing Director. The Pinnacle Ridge study analyzed comparable credit-data license pricing across Meridian's insurance-sector licensee base (to the extent publicly available or ascertainable from market intelligence) and identified material variance in per-record pricing across Meridian's insurance-sector licensees. The study provided empirical support for Quorum's MFN position and was shared with Meridian's team in advance of the second negotiation session.

March 9, 2023 — Second Session (Atlanta). The second in-person session was held at Meridian's offices in Atlanta. This session included, in addition to the legal teams, senior commercial personnel from both sides. Most favored nation pricing and derived-data rights remained unresolved. Meridian's commercial team, led by James Cavanaugh, indicated for the first time that Breckenridge Capital Partners — Meridian's 62.5% majority equity owner — had expressed categorical opposition to the inclusion of any MFN pricing clause in Meridian's data-licensing agreements. This was described as a portfolio-wide policy driven by Breckenridge's investment thesis and valuation methodology for its portfolio companies. Partial progress was made on SLA terms, including agreement in principle on the 99.9% monthly uptime standard, latency requirements, and the service credit framework.

May 15, 2023 — CEO-to-CEO Call. Following the second negotiation session and a period of limited progress at the working-team level, Margaret Tierney (CEO, Quorum) and Vincent Halstead (CEO, Meridian) held a direct telephone call on May 15, 2023. The call was arranged at Ms. Whitford's suggestion to break the impasse. During the call, the two CEOs acknowledged the strategic importance of the data-licensing relationship to both organizations and agreed to instruct their respective teams to continue negotiating in good faith toward a resolution. No specific substantive commitments were made during the call, but both CEOs expressed optimism that the remaining issues could be resolved.

June 30, 2023 — Third Session (New York). The third and final in-person session was held at Calderwood & Harkness's offices in New York. This session focused primarily on the SLA, data-delivery specifications, insurance minimums, and technical schedules — areas where meaningful progress could be made without resolving the two core commercial disputes. By the end of the session, the parties had reached agreement in principle on substantially all SLA terms, data delivery methods and refresh frequencies, the Data Security Addendum, the Data Processing Agreement, the FCRA Permissible Purpose Certification, and most insurance coverage minimums. However, most favored nation pricing and derived-data rights and IP ownership remained open, as did the dispute resolution mechanism and post-termination treatment of Derived Data. Following the session, Calderwood & Harkness prepared a third MDLA redline in July 2023, reflecting the agreed SLA and technical terms and maintaining Quorum's positions on the open issues. This third redline represents the most current version of the MDLA.

D. Escalation and Breakdown (August–November 2023)

Following the June 30, 2023 session, the pace of negotiations slowed considerably. We understand from KP&A that Meridian's board of directors convened in August 2023 to consider the MDLA terms in light of the company's broader strategic priorities, including its planned initial public offering in the 2025–2026 timeframe.

August 22, 2023 — Meridian Board Resolution. On August 22, 2023, Meridian's board of directors — influenced by Breckenridge Capital Management LLC (specifically Caleb Rourke, the partner overseeing the Meridian investment, and Elaine Drummond, managing partner of Breckenridge) and reflecting concerns raised by Whitmore Zanthor & Co. (Rachel Ng-Castillo, managing director, serving as Meridian's investment banking advisor on the planned IPO) — formally resolved against granting most favored nation pricing or unrestricted derived-data commercialization rights to any licensee. This resolution was communicated to Quorum's team by KP&A in a letter dated August 28, 2023. The board's stated rationale centered on (i) the need to preserve pricing power and margin flexibility across Meridian's licensee base; (ii) the impact that MFN clauses and uncontrolled derived-data commercialization could have on Meridian's revenue predictability and valuation narrative in the context of an IPO; and (iii) confidentiality obligations to existing licensees.

September 15, 2023 — Quorum's Pricing Audit Right Proposal. In response to Meridian's categorical rejection of the MFN, Calderwood & Harkness, at Quorum's direction, prepared and delivered a fallback proposal centered on a "pricing audit right." Under this proposal, Quorum would have the right, exercisable once per contract year, to engage an independent third-party auditor (approved by both parties) to verify that Quorum's effective per-record rate does not exceed 110% of the lowest per-record rate charged to any comparable insurance-industry licensee. The auditor's report would be limited to a "pass/fail" finding and would not disclose specific third-party pricing information. If the audit revealed a pricing disparity exceeding the 110% threshold, Meridian would be obligated to adjust Quorum's pricing prospectively to match the 110% ceiling. This proposal was designed to address Meridian's stated concerns about confidentiality and bespoke pricing while providing Quorum with meaningful, verifiable price protection.

October 10, 2023 — Meridian's Counter-Proposal. On October 10, 2023, KP&A delivered Meridian's counter-proposal. The counter-proposal contained two principal elements: (a) a "most favored terms" clause limited exclusively to data-delivery SLAs and uptime commitments, explicitly excluding pricing, fees, volume discounts, and all other economic terms; and (b) a 15% revenue share on net revenues from Quorum's third-party commercialization of Derived Data. Meridian described the SLA-only "most favored terms" clause as a meaningful concession reflecting Meridian's commitment to providing Quorum with best-in-class service. The 15% revenue share was described as a market-standard contribution fee reflecting the value of Meridian's underlying data in any derived analytics products.

November 17, 2023 — Quorum's Rejection and Dormancy. After consultation with Ms. Whitford and Mr. Stahl, Calderwood & Harkness delivered Quorum's formal rejection of Meridian's October 10, 2023 counter-proposal on November 17, 2023. The rejection letter noted that the SLA-only "most favored terms" clause offered no economic value to Quorum, given that SLA terms had already been substantially agreed during the June 30, 2023 session, and that the 15% revenue share on Derived Data commercialization was fundamentally inconsistent with Quorum's business objectives and competitive strategy. No substantive communication between the parties or their respective counsel has occurred since that date. Negotiations are dormant as of the date of this memorandum.

III. Unresolved Issue No. 1: Most Favored Nation Pricing

A. Quorum's Primary Position

Quorum demands the inclusion of a most favored nation provision in the MDLA ensuring that if Meridian offers any other insurance-industry licensee more favorable per-record pricing, volume discounts, or fee terms at any time during the term of the MDLA, Quorum's pricing will automatically adjust to match those more favorable terms. This provision is embodied in Quorum's proposed Section 4.7 of the MDLA.

The scope of the proposed MFN comparator class encompasses all U.S.-domiciled insurance carriers, managing general agents, and insurtech firms with annual premiums written equal to or exceeding $500,000,000. This comparator class was deliberately defined to include entities of comparable scale and market position to Quorum, ensuring that the MFN operates as a protection against competitive disadvantage among Meridian's most significant insurance-sector licensees rather than as a mechanism for obtaining pricing designed for smaller or materially different customers.

Quorum's rationale for the MFN is grounded in both market intelligence and commercial principle. The Pinnacle Ridge Advisory pricing benchmark study delivered on February 14, 2023 identified material variance in per-record pricing across Meridian's insurance-sector licensees. While the study was necessarily limited by the publicly available information and market intelligence accessible to Pinnacle Ridge, the variance identified was sufficient to support a reasonable inference that Quorum, absent an MFN or equivalent pricing protection, risks overpaying relative to competitors who may negotiate later, leverage different terms, or benefit from Meridian's desire to win new business in the insurance sector. Furthermore, Quorum's position as one of Meridian's largest insurance-sector clients — the MDLA's $60,000,000 total value, based on an estimated monthly volume of approximately 437 million records, positions Quorum among the top-tier licensees in Meridian's insurance vertical — warrants the pricing protection that an MFN provides. The risk of competitive disadvantage is particularly acute given the concentrated nature of the enterprise credit-data market and the limited number of comprehensive alternatives to Meridian's data products.

B. Meridian's Position — Categorical Rejection

Meridian has categorically refused any MFN clause throughout the negotiation process. Meridian, through KP&A and its commercial team, has articulated four grounds for its refusal:

First, Meridian contends that its confidentiality obligations to other licensees prohibit disclosure of pricing terms, even indirectly through an MFN adjustment mechanism. Meridian asserts that its standard data-licensing agreements contain confidentiality provisions that would be breached if Meridian were required to adjust Quorum's pricing based on terms offered to another licensee, as such adjustment would necessarily signal the existence of more favorable pricing elsewhere in the licensee base.

Second, Meridian argues that cross-licensee price comparisons are impracticable given the bespoke nature of each data-licensing arrangement. Each licensee receives a different mix of data products (Consumer Credit File, CommercialView, AltSignal, or some subset thereof), with different refresh frequencies, different delivery methods (SFTP batch versus REST API), different volume tiers, and different ancillary services. Meridian contends that effective per-record rates are not meaningfully comparable across licensees with materially different product configurations.

Third, and perhaps most significantly from a practical standpoint, Breckenridge Capital Partners (Meridian's 62.5% majority equity owner) and Whitmore Zanthor & Co. (Meridian's investment banking advisor on its planned 2025–2026 IPO) view an MFN clause as a margin risk that would negatively impact Meridian's valuation narrative. Specifically, Breckenridge and Whitmore Zanthor are concerned that an MFN would undermine Meridian's ability to demonstrate pricing power, data exclusivity, and margin stability — key elements of the valuation narrative being developed for the IPO. The presence of MFN clauses in material contracts would require disclosure in IPO offering documents and could invite questions from prospective investors about Meridian's ability to maintain and expand margins.

Fourth, Meridian has raised antitrust sensitivities specific to the credit-data market, claiming that MFN clauses may create price-signaling risks or facilitate tacit coordination among competitors. While this argument was raised somewhat obliquely by KP&A, it appears to reflect a general concern about regulatory scrutiny of the credit-data industry rather than a specific legal analysis of the antitrust implications of the proposed MFN clause.

C. Quorum's Fallback — Pricing Audit Right

In response to Meridian's categorical rejection of the MFN, Quorum proposed a fallback position on September 15, 2023 in the form of a limited "pricing audit right." The key elements of this proposal are as follows:

• Frequency: The pricing audit right would be exercisable once per contract year, at Quorum's election.

• Independent Auditor: The audit would be conducted by an independent third-party auditor mutually approved by both parties. If the parties cannot agree on an auditor within thirty (30) days of Quorum's exercise of the audit right, a "Big Four" accounting firm with no existing engagement with either party would be selected by lot.

• Scope of Audit: The auditor would be tasked with verifying that Quorum's effective per-record rate does not exceed 110% of the lowest per-record rate charged to any comparable insurance-industry licensee. The comparator class for the audit would be the same as for the MFN: all U.S.-domiciled insurance carriers, managing general agents, and insurtech firms with annual premiums written equal to or exceeding $500,000,000.

• Report Format: The auditor's report would be limited to a "pass/fail" finding — i.e., a statement that Quorum's effective per-record rate either does or does not exceed the 110% ceiling. The report would not disclose the identity of any comparator licensee, the specific pricing terms of any comparator license, or any other confidential information of Meridian or its licensees.

• Remediation: If the audit reveals that Quorum's effective per-record rate exceeds the 110% ceiling, Meridian would be obligated to adjust Quorum's pricing prospectively (not retroactively) to the 110% ceiling, effective as of the first day of the calendar quarter following delivery of the audit report.

• Cost Allocation: The cost of the audit would be borne by Quorum unless the audit reveals a pricing disparity exceeding the 110% ceiling, in which case Meridian would bear the cost.

This proposal was designed to address each of Meridian's stated objections to the full MFN: the pass/fail format preserves the confidentiality of third-party pricing; the use of an independent auditor avoids the need for Meridian to disclose pricing directly to Quorum; the comparator class is limited to genuinely comparable licensees; and the audit mechanism does not require any automatic price adjustment that would create price-signaling risks.

D. Meridian's Counter-Fallback — Most Favored Terms (SLA-Only)

On October 10, 2023, Meridian offered its own counter-fallback: a "most favored terms" clause that would be limited exclusively to data-delivery SLAs and uptime commitments. This clause would require Meridian to provide Quorum with service levels (including uptime, latency, refresh frequency, and support responsiveness) no less favorable than those offered to any other enterprise licensee. The clause explicitly excludes pricing, fees, volume discounts, and all other economic terms.

From Quorum's perspective, this counter-fallback is commercially meaningless. The SLA terms that would be covered by the "most favored terms" clause were already substantially agreed during the June 30, 2023 negotiation session and are reflected in the July 2023 third redline of the MDLA. Quorum has already secured a 99.9% monthly uptime commitment, specific latency standards, and a service credit framework that provides adequate SLA protection. Extending a "most favored terms" guarantee to these already-agreed SLA terms adds no incremental value. The core of Quorum's concern — pricing parity — is entirely unaddressed by Meridian's counter.

E. C&H Assessment and Annotation

Calderwood & Harkness has previously prepared two memoranda relevant to this issue. The first, prepared by the undersigned and Patricia Heng, analyzed the enforceability of MFN pricing clauses under New York law. That memorandum concluded that a properly scoped MFN clause is enforceable under New York law as a standard contractual pricing mechanism, subject to standard principles of contract interpretation and the requirement that the MFN be drafted with sufficient specificity to permit a court to determine whether a breach has occurred and what remedy is appropriate. The second memorandum, prepared by the undersigned, addressed the antitrust implications of MFN clauses in the credit-data licensing context. That memorandum concluded that an MFN benefiting a single licensee does not, standing alone, create a material antitrust risk under either Section 1 or Section 2 of the Sherman Act, though it acknowledged that the broader competitive dynamics of the credit-data market — including the FTC's ongoing scrutiny of data-broker practices — warrant careful drafting. Both memoranda support the enforceability of a properly scoped MFN but acknowledge practical challenges with verification and enforcement, particularly in the absence of a mechanism for Quorum to independently ascertain third-party pricing.

In our assessment, the pricing audit right fallback represents a reasonable and defensible middle ground that substantively addresses Meridian's stated objections while providing Quorum with meaningful — if not absolute — price protection. The pass/fail audit format preserves third-party confidentiality. The 110% threshold provides Meridian with meaningful pricing headroom (a 10% premium over the lowest comparator rate). And the annual exercise limitation prevents the audit from becoming unduly burdensome.

Meridian's SLA-only counter-fallback, by contrast, offers no economic value to Quorum and should not be accepted.

Recommendation for Restart. In any restart of negotiations, Quorum should continue to press for the pricing audit right as the minimum acceptable position on the MFN issue. If additional concessions are needed to secure Meridian's agreement, Quorum could consider (i) narrowing the scope of the comparator class (e.g., limiting it to the top five insurance-industry licensees by annual data volume rather than all licensees above the $500 million premium threshold); (ii) offering a longer interval between audits (e.g., biennial rather than annual); or (iii) accepting a higher pricing ceiling (e.g., 115% rather than 110%). Each of these concessions reduces the practical impact of the audit right on Meridian while preserving its core protective function for Quorum.

IV. Unresolved Issue No. 2: Derived-Data Rights and IP Ownership

A. Quorum's Primary Position

Quorum's primary position is that all intellectual property rights in any data, models, scores, indices, analytics outputs, or other works created by Quorum using the licensed Meridian data as an input (collectively, "Derived Data") should be owned exclusively by Quorum, free and clear of any claims, liens, licenses, or interests of Meridian. This position is reflected in Article VII of Quorum's proposed MDLA redline.

Specifically, Quorum's position encompasses the following elements:

• Exclusive Ownership: Quorum is the sole and exclusive owner of all intellectual property rights — including copyrights, trade secrets, patent rights, and any sui generis database rights — in and to all Derived Data;

• Unrestricted Commercialization: Quorum has the unrestricted right to use, reproduce, modify, sublicense, and commercially exploit Derived Data, including the right to license Derived Data to third parties outside Quorum's corporate group, without additional fees to Meridian or Meridian's prior consent;

• No License-Back: Meridian has no license, right, or interest in any Derived Data created by Quorum; and

• No Revenue Share: No portion of any revenue generated by Quorum from the use or commercialization of Derived Data is owed to Meridian.

The commercial importance of this position to Quorum cannot be overstated. Quorum's proprietary QuorumScore™ predictive underwriting model — for which a United States Patent and Trademark Office application is pending (Serial No. 97/482,116) — blends Meridian credit data with Quorum's own first-party claims experience data, policyholder data, and telematics data to generate proprietary risk scores and underwriting recommendations. QuorumScore™ is central to Quorum's underwriting competitive advantage, and the Company's strategic plan includes a B2B licensing revenue line based on licensing QuorumScore™ and related analytics products to other market participants. This B2B licensing revenue line is projected to reach $40,000,000 to $50,000,000 in annual revenue by 2027. Any restriction on Quorum's ability to own, use, and commercialize Derived Data — including QuorumScore™ outputs — directly threatens this strategic initiative and the Company's broader competitive position.

B. Meridian's Position

Meridian's position, as articulated by KP&A throughout the negotiation process, is that any Derived Data that incorporates, is based on, or is traceable to Meridian's raw data constitutes a "derivative work" within the meaning of the Copyright Act, 17 U.S.C. § 101, and accordingly remains subject to Meridian's underlying intellectual property rights in its raw data. Meridian has consistently demanded three elements:

1. License-Back. A perpetual, royalty-free, non-exclusive license-back on all Derived Data, granting Meridian the right to use all Derived Data created by Quorum for Meridian's own internal business purposes, including product development, benchmarking, and analytics.

2. Third-Party Commercialization Restriction. A prohibition on Quorum selling, sublicensing, or otherwise making available Derived Data to any third party unless the Derived Data has been "sufficiently transformed" such that no Meridian raw data can be reverse-engineered, reconstructed, or re-identified from the Derived Data. In Meridian's original proposal, Meridian retained sole discretion to determine whether any particular item of Derived Data met the "sufficient transformation" standard.

3. Revenue Share. If Quorum commercializes Derived Data externally (after clearance of the "sufficient transformation" standard), Meridian receives 15% of net revenues attributable to such Derived Data. "Net revenues" is defined in Meridian's draft as gross revenues less only direct third-party distribution costs, excluding any allocation of Quorum's internal costs, overhead, or development expenses.

C. Technical Dispute: Machine-Learning Model Outputs

A particularly consequential sub-issue within the derived-data dispute concerns the classification of outputs from Quorum's machine-learning models. The parties fundamentally disagree on whether the outputs of Quorum's machine-learning models — which are trained on, among other data sources, Meridian data — constitute "Derived Data" at all.

Quorum's position is that a careful technical and legal analysis of the machine-learning pipeline supports the conclusion that only the trained model weights and parameters are potentially derivative of training data inputs. Once a model has been trained and is deployed to make predictions or inferences on new, non-Meridian input data (e.g., a new insurance application submitted by a prospective policyholder), the resulting predictions or inferences are independent outputs that do not "incorporate" or "contain" any Meridian data. The model is a tool that was informed by Meridian data during training, but its live outputs are generated from new inputs and are not derivative of any specific Meridian record. This position is analogous to the principle that a student who learns from a textbook does not produce "derivative works" of the textbook when applying the learned knowledge to new problems.

Meridian's position is that any output of a model trained on Meridian data is traceable to and therefore derivative of Meridian's underlying data, regardless of the inputs used at inference time. Meridian characterizes the model as a "vessel" for Meridian's data, contending that the patterns, correlations, and statistical relationships learned by the model from Meridian's training data are inseparable from the model's outputs. Under this view, every QuorumScore™ prediction — even one generated using entirely non-Meridian input data — would be classified as Derived Data subject to Meridian's license-back, commercialization restriction, and revenue-share demands.

Calderwood & Harkness prepared a memorandum in January 2023 (prepared by the undersigned and Omar Siddiqui) analyzing the ownership of machine-learning model outputs under copyright and trade secret law. That memorandum concluded that the weight of the available authority supports Quorum's position — namely, that inference outputs generated from new, non-Meridian inputs are not "derivative works" of the training data under copyright law and do not incorporate protectable trade secrets of the training data owner. However, the memorandum acknowledged that case law directly addressing this issue remains limited, and the legal landscape in this area is evolving. The memorandum recommended that the MDLA address this issue explicitly through contractual definition rather than relying on uncertain common-law principles.

D. Quorum's Revised Compromise Framework (June 2023)

During and following the June 30, 2023 negotiation session, Quorum developed a revised compromise framework intended to address Meridian's legitimate concerns about the potential for Quorum's Derived Data products to effectively "re-export" Meridian's raw data, while preserving Quorum's core ownership and commercialization rights. The key elements of this framework are as follows:

• Ownership: Quorum retains sole and exclusive ownership of all Derived Data intellectual property.

• No License-Back: No license-back to Meridian on any Derived Data, whether for internal use or otherwise.

• Commercialization with Safeguards: Quorum may commercialize Derived Data to third parties, provided that any externally distributed Derived Data is "sufficiently de-identified and transformed" in accordance with an objective, jointly agreed standard. This standard would be embodied in a Draft Derived Data Commercialization Protocol, prepared by Calderwood & Harkness as a proposed appendix to Article VII. The Protocol specifies measurable criteria for determining "sufficient transformation," including de-identification metrics consistent with CCPA/CPRA standards, statistical irreversibility tests (e.g., demonstrating that the probability of re-identifying any individual Meridian record from the Derived Data output falls below a specified threshold), and technical safeguards against reconstruction.

• No Revenue Share: No revenue share to Meridian on any Derived Data commercialization.

• QuorumScore™ Carve-Out: An explicit carve-out protecting all QuorumScore™ outputs from any restriction, on the basis that QuorumScore™ is a proprietary Quorum product that blends data from multiple sources and that its outputs are not traceable to or identifiable with any specific Meridian data.

• Notification Mechanism: Quorum would provide Meridian with advance written notice (but not consent) of any planned third-party commercialization of Derived Data, including a description of the applicable de-identification and transformation measures. This notification mechanism provides Meridian with transparency without granting it veto power.

E. Meridian's October 2023 Counter

Meridian's October 10, 2023 counter-proposal addressed the derived-data issue as follows:

• Revenue Share: Meridian maintained its demand for a 15% net revenue share on any third-party commercialization of Derived Data. Meridian described this as a non-negotiable term reflecting the fundamental value of Meridian's data as an input to any Derived Data product.

• Sufficient Transformation Standard: Meridian moved slightly on the "sufficient transformation" standard, indicating willingness to use a "jointly agreed" standard rather than retaining Meridian's sole discretion. However, Meridian did not accept Quorum's proposed Derived Data Commercialization Protocol or its specific measurable criteria, instead proposing that the standard be defined by a "mutually appointed technical expert" on a case-by-case basis.

• License-Back: Meridian continued to insist on a perpetual, royalty-free, non-exclusive license-back on all Derived Data for Meridian's own internal use.

Quorum rejected this counter on November 17, 2023. The continued insistence on a 15% revenue share and the perpetual license-back were identified as the principal reasons for rejection.

F. C&H Assessment and Annotation

Calderwood & Harkness has conducted substantial analysis on the derived-data issues, and we provide the following assessment and annotations:

Market Norms. Omar Siddiqui conducted a market survey of derived-data provisions in enterprise data-licensing agreements (completed April 2023). The survey examined publicly available precedent transactions and drew on C&H's experience across the firm's technology transactions practice. The survey concluded that Meridian's proposed perpetual, royalty-free license-back on Derived Data is outside market norms for enterprise data-licensing transactions of this type and scale. While some data licensors negotiate "analytics feedback" provisions permitting the licensor to receive aggregated, de-identified usage data for product improvement purposes, a full license-back granting the licensor the right to use the licensee's proprietary analytics outputs for any internal purpose is uncommon and commercially aggressive.

Sufficient Transformation Standard. The undersigned prepared a critique (May 2023) of Meridian's "sufficient transformation" standard, concluding that the standard — even as revised in Meridian's October 2023 counter to a "jointly agreed" standard — remains unworkably subjective and would create ongoing commercial uncertainty for Quorum. Meridian's latest proposal to have a "mutually appointed technical expert" determine sufficiency on a case-by-case basis introduces further unpredictability and delay. Calderwood & Harkness's proposed objective protocol, which incorporates measurable de-identification metrics and statistical irreversibility tests aligned with industry standards and existing CCPA/CPRA de-identification frameworks, provides a more commercially sound and legally defensible approach.

Revenue Share Impact. The 15% revenue share demand is fundamentally incompatible with Quorum's QuorumScore™ B2B licensing strategy. Assuming the B2B licensing revenue line achieves the projected $40,000,000 to $50,000,000 in annual revenue by 2027, a 15% revenue share would cost Quorum approximately $6,000,000 to $7,500,000 annually on that revenue line alone — a material drag on profitability that would undermine the business case for the B2B licensing initiative. Moreover, accepting a revenue share on QuorumScore™ outputs would set a precedent that could be leveraged by other data vendors whose products also serve as inputs to the QuorumScore™ model.

License-Back Risks. The license-back poses risks beyond the immediate commercial cost. A perpetual, royalty-free license granting Meridian the right to use all Derived Data for its own internal purposes would effectively give Meridian access to Quorum's proprietary models, analytics methodologies, and underwriting insights. Given Meridian's planned IPO and potential future change of control, this access could ultimately benefit Quorum's competitors — either directly (if a competitor acquires Meridian) or indirectly (if Meridian leverages Quorum's insights to develop competing products or services for sale to Quorum's competitors). The license-back also creates diligence and disclosure risks in the IPO context: Meridian's IPO prospectus would likely reference the license-back as a source of proprietary data and analytics, potentially revealing the existence and nature of Quorum's proprietary models to public market participants.

CCPA/CPRA Implications. Patricia Heng and Erik Johannsen (of counsel, Data Privacy Group) prepared a separate memorandum (the "Johannsen Memorandum") analyzing the CCPA/CPRA implications of Quorum's proposed third-party commercialization of Derived Data built from consumer credit information. The Johannsen Memorandum concluded that third-party commercialization of Derived Data derived from consumer credit records triggers additional compliance obligations under the CCPA/CPRA, including de-identification requirements, consumer opt-out rights, and potential "sale" or "sharing" of personal information restrictions. Notably, the de-identification standards required by the CCPA/CPRA — including the requirement that information cannot be "reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household" — may already address a significant portion of Meridian's stated concern about reverse-engineering of raw data from Derived Data outputs. This observation provides additional support for Quorum's proposed objective transformation protocol.

Recommendation for Restart. In any restart of negotiations, Quorum should hold firm on the following positions: (i) no revenue share on Derived Data; (ii) no license-back to Meridian; and (iii) the QuorumScore™ carve-out is non-negotiable. Quorum should be prepared to accept an objective transformation standard, provided it is based on measurable criteria (such as Calderwood & Harkness's proposed Derived Data Commercialization Protocol) rather than subjective or case-by-case determination. Quorum should also be prepared to accept the notification mechanism for third-party commercialization. As a potential face-saving concession, Quorum might consider whether a limited "acknowledgment of contribution" — a contractual acknowledgment that Meridian's data was among the inputs to the Derived Data, without conferring any economic rights, IP ownership, or license — might satisfy Meridian's institutional need to document its data's role in the value chain without compromising Quorum's commercial position.

V. Unresolved Issue No. 3: Dispute Resolution

A. Quorum's Position — Exclusive Court Jurisdiction

Quorum's position, reflected in its proposed Section 13.2 of the MDLA, is that all disputes arising under or in connection with the MDLA should be subject to the exclusive jurisdiction of the United States District Court for the Southern District of New York or, if federal subject-matter jurisdiction is unavailable, the Commercial Division of the New York Supreme Court, New York County.

Quorum's preference for judicial resolution is grounded in several considerations. First, court proceedings provide full appellate rights, which are particularly important in complex intellectual property and data-licensing disputes where novel legal issues — such as the ownership of machine-learning model outputs — may arise. The limited grounds for vacating an arbitral award under the Federal Arbitration Act do not provide adequate protection against erroneous application of law. Second, judicial proceedings generate public precedent, which Quorum views as beneficial in an area of law where binding precedent is still developing. Third, the well-established procedural rules of federal civil litigation — including the Federal Rules of Civil Procedure, the Federal Rules of Evidence, and the Local Rules of the Southern District of New York — provide a predictable and transparent framework for dispute resolution. Fourth, Quorum, a Delaware-incorporated corporation with its principal executive offices in Stamford, Connecticut, is comfortable with New York as the forum for any litigation and has no objection to consenting to personal jurisdiction in New York.

B. Meridian's Position — Binding Arbitration

Meridian's position, reflected in its proposed Section 13.2 of the MDLA, is that all disputes should be resolved through binding arbitration conducted under the Commercial Rules of the American Arbitration Association ("AAA"), seated in New York, New York, before a panel of three arbitrators.

Meridian, through KP&A, has articulated several rationales for its preference for arbitration. First, the confidentiality of arbitration proceedings protects the proprietary business terms of the MDLA — including pricing, data volumes, and the specific terms of the derived-data provisions — from becoming part of the public record through court filings. This concern is particularly salient given Meridian's relationships with its broader licensee base and its desire to prevent other licensees from obtaining visibility into Meridian's commercial terms. Second, Meridian contends that arbitration offers a faster resolution timeline than litigation in federal or state court, particularly given the congested dockets in the Southern District of New York. Third, Meridian argues that the AAA's rules for the selection of arbitrators allow the parties to select arbitrators with specialized expertise in data licensing, technology transactions, and intellectual property law — expertise that may not be available from a randomly assigned federal or state court judge.

While Meridian has not stated this explicitly, we note that Meridian's preference for arbitration is likely also driven by Breckenridge Capital Partners' desire to keep dispute details confidential in advance of Meridian's planned 2025–2026 IPO. A public lawsuit between Meridian and one of its largest insurance-sector licensees — particularly one involving disputes over pricing, derived-data rights, and IP ownership — could create adverse publicity, trigger disclosure obligations, and raise questions among potential IPO investors about the stability and durability of Meridian's licensee relationships.

C. C&H Assessment and Annotation

In our assessment, the dispute resolution mechanism, while a material unresolved issue, is secondary in commercial importance to the MFN and derived-data disputes. The choice between court jurisdiction and arbitration affects the process by which disputes are resolved but does not itself alter the substantive rights of the parties. Accordingly, this issue may be available as a tradeable concession in the broader negotiation.

We note the following considerations for Quorum's evaluation:

Hybrid Approach. A hybrid dispute resolution mechanism could address the legitimate interests of both parties. Under this approach, pricing disputes and MFN verification issues — where confidentiality is important to both parties and where specialized expertise is valuable — would be subject to binding arbitration under AAA Commercial Rules. Disputes involving requests for injunctive relief, intellectual property ownership, and breach of data-security obligations — where appellate rights, public precedent, and the availability of expedited relief are important — would be carved out and subject to the exclusive jurisdiction of the U.S. District Court for the Southern District of New York or the Commercial Division of the New York Supreme Court, New York County. This hybrid structure is not uncommon in complex technology transactions and would allow Quorum to preserve court jurisdiction for the categories of disputes most likely to involve novel legal issues and the need for equitable relief.

Concession Value. Alternatively, Quorum could concede to binding arbitration across the board if Meridian makes meaningful movement on the MFN or derived-data rights. Meridian has placed significant value on arbitration — both for legitimate confidentiality reasons and for IPO-related strategic reasons — and a concession on dispute resolution may unlock corresponding flexibility from Meridian on the issues that matter most to Quorum. This concession should be held in reserve and deployed only in exchange for material reciprocal movement.

Governing Law. We note that the parties have agreed on governing law — New York, without regard to conflicts-of-law principles — and this issue is not in dispute. Any arbitration or litigation would apply New York substantive law.

Recommendation for Restart. Quorum should treat dispute resolution as a negotiating chip. The preferred approach is a hybrid mechanism (arbitration for pricing/MFN; court for IP/injunctive relief/data security). If a hybrid is not achievable, Quorum should be prepared to concede to full arbitration in exchange for meaningful concessions on MFN or derived-data rights, provided that any arbitration clause includes appropriate carve-outs for provisional and injunctive relief in court.

VI. Unresolved Issue No. 4: Post-Termination Treatment of Derived Data

A. Agreed Terms — Raw Data

The parties have reached agreement on the treatment of Meridian's raw data upon termination or expiration of the MDLA. Specifically, both parties agree that upon termination or expiration, Quorum must return or destroy all Meridian raw data — including all data from the MCI Consumer Credit File™, MCI CommercialView™, and MCI AltSignal™ data products — within ninety (90) days of the effective date of termination or expiration. Quorum would be required to provide an officer's certificate, executed by a senior officer of the Company, confirming the return or destruction of all raw data and certifying that no copies of raw data have been retained in any form.

This provision is not in dispute and would be included in the final MDLA.

B. Quorum's Position — Derived Data Post-Termination

Quorum's position is that it should retain perpetual rights to all Derived Data created during the license term, including the right to continue using, sublicensing, and commercially exploiting such Derived Data after termination or expiration of the MDLA. Under Quorum's proposed Article XII (Termination and Post-Termination Obligations), the return/destruction obligation would apply only to Meridian's raw data, and all Derived Data would be expressly excluded from the return/destruction requirement.

Quorum's rationale for this position is both legal and practical:

• intellectual Investment. Derived Data represents Quorum's own substantial intellectual and financial investment. The development of QuorumScore™ and related analytics products has required millions of dollars in R&D expenditure, the recruitment and retention of specialized data science talent, and years of model development and refinement. Quorum's Derived Data is not a passive by-product of Meridian's data; it is the result of Quorum's independent analytical work applied to multiple data sources, of which Meridian data is one input among many.

• Operational Interdependence. Derived Data is deeply intertwined with Quorum's operational systems. QuorumScore™ is embedded in Quorum's underwriting workflow, claims-fraud detection algorithms, pricing models, and customer-facing applications. Forcing the destruction of Derived Data upon termination would require Quorum to dismantle and rebuild core operational systems — a process that would take years and cost tens of millions of dollars.

• Model Integrity. Quorum's machine-learning models trained during the license term incorporate patterns and relationships learned from Meridian data along with many other data sources. Trained model parameters are not readily separable into "Meridian-derived" and "non-Meridian-derived" components. Requiring destruction of all model parameters that are in any way "traceable to" Meridian data would effectively require destruction of the models in their entirety, rendering years of model development worthless.

• Commercial Reasonableness. A data-licensing agreement is, by its nature, a time-limited arrangement. The licensee's ability to retain and use what it has created during the license term — as distinguished from the licensor's raw data, which must be returned — is a fundamental commercial expectation in enterprise data-licensing transactions.

C. Meridian's Position — Derived Data Post-Termination

Meridian has advanced two alternative positions on the post-termination treatment of Derived Data:

Primary Position — Return or Destruction. Meridian insists that all Derived Data containing or traceable to Meridian data must also be returned or destroyed within ninety (90) days of termination, on the same terms as raw data. Meridian characterizes this position as the logical consequence of its view that Derived Data constitutes a "derivative work" subject to Meridian's underlying intellectual property rights: if Meridian owns (or retains rights in) the Derived Data, then the Derived Data must be returned when the license that authorized its creation expires.

Alternative Position — Continuing Royalty. Alternatively, Meridian has indicated willingness to permit Quorum's post-termination use of Derived Data, subject to a continuing royalty of 15% of net revenues attributable to such Derived Data. This continuing royalty would apply indefinitely following termination and would extend to all uses of Derived Data, including internal use (valued at a notional fair market rate) and external commercialization. Meridian views this as a reasonable compromise that permits Quorum to continue operating while compensating Meridian for the ongoing use of data in which Meridian retains an interest.

Meridian has also characterized perpetual post-termination Derived Data rights as effectively making the license irrevocable with respect to the most valuable outputs of the relationship. Meridian argues that if Quorum can retain and commercially exploit all Derived Data in perpetuity after termination, the economic incentive for Quorum to renew the MDLA is significantly diminished — Quorum would have extracted the maximum value from Meridian's data during the initial term and would have little motivation to pay for continued access.

Wind-Down Alternative. As a further alternative, Meridian would accept a post-termination "wind-down" period of twelve (12) months, during which Quorum may continue using Derived Data for internal purposes only (but not commercially exploit it externally). At the end of the wind-down period, all Derived Data must be destroyed, or Quorum must enter into a new license with Meridian.

D. C&H Assessment and Annotation

The post-termination treatment of Derived Data is closely linked to the resolution of Unresolved Issue No. 2 (Derived Data IP Ownership). If Quorum prevails on the ownership issue — establishing that Quorum is the sole and exclusive owner of all Derived Data — then the termination treatment should follow naturally: Quorum retains what it owns, and Meridian has no basis to demand the return or destruction of property that belongs to Quorum. Conversely, if the parties reach a compromise on ownership that acknowledges some residual Meridian interest in Derived Data, the post-termination treatment will need to be crafted to reflect that compromise.

Operational Impracticability. Meridian's primary position — requiring destruction of all Derived Data within 90 days — is operationally impracticable for the reasons outlined above. In particular, trained machine-learning model parameters are not readily

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 425 Park Avenue New York, NY 10022
C&H Matter No. 1025-00008
MEMORANDUM
November 2023
TO: Carolyn Whitford, General Counsel & Executive Vice President, Quorum Insurance Holdings Corp. Gregory Stahl, Vice President, Legal Affairs, Quorum Insurance Holdings Corp.
FROM: Wendy Schultz, Associate, intellectual Property Group, Calderwood & Harkness LLP
RE: Annotated Summary of Unresolved Issues in Master Data License Agreement Between Quorum Insurance Holdings Corp. and Meridian Credit intelligence, Inc.
COPIES: Leonard Cross (Responsible Partner, Calderwood & Harkness LLP) Patricia Heng (Senior Counsel, Technology Transactions, Calderwood & Harkness LLP) Omar Siddiqui (Working Associate, Calderwood & Harkness LLP)
This memorandum is a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the use of the named recipients and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
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I. Executive Summary
This memorandum provides a comprehensive annotated summary of all material unresolved issues in the proposed Master Data License Agreement (the "MDLA") between Quorum Insurance Holdings Corp. ("Quorum" or the "Company") and Meridian Credit intelligence, Inc. ("Meridian" or "MCI"), as negotiations entered dormancy on November 17, 2023. The memorandum is prepared at the direction of Carolyn Whitford, General Counsel, to serve as a reference document in the event that Quorum elects to restart negotiations in early 2024, and to ensure that all members of the deal team — both internal and external — have a unified understanding of the current state of play on each open issue.
Background. Calderwood & Harkness's engagement on this matter was opened on August 8, 2022, with Nathaniel Bower designated as billing partner and a soft fee cap of $1,800,000 established for the negotiation and documentation phase. Meridian's form MDLA was delivered by its outside counsel, Kessler Pruitt & Ashe LLP ("KP&A"), on November 4, 2022. Calderwood & Harkness, on behalf of Quorum, delivered a comprehensive redline of that form MDLA on December 2, 2022. Since that exchange, the parties have conducted three in-person negotiation sessions: January 18, 2023 (New York), March 9, 2023 (Atlanta), and June 30, 2023 (New York). In addition, Quorum CEO Margaret Tierney and Meridian CEO Vincent Halstead held a principal-to-principal telephone call on May 15, 2023, during which they agreed that negotiations should continue and instructed their respective teams to seek resolution on the outstanding issues. Notwithstanding that instruction, the parties have been unable to close the gap on several fundamental commercial and legal terms.
Transaction Overview. The proposed MDLA contemplates a five-year enterprise data-licensing arrangement with an aggregate value of $60,000,000 in license fees. The fee structure consists of $10,800,000 in Year 1, escalating to $12,300,000 per year in Years 2 through 5, plus a one-time implementation and integration fee of $1,500,000. The MDLA would provide Quorum with enterprise-wide access to three core Meridian data products: the MCI Consumer Credit File™ (encompassing approximately 310 million consumer records), MCI CommercialView™ (encompassing approximately 42 million business records), and MCI AltSignal™ (encompassing approximately 85 million consumer alternative-data records). These data products are central to Quorum's underwriting, claims management, and predictive analytics capabilities, including the Company's proprietary QuorumScore™ predictive underwriting model.
Current Status. As of the date of this memorandum, negotiations are DORMANT. On October 10, 2023, Meridian delivered a counter-proposal that failed to address Quorum's core concerns on most favored nation pricing protection and derived-data ownership and commercialization rights. On November 17, 2023, Quorum formally rejected that counter-proposal. No substantive communication between the parties or their respective counsel has occurred since that date. Carolyn Whitford has indicated that she expects to determine in early 2024 whether to restart negotiations.
Summary of Unresolved Issues. This memorandum identifies and analyzes four categories of material unresolved issues:
1. Most Favored Nation Pricing (Section III) — Quorum's demand for pricing parity with comparable insurance-industry licensees, and the parties' alternative proposals regarding a pricing audit right;
2. Derived-Data Rights and IP Ownership (Section IV) — The fundamental disagreement over ownership and commercialization rights with respect to data, models, scores, and analytics outputs created by Quorum using licensed Meridian data as an input;
3. Dispute Resolution (Section V) — Quorum's preference for exclusive court jurisdiction versus Meridian's insistence on binding arbitration; and
4. Post-Termination Treatment of Derived Data (Section VI) — Whether Quorum retains perpetual rights to Derived Data following termination or expiration of the MDLA.
In addition, Section VII addresses several secondary unresolved items, including late payment interest compounding methodology, data-volume overage true-up payment terms, additional insured status on cyber liability insurance, indemnification scope and caps, limitation of liability with respect to consequential damages, and term and renewal mechanics.
Ancillary Matters. We note that the Standish National Bank, N.A. lender consent required under Section 7.12(b) of the Amended and Restated Credit Agreement dated June 15, 2021, remains outstanding. The $60,000,000 aggregate license value of the MDLA exceeds the $25,000,000 intellectual property license covenant threshold contained in that agreement by $35,000,000 (representing 240% of the threshold amount). As discussed in Section IX below, this consent must be obtained prior to execution of the MDLA, and re-engagement with Standish should be initiated promptly once a decision to restart negotiations has been made.
II. Procedural History and Negotiation Chronology
The following section sets forth a detailed chronology of the negotiation process, organized by phase, to provide context for the substantive issues discussed in Sections III through VII. This chronology is based on Calderwood & Harkness's contemporaneous records, correspondence files, session notes, and the internal deal tracker maintained by Omar Siddiqui.
A. Pre-Negotiation Phase (August–October 2022)
The engagement of Calderwood & Harkness on this matter was formalized on August 8, 2022, when Quorum executed an engagement letter designating Nathaniel Bower as billing partner. The engagement letter established a soft fee cap of $1,800,000 for the negotiation and documentation phase of the MDLA transaction, exclusive of out-of-pocket expenses and any litigation or regulatory matters that might arise in connection with the transaction. Leonard Cross was designated as the responsible partner, with Patricia Heng (Senior Counsel, Technology Transactions) and the undersigned (Wendy Schultz, Associate, intellectual Property Group) serving as the primary working team. Omar Siddiqui was brought onto the matter as a working associate in September 2022.
On August 15, 2022, the parties executed a mutual nondisclosure agreement (Reference NDA-QIH-MCI-2022-001), which governs the exchange of confidential information in connection with the MDLA negotiations. The NDA contains standard terms, including a two-year confidentiality period, mutual obligations, and customary carve-outs for information independently developed, publicly available, or disclosed pursuant to legal process.
Following execution of the NDA, the parties commenced a preliminary exchange of commercial terms. On September 12, 2022, Meridian delivered an initial term sheet outlining the proposed scope, pricing, and key commercial parameters of the data-licensing arrangement. Calderwood & Harkness, in consultation with Quorum's internal business and legal teams, prepared a counter-term sheet that was delivered to Meridian on September 30, 2022. The counter-term sheet incorporated several provisions not present in Meridian's initial proposal, including most favored nation pricing protections, enhanced derived-data ownership provisions, and Quorum's preferred dispute resolution framework. These provisions would become the central points of contention in the ensuing months.
On October 17, 2022, the parties exchanged initial MDLA drafts. Meridian's draft was based on its standard form data license agreement, which has historically served as the starting point for Meridian's enterprise licensing transactions. Quorum's draft, prepared by Calderwood & Harkness, was a marked-up version of Meridian's form reflecting Quorum's positions on all material terms.
B. MDLA Drafting and Initial Exchange (November–December 2022)
On November 4, 2022, Kessler Pruitt & Ashe LLP delivered Meridian's formal MDLA draft. The KP&A team on this matter is led by Graham Whitley (lead partner), with associates Nina Chastain and Derek Fontaine handling day-to-day drafting and negotiation. The Meridian form MDLA is a comprehensive agreement consisting of a main body of 14 articles and numerous schedules, exhibits, and addenda, including a Technical Schedule A (data delivery specifications), a Service Level Agreement, a Data Security Addendum, a Data Processing Agreement (addressing CCPA/CPRA compliance), and an FCRA Permissible Purpose Certification. The Meridian form MDLA reflected Meridian's standard positions on intellectual property ownership, derived-data restrictions, indemnification, and dispute resolution, among other terms.
Calderwood & Harkness conducted a thorough review of the Meridian form MDLA and, in consultation with the Quorum internal team, prepared Quorum's comprehensive redline. This redline was delivered to KP&A on December 2, 2022. The key insertions and modifications in Quorum's comprehensive redline included the following:
• Most Favored Nation Pricing Clause: A new Section 4.7 providing for automatic price adjustment if Meridian offers more favorable per-record pricing or fee terms to any comparable insurance-industry licensee;
• Revised Article VII (Derived Data and IP Ownership): A complete rewrite of the derived-data and intellectual property provisions to establish Quorum's exclusive ownership of all Derived Data, unrestricted commercialization rights, and elimination of any license-back to Meridian;
• Court Jurisdiction for Dispute Resolution: Replacement of Meridian's binding arbitration clause with a provision for exclusive jurisdiction in the U.S. District Court for the Southern District of New York or the Commercial Division of the New York Supreme Court, New York County;
• Enhanced Data Security and Breach Notification Provisions: More stringent data security obligations, including a 48-hour breach notification window (reduced from Meridian's proposed 72 hours), annual audit rights, and specific reference to SOC 2 Type II and ISO 27001 compliance standards; and
• Indemnification and Liability Provisions: Expanded indemnification obligations and carve-outs from limitations on liability for intellectual property infringement, data breaches, and confidentiality breaches.
C. Negotiation Sessions (January–June 2023)
Following delivery of Quorum's comprehensive redline, the parties scheduled and conducted three in-person negotiation sessions. Each session is summarized below.
January 18, 2023 — First Session (New York). The first in-person negotiation session was held at Calderwood & Harkness's offices in New York. The Quorum team was represented by Gregory Stahl (VP, Legal Affairs), the undersigned, Patricia Heng, and Omar Siddiqui. The Meridian team was represented by James Cavanaugh (VP, Enterprise Licensing), Graham Whitley, and Nina Chastain. During this session, the parties reviewed the comprehensive redline on an article-by-article basis and identified the principal areas of disagreement. Most favored nation pricing and derived-data rights and IP ownership were formally flagged as the two principal open issues requiring resolution at a senior level. The parties made progress on several ancillary provisions, including data delivery specifications, certain SLA parameters, and the framework for the Data Security Addendum. An issues list was compiled and distributed following the session.
February 14, 2023 — Pricing Benchmark Study. Between sessions, Quorum engaged Pinnacle Ridge Advisory LLC ("Pinnacle Ridge"), a specialized data-economics consulting firm, to prepare an independent pricing benchmark study. The study, delivered on February 14, 2023, was prepared by Franklin Osei, Managing Director. The Pinnacle Ridge study analyzed comparable credit-data license pricing across Meridian's insurance-sector licensee base (to the extent publicly available or ascertainable from market intelligence) and identified material variance in per-record pricing across Meridian's insurance-sector licensees. The study provided empirical support for Quorum's MFN position and was shared with Meridian's team in advance of the second negotiation session.
March 9, 2023 — Second Session (Atlanta). The second in-person session was held at Meridian's offices in Atlanta. This session included, in addition to the legal teams, senior commercial personnel from both sides. Most favored nation pricing and derived-data rights remained unresolved. Meridian's commercial team, led by James Cavanaugh, indicated for the first time that Breckenridge Capital Partners — Meridian's 62.5% majority equity owner — had expressed categorical opposition to the inclusion of any MFN pricing clause in Meridian's data-licensing agreements. This was described as a portfolio-wide policy driven by Breckenridge's investment thesis and valuation methodology for its portfolio companies. Partial progress was made on SLA terms, including agreement in principle on the 99.9% monthly uptime standard, latency requirements, and the service credit framework.
May 15, 2023 — CEO-to-CEO Call. Following the second negotiation session and a period of limited progress at the working-team level, Margaret Tierney (CEO, Quorum) and Vincent Halstead (CEO, Meridian) held a direct telephone call on May 15, 2023. The call was arranged at Ms. Whitford's suggestion to break the impasse. During the call, the two CEOs acknowledged the strategic importance of the data-licensing relationship to both organizations and agreed to instruct their respective teams to continue negotiating in good faith toward a resolution. No specific substantive commitments were made during the call, but both CEOs expressed optimism that the remaining issues could be resolved.
June 30, 2023 — Third Session (New York). The third and final in-person session was held at Calderwood & Harkness's offices in New York. This session focused primarily on the SLA, data-delivery specifications, insurance minimums, and technical schedules — areas where meaningful progress could be made without resolving the two core commercial disputes. By the end of the session, the parties had reached agreement in principle on substantially all SLA terms, data delivery methods and refresh frequencies, the Data Security Addendum, the Data Processing Agreement, the FCRA Permissible Purpose Certification, and most insurance coverage minimums. However, most favored nation pricing and derived-data rights and IP ownership remained open, as did the dispute resolution mechanism and post-termination treatment of Derived Data. Following the session, Calderwood & Harkness prepared a third MDLA redline in July 2023, reflecting the agreed SLA and technical terms and maintaining Quorum's positions on the open issues. This third redline represents the most current version of the MDLA.
D. Escalation and Breakdown (August–November 2023)
Following the June 30, 2023 session, the pace of negotiations slowed considerably. We understand from KP&A that Meridian's board of directors convened in August 2023 to consider the MDLA terms in light of the company's broader strategic priorities, including its planned initial public offering in the 2025–2026 timeframe.
August 22, 2023 — Meridian Board Resolution. On August 22, 2023, Meridian's board of directors — influenced by Breckenridge Capital Management LLC (specifically Caleb Rourke, the partner overseeing the Meridian investment, and Elaine Drummond, managing partner of Breckenridge) and reflecting concerns raised by Whitmore Zanthor & Co. (Rachel Ng-Castillo, managing director, serving as Meridian's investment banking advisor on the planned IPO) — formally resolved against granting most favored nation pricing or unrestricted derived-data commercialization rights to any licensee. This resolution was communicated to Quorum's team by KP&A in a letter dated August 28, 2023. The board's stated rationale centered on (i) the need to preserve pricing power and margin flexibility across Meridian's licensee base; (ii) the impact that MFN clauses and uncontrolled derived-data commercialization could have on Meridian's revenue predictability and valuation narrative in the context of an IPO; and (iii) confidentiality obligations to existing licensees.
September 15, 2023 — Quorum's Pricing Audit Right Proposal. In response to Meridian's categorical rejection of the MFN, Calderwood & Harkness, at Quorum's direction, prepared and delivered a fallback proposal centered on a "pricing audit right." Under this proposal, Quorum would have the right, exercisable once per contract year, to engage an independent third-party auditor (approved by both parties) to verify that Quorum's effective per-record rate does not exceed 110% of the lowest per-record rate charged to any comparable insurance-industry licensee. The auditor's report would be limited to a "pass/fail" finding and would not disclose specific third-party pricing information. If the audit revealed a pricing disparity exceeding the 110% threshold, Meridian would be obligated to adjust Quorum's pricing prospectively to match the 110% ceiling. This proposal was designed to address Meridian's stated concerns about confidentiality and bespoke pricing while providing Quorum with meaningful, verifiable price protection.
October 10, 2023 — Meridian's Counter-Proposal. On October 10, 2023, KP&A delivered Meridian's counter-proposal. The counter-proposal contained two principal elements: (a) a "most favored terms" clause limited exclusively to data-delivery SLAs and uptime commitments, explicitly excluding pricing, fees, volume discounts, and all other economic terms; and (b) a 15% revenue share on net revenues from Quorum's third-party commercialization of Derived Data. Meridian described the SLA-only "most favored terms" clause as a meaningful concession reflecting Meridian's commitment to providing Quorum with best-in-class service. The 15% revenue share was described as a market-standard contribution fee reflecting the value of Meridian's underlying data in any derived analytics products.
November 17, 2023 — Quorum's Rejection and Dormancy. After consultation with Ms. Whitford and Mr. Stahl, Calderwood & Harkness delivered Quorum's formal rejection of Meridian's October 10, 2023 counter-proposal on November 17, 2023. The rejection letter noted that the SLA-only "most favored terms" clause offered no economic value to Quorum, given that SLA terms had already been substantially agreed during the June 30, 2023 session, and that the 15% revenue share on Derived Data commercialization was fundamentally inconsistent with Quorum's business objectives and competitive strategy. No substantive communication between the parties or their respective counsel has occurred since that date. Negotiations are dormant as of the date of this memorandum.
III. Unresolved Issue No. 1: Most Favored Nation Pricing
A. Quorum's Primary Position
Quorum demands the inclusion of a most favored nation provision in the MDLA ensuring that if Meridian offers any other insurance-industry licensee more favorable per-record pricing, volume discounts, or fee terms at any time during the term of the MDLA, Quorum's pricing will automatically adjust to match those more favorable terms. This provision is embodied in Quorum's proposed Section 4.7 of the MDLA.
The scope of the proposed MFN comparator class encompasses all U.S.-domiciled insurance carriers, managing general agents, and insurtech firms with annual premiums written equal to or exceeding $500,000,000. This comparator class was deliberately defined to include entities of comparable scale and market position to Quorum, ensuring that the MFN operates as a protection against competitive disadvantage among Meridian's most significant insurance-sector licensees rather than as a mechanism for obtaining pricing designed for smaller or materially different customers.
Quorum's rationale for the MFN is grounded in both market intelligence and commercial principle. The Pinnacle Ridge Advisory pricing benchmark study delivered on February 14, 2023 identified material variance in per-record pricing across Meridian's insurance-sector licensees. While the study was necessarily limited by the publicly available information and market intelligence accessible to Pinnacle Ridge, the variance identified was sufficient to support a reasonable inference that Quorum, absent an MFN or equivalent pricing protection, risks overpaying relative to competitors who may negotiate later, leverage different terms, or benefit from Meridian's desire to win new business in the insurance sector. Furthermore, Quorum's position as one of Meridian's largest insurance-sector clients — the MDLA's $60,000,000 total value, based on an estimated monthly volume of approximately 437 million records, positions Quorum among the top-tier licensees in Meridian's insurance vertical — warrants the pricing protection that an MFN provides. The risk of competitive disadvantage is particularly acute given the concentrated nature of the enterprise credit-data market and the limited number of comprehensive alternatives to Meridian's data products.
B. Meridian's Position — Categorical Rejection
Meridian has categorically refused any MFN clause throughout the negotiation process. Meridian, through KP&A and its commercial team, has articulated four grounds for its refusal:
First, Meridian contends that its confidentiality obligations to other licensees prohibit disclosure of pricing terms, even indirectly through an MFN adjustment mechanism. Meridian asserts that its standard data-licensing agreements contain confidentiality provisions that would be breached if Meridian were required to adjust Quorum's pricing based on terms offered to another licensee, as such adjustment would necessarily signal the existence of more favorable pricing elsewhere in the licensee base.
Second, Meridian argues that cross-licensee price comparisons are impracticable given the bespoke nature of each data-licensing arrangement. Each licensee receives a different mix of data products (Consumer Credit File, CommercialView, AltSignal, or some subset thereof), with different refresh frequencies, different delivery methods (SFTP batch versus REST API), different volume tiers, and different ancillary services. Meridian contends that effective per-record rates are not meaningfully comparable across licensees with materially different product configurations.
Third, and perhaps most significantly from a practical standpoint, Breckenridge Capital Partners (Meridian's 62.5% majority equity owner) and Whitmore Zanthor & Co. (Meridian's investment banking advisor on its planned 2025–2026 IPO) view an MFN clause as a margin risk that would negatively impact Meridian's valuation narrative. Specifically, Breckenridge and Whitmore Zanthor are concerned that an MFN would undermine Meridian's ability to demonstrate pricing power, data exclusivity, and margin stability — key elements of the valuation narrative being developed for the IPO. The presence of MFN clauses in material contracts would require disclosure in IPO offering documents and could invite questions from prospective investors about Meridian's ability to maintain and expand margins.
Fourth, Meridian has raised antitrust sensitivities specific to the credit-data market, claiming that MFN clauses may create price-signaling risks or facilitate tacit coordination among competitors. While this argument was raised somewhat obliquely by KP&A, it appears to reflect a general concern about regulatory scrutiny of the credit-data industry rather than a specific legal analysis of the antitrust implications of the proposed MFN clause.
C. Quorum's Fallback — Pricing Audit Right
In response to Meridian's categorical rejection of the MFN, Quorum proposed a fallback position on September 15, 2023 in the form of a limited "pricing audit right." The key elements of this proposal are as follows:
• Frequency: The pricing audit right would be exercisable once per contract year, at Quorum's election.
• Independent Auditor: The audit would be conducted by an independent third-party auditor mutually approved by both parties. If the parties cannot agree on an auditor within thirty (30) days of Quorum's exercise of the audit right, a "Big Four" accounting firm with no existing engagement with either party would be selected by lot.
• Scope of Audit: The auditor would be tasked with verifying that Quorum's effective per-record rate does not exceed 110% of the lowest per-record rate charged to any comparable insurance-industry licensee. The comparator class for the audit would be the same as for the MFN: all U.S.-domiciled insurance carriers, managing general agents, and insurtech firms with annual premiums written equal to or exceeding $500,000,000.
• Report Format: The auditor's report would be limited to a "pass/fail" finding — i.e., a statement that Quorum's effective per-record rate either does or does not exceed the 110% ceiling. The report would not disclose the identity of any comparator licensee, the specific pricing terms of any comparator license, or any other confidential information of Meridian or its licensees.
• Remediation: If the audit reveals that Quorum's effective per-record rate exceeds the 110% ceiling, Meridian would be obligated to adjust Quorum's pricing prospectively (not retroactively) to the 110% ceiling, effective as of the first day of the calendar quarter following delivery of the audit report.
• Cost Allocation: The cost of the audit would be borne by Quorum unless the audit reveals a pricing disparity exceeding the 110% ceiling, in which case Meridian would bear the cost.
This proposal was designed to address each of Meridian's stated objections to the full MFN: the pass/fail format preserves the confidentiality of third-party pricing; the use of an independent auditor avoids the need for Meridian to disclose pricing directly to Quorum; the comparator class is limited to genuinely comparable licensees; and the audit mechanism does not require any automatic price adjustment that would create price-signaling risks.
D. Meridian's Counter-Fallback — Most Favored Terms (SLA-Only)
On October 10, 2023, Meridian offered its own counter-fallback: a "most favored terms" clause that would be limited exclusively to data-delivery SLAs and uptime commitments. This clause would require Meridian to provide Quorum with service levels (including uptime, latency, refresh frequency, and support responsiveness) no less favorable than those offered to any other enterprise licensee. The clause explicitly excludes pricing, fees, volume discounts, and all other economic terms.
From Quorum's perspective, this counter-fallback is commercially meaningless. The SLA terms that would be covered by the "most favored terms" clause were already substantially agreed during the June 30, 2023 negotiation session and are reflected in the July 2023 third redline of the MDLA. Quorum has already secured a 99.9% monthly uptime commitment, specific latency standards, and a service credit framework that provides adequate SLA protection. Extending a "most favored terms" guarantee to these already-agreed SLA terms adds no incremental value. The core of Quorum's concern — pricing parity — is entirely unaddressed by Meridian's counter.
E. C&H Assessment and Annotation
Calderwood & Harkness has previously prepared two memoranda relevant to this issue. The first, prepared by the undersigned and Patricia Heng, analyzed the enforceability of MFN pricing clauses under New York law. That memorandum concluded that a properly scoped MFN clause is enforceable under New York law as a standard contractual pricing mechanism, subject to standard principles of contract interpretation and the requirement that the MFN be drafted with sufficient specificity to permit a court to determine whether a breach has occurred and what remedy is appropriate. The second memorandum, prepared by the undersigned, addressed the antitrust implications of MFN clauses in the credit-data licensing context. That memorandum concluded that an MFN benefiting a single licensee does not, standing alone, create a material antitrust risk under either Section 1 or Section 2 of the Sherman Act, though it acknowledged that the broader competitive dynamics of the credit-data market — including the FTC's ongoing scrutiny of data-broker practices — warrant careful drafting. Both memoranda support the enforceability of a properly scoped MFN but acknowledge practical challenges with verification and enforcement, particularly in the absence of a mechanism for Quorum to independently ascertain third-party pricing.
In our assessment, the pricing audit right fallback represents a reasonable and defensible middle ground that substantively addresses Meridian's stated objections while providing Quorum with meaningful — if not absolute — price protection. The pass/fail audit format preserves third-party confidentiality. The 110% threshold provides Meridian with meaningful pricing headroom (a 10% premium over the lowest comparator rate). And the annual exercise limitation prevents the audit from becoming unduly burdensome.
Meridian's SLA-only counter-fallback, by contrast, offers no economic value to Quorum and should not be accepted.
Recommendation for Restart. In any restart of negotiations, Quorum should continue to press for the pricing audit right as the minimum acceptable position on the MFN issue. If additional concessions are needed to secure Meridian's agreement, Quorum could consider (i) narrowing the scope of the comparator class (e.g., limiting it to the top five insurance-industry licensees by annual data volume rather than all licensees above the $500 million premium threshold); (ii) offering a longer interval between audits (e.g., biennial rather than annual); or (iii) accepting a higher pricing ceiling (e.g., 115% rather than 110%). Each of these concessions reduces the practical impact of the audit right on Meridian while preserving its core protective function for Quorum.
IV. Unresolved Issue No. 2: Derived-Data Rights and IP Ownership
A. Quorum's Primary Position
Quorum's primary position is that all intellectual property rights in any data, models, scores, indices, analytics outputs, or other works created by Quorum using the licensed Meridian data as an input (collectively, "Derived Data") should be owned exclusively by Quorum, free and clear of any claims, liens, licenses, or interests of Meridian. This position is reflected in Article VII of Quorum's proposed MDLA redline.
Specifically, Quorum's position encompasses the following elements:
• Exclusive Ownership: Quorum is the sole and exclusive owner of all intellectual property rights — including copyrights, trade secrets, patent rights, and any sui generis database rights — in and to all Derived Data;
• Unrestricted Commercialization: Quorum has the unrestricted right to use, reproduce, modify, sublicense, and commercially exploit Derived Data, including the right to license Derived Data to third parties outside Quorum's corporate group, without additional fees to Meridian or Meridian's prior consent;
• No License-Back: Meridian has no license, right, or interest in any Derived Data created by Quorum; and
• No Revenue Share: No portion of any revenue generated by Quorum from the use or commercialization of Derived Data is owed to Meridian.
The commercial importance of this position to Quorum cannot be overstated. Quorum's proprietary QuorumScore™ predictive underwriting model — for which a United States Patent and Trademark Office application is pending (Serial No. 97/482,116) — blends Meridian credit data with Quorum's own first-party claims experience data, policyholder data, and telematics data to generate proprietary risk scores and underwriting recommendations. QuorumScore™ is central to Quorum's underwriting competitive advantage, and the Company's strategic plan includes a B2B licensing revenue line based on licensing QuorumScore™ and related analytics products to other market participants. This B2B licensing revenue line is projected to reach $40,000,000 to $50,000,000 in annual revenue by 2027. Any restriction on Quorum's ability to own, use, and commercialize Derived Data — including QuorumScore™ outputs — directly threatens this strategic initiative and the Company's broader competitive position.
B. Meridian's Position
Meridian's position, as articulated by KP&A throughout the negotiation process, is that any Derived Data that incorporates, is based on, or is traceable to Meridian's raw data constitutes a "derivative work" within the meaning of the Copyright Act, 17 U.S.C. § 101, and accordingly remains subject to Meridian's underlying intellectual property rights in its raw data. Meridian has consistently demanded three elements:
1. License-Back. A perpetual, royalty-free, non-exclusive license-back on all Derived Data, granting Meridian the right to use all Derived Data created by Quorum for Meridian's own internal business purposes, including product development, benchmarking, and analytics.
2. Third-Party Commercialization Restriction. A prohibition on Quorum selling, sublicensing, or otherwise making available Derived Data to any third party unless the Derived Data has been "sufficiently transformed" such that no Meridian raw data can be reverse-engineered, reconstructed, or re-identified from the Derived Data. In Meridian's original proposal, Meridian retained sole discretion to determine whether any particular item of Derived Data met the "sufficient transformation" standard.
3. Revenue Share. If Quorum commercializes Derived Data externally (after clearance of the "sufficient transformation" standard), Meridian receives 15% of net revenues attributable to such Derived Data. "Net revenues" is defined in Meridian's draft as gross revenues less only direct third-party distribution costs, excluding any allocation of Quorum's internal costs, overhead, or development expenses.
C. Technical Dispute: Machine-Learning Model Outputs
A particularly consequential sub-issue within the derived-data dispute concerns the classification of outputs from Quorum's machine-learning models. The parties fundamentally disagree on whether the outputs of Quorum's machine-learning models — which are trained on, among other data sources, Meridian data — constitute "Derived Data" at all.
Quorum's position is that a careful technical and legal analysis of the machine-learning pipeline supports the conclusion that only the trained model weights and parameters are potentially derivative of training data inputs. Once a model has been trained and is deployed to make predictions or inferences on new, non-Meridian input data (e.g., a new insurance application submitted by a prospective policyholder), the resulting predictions or inferences are independent outputs that do not "incorporate" or "contain" any Meridian data. The model is a tool that was informed by Meridian data during training, but its live outputs are generated from new inputs and are not derivative of any specific Meridian record. This position is analogous to the principle that a student who learns from a textbook does not produce "derivative works" of the textbook when applying the learned knowledge to new problems.
Meridian's position is that any output of a model trained on Meridian data is traceable to and therefore derivative of Meridian's underlying data, regardless of the inputs used at inference time. Meridian characterizes the model as a "vessel" for Meridian's data, contending that the patterns, correlations, and statistical relationships learned by the model from Meridian's training data are inseparable from the model's outputs. Under this view, every QuorumScore™ prediction — even one generated using entirely non-Meridian input data — would be classified as Derived Data subject to Meridian's license-back, commercialization restriction, and revenue-share demands.
Calderwood & Harkness prepared a memorandum in January 2023 (prepared by the undersigned and Omar Siddiqui) analyzing the ownership of machine-learning model outputs under copyright and trade secret law. That memorandum concluded that the weight of the available authority supports Quorum's position — namely, that inference outputs generated from new, non-Meridian inputs are not "derivative works" of the training data under copyright law and do not incorporate protectable trade secrets of the training data owner. However, the memorandum acknowledged that case law directly addressing this issue remains limited, and the legal landscape in this area is evolving. The memorandum recommended that the MDLA address this issue explicitly through contractual definition rather than relying on uncertain common-law principles.
D. Quorum's Revised Compromise Framework (June 2023)
During and following the June 30, 2023 negotiation session, Quorum developed a revised compromise framework intended to address Meridian's legitimate concerns about the potential for Quorum's Derived Data products to effectively "re-export" Meridian's raw data, while preserving Quorum's core ownership and commercialization rights. The key elements of this framework are as follows:
• Ownership: Quorum retains sole and exclusive ownership of all Derived Data intellectual property.
• No License-Back: No license-back to Meridian on any Derived Data, whether for internal use or otherwise.
• Commercialization with Safeguards: Quorum may commercialize Derived Data to third parties, provided that any externally distributed Derived Data is "sufficiently de-identified and transformed" in accordance with an objective, jointly agreed standard. This standard would be embodied in a Draft Derived Data Commercialization Protocol, prepared by Calderwood & Harkness as a proposed appendix to Article VII. The Protocol specifies measurable criteria for determining "sufficient transformation," including de-identification metrics consistent with CCPA/CPRA standards, statistical irreversibility tests (e.g., demonstrating that the probability of re-identifying any individual Meridian record from the Derived Data output falls below a specified threshold), and technical safeguards against reconstruction.
• No Revenue Share: No revenue share to Meridian on any Derived Data commercialization.
• QuorumScore™ Carve-Out: An explicit carve-out protecting all QuorumScore™ outputs from any restriction, on the basis that QuorumScore™ is a proprietary Quorum product that blends data from multiple sources and that its outputs are not traceable to or identifiable with any specific Meridian data.
• Notification Mechanism: Quorum would provide Meridian with advance written notice (but not consent) of any planned third-party commercialization of Derived Data, including a description of the applicable de-identification and transformation measures. This notification mechanism provides Meridian with transparency without granting it veto power.
E. Meridian's October 2023 Counter
Meridian's October 10, 2023 counter-proposal addressed the derived-data issue as follows:
• Revenue Share: Meridian maintained its demand for a 15% net revenue share on any third-party commercialization of Derived Data. Meridian described this as a non-negotiable term reflecting the fundamental value of Meridian's data as an input to any Derived Data product.
• Sufficient Transformation Standard: Meridian moved slightly on the "sufficient transformation" standard, indicating willingness to use a "jointly agreed" standard rather than retaining Meridian's sole discretion. However, Meridian did not accept Quorum's proposed Derived Data Commercialization Protocol or its specific measurable criteria, instead proposing that the standard be defined by a "mutually appointed technical expert" on a case-by-case basis.
• License-Back: Meridian continued to insist on a perpetual, royalty-free, non-exclusive license-back on all Derived Data for Meridian's own internal use.
Quorum rejected this counter on November 17, 2023. The continued insistence on a 15% revenue share and the perpetual license-back were identified as the principal reasons for rejection.
F. C&H Assessment and Annotation
Calderwood & Harkness has conducted substantial analysis on the derived-data issues, and we provide the following assessment and annotations:
Market Norms. Omar Siddiqui conducted a market survey of derived-data provisions in enterprise data-licensing agreements (completed April 2023). The survey examined publicly available precedent transactions and drew on C&H's experience across the firm's technology transactions practice. The survey concluded that Meridian's proposed perpetual, royalty-free license-back on Derived Data is outside market norms for enterprise data-licensing transactions of this type and scale. While some data licensors negotiate "analytics feedback" provisions permitting the licensor to receive aggregated, de-identified usage data for product improvement purposes, a full license-back granting the licensor the right to use the licensee's proprietary analytics outputs for any internal purpose is uncommon and commercially aggressive.
Sufficient Transformation Standard. The undersigned prepared a critique (May 2023) of Meridian's "sufficient transformation" standard, concluding that the standard — even as revised in Meridian's October 2023 counter to a "jointly agreed" standard — remains unworkably subjective and would create ongoing commercial uncertainty for Quorum. Meridian's latest proposal to have a "mutually appointed technical expert" determine sufficiency on a case-by-case basis introduces further unpredictability and delay. Calderwood & Harkness's proposed objective protocol, which incorporates measurable de-identification metrics and statistical irreversibility tests aligned with industry standards and existing CCPA/CPRA de-identification frameworks, provides a more commercially sound and legally defensible approach.
Revenue Share Impact. The 15% revenue share demand is fundamentally incompatible with Quorum's QuorumScore™ B2B licensing strategy. Assuming the B2B licensing revenue line achieves the projected $40,000,000 to $50,000,000 in annual revenue by 2027, a 15% revenue share would cost Quorum approximately $6,000,000 to $7,500,000 annually on that revenue line alone — a material drag on profitability that would undermine the business case for the B2B licensing initiative. Moreover, accepting a revenue share on QuorumScore™ outputs would set a precedent that could be leveraged by other data vendors whose products also serve as inputs to the QuorumScore™ model.
License-Back Risks. The license-back poses risks beyond the immediate commercial cost. A perpetual, royalty-free license granting Meridian the right to use all Derived Data for its own internal purposes would effectively give Meridian access to Quorum's proprietary models, analytics methodologies, and underwriting insights. Given Meridian's planned IPO and potential future change of control, this access could ultimately benefit Quorum's competitors — either directly (if a competitor acquires Meridian) or indirectly (if Meridian leverages Quorum's insights to develop competing products or services for sale to Quorum's competitors). The license-back also creates diligence and disclosure risks in the IPO context: Meridian's IPO prospectus would likely reference the license-back as a source of proprietary data and analytics, potentially revealing the existence and nature of Quorum's proprietary models to public market participants.
CCPA/CPRA Implications. Patricia Heng and Erik Johannsen (of counsel, Data Privacy Group) prepared a separate memorandum (the "Johannsen Memorandum") analyzing the CCPA/CPRA implications of Quorum's proposed third-party commercialization of Derived Data built from consumer credit information. The Johannsen Memorandum concluded that third-party commercialization of Derived Data derived from consumer credit records triggers additional compliance obligations under the CCPA/CPRA, including de-identification requirements, consumer opt-out rights, and potential "sale" or "sharing" of personal information restrictions. Notably, the de-identification standards required by the CCPA/CPRA — including the requirement that information cannot be "reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household" — may already address a significant portion of Meridian's stated concern about reverse-engineering of raw data from Derived Data outputs. This observation provides additional support for Quorum's proposed objective transformation protocol.
Recommendation for Restart. In any restart of negotiations, Quorum should hold firm on the following positions: (i) no revenue share on Derived Data; (ii) no license-back to Meridian; and (iii) the QuorumScore™ carve-out is non-negotiable. Quorum should be prepared to accept an objective transformation standard, provided it is based on measurable criteria (such as Calderwood & Harkness's proposed Derived Data Commercialization Protocol) rather than subjective or case-by-case determination. Quorum should also be prepared to accept the notification mechanism for third-party commercialization. As a potential face-saving concession, Quorum might consider whether a limited "acknowledgment of contribution" — a contractual acknowledgment that Meridian's data was among the inputs to the Derived Data, without conferring any economic rights, IP ownership, or license — might satisfy Meridian's institutional need to document its data's role in the value chain without compromising Quorum's commercial position.
V. Unresolved Issue No. 3: Dispute Resolution
A. Quorum's Position — Exclusive Court Jurisdiction
Quorum's position, reflected in its proposed Section 13.2 of the MDLA, is that all disputes arising under or in connection with the MDLA should be subject to the exclusive jurisdiction of the United States District Court for the Southern District of New York or, if federal subject-matter jurisdiction is unavailable, the Commercial Division of the New York Supreme Court, New York County.
Quorum's preference for judicial resolution is grounded in several considerations. First, court proceedings provide full appellate rights, which are particularly important in complex intellectual property and data-licensing disputes where novel legal issues — such as the ownership of machine-learning model outputs — may arise. The limited grounds for vacating an arbitral award under the Federal Arbitration Act do not provide adequate protection against erroneous application of law. Second, judicial proceedings generate public precedent, which Quorum views as beneficial in an area of law where binding precedent is still developing. Third, the well-established procedural rules of federal civil litigation — including the Federal Rules of Civil Procedure, the Federal Rules of Evidence, and the Local Rules of the Southern District of New York — provide a predictable and transparent framework for dispute resolution. Fourth, Quorum, a Delaware-incorporated corporation with its principal executive offices in Stamford, Connecticut, is comfortable with New York as the forum for any litigation and has no objection to consenting to personal jurisdiction in New York.
B. Meridian's Position — Binding Arbitration
Meridian's position, reflected in its proposed Section 13.2 of the MDLA, is that all disputes should be resolved through binding arbitration conducted under the Commercial Rules of the American Arbitration Association ("AAA"), seated in New York, New York, before a panel of three arbitrators.
Meridian, through KP&A, has articulated several rationales for its preference for arbitration. First, the confidentiality of arbitration proceedings protects the proprietary business terms of the MDLA — including pricing, data volumes, and the specific terms of the derived-data provisions — from becoming part of the public record through court filings. This concern is particularly salient given Meridian's relationships with its broader licensee base and its desire to prevent other licensees from obtaining visibility into Meridian's commercial terms. Second, Meridian contends that arbitration offers a faster resolution timeline than litigation in federal or state court, particularly given the congested dockets in the Southern District of New York. Third, Meridian argues that the AAA's rules for the selection of arbitrators allow the parties to select arbitrators with specialized expertise in data licensing, technology transactions, and intellectual property law — expertise that may not be available from a randomly assigned federal or state court judge.
While Meridian has not stated this explicitly, we note that Meridian's preference for arbitration is likely also driven by Breckenridge Capital Partners' desire to keep dispute details confidential in advance of Meridian's planned 2025–2026 IPO. A public lawsuit between Meridian and one of its largest insurance-sector licensees — particularly one involving disputes over pricing, derived-data rights, and IP ownership — could create adverse publicity, trigger disclosure obligations, and raise questions among potential IPO investors about the stability and durability of Meridian's licensee relationships.
C. C&H Assessment and Annotation
In our assessment, the dispute resolution mechanism, while a material unresolved issue, is secondary in commercial importance to the MFN and derived-data disputes. The choice between court jurisdiction and arbitration affects the process by which disputes are resolved but does not itself alter the substantive rights of the parties. Accordingly, this issue may be available as a tradeable concession in the broader negotiation.
We note the following considerations for Quorum's evaluation:
Hybrid Approach. A hybrid dispute resolution mechanism could address the legitimate interests of both parties. Under this approach, pricing disputes and MFN verification issues — where confidentiality is important to both parties and where specialized expertise is valuable — would be subject to binding arbitration under AAA Commercial Rules. Disputes involving requests for injunctive relief, intellectual property ownership, and breach of data-security obligations — where appellate rights, public precedent, and the availability of expedited relief are important — would be carved out and subject to the exclusive jurisdiction of the U.S. District Court for the Southern District of New York or the Commercial Division of the New York Supreme Court, New York County. This hybrid structure is not uncommon in complex technology transactions and would allow Quorum to preserve court jurisdiction for the categories of disputes most likely to involve novel legal issues and the need for equitable relief.
Concession Value. Alternatively, Quorum could concede to binding arbitration across the board if Meridian makes meaningful movement on the MFN or derived-data rights. Meridian has placed significant value on arbitration — both for legitimate confidentiality reasons and for IPO-related strategic reasons — and a concession on dispute resolution may unlock corresponding flexibility from Meridian on the issues that matter most to Quorum. This concession should be held in reserve and deployed only in exchange for material reciprocal movement.
Governing Law. We note that the parties have agreed on governing law — New York, without regard to conflicts-of-law principles — and this issue is not in dispute. Any arbitration or litigation would apply New York substantive law.
Recommendation for Restart. Quorum should treat dispute resolution as a negotiating chip. The preferred approach is a hybrid mechanism (arbitration for pricing/MFN; court for IP/injunctive relief/data security). If a hybrid is not achievable, Quorum should be prepared to concede to full arbitration in exchange for meaningful concessions on MFN or derived-data rights, provided that any arbitration clause includes appropriate carve-outs for provisional and injunctive relief in court.
VI. Unresolved Issue No. 4: Post-Termination Treatment of Derived Data
A. Agreed Terms — Raw Data
The parties have reached agreement on the treatment of Meridian's raw data upon termination or expiration of the MDLA. Specifically, both parties agree that upon termination or expiration, Quorum must return or destroy all Meridian raw data — including all data from the MCI Consumer Credit File™, MCI CommercialView™, and MCI AltSignal™ data products — within ninety (90) days of the effective date of termination or expiration. Quorum would be required to provide an officer's certificate, executed by a senior officer of the Company, confirming the return or destruction of all raw data and certifying that no copies of raw data have been retained in any form.
This provision is not in dispute and would be included in the final MDLA.
B. Quorum's Position — Derived Data Post-Termination
Quorum's position is that it should retain perpetual rights to all Derived Data created during the license term, including the right to continue using, sublicensing, and commercially exploiting such Derived Data after termination or expiration of the MDLA. Under Quorum's proposed Article XII (Termination and Post-Termination Obligations), the return/destruction obligation would apply only to Meridian's raw data, and all Derived Data would be expressly excluded from the return/destruction requirement.
Quorum's rationale for this position is both legal and practical:
• intellectual Investment. Derived Data represents Quorum's own substantial intellectual and financial investment. The development of QuorumScore™ and related analytics products has required millions of dollars in R&D expenditure, the recruitment and retention of specialized data science talent, and years of model development and refinement. Quorum's Derived Data is not a passive by-product of Meridian's data; it is the result of Quorum's independent analytical work applied to multiple data sources, of which Meridian data is one input among many.
• Operational Interdependence. Derived Data is deeply intertwined with Quorum's operational systems. QuorumScore™ is embedded in Quorum's underwriting workflow, claims-fraud detection algorithms, pricing models, and customer-facing applications. Forcing the destruction of Derived Data upon termination would require Quorum to dismantle and rebuild core operational systems — a process that would take years and cost tens of millions of dollars.
• Model Integrity. Quorum's machine-learning models trained during the license term incorporate patterns and relationships learned from Meridian data along with many other data sources. Trained model parameters are not readily separable into "Meridian-derived" and "non-Meridian-derived" components. Requiring destruction of all model parameters that are in any way "traceable to" Meridian data would effectively require destruction of the models in their entirety, rendering years of model development worthless.
• Commercial Reasonableness. A data-licensing agreement is, by its nature, a time-limited arrangement. The licensee's ability to retain and use what it has created during the license term — as distinguished from the licensor's raw data, which must be returned — is a fundamental commercial expectation in enterprise data-licensing transactions.
C. Meridian's Position — Derived Data Post-Termination
Meridian has advanced two alternative positions on the post-termination treatment of Derived Data:
Primary Position — Return or Destruction. Meridian insists that all Derived Data containing or traceable to Meridian data must also be returned or destroyed within ninety (90) days of termination, on the same terms as raw data. Meridian characterizes this position as the logical consequence of its view that Derived Data constitutes a "derivative work" subject to Meridian's underlying intellectual property rights: if Meridian owns (or retains rights in) the Derived Data, then the Derived Data must be returned when the license that authorized its creation expires.
Alternative Position — Continuing Royalty. Alternatively, Meridian has indicated willingness to permit Quorum's post-termination use of Derived Data, subject to a continuing royalty of 15% of net revenues attributable to such Derived Data. This continuing royalty would apply indefinitely following termination and would extend to all uses of Derived Data, including internal use (valued at a notional fair market rate) and external commercialization. Meridian views this as a reasonable compromise that permits Quorum to continue operating while compensating Meridian for the ongoing use of data in which Meridian retains an interest.
Meridian has also characterized perpetual post-termination Derived Data rights as effectively making the license irrevocable with respect to the most valuable outputs of the relationship. Meridian argues that if Quorum can retain and commercially exploit all Derived Data in perpetuity after termination, the economic incentive for Quorum to renew the MDLA is significantly diminished — Quorum would have extracted the maximum value from Meridian's data during the initial term and would have little motivation to pay for continued access.
Wind-Down Alternative. As a further alternative, Meridian would accept a post-termination "wind-down" period of twelve (12) months, during which Quorum may continue using Derived Data for internal purposes only (but not commercially exploit it externally). At the end of the wind-down period, all Derived Data must be destroyed, or Quorum must enter into a new license with Meridian.
D. C&H Assessment and Annotation
The post-termination treatment of Derived Data is closely linked to the resolution of Unresolved Issue No. 2 (Derived Data IP Ownership). If Quorum prevails on the ownership issue — establishing that Quorum is the sole and exclusive owner of all Derived Data — then the termination treatment should follow naturally: Quorum retains what it owns, and Meridian has no basis to demand the return or destruction of property that belongs to Quorum. Conversely, if the parties reach a compromise on ownership that acknowledges some residual Meridian interest in Derived Data, the post-termination treatment will need to be crafted to reflect that compromise.
Operational Impracticability. Meridian's primary position — requiring destruction of all Derived Data within 90 days — is operationally impracticable for the reasons outlined above. In particular, trained machine-learning model parameters are not readily

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