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

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ARTICLE VII — DERIVED DATA; INTELLECTUAL PROPERTY OWNERSHIP AND COMMERCIALIZATION RIGHTS

QUORUM'S PROPOSED DRAFTING — FOR INSERTION INTO MASTER DATA LICENSE AGREEMENT

DRAFT — PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

Prepared by: Wendy Schultz, Associate, intellectual Property, and Omar Siddiqui, Associate, intellectual Property, Calderwood & Harkness LLP

Date: January 2023

C&H Matter No.: 1025-00008

Client: Quorum Insurance Holdings Corp. ("Licensee")

Counterparty: Meridian Credit intelligence, Inc. ("Licensor")

Context Note: This draft Article VII is prepared for insertion into the Master Data License Agreement (the "MDLA") currently under negotiation between Quorum Insurance Holdings Corp. ("Licensee") and Meridian Credit intelligence, Inc. ("Licensor"). This draft reflects Licensee's opening position and supersedes the corresponding provisions in Licensor's form MDLA delivered by Kessler Pruitt & Ashe LLP on November 4, 2022. All cross-references herein are to the December 2, 2022 Calderwood & Harkness LLP comprehensive redline of the MDLA unless otherwise indicated.

DRAFTING NOTE / COVER MEMORANDUM

January 2023

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

FROM: Wendy Schultz and Omar Siddiqui, Calderwood & Harkness LLP

RE: Transmittal of Proposed Article VII Language — Derived Data; intellectual Property Ownership and Commercialization Rights — For Client Review Prior to Delivery to Kessler Pruitt & Ashe LLP

We are pleased to transmit the enclosed proposed Article VII language for inclusion in the Master Data License Agreement currently under negotiation between Quorum Insurance Holdings Corp. ("Quorum") and Meridian Credit intelligence, Inc. ("Meridian"). This draft has been prepared for your review and comment prior to delivery to Graham Whitley at Kessler Pruitt & Ashe LLP ("KP&A") as part of the ongoing MDLA negotiation.

Coordination with Caldwell & Strauss LLP. This Article VII drafting was developed in close coordination with Angela Firth, Partner at Caldwell & Strauss LLP, regarding the implications of the proposed language for Quorum's existing intellectual property portfolio. In particular, we have worked with Ms. Firth's team to ensure that the proposed provisions adequately protect Quorum's rights in the QuorumScore™ predictive underwriting model, for which a trademark application is currently pending before the United States Patent and Trademark Office (Serial No. 97/482,116). The language in Section 7.3(c) includes a specific carve-out for QuorumScore™ that has been reviewed and approved by Ms. Firth's team, subject to any final comments from your office.

Meridian's Form MDLA Provisions — Rejected. Meridian's form MDLA, as delivered by KP&A on November 4, 2022, included the following provisions relating to derived data and intellectual property rights, all three of which Quorum's proposed Article VII rejects in their entirety:

(i) Perpetual, Royalty-Free License-Back. Meridian's form MDLA included a provision granting Meridian a perpetual, royalty-free license-back on all Derived Data created by Quorum using Licensed Data, including the right for Meridian to use, reproduce, modify, and distribute such Derived Data for its own commercial purposes and the purposes of its affiliates and equity holders. This provision would effectively grant Meridian a free option on the outputs of Quorum's substantial proprietary investment in data analytics and model development.

(ii) Prohibition on Third-Party Commercialization Absent "Sufficient Transformation." Meridian's form MDLA prohibited Quorum from commercializing any Derived Data to third parties unless Meridian, in its sole discretion, determined that the Derived Data had been "sufficiently transformed" such that the underlying Licensed Data could not be reverse-engineered from the Derived Data. The standard of "sufficient transformation" was undefined and left entirely to Meridian's subjective judgment, creating an effectively unlimited veto right over Quorum's commercialization activities.

(iii) 15% Revenue Share. Even where Meridian approved external commercialization of Derived Data under the "sufficient transformation" standard, Meridian's form MDLA required Quorum to pay Meridian a revenue share equal to fifteen percent (15%) of net revenues derived from such commercialization. This revenue share was uncapped and applied in perpetuity, including after termination of the MDLA.

Quorum's position, as reflected in the enclosed draft, rejects all three of these provisions. Quorum's proposed Article VII instead establishes sole and exclusive ownership by Quorum of all Derived Data and Model Outputs, with unrestricted commercialization rights, no license-back, no revenue share, and no "sufficient transformation" gatekeeping mechanism.

Strategic Context. The importance of this Article VII to Quorum's business strategy cannot be overstated. The QuorumScore™ predictive underwriting model represents the centerpiece of Quorum's data analytics strategy. QuorumScore™ blends Meridian credit data (specifically, data from MCI Consumer Credit File™, MCI CommercialView™, and MCI AltSignal™) with Quorum's extensive first-party claims data, policy data, and telematics data to produce proprietary risk scores and underwriting analytics that are materially superior to those available from any competitor or from Meridian's raw data alone. QuorumScore™ is central to two critical Quorum business objectives:

First, QuorumScore™ is the foundation of Quorum's underwriting competitive advantage. Quorum's ability to price risk more accurately and efficiently than its competitors is directly attributable to the predictive power of QuorumScore™. Any provision that grants Meridian a license-back on QuorumScore™ outputs or that gives Meridian discretion to block Quorum's use of its own analytics would directly undermine this competitive advantage.

Second, Quorum has identified B2B licensing of QuorumScore™ outputs as a significant planned revenue line, with projected revenues of $40–50 million annually by 2027. Granting Meridian a fifteen percent revenue share on this revenue stream, or subjecting Quorum's commercialization to Meridian's approval, would render this business plan economically unviable and strategically dependent on a counterparty's consent.

Anticipated Counterparty Resistance. We are aware that Breckenridge Capital Partners Fund IV, L.P. ("Breckenridge"), which holds a 62.5% majority equity interest in Meridian, and Whitmore Zanthor & Co. (Meridian's investment bank and IPO advisor, led by Rachel Ng-Castillo), are likely to resist the broad derived-data rights proposed in this Article VII. Meridian is currently planning an initial public offering in the 2025–2026 timeframe, and its valuation narrative centers heavily on the exclusivity and "stickiness" of its data assets. From Meridian's perspective and from the perspective of its financial advisors, granting a major licensee like Quorum unrestricted rights to create and commercialize derivative analytics products based on Meridian's data may be perceived as diluting the value proposition of Meridian's core data assets, which in turn could affect the IPO valuation. We expect this concern to be a principal driver of KP&A's resistance to the enclosed provisions.

We anticipate that this Article VII will be the principal area of negotiation in the MDLA, potentially requiring multiple rounds of drafting and several negotiation sessions. The Calderwood & Harkness team is prepared to discuss fallback positions and potential compromise frameworks with Quorum's team at your convenience, but we recommend leading the negotiation with this maximalist position in order to establish the strongest possible baseline for the eventual resolution. A compromise framework memorandum is under development internally and will be circulated to the deal team upon completion.

We look forward to receiving your comments and are available to discuss this draft at your convenience.

ARTICLE VII

DERIVED DATA; INTELLECTUAL PROPERTY OWNERSHIP AND COMMERCIALIZATION RIGHTS

Section 7.1 — Definitions

For purposes of this Article VII and the Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Article VII shall have the meanings ascribed to them elsewhere in this Agreement.

Section 7.1(a) — "Derived Data"

"Derived Data" means any and all data, datasets, databases, compilations, indices, metrics, risk scores, predictive scores, propensity models, statistical models, algorithms (including trained machine-learning model weights and parameters), analytical outputs, enriched datasets, blended datasets, reports, visualizations, and any other information or work product, in any format or medium, that is created, developed, generated, compiled, computed, or derived by or on behalf of Licensee (whether by Licensee's employees, contractors, or agents, or through automated processes or systems operated by or on behalf of Licensee), in whole or in part, using, incorporating, referencing, processing, analyzing, or otherwise based on any Licensed Data as an input, whether or not such Derived Data incorporates or contains any Licensed Data in its original or modified form.

Without limiting the generality of the foregoing, "Derived Data" includes:

(i) blended risk scores combining Licensed Data with Licensee's proprietary first-party data, including but not limited to claims data, policy data, actuarial data, and telematics data;

(ii) propensity models, segmentation models, and classification models that incorporate or are trained on Licensed Data, in whole or in part;

(iii) enriched datasets created by augmenting, supplementing, or blending Licensed Data with data from any other source (whether proprietary to Licensee or obtained from third parties);

(iv) outputs of machine-learning models, artificial intelligence models, deep learning models, or other automated analytical systems that are trained on, calibrated with, validated against, or otherwise use Licensed Data;

(v) statistical analyses, aggregations, anonymizations, pseudonymizations, or summaries of Licensed Data;

(vi) indices, benchmarks, or composite indicators derived from or informed by Licensed Data; and

(vii) the QuorumScore™ predictive underwriting model outputs and any successor, derivative, or related models, scores, indices, or analytics generated therefrom, regardless of the degree to which such outputs incorporate or reflect Licensed Data.

Section 7.1(b) — "Licensed Data"

"Licensed Data" shall have the meaning set forth in Section [1.1(aa)] / [2.1] of this Agreement and shall include all data delivered by Licensor to Licensee under this Agreement, including without limitation data from the following Licensor data products:

(i) MCI Consumer Credit File™ — consisting of approximately three hundred ten million (310,000,000) individual consumer credit records, including tradeline data, inquiry data, public records data, and associated metadata;

(ii) MCI CommercialView™ — consisting of approximately forty-two million (42,000,000) individual business credit and commercial entity records; and

(iii) MCI AltSignal™ — consisting of approximately eighty-five million (85,000,000) individual consumer alternative-data records, including utility payment histories, rental payment histories, and other non-traditional credit data.

Section 7.1(c) — "Licensee IP"

"Licensee IP" means all intellectual property rights owned by or licensed to Licensee (other than rights licensed to Licensee under this Agreement) as of or after the Effective Date, including without limitation:

(i) all patents and patent applications, including United States Patent and Trademark Office application Serial No. 97/482,116 for QuorumScore™, and all continuations, continuations-in-part, divisionals, reissues, reexaminations, and foreign counterparts thereof;

(ii) all copyrights and copyrightable works, including software, documentation, and compilations;

(iii) all trade secrets, know-how, proprietary methodologies, algorithms, and confidential business information;

(iv) all trademarks, service marks, trade names, trade dress, and associated goodwill;

(v) all proprietary data and datasets generated, collected, compiled, or owned by Licensee independently of the Licensed Data, including but not limited to Licensee's claims data, policy data, underwriting data, actuarial data, telematics data, customer data, and internal operational data; and

(vi) all other intellectual property rights of any kind or nature, whether registered or unregistered, arising under the laws of any jurisdiction.

Section 7.1(d) — "Licensor IP"

"Licensor IP" means all intellectual property rights owned by Licensor in and to the Licensed Data as delivered to Licensee in its original, unmodified form, including without limitation:

(i) Licensor's proprietary database rights (to the extent recognized under applicable law) in the Licensed Data as compiled and organized by Licensor;

(ii) copyrights, if any, in compilations and arrangements of the Licensed Data as delivered;

(iii) trademarks and service marks associated with Licensor's data products, including MCI Consumer Credit File™, MCI CommercialView™, and MCI AltSignal™;

(iv) trade secrets in Licensor's data-collection methodologies, data-processing methodologies, data-sourcing relationships, and data-curation processes, in each case as embodied in or reflected by the Licensed Data in its original, unmodified form as delivered to Licensee; and

(v) all other intellectual property rights of Licensor in and to the Licensed Data, in each case solely as they exist in the Licensed Data in its original, unmodified form as delivered to Licensee under this Agreement.

For the avoidance of doubt, "Licensor IP" does not include any intellectual property rights in Derived Data or Model Outputs.

Section 7.1(e) — "Model Outputs"

"Model Outputs" means the predictions, scores, classifications, rankings, recommendations, risk assessments, probability estimates, or other outputs generated by Licensee's machine-learning models, statistical models, deep learning models, neural networks, or other algorithms in real-time or batch processing using new input data (whether or not such new input data includes Licensed Data), where such models were trained, calibrated, validated, fine-tuned, or otherwise developed, in whole or in part, on or using Licensed Data.

For the avoidance of doubt, this definition is included to address the technical distinction between (A) model weights, parameters, hyperparameters, and learned representations (which are developed through training processes that may use Licensed Data as training inputs) and (B) inference-time outputs (which are generated when trained models are applied to new, potentially non-Licensed Data inputs to produce predictions or scores). Both categories (A) and (B) constitute Derived Data and are owned exclusively by Licensee as set forth in Section 7.2 below.

Section 7.1(f) — "Commercialization"

"Commercialization" means the sale, sublicensing, distribution, provision as a service (whether as software-as-a-service, data-as-a-service, analytics-as-a-service, or otherwise), or other transfer or making available of Derived Data or Model Outputs to any third party (including affiliates and subsidiaries within Licensee's corporate group and unrelated third parties), for such third party's own use or for redistribution, in exchange for fees, revenue, royalties, equity, or other consideration, whether monetary or non-monetary, and whether on a one-time, recurring, subscription, or transaction-based basis. "Commercialize" and "Commercializing" shall have correlative meanings.

Section 7.2 — Ownership of Derived Data

Section 7.2(a) — Vesting of Ownership in Licensee

As between Licensor and Licensee, Licensee shall be the sole and exclusive owner of all right, title, and interest in and to all Derived Data, including without limitation all intellectual property rights therein and thereto, including all copyrights, trade secrets, database rights, patent rights, and all other proprietary rights of any kind or nature, whether now known or hereafter recognized, in each case free and clear of any claim, lien, encumbrance, license, or other right or interest of Licensor.

Licensor hereby acknowledges and agrees that Derived Data does not constitute a "derivative work" of the Licensed Data within the meaning of Section 101 of the Copyright Act of 1976, as amended (17 U.S.C. § 101), and that Licensor retains no intellectual property interest, ownership right, or other proprietary claim in or to any Derived Data. Licensor further acknowledges that the creation of Derived Data by Licensee constitutes an independent act of authorship, compilation, invention, or creation by Licensee, and that the intellectual property rights in such Derived Data vest exclusively in Licensee from the moment of creation.

No provision of this Agreement shall be construed, by implication, estoppel, or otherwise, to grant Licensor any ownership interest, license, or other right in or to any Derived Data. Any prior or contemporaneous understandings, representations, or agreements between the parties regarding the ownership or exploitation of Derived Data are hereby superseded and replaced in their entirety by the provisions of this Article VII.

Section 7.2(b) — Ownership of Model Outputs

All Model Outputs shall be deemed Derived Data for all purposes of this Agreement and shall be owned exclusively by Licensee, regardless of whether such Model Outputs are generated using Licensed Data, Licensee's proprietary data, third-party data, or any combination thereof as inputs at the time of inference or generation. The ownership of Model Outputs by Licensee shall not be contingent upon, or affected by, the nature, source, or composition of the input data used at the time such Model Outputs are generated.

Without limiting the foregoing, the trained model weights, parameters, hyperparameters, learned representations, embeddings, and any other components of Licensee's machine-learning models, statistical models, deep learning models, or other algorithmic systems shall be the exclusive property of Licensee, even where such weights, parameters, or other components were developed through training processes, calibration processes, or validation processes that used Licensed Data as training inputs, validation inputs, or calibration inputs.

Licensor acknowledges and agrees that live inference-time predictions, scores, classifications, or other outputs generated by Licensee's models using new input data that does not include Licensed Data are not "derived from" Licensed Data within the meaning of this Agreement or applicable intellectual property law, and are Licensee's sole and exclusive property without qualification. For the further avoidance of doubt, even where inference-time outputs are generated using new Licensed Data as inputs, such outputs constitute Derived Data owned exclusively by Licensee.

Section 7.2(c) — No License-Back

Licensee does not grant, and shall not be deemed to grant, any license, right, or interest of any kind — whether express, implied, by estoppel, by exhaustion, or otherwise — to Licensor in or to any Derived Data, Model Outputs, Licensee IP, or any other intellectual property of Licensee. This prohibition applies regardless of the degree to which any Derived Data or Model Outputs incorporate, reflect, or are informed by Licensed Data.

For the avoidance of doubt, Licensor shall have no right to access, use, reproduce, modify, adapt, distribute, sublicense, display, perform, transmit, or otherwise exploit any Derived Data or Model Outputs for any purpose whatsoever, whether for Licensor's own commercial purposes, for the purposes of Licensor's affiliates or equity holders (including Breckenridge Capital Partners Fund IV, L.P.), or for the purposes of any other third party. Nothing in this Agreement shall be construed to create or imply any such right.

Section 7.2(d) — No Revenue Sharing

Licensee shall not owe Licensor any royalties, revenue share, profit share, fees, or other compensation of any kind or nature, whether fixed or variable, in connection with Licensee's creation, development, use, internal deployment, or Commercialization of Derived Data or Model Outputs, whether within Licensee's corporate group or to third parties, and regardless of the volume, scale, or revenue generated from such activities.

All consideration payable by Licensee to Licensor under this Agreement is limited exclusively to:

(i) the license fees set forth in Article IV of this Agreement, consisting of an aggregate total of Sixty Million Dollars ($60,000,000) payable over the five-year Term, allocated as follows: Ten Million Eight Hundred Thousand Dollars ($10,800,000) in Year 1 of the Term; and Twelve Million Three Hundred Thousand Dollars ($12,300,000) per year in each of Years 2 through 5 of the Term; and

(ii) the one-time implementation fee of One Million Five Hundred Thousand Dollars ($1,500,000) payable in accordance with Article IV.

No additional fees, royalties, revenue shares, or other payments shall be owed by Licensee to Licensor in connection with Licensee's exercise of any rights granted or confirmed under this Article VII, and Licensor agrees not to seek or demand any such additional payments.

Section 7.2(e) — Reservation of Licensor IP

Notwithstanding anything to the contrary in this Section 7.2, Licensor retains all right, title, and interest in and to the Licensed Data in its original, unmodified form as delivered to Licensee under this Agreement, including all Licensor IP therein. Nothing in this Article VII shall be construed to transfer ownership of the Licensed Data (in its raw, unmodified form as delivered by Licensor) from Licensor to Licensee, and Licensee acknowledges that its rights with respect to the Licensed Data in its raw, unmodified form are limited to the license rights expressly granted in Article II and Article III of this Agreement.

For the avoidance of doubt, this reservation of Licensor IP does not limit, qualify, or otherwise affect Licensee's sole and exclusive ownership of Derived Data and Model Outputs as set forth in Sections 7.2(a) through 7.2(d) above.

Section 7.3 — Licensee's Commercialization Rights

Section 7.3(a) — Unrestricted Commercialization

Subject only to the restrictions on redistribution of raw Licensed Data set forth in Section 7.4(a) and the regulatory compliance obligations set forth in Section 7.4(b) and Section 7.4(c), Licensee shall have the unrestricted right to use, reproduce, modify, adapt, create derivative works from, display, perform, distribute, sublicense, sell, offer for sale, import, export, transmit, and otherwise exploit and Commercialize any and all Derived Data and Model Outputs, in any format, medium, channel, or delivery mechanism, to any person or entity (including third parties outside Licensee's corporate group, competitors of Licensor, and entities in any industry or sector), worldwide, in perpetuity (including after the expiration or termination of this Agreement), without any additional fees, royalties, revenue shares, or other payments to Licensor, and without requiring Licensor's prior consent, approval, review, notification, or acknowledgment.

The foregoing rights include, without limitation, the right to:

(i) license or sublicense Derived Data or Model Outputs to third parties on terms determined by Licensee in its sole discretion;

(ii) incorporate Derived Data or Model Outputs into products or services offered by Licensee to third parties, whether as standalone offerings or as components of bundled offerings;

(iii) use Derived Data or Model Outputs as the basis for analytics-as-a-service, software-as-a-service, or data-as-a-service offerings;

(iv) publish, disseminate, or make available Derived Data or Model Outputs in research publications, industry reports, or marketing materials;

(v) share Derived Data or Model Outputs with reinsurers, co-insurers, brokers, agents, and other counterparties in the ordinary course of Licensee's insurance business; and

(vi) further modify, enhance, combine, or transform Derived Data or Model Outputs without restriction.

Section 7.3(b) — No "Sufficient Transformation" Requirement

Licensee's right to Commercialize Derived Data and Model Outputs under Section 7.3(a) shall not be conditioned on, or subject to, any determination by Licensor (or by any third party designated, retained, or approved by Licensor) that the Derived Data or Model Outputs have been "sufficiently transformed," "adequately anonymized," "materially altered," or otherwise modified to a degree satisfactory to Licensor, or that the Licensed Data cannot be "reverse-engineered," "reconstructed," "re-identified," or otherwise recovered from the Derived Data or Model Outputs.

Notwithstanding the foregoing, Licensee shall exercise commercially reasonable efforts to ensure that Derived Data distributed to third parties pursuant to Section 7.3(a) does not contain Licensed Data in its raw, unmodified form — that is, individual consumer tradeline records, individual commercial credit records, or individual alternative-data records as originally delivered by Licensor in the format and granularity in which they were received. This obligation is a reasonable commercial covenant and does not confer, and shall not be construed to confer, any approval right, consent right, review right, or veto power on Licensor with respect to Licensee's Commercialization activities. A breach of this covenant shall not limit or impair Licensee's Commercialization rights under Section 7.3(a) and shall be subject only to the remedies set forth in Article [__] (Remedies) of this Agreement.

Section 7.3(c) — Specific Carve-Out for QuorumScore™

Without limiting the generality of Sections 7.2 and 7.3(a)–(b), the parties specifically acknowledge and agree as follows:

(i) The QuorumScore™ predictive underwriting model (United States Patent and Trademark Office application pending, Serial No. 97/482,116), including all algorithms, trained model weights, parameters, and methodologies embodied therein, constitutes Licensee IP and Derived Data owned exclusively by Licensee.

(ii) All outputs, scores, indices, rankings, classifications, risk assessments, and analytics generated by the QuorumScore™ model or any successor, derivative, enhanced, or related model constitute Derived Data and Model Outputs owned exclusively by Licensee.

(iii) Licensee's Commercialization of QuorumScore™ and its outputs to third parties — including but not limited to the licensing of QuorumScore™ outputs to insurers, reinsurers, financial institutions, fintech companies, and other commercial counterparties — shall not require any consent, approval, review, notification, or payment to Licensor, and Licensor hereby waives any right to object to, restrict, or impose conditions on such Commercialization.

(iv) Licensor acknowledges that QuorumScore™ was developed by Licensee at substantial cost and represents Licensee's independent intellectual contribution and creative effort, and that the value of QuorumScore™ is attributable to Licensee's proprietary data, analytical expertise, and technological investment, notwithstanding that Licensed Data is among the inputs used in the training and operation of the QuorumScore™ model.

Section 7.4 — Licensee's Obligations Regarding Licensed Data

Section 7.4(a) — Restrictions on Redistribution of Raw Licensed Data

Licensee shall not sell, sublicense, distribute, publish, transmit, or otherwise make available to any third party the Licensed Data in its raw, unmodified form as received from Licensor. For the purposes of this Section 7.4(a), "raw, unmodified form" means the Licensed Data as delivered by Licensor to Licensee without any material transformation, aggregation, anonymization, blending, or analytical processing by Licensee.

For the avoidance of doubt, this restriction applies only to the Licensed Data in its original form as delivered by Licensor and does not restrict, limit, or otherwise affect Licensee's rights with respect to Derived Data or Model Outputs, including Licensee's rights to Commercialize Derived Data and Model Outputs under Section 7.3. The determination of whether particular data constitutes Licensed Data in its "raw, unmodified form" or constitutes Derived Data shall be made objectively based on the nature and degree of transformation applied by Licensee, and Licensor shall not have sole or unilateral discretion over such determination.

Section 7.4(b) — Compliance with Applicable Law

Licensee's use, processing, storage, and Commercialization of Derived Data and Model Outputs shall comply with all applicable federal, state, and local laws, regulations, rules, and orders, including without limitation:

(i) the Fair Credit Reporting Act, as amended ("FCRA"), 15 U.S.C. § 1681 et seq.;

(ii) the Gramm-Leach-Bliley Act ("GLBA"), 15 U.S.C. § 6801 et seq., and implementing regulations, including Regulation P (12 C.F.R. Part 1016) and the FTC Safeguards Rule (16 C.F.R. Part 314);

(iii) the California Consumer Privacy Act, as amended by the California Privacy Rights Act ("CCPA/CPRA"), Cal. Civ. Code § 1798.100 et seq.;

(iv) the New York Department of Financial Services Cybersecurity Regulation, 23 N.Y.C.R.R. Part 500;

(v) all applicable state insurance data-security regulations, including without limitation the NAIC Insurance Data Security Model Law as adopted in applicable jurisdictions; and

(vi) all other applicable data-protection, privacy, consumer-protection, and cybersecurity laws and regulations in each jurisdiction in which Licensee operates or in which Derived Data or Model Outputs are used, distributed, or Commercialized.

Licensee shall maintain its SOC 2 Type II certification (currently issued by Felton Thorpe & Co. LLP, with the most recent audit period ending December 31, 2023) throughout the Term and shall implement and maintain appropriate administrative, technical, and physical data-security measures consistent with the Data Security Addendum to this Agreement. Licensee shall promptly notify Licensor in the event that its SOC 2 Type II certification lapses or is materially qualified.

Section 7.4(c) — FCRA Compliance for Derived Data

To the extent any Derived Data or Model Output constitutes a "consumer report" within the meaning of Section 603(d) of the FCRA (15 U.S.C. § 1681a(d)), or is used or expected to be used as a factor in establishing a consumer's eligibility for credit, insurance, employment, or any other purpose described in Section 604 of the FCRA (15 U.S.C. § 1681b), Licensee shall use and Commercialize such Derived Data or Model Output only in accordance with all applicable FCRA requirements, including without limitation:

(i) permissible purpose limitations under Section 604 of the FCRA;

(ii) accuracy and dispute resolution obligations under Sections 611 and 623 of the FCRA, to the extent applicable;

(iii) adverse action notice requirements under Sections 615 and 616 of the FCRA; and

(iv) all applicable regulations promulgated by the Consumer Financial Protection Bureau under the FCRA.

This Section 7.4(c) is a regulatory compliance obligation undertaken by Licensee for its own benefit and the benefit of consumers and regulatory authorities, and does not grant Licensor any approval right, consent right, or veto power over Licensee's Commercialization activities. Licensor shall not have the right to determine whether any particular Derived Data or Model Output constitutes a "consumer report" under the FCRA or whether Licensee's use thereof complies with FCRA requirements.

Section 7.5 — Intellectual Property Representations and Warranties

Section 7.5(a) — Licensor Representations and Warranties

Licensor represents and warrants to Licensee as of the Effective Date and as of each date on which Licensed Data is delivered to Licensee that:

(i) Licensor owns or has the right to license the Licensed Data to Licensee as contemplated by this Agreement, and has full power and authority to grant the rights and licenses set forth herein, including without limitation the right to permit Licensee to create Derived Data and Model Outputs and to own and Commercialize such Derived Data and Model Outputs as provided in this Article VII;

(ii) the Licensed Data, as delivered to Licensee, does not infringe, misappropriate, or otherwise violate any intellectual property right, trade secret, contractual right, or other proprietary right of any third party;

(iii) Licensor has not granted, and will not grant during the Term of this Agreement, any rights to any third party that would conflict with, limit, restrict, or otherwise impair Licensee's rights under this Article VII, including without limitation Licensee's right to own Derived Data and Model Outputs exclusively and to Commercialize such Derived Data and Model Outputs without restriction;

(iv) no provisions of Licensor's agreements with its equity holders (including without limitation the stockholders' agreement, investor rights agreement, or any other agreement with Breckenridge Capital Partners Fund IV, L.P., Licensor's 62.5% majority equity holder) restrict, limit, or impair Licensor's ability to grant the rights set forth in this Article VII or otherwise conflict with the provisions of this Article VII; and

(v) Licensor is not aware of any pending or threatened claim, action, proceeding, or investigation by any third party that challenges or is reasonably likely to challenge Licensor's ownership of the Licensed Data or Licensor's right to license the Licensed Data as contemplated hereby.

Section 7.5(b) — Licensee Representations and Warranties

Licensee represents and warrants to Licensor as of the Effective Date that:

(i) Licensee has the technical capability, analytical expertise, and organizational infrastructure to create Derived Data and Model Outputs in compliance with this Agreement and all applicable laws and regulations;

(ii) Licensee has implemented and maintains data-governance policies, information-security programs, and compliance frameworks adequate to support its obligations under this Agreement, including the obligations set forth in Section 7.4; and

(iii) Licensee's creation, use, and Commercialization of Derived Data and Model Outputs as contemplated by this Article VII does not, to Licensee's knowledge, violate any contractual obligation of Licensee to any third party.

Section 7.6 — Survival and Post-Termination Rights

Section 7.6(a) — Survival of Derived Data Rights

Licensee's ownership of all Derived Data and Model Outputs created during the Term of this Agreement, and all of Licensee's rights to use, modify, adapt, reproduce, distribute, sublicense, Commercialize, and otherwise exploit such Derived Data and Model Outputs, shall survive the expiration or termination of this Agreement in perpetuity, regardless of the reason for such expiration or termination (including termination for cause, termination for convenience, termination by mutual agreement, or expiration of the Term without renewal).

For the avoidance of doubt, upon expiration or termination of this Agreement:

(i) Licensee shall return or destroy all Licensed Data in its raw, unmodified form as received from Licensor within ninety (90) calendar days of the effective date of expiration or termination, in accordance with the procedures set forth in Article [__] (Termination; Effects of Termination) of this Agreement, and shall certify such return or destruction in writing to Licensor; but

(ii) Licensee shall retain all Derived Data and Model Outputs, and Licensee's rights under this Article VII with respect to such Derived Data and Model Outputs shall continue in full force and effect without limitation, modification, or reduction.

The survival provisions of this Section 7.6(a) are a material inducement to Licensee's entry into this Agreement and the payment of the license fees set forth in Article IV.

Section 7.6(b) — No Reversion

No right, title, or interest in any Derived Data or Model Outputs shall revert to Licensor upon the expiration or termination of this Agreement, regardless of the reason for such expiration or termination. Licensor hereby irrevocably waives any claim, right, or argument that any portion of the Derived Data or Model Outputs should revert to Licensor, be returned to Licensor, be destroyed by Licensee, or otherwise cease to be the exclusive property of Licensee upon or following the expiration or termination of this Agreement.

Section 7.7 — Indemnification for intellectual Property Claims

Section 7.7(a) — Licensor Indemnification

Licensor shall indemnify, defend, and hold harmless Licensee and its officers, directors, employees, agents, affiliates, successors, and assigns (collectively, the "Licensee Indemnified Parties") from and against any and all claims, demands, actions, suits, proceedings, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and costs of litigation or arbitration) arising out of or relating to any third-party claim alleging that the Licensed Data, as delivered by Licensor to Licensee, infringes, misappropriates, or otherwise violates any intellectual property right, trade secret, or other proprietary right of any third party. Licensor's indemnification obligations under this Section 7.7(a) shall be subject to the procedures and limitations set forth in Article [__] (Indemnification) of this Agreement.

Section 7.7(b) — Licensee Indemnification

Licensee shall indemnify, defend, and hold harmless Licensor and its officers, directors, employees, agents, affiliates, successors, and assigns (collectively, the "Licensor Indemnified Parties") from and against any and all claims, demands, actions, suits, proceedings, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and costs of litigation or arbitration) arising out of or relating to any third-party claim arising solely and directly from Licensee's creation, use, or Commercialization of Derived Data or Model Outputs, to the extent such claim does not arise from (i) the Licensed Data as delivered by Licensor or (ii) any breach by Licensor of its representations, warranties, or obligations under this Agreement. Licensee's indemnification obligations under this Section 7.7(b) shall be subject to the procedures and limitations set forth in Article [__] (Indemnification) of this Agreement.

Section 7.8 — Dispute Resolution for Article VII Matters

Any dispute, controversy, or claim arising under or in connection with this Article VII, including disputes regarding the ownership, characterization, or classification of any data or information as Derived Data, Licensed Data, or Model Outputs, shall be resolved in accordance with the dispute resolution provisions of Article [__] (Dispute Resolution; Governing Law) of this Agreement.

Drafting Note: Quorum's position is that all disputes under the MDLA, including disputes arising under this Article VII, shall be subject to the exclusive jurisdiction of the United States District Court for the Southern District of New York or, where federal jurisdiction is unavailable, the Commercial Division of the Supreme Court of the State of New York, New York County. Meridian has proposed binding arbitration under the American Arbitration Association Commercial Arbitration Rules with a three-arbitrator panel seated in New York, New York. This issue remains open as of the date of this draft and will be addressed in the dispute-resolution provisions of the MDLA.

Section 7.9 — Entire Article; No Implied Licenses

This Article VII sets forth the entire agreement of the parties with respect to the ownership, licensing, use, and Commercialization of Derived Data and Model Outputs and the allocation of intellectual property rights between the parties with respect thereto. This Article VII supersedes any prior or contemporaneous understandings, representations, negotiations, correspondence, or agreements between the parties (whether written or oral) relating to the subject matter hereof, including without limitation any provisions of the Licensor's form MDLA delivered by Kessler Pruitt & Ashe LLP on November 4, 2022 that address derived data, derivative works, intellectual property ownership, license-backs, revenue sharing, or commercialization rights.

No rights or licenses are granted by implication, estoppel, exhaustion, or otherwise under this Article VII or under this Agreement, except as expressly set forth herein. The express provisions of this Article VII and the other Articles of this Agreement constitute the sole basis for any rights or obligations of the parties with respect to intellectual property in Derived Data and Model Outputs.

APPENDIX A

COMPARATIVE TABLE — QUORUM'S POSITION VS. MERIDIAN'S POSITION ON ARTICLE VII ISSUES

The following table sets forth a comparison of the key positions taken by Quorum (as reflected in this draft Article VII) and Meridian (as reflected in the KP&A form MDLA delivered November 4, 2022) on the principal issues addressed by Article VII. This table is provided for internal reference purposes only and does not form part of the proposed contract language.

INTERNAL CALDERWOOD & HARKNESS LLP ANNOTATIONS

The following annotations are for internal C&H use only and should not be transmitted to opposing counsel or included in any document delivered to Kessler Pruitt & Ashe LLP or Meridian Credit intelligence, Inc.

Note for Leonard Cross, Responsible Partner, Calderwood & Harkness LLP:

This draft represents Quorum's maximalist opening position on the derived-data ownership and commercialization issues. We fully anticipate significant pushback from Kessler Pruitt & Ashe (Graham Whitley, Nina Chastain, and Derek Fontaine) and from Meridian's board, which we understand is heavily influenced by Breckenridge Capital Partners (Caleb Rourke, Managing Partner) and by Whitmore Zanthor & Co. (Rachel Ng-Castillo, Managing Director and lead IPO advisor). The principal driver of resistance will be Meridian's concern that granting broad derived-data rights to a major licensee like Quorum undermines Meridian's IPO valuation narrative, which centers on the exclusivity and defensibility of Meridian's data assets.

A compromise framework memorandum is under development for potential deployment if Quorum authorizes fallback positions. Possible compromise elements under consideration include: (i) a limited license-back for Meridian to use aggregated, anonymized Derived Data solely for internal data-quality improvement purposes (excluding commercialization); (ii) a reduced or nominal revenue share on external commercialization above a defined revenue threshold; and (iii) a mutually agreed-upon independent third-party review mechanism (in lieu of Meridian's sole discretion) for evaluating re-identification risk in externally commercialized Derived Data. These fallback positions have not yet been discussed with the Quorum team and should be treated as preliminary.

Note for Patricia Heng, Senior Counsel, Technology Transactions, Calderwood & Harkness LLP:

Please review the definitions in Sections 7.1(a) (Derived Data) and 7.1(e) (Model Outputs) for alignment with market-standard technology-licensing terminology, particularly with respect to the treatment of machine-learning model weights, trained parameters, and inference-time outputs. We have attempted to draft these definitions to capture the full spectrum of analytics products that Quorum may develop, but we want to ensure that the terminology is consistent with emerging industry practice and with the approach taken in comparable data-licensing transactions.

Note for David Cartwright, Partner, Data Privacy & Cybersecurity, Calderwood & Harkness LLP:

Please confirm that the regulatory compliance language in Sections 7.4(b) and 7.4(c) is consistent with and does not conflict with the Data Security Addendum and the Data Processing Agreement drafts currently under negotiation as supplements to the MDLA. In particular, please review whether the FCRA compliance provisions in Section 7.4(c) are adequate given the current CFPB regulatory environment and recent guidance regarding AI-generated credit scoring outputs. We also want to ensure there is no tension between the "commercially reasonable efforts" standard in Section 7.3(b) and any data-minimization or purpose-limitation obligations in the Data Processing Agreement.

Note for Coordination with Caldwell & Strauss LLP (Angela Firth, Partner):

The QuorumScore™ carve-out in Section 7.3(c) should be reviewed by Ms. Firth's team for alignment with Quorum's existing IP portfolio and the pending USPTO trademark application (Serial No. 97/482,116). We should also coordinate with Caldwell & Strauss on whether any additional patent applications or defensive IP filings should be pursued prior to the delivery of this Article VII to KP&A, in order to strengthen Quorum's negotiating position and IP posture.

Reminder — Standish National Bank, N.A. Lender Consent:

Lender consent under Section 7.12(b) of the Amended and Restated Credit Agreement, dated June 15, 2021, between Quorum Insurance Holdings Corp. and Standish National Bank, N.A. (as administrative agent), must be obtained before the MDLA (including this Article VII) becomes effective. The aggregate license value of $60,000,000 over five years exceeds the $25,000,000 threshold for material contracts requiring lender consent by $35,000,000. Marcus Weill at Calderwood & Harkness is handling the consent process with Philip Yardley, Senior Vice President, Commercial Lending, at Standish National Bank, N.A. The consent request was submitted on December 19, 2022, and a response is expected by late January 2023.

End of Document — DRAFT — PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT

Calderwood & Harkness LLP — C&H Matter No. 1025-00008

Issue	Quorum's Proposed Position (This Draft)	Meridian's Position (KP&A Form MDLA, Nov. 4, 2022)
Ownership of Derived Data	Sole and exclusive ownership by Quorum of all Derived Data, including all intellectual property rights therein, free and clear of any claim or interest by Meridian. Derived Data is expressly not a "derivative work" of Licensed Data.	Derived Data is characterized as a "derivative work" of Licensed Data subject to Meridian's underlying intellectual property rights. Meridian retains a residual ownership or co-ownership interest in all Derived Data.
License-Back to Licensor	None. No license-back of any kind is granted to Meridian. Meridian has no right to access, use, or exploit any Derived Data or Model Outputs.	Perpetual, royalty-free license-back to Meridian on all Derived Data for Meridian's own use, including the right to use, reproduce, modify, and distribute Derived Data for its commercial purposes.
Third-Party Commercialization	Unrestricted. Quorum has the right to Commercialize Derived Data and Model Outputs to any third party, worldwide, in perpetuity, without Meridian's consent, approval, or notification.	Prohibited unless Meridian, in its sole discretion, determines that the Derived Data has been "sufficiently transformed" such that Licensed Data cannot be reverse-engineered.
Revenue Sharing	None. No royalties, revenue share, or additional fees of any kind owed to Meridian in connection with Commercialization of Derived Data or Model Outputs.	15% of net revenues from any approved external Derived Data commercialization, uncapped and perpetual.
"Sufficient Transformation" Standard	Rejected in its entirety. No transformation requirement or approval process. Quorum commits only to commercially reasonable efforts not to redistribute raw Licensed Data in unmodified form.	Meridian has sole and unilateral discretion to determine whether Derived Data has been "sufficiently transformed," effectively creating an unlimited veto right.
Model Outputs / ML Inference	Owned exclusively by Quorum. Trained model weights and inference-time outputs are both Derived Data. Inference-time predictions using non-Licensed Data inputs are expressly not "derived from" Licensed Data.	Not addressed separately in KP&A draft. Likely subsumed under Meridian's broad "derivative work" theory, which would claim residual rights in model outputs.
QuorumScore™	Expressly carved out as Quorum-owned Derived Data and Licensee IP. Quorum's Commercialization of QuorumScore™ requires no consent, approval, or payment to Meridian.	Not addressed. Would likely fall under Meridian's general derived-data restrictions, including the license-back, "sufficient transformation" requirement, and 15% revenue share.
Post-Termination Derived Data	Quorum retains all Derived Data and Model Outputs in perpetuity upon expiration or termination, regardless of reason. Only raw Licensed Data must be returned or destroyed.	Not specified in KP&A draft. Post-termination treatment of Derived Data is disputed. Meridian's negotiators have informally suggested that Derived Data should revert upon termination.
Regulatory Compliance	Quorum commits to compliance with FCRA, GLBA, CCPA/CPRA, 23 NYCRR 500, and all applicable state insurance data-security regulations. SOC 2 Type II certification maintained. Compliance obligations do not confer approval rights on Meridian.	Meridian's draft includes similar but narrower compliance obligations. Meridian's draft ties FCRA compliance to Meridian's discretionary approval of commercialization, creating an additional lever for Meridian control.

ARTICLE VII — DERIVED DATA; INTELLECTUAL PROPERTY OWNERSHIP AND COMMERCIALIZATION RIGHTS
QUORUM'S PROPOSED DRAFTING — FOR INSERTION INTO MASTER DATA LICENSE AGREEMENT
DRAFT — PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
Prepared by: Wendy Schultz, Associate, intellectual Property, and Omar Siddiqui, Associate, intellectual Property, Calderwood & Harkness LLP
Date: January 2023
C&H Matter No.: 1025-00008
Client: Quorum Insurance Holdings Corp. ("Licensee")
Counterparty: Meridian Credit intelligence, Inc. ("Licensor")
Context Note: This draft Article VII is prepared for insertion into the Master Data License Agreement (the "MDLA") currently under negotiation between Quorum Insurance Holdings Corp. ("Licensee") and Meridian Credit intelligence, Inc. ("Licensor"). This draft reflects Licensee's opening position and supersedes the corresponding provisions in Licensor's form MDLA delivered by Kessler Pruitt & Ashe LLP on November 4, 2022. All cross-references herein are to the December 2, 2022 Calderwood & Harkness LLP comprehensive redline of the MDLA unless otherwise indicated.
DRAFTING NOTE / COVER MEMORANDUM
January 2023
TO: Carolyn Whitford, General Counsel & Executive Vice President, Quorum Insurance Holdings Corp. Gregory Stahl, Vice President, Legal Affairs, Quorum Insurance Holdings Corp. Rajesh Anand, Chief Data Officer, Quorum Insurance Holdings Corp.
FROM: Wendy Schultz and Omar Siddiqui, Calderwood & Harkness LLP
RE: Transmittal of Proposed Article VII Language — Derived Data; intellectual Property Ownership and Commercialization Rights — For Client Review Prior to Delivery to Kessler Pruitt & Ashe LLP
We are pleased to transmit the enclosed proposed Article VII language for inclusion in the Master Data License Agreement currently under negotiation between Quorum Insurance Holdings Corp. ("Quorum") and Meridian Credit intelligence, Inc. ("Meridian"). This draft has been prepared for your review and comment prior to delivery to Graham Whitley at Kessler Pruitt & Ashe LLP ("KP&A") as part of the ongoing MDLA negotiation.
Coordination with Caldwell & Strauss LLP. This Article VII drafting was developed in close coordination with Angela Firth, Partner at Caldwell & Strauss LLP, regarding the implications of the proposed language for Quorum's existing intellectual property portfolio. In particular, we have worked with Ms. Firth's team to ensure that the proposed provisions adequately protect Quorum's rights in the QuorumScore™ predictive underwriting model, for which a trademark application is currently pending before the United States Patent and Trademark Office (Serial No. 97/482,116). The language in Section 7.3(c) includes a specific carve-out for QuorumScore™ that has been reviewed and approved by Ms. Firth's team, subject to any final comments from your office.
Meridian's Form MDLA Provisions — Rejected. Meridian's form MDLA, as delivered by KP&A on November 4, 2022, included the following provisions relating to derived data and intellectual property rights, all three of which Quorum's proposed Article VII rejects in their entirety:
(i) Perpetual, Royalty-Free License-Back. Meridian's form MDLA included a provision granting Meridian a perpetual, royalty-free license-back on all Derived Data created by Quorum using Licensed Data, including the right for Meridian to use, reproduce, modify, and distribute such Derived Data for its own commercial purposes and the purposes of its affiliates and equity holders. This provision would effectively grant Meridian a free option on the outputs of Quorum's substantial proprietary investment in data analytics and model development.
(ii) Prohibition on Third-Party Commercialization Absent "Sufficient Transformation." Meridian's form MDLA prohibited Quorum from commercializing any Derived Data to third parties unless Meridian, in its sole discretion, determined that the Derived Data had been "sufficiently transformed" such that the underlying Licensed Data could not be reverse-engineered from the Derived Data. The standard of "sufficient transformation" was undefined and left entirely to Meridian's subjective judgment, creating an effectively unlimited veto right over Quorum's commercialization activities.
(iii) 15% Revenue Share. Even where Meridian approved external commercialization of Derived Data under the "sufficient transformation" standard, Meridian's form MDLA required Quorum to pay Meridian a revenue share equal to fifteen percent (15%) of net revenues derived from such commercialization. This revenue share was uncapped and applied in perpetuity, including after termination of the MDLA.
Quorum's position, as reflected in the enclosed draft, rejects all three of these provisions. Quorum's proposed Article VII instead establishes sole and exclusive ownership by Quorum of all Derived Data and Model Outputs, with unrestricted commercialization rights, no license-back, no revenue share, and no "sufficient transformation" gatekeeping mechanism.
Strategic Context. The importance of this Article VII to Quorum's business strategy cannot be overstated. The QuorumScore™ predictive underwriting model represents the centerpiece of Quorum's data analytics strategy. QuorumScore™ blends Meridian credit data (specifically, data from MCI Consumer Credit File™, MCI CommercialView™, and MCI AltSignal™) with Quorum's extensive first-party claims data, policy data, and telematics data to produce proprietary risk scores and underwriting analytics that are materially superior to those available from any competitor or from Meridian's raw data alone. QuorumScore™ is central to two critical Quorum business objectives:
First, QuorumScore™ is the foundation of Quorum's underwriting competitive advantage. Quorum's ability to price risk more accurately and efficiently than its competitors is directly attributable to the predictive power of QuorumScore™. Any provision that grants Meridian a license-back on QuorumScore™ outputs or that gives Meridian discretion to block Quorum's use of its own analytics would directly undermine this competitive advantage.
Second, Quorum has identified B2B licensing of QuorumScore™ outputs as a significant planned revenue line, with projected revenues of $40–50 million annually by 2027. Granting Meridian a fifteen percent revenue share on this revenue stream, or subjecting Quorum's commercialization to Meridian's approval, would render this business plan economically unviable and strategically dependent on a counterparty's consent.
Anticipated Counterparty Resistance. We are aware that Breckenridge Capital Partners Fund IV, L.P. ("Breckenridge"), which holds a 62.5% majority equity interest in Meridian, and Whitmore Zanthor & Co. (Meridian's investment bank and IPO advisor, led by Rachel Ng-Castillo), are likely to resist the broad derived-data rights proposed in this Article VII. Meridian is currently planning an initial public offering in the 2025–2026 timeframe, and its valuation narrative centers heavily on the exclusivity and "stickiness" of its data assets. From Meridian's perspective and from the perspective of its financial advisors, granting a major licensee like Quorum unrestricted rights to create and commercialize derivative analytics products based on Meridian's data may be perceived as diluting the value proposition of Meridian's core data assets, which in turn could affect the IPO valuation. We expect this concern to be a principal driver of KP&A's resistance to the enclosed provisions.
We anticipate that this Article VII will be the principal area of negotiation in the MDLA, potentially requiring multiple rounds of drafting and several negotiation sessions. The Calderwood & Harkness team is prepared to discuss fallback positions and potential compromise frameworks with Quorum's team at your convenience, but we recommend leading the negotiation with this maximalist position in order to establish the strongest possible baseline for the eventual resolution. A compromise framework memorandum is under development internally and will be circulated to the deal team upon completion.
We look forward to receiving your comments and are available to discuss this draft at your convenience.
ARTICLE VII
DERIVED DATA; INTELLECTUAL PROPERTY OWNERSHIP AND COMMERCIALIZATION RIGHTS
Section 7.1 — Definitions
For purposes of this Article VII and the Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Article VII shall have the meanings ascribed to them elsewhere in this Agreement.
Section 7.1(a) — "Derived Data"
"Derived Data" means any and all data, datasets, databases, compilations, indices, metrics, risk scores, predictive scores, propensity models, statistical models, algorithms (including trained machine-learning model weights and parameters), analytical outputs, enriched datasets, blended datasets, reports, visualizations, and any other information or work product, in any format or medium, that is created, developed, generated, compiled, computed, or derived by or on behalf of Licensee (whether by Licensee's employees, contractors, or agents, or through automated processes or systems operated by or on behalf of Licensee), in whole or in part, using, incorporating, referencing, processing, analyzing, or otherwise based on any Licensed Data as an input, whether or not such Derived Data incorporates or contains any Licensed Data in its original or modified form.
Without limiting the generality of the foregoing, "Derived Data" includes:
(i) blended risk scores combining Licensed Data with Licensee's proprietary first-party data, including but not limited to claims data, policy data, actuarial data, and telematics data;
(ii) propensity models, segmentation models, and classification models that incorporate or are trained on Licensed Data, in whole or in part;
(iii) enriched datasets created by augmenting, supplementing, or blending Licensed Data with data from any other source (whether proprietary to Licensee or obtained from third parties);
(iv) outputs of machine-learning models, artificial intelligence models, deep learning models, or other automated analytical systems that are trained on, calibrated with, validated against, or otherwise use Licensed Data;
(v) statistical analyses, aggregations, anonymizations, pseudonymizations, or summaries of Licensed Data;
(vi) indices, benchmarks, or composite indicators derived from or informed by Licensed Data; and
(vii) the QuorumScore™ predictive underwriting model outputs and any successor, derivative, or related models, scores, indices, or analytics generated therefrom, regardless of the degree to which such outputs incorporate or reflect Licensed Data.
Section 7.1(b) — "Licensed Data"
"Licensed Data" shall have the meaning set forth in Section [1.1(aa)] / [2.1] of this Agreement and shall include all data delivered by Licensor to Licensee under this Agreement, including without limitation data from the following Licensor data products:
(i) MCI Consumer Credit File™ — consisting of approximately three hundred ten million (310,000,000) individual consumer credit records, including tradeline data, inquiry data, public records data, and associated metadata;
(ii) MCI CommercialView™ — consisting of approximately forty-two million (42,000,000) individual business credit and commercial entity records; and
(iii) MCI AltSignal™ — consisting of approximately eighty-five million (85,000,000) individual consumer alternative-data records, including utility payment histories, rental payment histories, and other non-traditional credit data.
Section 7.1(c) — "Licensee IP"
"Licensee IP" means all intellectual property rights owned by or licensed to Licensee (other than rights licensed to Licensee under this Agreement) as of or after the Effective Date, including without limitation:
(i) all patents and patent applications, including United States Patent and Trademark Office application Serial No. 97/482,116 for QuorumScore™, and all continuations, continuations-in-part, divisionals, reissues, reexaminations, and foreign counterparts thereof;
(ii) all copyrights and copyrightable works, including software, documentation, and compilations;
(iii) all trade secrets, know-how, proprietary methodologies, algorithms, and confidential business information;
(iv) all trademarks, service marks, trade names, trade dress, and associated goodwill;
(v) all proprietary data and datasets generated, collected, compiled, or owned by Licensee independently of the Licensed Data, including but not limited to Licensee's claims data, policy data, underwriting data, actuarial data, telematics data, customer data, and internal operational data; and
(vi) all other intellectual property rights of any kind or nature, whether registered or unregistered, arising under the laws of any jurisdiction.
Section 7.1(d) — "Licensor IP"
"Licensor IP" means all intellectual property rights owned by Licensor in and to the Licensed Data as delivered to Licensee in its original, unmodified form, including without limitation:
(i) Licensor's proprietary database rights (to the extent recognized under applicable law) in the Licensed Data as compiled and organized by Licensor;
(ii) copyrights, if any, in compilations and arrangements of the Licensed Data as delivered;
(iii) trademarks and service marks associated with Licensor's data products, including MCI Consumer Credit File™, MCI CommercialView™, and MCI AltSignal™;
(iv) trade secrets in Licensor's data-collection methodologies, data-processing methodologies, data-sourcing relationships, and data-curation processes, in each case as embodied in or reflected by the Licensed Data in its original, unmodified form as delivered to Licensee; and
(v) all other intellectual property rights of Licensor in and to the Licensed Data, in each case solely as they exist in the Licensed Data in its original, unmodified form as delivered to Licensee under this Agreement.
For the avoidance of doubt, "Licensor IP" does not include any intellectual property rights in Derived Data or Model Outputs.
Section 7.1(e) — "Model Outputs"
"Model Outputs" means the predictions, scores, classifications, rankings, recommendations, risk assessments, probability estimates, or other outputs generated by Licensee's machine-learning models, statistical models, deep learning models, neural networks, or other algorithms in real-time or batch processing using new input data (whether or not such new input data includes Licensed Data), where such models were trained, calibrated, validated, fine-tuned, or otherwise developed, in whole or in part, on or using Licensed Data.
For the avoidance of doubt, this definition is included to address the technical distinction between (A) model weights, parameters, hyperparameters, and learned representations (which are developed through training processes that may use Licensed Data as training inputs) and (B) inference-time outputs (which are generated when trained models are applied to new, potentially non-Licensed Data inputs to produce predictions or scores). Both categories (A) and (B) constitute Derived Data and are owned exclusively by Licensee as set forth in Section 7.2 below.
Section 7.1(f) — "Commercialization"
"Commercialization" means the sale, sublicensing, distribution, provision as a service (whether as software-as-a-service, data-as-a-service, analytics-as-a-service, or otherwise), or other transfer or making available of Derived Data or Model Outputs to any third party (including affiliates and subsidiaries within Licensee's corporate group and unrelated third parties), for such third party's own use or for redistribution, in exchange for fees, revenue, royalties, equity, or other consideration, whether monetary or non-monetary, and whether on a one-time, recurring, subscription, or transaction-based basis. "Commercialize" and "Commercializing" shall have correlative meanings.
Section 7.2 — Ownership of Derived Data
Section 7.2(a) — Vesting of Ownership in Licensee
As between Licensor and Licensee, Licensee shall be the sole and exclusive owner of all right, title, and interest in and to all Derived Data, including without limitation all intellectual property rights therein and thereto, including all copyrights, trade secrets, database rights, patent rights, and all other proprietary rights of any kind or nature, whether now known or hereafter recognized, in each case free and clear of any claim, lien, encumbrance, license, or other right or interest of Licensor.
Licensor hereby acknowledges and agrees that Derived Data does not constitute a "derivative work" of the Licensed Data within the meaning of Section 101 of the Copyright Act of 1976, as amended (17 U.S.C. § 101), and that Licensor retains no intellectual property interest, ownership right, or other proprietary claim in or to any Derived Data. Licensor further acknowledges that the creation of Derived Data by Licensee constitutes an independent act of authorship, compilation, invention, or creation by Licensee, and that the intellectual property rights in such Derived Data vest exclusively in Licensee from the moment of creation.
No provision of this Agreement shall be construed, by implication, estoppel, or otherwise, to grant Licensor any ownership interest, license, or other right in or to any Derived Data. Any prior or contemporaneous understandings, representations, or agreements between the parties regarding the ownership or exploitation of Derived Data are hereby superseded and replaced in their entirety by the provisions of this Article VII.
Section 7.2(b) — Ownership of Model Outputs
All Model Outputs shall be deemed Derived Data for all purposes of this Agreement and shall be owned exclusively by Licensee, regardless of whether such Model Outputs are generated using Licensed Data, Licensee's proprietary data, third-party data, or any combination thereof as inputs at the time of inference or generation. The ownership of Model Outputs by Licensee shall not be contingent upon, or affected by, the nature, source, or composition of the input data used at the time such Model Outputs are generated.
Without limiting the foregoing, the trained model weights, parameters, hyperparameters, learned representations, embeddings, and any other components of Licensee's machine-learning models, statistical models, deep learning models, or other algorithmic systems shall be the exclusive property of Licensee, even where such weights, parameters, or other components were developed through training processes, calibration processes, or validation processes that used Licensed Data as training inputs, validation inputs, or calibration inputs.
Licensor acknowledges and agrees that live inference-time predictions, scores, classifications, or other outputs generated by Licensee's models using new input data that does not include Licensed Data are not "derived from" Licensed Data within the meaning of this Agreement or applicable intellectual property law, and are Licensee's sole and exclusive property without qualification. For the further avoidance of doubt, even where inference-time outputs are generated using new Licensed Data as inputs, such outputs constitute Derived Data owned exclusively by Licensee.
Section 7.2(c) — No License-Back
Licensee does not grant, and shall not be deemed to grant, any license, right, or interest of any kind — whether express, implied, by estoppel, by exhaustion, or otherwise — to Licensor in or to any Derived Data, Model Outputs, Licensee IP, or any other intellectual property of Licensee. This prohibition applies regardless of the degree to which any Derived Data or Model Outputs incorporate, reflect, or are informed by Licensed Data.
For the avoidance of doubt, Licensor shall have no right to access, use, reproduce, modify, adapt, distribute, sublicense, display, perform, transmit, or otherwise exploit any Derived Data or Model Outputs for any purpose whatsoever, whether for Licensor's own commercial purposes, for the purposes of Licensor's affiliates or equity holders (including Breckenridge Capital Partners Fund IV, L.P.), or for the purposes of any other third party. Nothing in this Agreement shall be construed to create or imply any such right.
Section 7.2(d) — No Revenue Sharing
Licensee shall not owe Licensor any royalties, revenue share, profit share, fees, or other compensation of any kind or nature, whether fixed or variable, in connection with Licensee's creation, development, use, internal deployment, or Commercialization of Derived Data or Model Outputs, whether within Licensee's corporate group or to third parties, and regardless of the volume, scale, or revenue generated from such activities.
All consideration payable by Licensee to Licensor under this Agreement is limited exclusively to:
(i) the license fees set forth in Article IV of this Agreement, consisting of an aggregate total of Sixty Million Dollars ($60,000,000) payable over the five-year Term, allocated as follows: Ten Million Eight Hundred Thousand Dollars ($10,800,000) in Year 1 of the Term; and Twelve Million Three Hundred Thousand Dollars ($12,300,000) per year in each of Years 2 through 5 of the Term; and
(ii) the one-time implementation fee of One Million Five Hundred Thousand Dollars ($1,500,000) payable in accordance with Article IV.
No additional fees, royalties, revenue shares, or other payments shall be owed by Licensee to Licensor in connection with Licensee's exercise of any rights granted or confirmed under this Article VII, and Licensor agrees not to seek or demand any such additional payments.
Section 7.2(e) — Reservation of Licensor IP
Notwithstanding anything to the contrary in this Section 7.2, Licensor retains all right, title, and interest in and to the Licensed Data in its original, unmodified form as delivered to Licensee under this Agreement, including all Licensor IP therein. Nothing in this Article VII shall be construed to transfer ownership of the Licensed Data (in its raw, unmodified form as delivered by Licensor) from Licensor to Licensee, and Licensee acknowledges that its rights with respect to the Licensed Data in its raw, unmodified form are limited to the license rights expressly granted in Article II and Article III of this Agreement.
For the avoidance of doubt, this reservation of Licensor IP does not limit, qualify, or otherwise affect Licensee's sole and exclusive ownership of Derived Data and Model Outputs as set forth in Sections 7.2(a) through 7.2(d) above.
Section 7.3 — Licensee's Commercialization Rights
Section 7.3(a) — Unrestricted Commercialization
Subject only to the restrictions on redistribution of raw Licensed Data set forth in Section 7.4(a) and the regulatory compliance obligations set forth in Section 7.4(b) and Section 7.4(c), Licensee shall have the unrestricted right to use, reproduce, modify, adapt, create derivative works from, display, perform, distribute, sublicense, sell, offer for sale, import, export, transmit, and otherwise exploit and Commercialize any and all Derived Data and Model Outputs, in any format, medium, channel, or delivery mechanism, to any person or entity (including third parties outside Licensee's corporate group, competitors of Licensor, and entities in any industry or sector), worldwide, in perpetuity (including after the expiration or termination of this Agreement), without any additional fees, royalties, revenue shares, or other payments to Licensor, and without requiring Licensor's prior consent, approval, review, notification, or acknowledgment.
The foregoing rights include, without limitation, the right to:
(i) license or sublicense Derived Data or Model Outputs to third parties on terms determined by Licensee in its sole discretion;
(ii) incorporate Derived Data or Model Outputs into products or services offered by Licensee to third parties, whether as standalone offerings or as components of bundled offerings;
(iii) use Derived Data or Model Outputs as the basis for analytics-as-a-service, software-as-a-service, or data-as-a-service offerings;
(iv) publish, disseminate, or make available Derived Data or Model Outputs in research publications, industry reports, or marketing materials;
(v) share Derived Data or Model Outputs with reinsurers, co-insurers, brokers, agents, and other counterparties in the ordinary course of Licensee's insurance business; and
(vi) further modify, enhance, combine, or transform Derived Data or Model Outputs without restriction.
Section 7.3(b) — No "Sufficient Transformation" Requirement
Licensee's right to Commercialize Derived Data and Model Outputs under Section 7.3(a) shall not be conditioned on, or subject to, any determination by Licensor (or by any third party designated, retained, or approved by Licensor) that the Derived Data or Model Outputs have been "sufficiently transformed," "adequately anonymized," "materially altered," or otherwise modified to a degree satisfactory to Licensor, or that the Licensed Data cannot be "reverse-engineered," "reconstructed," "re-identified," or otherwise recovered from the Derived Data or Model Outputs.
Notwithstanding the foregoing, Licensee shall exercise commercially reasonable efforts to ensure that Derived Data distributed to third parties pursuant to Section 7.3(a) does not contain Licensed Data in its raw, unmodified form — that is, individual consumer tradeline records, individual commercial credit records, or individual alternative-data records as originally delivered by Licensor in the format and granularity in which they were received. This obligation is a reasonable commercial covenant and does not confer, and shall not be construed to confer, any approval right, consent right, review right, or veto power on Licensor with respect to Licensee's Commercialization activities. A breach of this covenant shall not limit or impair Licensee's Commercialization rights under Section 7.3(a) and shall be subject only to the remedies set forth in Article [__] (Remedies) of this Agreement.
Section 7.3(c) — Specific Carve-Out for QuorumScore™
Without limiting the generality of Sections 7.2 and 7.3(a)–(b), the parties specifically acknowledge and agree as follows:
(i) The QuorumScore™ predictive underwriting model (United States Patent and Trademark Office application pending, Serial No. 97/482,116), including all algorithms, trained model weights, parameters, and methodologies embodied therein, constitutes Licensee IP and Derived Data owned exclusively by Licensee.
(ii) All outputs, scores, indices, rankings, classifications, risk assessments, and analytics generated by the QuorumScore™ model or any successor, derivative, enhanced, or related model constitute Derived Data and Model Outputs owned exclusively by Licensee.
(iii) Licensee's Commercialization of QuorumScore™ and its outputs to third parties — including but not limited to the licensing of QuorumScore™ outputs to insurers, reinsurers, financial institutions, fintech companies, and other commercial counterparties — shall not require any consent, approval, review, notification, or payment to Licensor, and Licensor hereby waives any right to object to, restrict, or impose conditions on such Commercialization.
(iv) Licensor acknowledges that QuorumScore™ was developed by Licensee at substantial cost and represents Licensee's independent intellectual contribution and creative effort, and that the value of QuorumScore™ is attributable to Licensee's proprietary data, analytical expertise, and technological investment, notwithstanding that Licensed Data is among the inputs used in the training and operation of the QuorumScore™ model.
Section 7.4 — Licensee's Obligations Regarding Licensed Data
Section 7.4(a) — Restrictions on Redistribution of Raw Licensed Data
Licensee shall not sell, sublicense, distribute, publish, transmit, or otherwise make available to any third party the Licensed Data in its raw, unmodified form as received from Licensor. For the purposes of this Section 7.4(a), "raw, unmodified form" means the Licensed Data as delivered by Licensor to Licensee without any material transformation, aggregation, anonymization, blending, or analytical processing by Licensee.
For the avoidance of doubt, this restriction applies only to the Licensed Data in its original form as delivered by Licensor and does not restrict, limit, or otherwise affect Licensee's rights with respect to Derived Data or Model Outputs, including Licensee's rights to Commercialize Derived Data and Model Outputs under Section 7.3. The determination of whether particular data constitutes Licensed Data in its "raw, unmodified form" or constitutes Derived Data shall be made objectively based on the nature and degree of transformation applied by Licensee, and Licensor shall not have sole or unilateral discretion over such determination.
Section 7.4(b) — Compliance with Applicable Law
Licensee's use, processing, storage, and Commercialization of Derived Data and Model Outputs shall comply with all applicable federal, state, and local laws, regulations, rules, and orders, including without limitation:
(i) the Fair Credit Reporting Act, as amended ("FCRA"), 15 U.S.C. § 1681 et seq.;
(ii) the Gramm-Leach-Bliley Act ("GLBA"), 15 U.S.C. § 6801 et seq., and implementing regulations, including Regulation P (12 C.F.R. Part 1016) and the FTC Safeguards Rule (16 C.F.R. Part 314);
(iii) the California Consumer Privacy Act, as amended by the California Privacy Rights Act ("CCPA/CPRA"), Cal. Civ. Code § 1798.100 et seq.;
(iv) the New York Department of Financial Services Cybersecurity Regulation, 23 N.Y.C.R.R. Part 500;
(v) all applicable state insurance data-security regulations, including without limitation the NAIC Insurance Data Security Model Law as adopted in applicable jurisdictions; and
(vi) all other applicable data-protection, privacy, consumer-protection, and cybersecurity laws and regulations in each jurisdiction in which Licensee operates or in which Derived Data or Model Outputs are used, distributed, or Commercialized.
Licensee shall maintain its SOC 2 Type II certification (currently issued by Felton Thorpe & Co. LLP, with the most recent audit period ending December 31, 2023) throughout the Term and shall implement and maintain appropriate administrative, technical, and physical data-security measures consistent with the Data Security Addendum to this Agreement. Licensee shall promptly notify Licensor in the event that its SOC 2 Type II certification lapses or is materially qualified.
Section 7.4(c) — FCRA Compliance for Derived Data
To the extent any Derived Data or Model Output constitutes a "consumer report" within the meaning of Section 603(d) of the FCRA (15 U.S.C. § 1681a(d)), or is used or expected to be used as a factor in establishing a consumer's eligibility for credit, insurance, employment, or any other purpose described in Section 604 of the FCRA (15 U.S.C. § 1681b), Licensee shall use and Commercialize such Derived Data or Model Output only in accordance with all applicable FCRA requirements, including without limitation:
(i) permissible purpose limitations under Section 604 of the FCRA;
(ii) accuracy and dispute resolution obligations under Sections 611 and 623 of the FCRA, to the extent applicable;
(iii) adverse action notice requirements under Sections 615 and 616 of the FCRA; and
(iv) all applicable regulations promulgated by the Consumer Financial Protection Bureau under the FCRA.
This Section 7.4(c) is a regulatory compliance obligation undertaken by Licensee for its own benefit and the benefit of consumers and regulatory authorities, and does not grant Licensor any approval right, consent right, or veto power over Licensee's Commercialization activities. Licensor shall not have the right to determine whether any particular Derived Data or Model Output constitutes a "consumer report" under the FCRA or whether Licensee's use thereof complies with FCRA requirements.
Section 7.5 — Intellectual Property Representations and Warranties
Section 7.5(a) — Licensor Representations and Warranties
Licensor represents and warrants to Licensee as of the Effective Date and as of each date on which Licensed Data is delivered to Licensee that:
(i) Licensor owns or has the right to license the Licensed Data to Licensee as contemplated by this Agreement, and has full power and authority to grant the rights and licenses set forth herein, including without limitation the right to permit Licensee to create Derived Data and Model Outputs and to own and Commercialize such Derived Data and Model Outputs as provided in this Article VII;
(ii) the Licensed Data, as delivered to Licensee, does not infringe, misappropriate, or otherwise violate any intellectual property right, trade secret, contractual right, or other proprietary right of any third party;
(iii) Licensor has not granted, and will not grant during the Term of this Agreement, any rights to any third party that would conflict with, limit, restrict, or otherwise impair Licensee's rights under this Article VII, including without limitation Licensee's right to own Derived Data and Model Outputs exclusively and to Commercialize such Derived Data and Model Outputs without restriction;
(iv) no provisions of Licensor's agreements with its equity holders (including without limitation the stockholders' agreement, investor rights agreement, or any other agreement with Breckenridge Capital Partners Fund IV, L.P., Licensor's 62.5% majority equity holder) restrict, limit, or impair Licensor's ability to grant the rights set forth in this Article VII or otherwise conflict with the provisions of this Article VII; and
(v) Licensor is not aware of any pending or threatened claim, action, proceeding, or investigation by any third party that challenges or is reasonably likely to challenge Licensor's ownership of the Licensed Data or Licensor's right to license the Licensed Data as contemplated hereby.
Section 7.5(b) — Licensee Representations and Warranties
Licensee represents and warrants to Licensor as of the Effective Date that:
(i) Licensee has the technical capability, analytical expertise, and organizational infrastructure to create Derived Data and Model Outputs in compliance with this Agreement and all applicable laws and regulations;
(ii) Licensee has implemented and maintains data-governance policies, information-security programs, and compliance frameworks adequate to support its obligations under this Agreement, including the obligations set forth in Section 7.4; and
(iii) Licensee's creation, use, and Commercialization of Derived Data and Model Outputs as contemplated by this Article VII does not, to Licensee's knowledge, violate any contractual obligation of Licensee to any third party.
Section 7.6 — Survival and Post-Termination Rights
Section 7.6(a) — Survival of Derived Data Rights
Licensee's ownership of all Derived Data and Model Outputs created during the Term of this Agreement, and all of Licensee's rights to use, modify, adapt, reproduce, distribute, sublicense, Commercialize, and otherwise exploit such Derived Data and Model Outputs, shall survive the expiration or termination of this Agreement in perpetuity, regardless of the reason for such expiration or termination (including termination for cause, termination for convenience, termination by mutual agreement, or expiration of the Term without renewal).
For the avoidance of doubt, upon expiration or termination of this Agreement:
(i) Licensee shall return or destroy all Licensed Data in its raw, unmodified form as received from Licensor within ninety (90) calendar days of the effective date of expiration or termination, in accordance with the procedures set forth in Article [__] (Termination; Effects of Termination) of this Agreement, and shall certify such return or destruction in writing to Licensor; but
(ii) Licensee shall retain all Derived Data and Model Outputs, and Licensee's rights under this Article VII with respect to such Derived Data and Model Outputs shall continue in full force and effect without limitation, modification, or reduction.
The survival provisions of this Section 7.6(a) are a material inducement to Licensee's entry into this Agreement and the payment of the license fees set forth in Article IV.
Section 7.6(b) — No Reversion
No right, title, or interest in any Derived Data or Model Outputs shall revert to Licensor upon the expiration or termination of this Agreement, regardless of the reason for such expiration or termination. Licensor hereby irrevocably waives any claim, right, or argument that any portion of the Derived Data or Model Outputs should revert to Licensor, be returned to Licensor, be destroyed by Licensee, or otherwise cease to be the exclusive property of Licensee upon or following the expiration or termination of this Agreement.
Section 7.7 — Indemnification for intellectual Property Claims
Section 7.7(a) — Licensor Indemnification
Licensor shall indemnify, defend, and hold harmless Licensee and its officers, directors, employees, agents, affiliates, successors, and assigns (collectively, the "Licensee Indemnified Parties") from and against any and all claims, demands, actions, suits, proceedings, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and costs of litigation or arbitration) arising out of or relating to any third-party claim alleging that the Licensed Data, as delivered by Licensor to Licensee, infringes, misappropriates, or otherwise violates any intellectual property right, trade secret, or other proprietary right of any third party. Licensor's indemnification obligations under this Section 7.7(a) shall be subject to the procedures and limitations set forth in Article [__] (Indemnification) of this Agreement.
Section 7.7(b) — Licensee Indemnification
Licensee shall indemnify, defend, and hold harmless Licensor and its officers, directors, employees, agents, affiliates, successors, and assigns (collectively, the "Licensor Indemnified Parties") from and against any and all claims, demands, actions, suits, proceedings, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and costs of litigation or arbitration) arising out of or relating to any third-party claim arising solely and directly from Licensee's creation, use, or Commercialization of Derived Data or Model Outputs, to the extent such claim does not arise from (i) the Licensed Data as delivered by Licensor or (ii) any breach by Licensor of its representations, warranties, or obligations under this Agreement. Licensee's indemnification obligations under this Section 7.7(b) shall be subject to the procedures and limitations set forth in Article [__] (Indemnification) of this Agreement.
Section 7.8 — Dispute Resolution for Article VII Matters
Any dispute, controversy, or claim arising under or in connection with this Article VII, including disputes regarding the ownership, characterization, or classification of any data or information as Derived Data, Licensed Data, or Model Outputs, shall be resolved in accordance with the dispute resolution provisions of Article [__] (Dispute Resolution; Governing Law) of this Agreement.
Drafting Note: Quorum's position is that all disputes under the MDLA, including disputes arising under this Article VII, shall be subject to the exclusive jurisdiction of the United States District Court for the Southern District of New York or, where federal jurisdiction is unavailable, the Commercial Division of the Supreme Court of the State of New York, New York County. Meridian has proposed binding arbitration under the American Arbitration Association Commercial Arbitration Rules with a three-arbitrator panel seated in New York, New York. This issue remains open as of the date of this draft and will be addressed in the dispute-resolution provisions of the MDLA.
Section 7.9 — Entire Article; No Implied Licenses
This Article VII sets forth the entire agreement of the parties with respect to the ownership, licensing, use, and Commercialization of Derived Data and Model Outputs and the allocation of intellectual property rights between the parties with respect thereto. This Article VII supersedes any prior or contemporaneous understandings, representations, negotiations, correspondence, or agreements between the parties (whether written or oral) relating to the subject matter hereof, including without limitation any provisions of the Licensor's form MDLA delivered by Kessler Pruitt & Ashe LLP on November 4, 2022 that address derived data, derivative works, intellectual property ownership, license-backs, revenue sharing, or commercialization rights.
No rights or licenses are granted by implication, estoppel, exhaustion, or otherwise under this Article VII or under this Agreement, except as expressly set forth herein. The express provisions of this Article VII and the other Articles of this Agreement constitute the sole basis for any rights or obligations of the parties with respect to intellectual property in Derived Data and Model Outputs.
APPENDIX A
COMPARATIVE TABLE — QUORUM'S POSITION VS. MERIDIAN'S POSITION ON ARTICLE VII ISSUES
The following table sets forth a comparison of the key positions taken by Quorum (as reflected in this draft Article VII) and Meridian (as reflected in the KP&A form MDLA delivered November 4, 2022) on the principal issues addressed by Article VII. This table is provided for internal reference purposes only and does not form part of the proposed contract language.
INTERNAL CALDERWOOD & HARKNESS LLP ANNOTATIONS
The following annotations are for internal C&H use only and should not be transmitted to opposing counsel or included in any document delivered to Kessler Pruitt & Ashe LLP or Meridian Credit intelligence, Inc.
Note for Leonard Cross, Responsible Partner, Calderwood & Harkness LLP:
This draft represents Quorum's maximalist opening position on the derived-data ownership and commercialization issues. We fully anticipate significant pushback from Kessler Pruitt & Ashe (Graham Whitley, Nina Chastain, and Derek Fontaine) and from Meridian's board, which we understand is heavily influenced by Breckenridge Capital Partners (Caleb Rourke, Managing Partner) and by Whitmore Zanthor & Co. (Rachel Ng-Castillo, Managing Director and lead IPO advisor). The principal driver of resistance will be Meridian's concern that granting broad derived-data rights to a major licensee like Quorum undermines Meridian's IPO valuation narrative, which centers on the exclusivity and defensibility of Meridian's data assets.
A compromise framework memorandum is under development for potential deployment if Quorum authorizes fallback positions. Possible compromise elements under consideration include: (i) a limited license-back for Meridian to use aggregated, anonymized Derived Data solely for internal data-quality improvement purposes (excluding commercialization); (ii) a reduced or nominal revenue share on external commercialization above a defined revenue threshold; and (iii) a mutually agreed-upon independent third-party review mechanism (in lieu of Meridian's sole discretion) for evaluating re-identification risk in externally commercialized Derived Data. These fallback positions have not yet been discussed with the Quorum team and should be treated as preliminary.
Note for Patricia Heng, Senior Counsel, Technology Transactions, Calderwood & Harkness LLP:
Please review the definitions in Sections 7.1(a) (Derived Data) and 7.1(e) (Model Outputs) for alignment with market-standard technology-licensing terminology, particularly with respect to the treatment of machine-learning model weights, trained parameters, and inference-time outputs. We have attempted to draft these definitions to capture the full spectrum of analytics products that Quorum may develop, but we want to ensure that the terminology is consistent with emerging industry practice and with the approach taken in comparable data-licensing transactions.
Note for David Cartwright, Partner, Data Privacy & Cybersecurity, Calderwood & Harkness LLP:
Please confirm that the regulatory compliance language in Sections 7.4(b) and 7.4(c) is consistent with and does not conflict with the Data Security Addendum and the Data Processing Agreement drafts currently under negotiation as supplements to the MDLA. In particular, please review whether the FCRA compliance provisions in Section 7.4(c) are adequate given the current CFPB regulatory environment and recent guidance regarding AI-generated credit scoring outputs. We also want to ensure there is no tension between the "commercially reasonable efforts" standard in Section 7.3(b) and any data-minimization or purpose-limitation obligations in the Data Processing Agreement.
Note for Coordination with Caldwell & Strauss LLP (Angela Firth, Partner):
The QuorumScore™ carve-out in Section 7.3(c) should be reviewed by Ms. Firth's team for alignment with Quorum's existing IP portfolio and the pending USPTO trademark application (Serial No. 97/482,116). We should also coordinate with Caldwell & Strauss on whether any additional patent applications or defensive IP filings should be pursued prior to the delivery of this Article VII to KP&A, in order to strengthen Quorum's negotiating position and IP posture.
Reminder — Standish National Bank, N.A. Lender Consent:
Lender consent under Section 7.12(b) of the Amended and Restated Credit Agreement, dated June 15, 2021, between Quorum Insurance Holdings Corp. and Standish National Bank, N.A. (as administrative agent), must be obtained before the MDLA (including this Article VII) becomes effective. The aggregate license value of $60,000,000 over five years exceeds the $25,000,000 threshold for material contracts requiring lender consent by $35,000,000. Marcus Weill at Calderwood & Harkness is handling the consent process with Philip Yardley, Senior Vice President, Commercial Lending, at Standish National Bank, N.A. The consent request was submitted on December 19, 2022, and a response is expected by late January 2023.
End of Document — DRAFT — PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
Calderwood & Harkness LLP — C&H Matter No. 1025-00008
© 2023 Calderwood & Harkness LLP. All rights reserved.
Issue | Quorum's Proposed Position (This Draft) | Meridian's Position (KP&A Form MDLA, Nov. 4, 2022)
Ownership of Derived Data | Sole and exclusive ownership by Quorum of all Derived Data, including all intellectual property rights therein, free and clear of any claim or interest by Meridian. Derived Data is expressly not a "derivative work" of Licensed Data. | Derived Data is characterized as a "derivative work" of Licensed Data subject to Meridian's underlying intellectual property rights. Meridian retains a residual ownership or co-ownership interest in all Derived Data.
License-Back to Licensor | None. No license-back of any kind is granted to Meridian. Meridian has no right to access, use, or exploit any Derived Data or Model Outputs. | Perpetual, royalty-free license-back to Meridian on all Derived Data for Meridian's own use, including the right to use, reproduce, modify, and distribute Derived Data for its commercial purposes.
Third-Party Commercialization | Unrestricted. Quorum has the right to Commercialize Derived Data and Model Outputs to any third party, worldwide, in perpetuity, without Meridian's consent, approval, or notification. | Prohibited unless Meridian, in its sole discretion, determines that the Derived Data has been "sufficiently transformed" such that Licensed Data cannot be reverse-engineered.
Revenue Sharing | None. No royalties, revenue share, or additional fees of any kind owed to Meridian in connection with Commercialization of Derived Data or Model Outputs. | 15% of net revenues from any approved external Derived Data commercialization, uncapped and perpetual.
"Sufficient Transformation" Standard | Rejected in its entirety. No transformation requirement or approval process. Quorum commits only to commercially reasonable efforts not to redistribute raw Licensed Data in unmodified form. | Meridian has sole and unilateral discretion to determine whether Derived Data has been "sufficiently transformed," effectively creating an unlimited veto right.
Model Outputs / ML Inference | Owned exclusively by Quorum. Trained model weights and inference-time outputs are both Derived Data. Inference-time predictions using non-Licensed Data inputs are expressly not "derived from" Licensed Data. | Not addressed separately in KP&A draft. Likely subsumed under Meridian's broad "derivative work" theory, which would claim residual rights in model outputs.
QuorumScore™ | Expressly carved out as Quorum-owned Derived Data and Licensee IP. Quorum's Commercialization of QuorumScore™ requires no consent, approval, or payment to Meridian. | Not addressed. Would likely fall under Meridian's general derived-data restrictions, including the license-back, "sufficient transformation" requirement, and 15% revenue share.
Post-Termination Derived Data | Quorum retains all Derived Data and Model Outputs in perpetuity upon expiration or termination, regardless of reason. Only raw Licensed Data must be returned or destroyed. | Not specified in KP&A draft. Post-termination treatment of Derived Data is disputed. Meridian's negotiators have informally suggested that Derived Data should revert upon termination.
Regulatory Compliance | Quorum commits to compliance with FCRA, GLBA, CCPA/CPRA, 23 NYCRR 500, and all applicable state insurance data-security regulations. SOC 2 Type II certification maintained. Compliance obligations do not confer approval rights on Meridian. | Meridian's draft includes similar but narrower compliance obligations. Meridian's draft ties FCRA compliance to Meridian's discretionary approval of commercialization, creating an additional lever for Meridian control.

ARTICLE VII — DERIVED DATA; INTELLECTUAL PROPERTY OWNERSHIP AND COMMERCIALIZATION RIGHTS

DRAFTING NOTE / COVER MEMORANDUM

ARTICLE VII

APPENDIX A

INTERNAL CALDERWOOD & HARKNESS LLP ANNOTATIONS

Record

Parties

Dates

Amounts