PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT WORK PRODUCT
MOST FAVORED NATION PRICING RIDER
Rider to Master Data License Agreement
Rider [●] — Most Favored Nation Pricing
This Most Favored Nation Pricing Rider (this "MFN Rider") is entered into and shall be effective as of the Effective Date (as defined in the MDLA (defined below)), by and between:
Quorum Insurance Holdings Corp., a corporation organized and existing under the laws of the State of Delaware, with its principal offices located at 1200 Atlantic Street, Suite 3400, Stamford, Connecticut 06901 (the "Licensee" or "Quorum");
and
Meridian Credit intelligence, Inc., a corporation organized and existing under the laws of the State of Georgia, with its principal offices located at 3300 Peachtree Road NE, Suite 2100, Atlanta, Georgia 30326 (the "Licensor" or "Meridian").
Quorum and Meridian are each referred to herein as a "Party" and collectively as the "Parties."
This MFN Rider is to be attached to and shall form an integral part of that certain Master Data License Agreement by and between Quorum and Meridian (the "MDLA"), and shall be governed by and subject to all terms and conditions of the MDLA except as specifically supplemented or modified herein.
Prepared by: Calderwood & Harkness LLP 425 Park Avenue New York, NY 10022
C&H Matter No.: 1025-00008 Draft Date: January 2023
DRAFT — FOR DISCUSSION PURPOSES ONLY. This document is a preliminary draft prepared by counsel for Quorum Insurance Holdings Corp. and is circulated solely for discussion between the Parties and their respective counsel. This document does not constitute an offer, acceptance, or binding commitment of any kind.
RECITALS
A. Quorum and Meridian have entered into (or are entering into contemporaneously herewith) the Master Data License Agreement (the "MDLA"), pursuant to which Meridian has agreed to grant to Quorum a non-exclusive license to access and use certain consumer credit, commercial credit, and alternative data products maintained, compiled, and distributed by Meridian, specifically including the MCI Consumer Credit File™, the MCI CommercialView™, and the MCI AltSignal™ data products (collectively, the "Licensed Data Products," as more fully defined in the MDLA), for use by Quorum and its subsidiaries in connection with Quorum's insurance underwriting, pricing, claims analytics, and related business operations.
B. The MDLA provides for an initial term of five (5) years (the "Term"), during which Quorum shall pay to Meridian aggregate license fees in the total amount of Sixty Million Dollars ($60,000,000), allocated as follows: (i) Ten Million Eight Hundred Thousand Dollars ($10,800,000) for Year 1 of the Term; and (ii) Twelve Million Three Hundred Thousand Dollars ($12,300,000) for each of Years 2 through 5 of the Term, in each case payable in equal quarterly installments in advance in accordance with the payment terms set forth in the MDLA.
C. As a condition to Quorum's willingness to enter into the MDLA and to commit to the substantial multi-year license fees contemplated thereby, Quorum requires assurance that the pricing and economic terms applicable to Quorum under the MDLA will at all times remain competitive with, and no less favorable than, the pricing and economic terms offered by Meridian to similarly situated licensees operating in the insurance industry. Accordingly, the Parties have agreed to enter into this Most Favored Nation Pricing Rider (the "MFN Rider") to establish a binding mechanism ensuring pricing parity between Quorum and any such similarly situated licensee for the duration of the Term.
D. This MFN Rider is incorporated into and forms an integral part of the MDLA. Capitalized terms used but not otherwise defined in this MFN Rider shall have the meanings ascribed to such terms in the MDLA. In the event of any conflict or inconsistency between the terms of this MFN Rider and the terms of the MDLA, the terms of this MFN Rider shall control solely with respect to the subject matter addressed herein.
SECTION 1: DEFINITIONS
For purposes of this MFN Rider, the following terms shall have the meanings set forth below:
1.1 "Comparable Licensee" means any Person (as defined in the MDLA) that satisfies each of the following criteria:
(a) such Person is domiciled in the United States of America;
(b) such Person is an insurance carrier, a managing general agent ("MGA"), a managing general underwriter ("MGU"), or an insurance technology company (an "Insurtech Firm"), in each case as determined by the primary business activity of such Person;
(c) such Person has annual gross written premiums of Five Hundred Million Dollars ($500,000,000) or more for the most recently completed fiscal year or, in the case of an MGA, MGU, or Insurtech Firm, annual managed or facilitated premiums of Five Hundred Million Dollars ($500,000,000) or more for the most recently completed fiscal year, as reported in such Person's statutory filings, audited financial statements, or other publicly available or verifiable financial disclosures; and
(d) such Person is a party to a data license agreement, data access agreement, master services agreement, or similar contractual arrangement with Meridian (or any of Meridian's affiliates or subsidiaries) for access to one or more of the Licensed Data Products or substantially similar data products offered by Meridian.
For the avoidance of doubt, "Comparable Licensee" shall exclude any affiliate, subsidiary, or parent entity of Meridian, or any entity in which Meridian holds, directly or indirectly, an equity interest of ten percent (10%) or more.
1.2 "Comparable License Agreement" means any data license agreement, data access agreement, master services agreement, subscription agreement, or similar contractual arrangement (in each case, regardless of the title or designation thereof) between Meridian (or any of its affiliates, subsidiaries, or successor entities) and a Comparable Licensee, pursuant to which Meridian provides, or agrees to provide, the Comparable Licensee with access to one or more Licensed Data Products or substantially similar data products. The term "Comparable License Agreement" includes, without limitation, any amendment, supplement, restatement, renewal, extension, side letter, pricing letter, addendum, or other instrument or arrangement that modifies, supplements, or otherwise affects the economic terms (including, without limitation, fees, pricing, discounts, credits, or other financial terms) of any such agreement.
1.3 "Effective Per-Record Rate" means, with respect to any licensee (including Quorum), the quotient obtained by dividing (i) the total annual fees payable by such licensee under the applicable data license agreement (including, without limitation, base license fees, access fees, minimum commitment fees, recurring platform fees, technology fees, and any other recurring charges, but expressly excluding one-time implementation fees, one-time integration fees, and one-time setup charges) by (ii) the total number of data records made available to such licensee per annum under such agreement.
(a) Multi-Product Calculation. Where a Comparable License Agreement covers multiple data products (e.g., consumer credit data, commercial credit data, and alternative data), the Effective Per-Record Rate shall be calculated on a blended basis across all Licensed Data Products covered by such agreement, unless a product-by-product comparison is required pursuant to Section 2.1 of this MFN Rider, in which case the Effective Per-Record Rate shall be calculated separately for each applicable data product by allocating the total annual fees to each product on a pro rata basis consistent with Meridian's standard internal pricing methodology or, if no such methodology exists or is applicable, on the basis of the relative fair market value of each product.
(b) Bundled Arrangements. Where a Comparable License Agreement bundles data products with non-data services (including, without limitation, analytics consulting, model development, portfolio review services, or similar value-added services), the fees attributable to data access shall be allocated and separated from fees attributable to non-data services on a reasonable basis consistent with Meridian's internal transfer pricing policies as applied in Meridian's ordinary course of business. If Meridian does not maintain internal transfer pricing policies applicable to such allocation, or if such policies do not reasonably reflect the economic substance of the arrangement, the allocation shall be determined on the basis of the fair market value of the data access component and the non-data services component, respectively.
(c) Measurement Period. The Effective Per-Record Rate shall be calculated using annualized figures. For Comparable License Agreements with a term of less than twelve (12) months, the Effective Per-Record Rate shall be annualized by multiplying the fees and record volumes for the actual term by the factor necessary to produce a twelve-month equivalent.
The calculation methodology and worked examples for the Effective Per-Record Rate are set forth in Appendix A attached hereto.
1.4 "Most Favored Nation" or "MFN" means the pricing protection mechanism described in Section 2 of this MFN Rider, pursuant to which Quorum is entitled to assurance that its Effective Per-Record Rate under the MDLA does not exceed the most favorable Effective Per-Record Rate offered by Meridian to any Comparable Licensee during the Term.
1.5 "MFN Adjustment Date" means (a) each anniversary of the Effective Date of the MDLA, and (b) any other date on which a Price Adjustment (as defined in Section 2.2) becomes effective pursuant to the terms of this MFN Rider. For the avoidance of doubt, there may be multiple MFN Adjustment Dates within a single contract year if more than one Price Adjustment event occurs during such year.
1.6 "MFN Audit" means the independent audit procedure described in Section 4 of this MFN Rider, pursuant to which an independent third-party auditor is engaged to verify Meridian's compliance with the most favored nation pricing obligation set forth in Section 2.
1.7 "Licensed Data Products" shall have the meaning assigned to such term in the MDLA. For clarity and ease of reference, the Licensed Data Products as of the date hereof consist of the following:
(a) MCI Consumer Credit File™ — Meridian's proprietary consumer credit database, comprising approximately three hundred ten million (310,000,000) individual consumer credit records;
(b) MCI CommercialView™ — Meridian's proprietary commercial credit and business information database, comprising approximately forty-two million (42,000,000) business entity records; and
(c) MCI AltSignal™ — Meridian's proprietary alternative consumer data repository, comprising approximately eighty-five million (85,000,000) consumer alternative-data records, including utility payment histories, rental payment records, and other non-traditional credit indicators.
1.8 "Quorum Effective Per-Record Rate" means the Effective Per-Record Rate applicable to Quorum, as calculated using (a) the annual license fees payable by Quorum under the MDLA (Year 1: $10,800,000; Years 2 through 5: $12,300,000 per year), and (b) the applicable record volumes available to Quorum under the MDLA, currently estimated at approximately four hundred thirty-seven million (437,000,000) records per month, or approximately five billion two hundred forty-four million (5,244,000,000) records per annum, within the base tier of five hundred million (500,000,000) records per month as set forth in the MDLA. The Quorum Effective Per-Record Rate shall be recalculated to reflect any Price Adjustment implemented pursuant to Section 2.2. A detailed calculation of the initial Quorum Effective Per-Record Rate is set forth in Appendix A.
SECTION 2: MOST FAVORED NATION PRICING OBLIGATION
2.1 MFN Covenant.
Meridian hereby covenants and agrees that, during the Term of the MDLA (including any renewal or extension thereof), Meridian shall not enter into, amend, supplement, restate, renew, extend, or otherwise modify any Comparable License Agreement in a manner that results in the Effective Per-Record Rate charged to any Comparable Licensee being lower than the Quorum Effective Per-Record Rate then in effect, without simultaneously offering to Quorum a corresponding reduction in Quorum's fees under the MDLA sufficient to achieve pricing parity between Quorum and such Comparable Licensee (as more fully described in Section 2.2).
The MFN obligation set forth in this Section 2.1 shall apply to:
(a) all Comparable License Agreements entered into after the Effective Date of the MDLA;
(b) all amendments, supplements, restatements, renewals, extensions, side letters, pricing letters, addenda, or other modifications to existing Comparable License Agreements executed after the Effective Date of the MDLA that have the effect of reducing the Effective Per-Record Rate applicable to a Comparable Licensee; and
(c) all Comparable License Agreements entered into by Meridian directly, or by or through any affiliate, subsidiary, division, successor entity, or assign of Meridian, regardless of the corporate form or structure through which such agreement is executed or performed.
For the avoidance of doubt, the MFN obligation set forth herein shall apply regardless of whether a Comparable License Agreement relates to all three Licensed Data Products or only to a subset thereof. Where a Comparable Licensee has entered into a Comparable License Agreement covering only a subset of the Licensed Data Products (e.g., only MCI Consumer Credit File™ and MCI AltSignal™, but not MCI CommercialView™), the Effective Per-Record Rate comparison shall be made on a product-by-product basis for each overlapping Licensed Data Product. If the Comparable Licensee's Effective Per-Record Rate for any individual overlapping Licensed Data Product is lower than Quorum's Effective Per-Record Rate for the same product (as allocated pursuant to Section 1.3(a)), such difference shall trigger the Price Adjustment mechanism set forth in Section 2.2 with respect to that product.
2.2 Price Adjustment Mechanism.
If, at any time during the Term, Meridian enters into or amends a Comparable License Agreement that results in an Effective Per-Record Rate for a Comparable Licensee that is lower than Quorum's then-current Effective Per-Record Rate (such lower rate, the "More Favorable Rate"), then Meridian shall promptly take the following actions:
(a) Notification. Within fifteen (15) business days of the execution or amendment of such Comparable License Agreement, Meridian shall provide written notice to Quorum in accordance with Section 3, identifying the More Favorable Rate. Such notice need not identify the Comparable Licensee by name but shall describe the Comparable Licensee in sufficient detail (including the category of licensee and approximate annual premium volume tier) to enable Quorum to assess comparability.
(b) Offer of Price Adjustment. Simultaneously with the delivery of the notice described in clause (a) above, Meridian shall offer Quorum a reduction in the annual license fees payable by Quorum under the MDLA such that, upon implementation of such reduction, Quorum's Effective Per-Record Rate equals the More Favorable Rate (such reduction, the "Price Adjustment"). The Price Adjustment shall specify the revised annual fee, the revised quarterly installment amount, and the effective date thereof.
The Price Adjustment shall be retroactive to the date on which the Comparable License Agreement (or amendment thereto) giving rise to the More Favorable Rate became effective (the "Retroactive Date"). Quorum shall have a period of thirty (30) days following its receipt of the notice described in Section 2.2(a) within which to elect, by written notice to Meridian, to accept or decline the Price Adjustment.
(i) Acceptance. If Quorum elects to accept the Price Adjustment, the adjusted pricing shall apply prospectively from the applicable MFN Adjustment Date, and Meridian shall, within forty-five (45) days of Quorum's acceptance, issue a credit to Quorum's account (or, at Quorum's election, a cash refund by wire transfer of immediately available funds) in the amount of any overpayment made by Quorum during the period from the Retroactive Date through the date on which the adjusted pricing takes effect.
(ii) Declination. If Quorum elects to decline the Price Adjustment, or if Quorum fails to respond within the thirty (30)-day election period, Quorum's existing pricing under the MDLA shall continue unchanged, and no credit or refund shall be due. Quorum's declination of a Price Adjustment shall not constitute a waiver of Quorum's right to accept any future Price Adjustment.
2.3 Quarterly Installment Recalculation.
Upon any Price Adjustment pursuant to Section 2.2, the quarterly installment amounts payable by Quorum under the MDLA shall be recalculated to reflect the adjusted annual license fee. For reference, the current quarterly installments are as follows:
Following any Price Adjustment, Meridian shall deliver to Quorum a revised fee schedule reflecting the adjusted annual license fee and revised quarterly installment amounts. Adjusted quarterly installments shall be prorated for any partial quarter in which the Price Adjustment takes effect, calculated on the basis of the actual number of days elapsed in such quarter relative to the total number of days in such quarter.
2.4 Volume discount Parity.
If, during the Term, Meridian provides any Comparable Licensee with volume discounts, tiered pricing structures, reduced overage rates, or any other pricing mechanism that varies based on the volume of data records accessed or consumed, and the application of such volume-based pricing mechanism results in a lower Effective Per-Record Rate for such Comparable Licensee at any volume tier, Quorum shall be entitled to receive the same volume discount, tiered pricing structure, or reduced overage rate at equivalent volume thresholds. For reference, Quorum's current overage rate under the MDLA is $0.003 per record for records accessed in excess of the base tier of five hundred million (500,000,000) records per month. Any volume discount or reduced overage rate offered to a Comparable Licensee that would result in a lower effective cost per record at a volume threshold equal to or below Quorum's actual or projected usage levels shall be made available to Quorum on the same terms and conditions.
2.5 Non-Price Economic Terms.
In addition to the pricing protections set forth in Sections 2.1 through 2.4, if Meridian offers any Comparable Licensee non-price economic terms that are more favorable than the corresponding terms provided to Quorum under the MDLA and that have a quantifiable economic value, Meridian shall notify Quorum of such terms in accordance with Section 3 and shall offer Quorum equivalent terms. Non-price economic terms with quantifiable economic value include, without limitation:
(a) extended payment terms (e.g., net 60 or net 90 rather than payment in advance);
(b) waived or reduced implementation fees, integration fees, or setup charges;
(c) additional Licensed Data Products or supplemental data sets provided at no incremental charge or at a reduced charge;
(d) enhanced service-level commitments or service credits;
(e) more favorable data refresh frequency or delivery cadence at no additional cost; and
(f) any other economic concession or benefit with a quantifiable monetary value.
For the avoidance of doubt, this Section 2.5 shall not apply to terms that are specific to the unique operational or technical requirements of a Comparable Licensee and do not confer a net economic benefit transferable to Quorum, including, without limitation, bespoke data delivery formats, custom API configurations, or specialized data mapping tailored to a particular licensee's proprietary systems.
SECTION 3: NOTIFICATION OBLIGATIONS
3.1 Meridian's Affirmative Notification Duty.
Meridian shall provide written notice to Quorum within fifteen (15) business days of the occurrence of any of the following events:
(a) Meridian (or any of its affiliates or subsidiaries) entering into any new Comparable License Agreement;
(b) Meridian (or any of its affiliates or subsidiaries) amending, supplementing, restating, renewing, or extending any existing Comparable License Agreement in a manner that modifies the Effective Per-Record Rate or any other economic term (including, without limitation, fees, pricing tiers, volume discounts, overage rates, payment terms, or service credits) applicable to the Comparable Licensee thereunder; or
(c) Meridian (or any of its affiliates or subsidiaries) entering into any side letter, pricing letter, term sheet, letter agreement, or other arrangement or understanding (whether written or oral, but to the extent an oral arrangement is subsequently memorialized in writing) that has the effect of modifying, supplementing, or superseding the economic terms of any existing Comparable License Agreement.
All notices under this Section 3.1 shall be delivered to:
Carolyn Whitford General Counsel & Executive Vice President Quorum Insurance Holdings Corp. 1200 Atlantic Street, Suite 3400 Stamford, Connecticut 06901
with a copy to:
Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022
Attention: Leonard Cross / Wendy Schultz
3.2 Content of Notice.
Each notice delivered pursuant to Section 3.1 shall include the following information:
(a) the date of execution, amendment, or modification of the Comparable License Agreement or other arrangement;
(b) a description of the Licensed Data Products (or substantially similar data products) covered by the Comparable License Agreement;
(c) the aggregate annual fees payable by the Comparable Licensee under the Comparable License Agreement, including a breakdown by fee category (base license fees, access fees, platform fees, and similar charges);
(d) the Effective Per-Record Rate applicable to the Comparable Licensee, calculated in accordance with the methodology set forth in Section 1.3 and Appendix A;
(e) the initial term and any renewal or extension provisions of the Comparable License Agreement;
(f) a description of any volume-based pricing tiers, volume discounts, or tiered overage rates applicable to the Comparable Licensee; and
(g) a description of any non-price economic terms with quantifiable economic value (as contemplated by Section 2.5) that are more favorable than the corresponding terms provided to Quorum.
The notice need not identify the Comparable Licensee by name; however, it shall identify the Comparable Licensee by category (i.e., insurance carrier, MGA, MGU, or Insurtech Firm) and approximate annual premium volume tier (e.g., "$500M–$1B," "$1B–$5B," "$5B–$10B," or "$10B+").
3.3 Confidentiality of Notices.
All notices, information, and data provided by Meridian to Quorum under this Section 3 shall constitute "Confidential Information" of Meridian as defined in the MDLA and in the Mutual Non-Disclosure Agreement between the Parties (Reference No. NDA-QIH-MCI-2022-001, dated August 15, 2022) (the "Mutual NDA"), and shall be subject to all confidentiality, non-disclosure, and use restrictions set forth in the MDLA and the Mutual NDA. Quorum agrees that it shall use information received pursuant to this Section 3 solely for the purpose of administering and enforcing its rights under this MFN Rider and shall not use such information for any competitive purpose, market intelligence purpose, or any other purpose not directly related to the administration of this MFN Rider. Quorum shall restrict access to such information to those of its employees, officers, directors, and outside legal and financial advisors who have a need to know such information in connection with the administration of this MFN Rider and who are bound by confidentiality obligations no less restrictive than those set forth in the Mutual NDA.
SECTION 4: AUDIT RIGHTS
4.1 Annual MFN Audit Right.
Once during each contract year of the Term (a "contract year" being each twelve-month period commencing on the Effective Date or any anniversary thereof), Quorum shall have the right, at Quorum's sole cost and expense (subject to reimbursement as provided in Section 4.4), to engage an independent third-party auditor (the "MFN Auditor") to conduct an audit (an "MFN Audit") to verify Meridian's compliance with the most favored nation pricing obligation set forth in Section 2 and the notification obligations set forth in Section 3 of this MFN Rider.
The MFN Auditor shall be a nationally recognized accounting firm or consulting firm with relevant experience in data licensing, technology transactions, or insurance industry pricing. The MFN Auditor shall be mutually agreed upon by the Parties. If the Parties are unable to agree upon the selection of an MFN Auditor within fifteen (15) business days of Quorum's written request to initiate an MFN Audit, the following selection procedure shall apply: each Party shall, within ten (10) business days, nominate one nationally recognized accounting or consulting firm, and those two nominated firms shall jointly select a third firm to serve as the MFN Auditor, such selection to be made within ten (10) business days of the nomination of the two firms.
Quorum's right to initiate an MFN Audit shall be exercisable upon not fewer than thirty (30) days' prior written notice to Meridian, specifying the contract year to be audited, the identity of the proposed MFN Auditor (or, if the mutual selection process is to be invoked, a statement to that effect), and the anticipated audit commencement date.
4.2 Scope of Audit.
The MFN Auditor shall be entitled to examine Meridian's books, records, financial documents, contracts, and agreements (including, without limitation, all Comparable License Agreements and related amendments, supplements, side letters, and pricing letters), solely to the extent reasonably necessary to verify:
(a) whether any Comparable License Agreement in effect during the audited period contains or contained an Effective Per-Record Rate that is or was lower than Quorum's then-current Effective Per-Record Rate for the corresponding period;
(b) whether Meridian has complied with its affirmative notification obligations under Section 3 of this MFN Rider with respect to all new Comparable License Agreements and all amendments or modifications to existing Comparable License Agreements that occurred during the audited period; and
(c) whether any Price Adjustment required under Section 2.2 was correctly calculated and timely implemented, including verification of the retroactive credit or refund amount, if applicable.
Meridian shall make available all records, documents, and information reasonably requested by the MFN Auditor within fifteen (15) business days of the MFN Auditor's written request therefor. Meridian shall cooperate in good faith with the MFN Auditor and shall designate a knowledgeable representative to serve as a point of contact and to respond to the MFN Auditor's reasonable inquiries.
The MFN Audit shall be conducted at Meridian's principal offices located at 3300 Peachtree Road NE, Suite 2100, Atlanta, Georgia 30326, or at such other location as Meridian may reasonably designate in writing, during normal business hours (Monday through Friday, 9:00 a.m. to 5:00 p.m. Eastern Time, excluding federal holidays). Meridian may, in its reasonable discretion, require that the audit be conducted in a secure document review room with no electronic copying or photographic reproduction of Comparable License Agreements, provided that the MFN Auditor is permitted to make handwritten notes necessary for the preparation of the audit report.
4.3 Auditor Confidentiality.
Prior to commencing any MFN Audit, the MFN Auditor shall execute a confidentiality agreement in form and substance reasonably satisfactory to both Parties, which confidentiality agreement shall, at a minimum, obligate the MFN Auditor to maintain the confidentiality of all Meridian Confidential Information accessed during the audit, to limit the use of such information solely to the conduct of the MFN Audit and the preparation of the audit report, and to return or destroy all copies of Meridian Confidential Information upon completion of the audit.
The MFN Auditor's report to Quorum shall be limited to the following information:
(a) a determination of whether Meridian is or is not in compliance with the MFN obligation set forth in Section 2 for the audited period;
(b) if the MFN Auditor determines that Meridian is not in compliance, the amount of any required Price Adjustment, expressed as a reduction in the annual license fee and/or a credit or refund amount; and
(c) the period for which any such Price Adjustment is retroactive, expressed as a date range.
The MFN Auditor shall not disclose to Quorum the identity of any Comparable Licensee, the specific financial terms of any Comparable License Agreement (other than as necessary to quantify the required Price Adjustment), or any other confidential business information of Meridian beyond what is strictly necessary to report the compliance findings described in clauses (a) through (c) above.
4.4 Audit Findings and Remediation.
If the MFN Audit reveals that Meridian has failed to provide a Price Adjustment required under Section 2.2, or has otherwise breached its MFN obligation under Section 2, Meridian shall, within thirty (30) days of its receipt of the MFN Auditor's report:
(a) implement the required Price Adjustment retroactively to the Retroactive Date, as determined by the MFN Auditor;
(b) issue a credit to Quorum's account (or, at Quorum's election, a cash refund by wire transfer of immediately available funds to an account designated by Quorum) in the amount of all overpayments made by Quorum during the period of non-compliance, together with interest on such overpayments calculated at the MDLA's late payment rate of one and one-half percent (1.5%) per month (eighteen percent (18%) per annum), compounding monthly, from the date each overpayment was made through the date the credit or refund is issued; and
(c) reimburse Quorum for the reasonable, documented out-of-pocket costs incurred by Quorum in connection with the MFN Audit, including, without limitation, the fees and expenses of the MFN Auditor.
If the MFN Audit reveals that Meridian is in compliance with its MFN obligation under Section 2, Quorum shall bear all costs and expenses of the MFN Audit, and no credit, refund, or reimbursement shall be due from Meridian.
4.5 Survival of Audit Right.
Quorum's right to conduct an MFN Audit under this Section 4 shall survive for a period of two (2) years following the expiration or termination of the MDLA (for any reason), solely with respect to the verification of Meridian's compliance with the MFN obligation during the Term. All procedural requirements, confidentiality obligations, and remediation provisions of this Section 4 shall apply to any such post-termination audit.
SECTION 5: REPRESENTATIONS AND WARRANTIES
5.1 Meridian's Representations and Warranties.
Meridian represents and warrants to Quorum, as of the date of this MFN Rider and as of the Effective Date of the MDLA, as follows:
(a) No Existing Lower Rates. As of the date hereof, no existing Comparable License Agreement contains an Effective Per-Record Rate that is lower than the Quorum Effective Per-Record Rate. Meridian has conducted a reasonable review of its existing portfolio of data license agreements with licensees in the insurance industry and has determined that no such agreement provides pricing terms that would trigger the Price Adjustment mechanism set forth in Section 2.2 if such agreement were entered into on the date hereof.
(b) Authority and No Conflicts. Meridian has full corporate power and authority to enter into this MFN Rider and to perform and comply with all of its obligations hereunder. The execution, delivery, and performance of this MFN Rider by Meridian has been duly authorized by all necessary corporate action. The compliance by Meridian with its obligations under this MFN Rider does not and will not (i) violate, conflict with, or result in a breach of, or constitute a default under, any provision of Meridian's certificate of incorporation, bylaws, or other organizational documents, (ii) violate, conflict with, or result in a breach of, or constitute a default under, any existing agreement, contract, commitment, or obligation to which Meridian is a party or by which Meridian is bound, or (iii) violate any applicable law, rule, regulation, order, judgment, or decree.
(c) No Restrictions on Disclosure or Audit. Meridian is not subject to any contractual restriction, confidentiality obligation, or other legal or contractual impediment that would prevent Meridian from (i) disclosing to Quorum the information required to be disclosed under Section 3 of this MFN Rider, or (ii) permitting the MFN Audit described in Section 4 of this MFN Rider, including providing the MFN Auditor with access to Comparable License Agreements and related records. To the extent that any existing Comparable License Agreement contains confidentiality provisions that could restrict the foregoing disclosures or audit access, Meridian represents that such restrictions do not prohibit disclosure to or examination by an independent third-party auditor under a confidentiality agreement of the type contemplated by Section 4.3.
5.2 Quorum's Representations and Warranties.
Quorum represents and warrants to Meridian, as of the date of this MFN Rider and as of the Effective Date of the MDLA, as follows:
(a) Permitted Use of Information. Quorum shall use any and all information received pursuant to this MFN Rider (including, without limitation, information received under Section 3 and any findings of an MFN Audit under Section 4) solely for the purpose of administering and enforcing its rights under this MFN Rider. Quorum shall not use any such information for any competitive intelligence purpose, market analysis purpose, or for the purpose of soliciting, negotiating, or entering into agreements with Meridian's customers, licensees, or prospective licensees.
(b) No Unauthorized Disclosure. Quorum shall not disclose any information received under this MFN Rider to any third party, except (i) to Quorum's outside legal counsel and financial advisors who have a need to know such information in connection with the administration of this MFN Rider and who are bound by professional obligations of confidentiality or written confidentiality agreements no less restrictive than those set forth in the Mutual NDA, or (ii) as otherwise permitted under the confidentiality provisions of the MDLA and the Mutual NDA.
SECTION 6: REMEDIES
6.1 Specific Performance.
The Parties acknowledge and agree that a breach by Meridian of the most favored nation pricing obligation set forth in Section 2 of this MFN Rider would cause irreparable harm to Quorum for which monetary damages alone would be an inadequate and insufficient remedy. Accordingly, in the event of any actual or threatened breach by Meridian of its obligations under Section 2 or Section 3 of this MFN Rider, Quorum shall be entitled to seek and obtain specific performance, temporary restraining orders, preliminary and permanent injunctive relief, and any other equitable remedies available at law or in equity, in each case without the necessity of (i) proving actual damages, (ii) posting any bond, surety, or other security, or (iii) satisfying any other prerequisite to equitable relief, except to the extent that any such bond, surety, or prerequisite is mandated by applicable law and cannot be waived. Meridian hereby waives, to the fullest extent permitted by law, any requirement that Quorum post a bond or other security as a condition to obtaining injunctive or other equitable relief.
The remedies set forth in this Section 6.1 are in addition to, and not in lieu of, any other remedies available to Quorum under this MFN Rider, the MDLA, or at law or in equity, including, without limitation, the right to recover monetary damages, credits, refunds, and interest as provided herein.
6.2 Termination Right.
If Meridian materially breaches its MFN obligation under Section 2 of this MFN Rider, and such breach remains uncured for a period of sixty (60) days following Quorum's delivery of written notice to Meridian specifying the nature of the breach in reasonable detail, Quorum shall have the right, exercisable in its sole discretion and in addition to (and not in lieu of) any other remedies available to Quorum, to terminate the MDLA upon written notice to Meridian, effective immediately upon delivery of such notice (or on such later date as Quorum may specify in the termination notice). Upon any such termination:
(a) Meridian shall refund to Quorum, within thirty (30) days of the effective date of termination, all prepaid license fees attributable to periods following the effective date of termination, calculated on a pro rata basis;
(b) such termination shall be without penalty, early termination fee, or other charge to Quorum; and
(c) Quorum shall retain all rights and remedies accrued prior to the effective date of termination, including, without limitation, the right to seek damages, credits, and refunds for periods of non-compliance prior to termination.
6.3 Cumulative Remedies.
All remedies provided under this MFN Rider, whether set forth in this Section 6 or elsewhere herein, are cumulative and are in addition to, and not exclusive of, any other remedies available to the Parties under the MDLA, at law, or in equity. The exercise by either Party of any remedy under this MFN Rider shall not preclude the exercise of any other remedy to which such Party may be entitled. No failure or delay by Quorum in exercising any right or remedy under this MFN Rider shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy.
SECTION 7: EXCLUSIONS AND LIMITATIONS
7.1 Excluded Arrangements.
The MFN obligation set forth in Section 2 of this MFN Rider shall not apply to the following categories of agreements or arrangements:
(a) Government and Regulatory Arrangements. Data license agreements, data access agreements, or similar arrangements entered into by Meridian with any federal, state, or local government agency, department, or instrumentality, or with any regulatory body or self-regulatory organization (including, without limitation, state departments of insurance, the National Association of Insurance Commissioners, and federal financial regulatory agencies);
(b) Pro Bono and Charitable Arrangements. Arrangements pursuant to which Meridian provides data access on a pro bono or charitable basis to non-profit organizations, academic institutions, or charitable entities, where such arrangements are made in furtherance of Meridian's corporate social responsibility initiatives and are not structured to provide a competitive economic benefit to the recipient;
(c) Pilot Programs and Trials. Pilot programs, proof-of-concept arrangements, evaluation licenses, or trial arrangements with a total duration of ninety (90) days or less, provided that such arrangements are not renewed, extended, or converted into a Comparable License Agreement with economic terms more favorable than Quorum's without triggering the notification and Price Adjustment obligations of this MFN Rider;
(d) Non-U.S. Arrangements. Data license agreements or similar arrangements with entities that are domiciled outside the United States of America, where the data access is primarily for use in connection with business operations conducted outside the United States; and
(e) Non-Comparable Data Products. Arrangements relating to data products that are not Licensed Data Products (as defined in the MDLA) and are not substantially similar to the Licensed Data Products, as reasonably determined based on the nature, scope, and content of the data involved. For the avoidance of doubt, data products that cover the same or substantially overlapping subject matter, data fields, or consumer or business populations as the Licensed Data Products shall be considered "substantially similar" for purposes of this MFN Rider.
7.2 Bona Fide Differences.
Differences in Effective Per-Record Rates between Quorum and a Comparable Licensee that arise solely from bona fide, objectively verifiable differences in the following factors shall not, in and of themselves, constitute a breach of the MFN obligation set forth in Section 2:
(a) differences in the volume of data records committed to or consumed by the respective licensees (i.e., higher-volume licensees receiving lower per-record rates as a natural consequence of higher volume commitments);
(b) differences in data delivery methods, formats, or frequency that result in measurably different costs to Meridian in providing the data; or
(c) differences in data product scope, where a Comparable Licensee licenses fewer Licensed Data Products than Quorum and the per-product pricing reflects the absence of cross-product bundling economies.
Provided, however, that the foregoing exclusion shall apply only to the extent that, when such bona fide differences are normalized (on a per-product, per-record basis, adjusting for volume to equivalent volume tiers), the Comparable Licensee's Effective Per-Record Rate for the overlapping Licensed Data Products does not fall below Quorum's Effective Per-Record Rate for the same Licensed Data Products at equivalent volume levels. In other words, the existence of a bona fide difference in one factor (e.g., volume) shall not be used to justify or shield a pricing differential that, when properly normalized, represents a more favorable rate for the Comparable Licensee on a like-for-like basis.
7.3 No Obligation to Increase Fees.
Nothing in this MFN Rider shall be construed to require or authorize Meridian to increase the fees, rates, or charges applicable to any Comparable Licensee, or to otherwise impose any obligation on Meridian to raise prices charged to its other licensees. The MFN obligation operates solely as a price reduction mechanism for the benefit of Quorum. Meridian's sole obligation under this MFN Rider is to reduce Quorum's fees to the extent necessary to achieve pricing parity as described in Section 2 when a More Favorable Rate is identified.
SECTION 8: TERM AND SURVIVAL
8.1 Term.
This MFN Rider shall be effective as of the Effective Date of the MDLA and shall remain in full force and effect for the entire duration of the initial five-year Term of the MDLA. If the MDLA is renewed, extended, or otherwise continued beyond the initial Term, whether by exercise of a renewal option, mutual agreement of the Parties, or operation of any automatic renewal provision, this MFN Rider shall automatically continue in full force and effect for the duration of any such renewal or extension period, unless otherwise agreed in writing by the Parties.
8.2 Survival.
The following provisions of this MFN Rider shall survive the expiration or termination of this MFN Rider and the MDLA, for any reason:
(a) Section 4.5 (Survival of Audit Right);
(b) Section 6 (Remedies), in its entirety, with respect to any claims, rights, or obligations that have accrued prior to the effective date of expiration or termination; and
(c) Section 9 (General Provisions), in its entirety.
In addition, any Price Adjustment, credit, refund, or other monetary obligation that has accrued but has not been fully paid or satisfied as of the date of expiration or termination shall survive and remain payable in accordance with the terms of this MFN Rider.
SECTION 9: GENERAL PROVISIONS
9.1 Governing Law.
This MFN Rider shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to its conflicts-of-law principles or rules that would cause the application of the laws of any other jurisdiction. Each Party irrevocably consents to the application of the laws of the State of New York to all matters arising out of or relating to this MFN Rider.
9.2 Dispute Resolution.
Any dispute, controversy, or claim arising out of or relating to this MFN Rider, including any question regarding its existence, validity, interpretation, performance, breach, or termination, shall be resolved in accordance with the dispute resolution provisions set forth in the MDLA.
[Note to Meridian counsel: Quorum's position is that all disputes shall be subject to the exclusive jurisdiction of the United States District Court for the Southern District of New York, or, if such court lacks subject matter jurisdiction, the Commercial Division of the Supreme Court of the State of New York, New York County. Meridian has proposed binding arbitration administered by the American Arbitration Association ("AAA") under its Commercial Arbitration Rules. This issue remains open and is to be resolved in the context of the MDLA negotiation. The dispute resolution provision of this MFN Rider will conform to the final, agreed-upon dispute resolution provision of the MDLA.]
9.3 Integration.
This MFN Rider is an integral part of the MDLA and, together with the MDLA and all schedules, exhibits, riders, addenda, and other attachments thereto, constitutes the entire agreement of the Parties with respect to the subject matter hereof. This MFN Rider supersedes all prior and contemporaneous negotiations, discussions, correspondence, proposals, representations, warranties, and agreements between the Parties, whether written or oral, relating to the subject matter of this MFN Rider. No prior course of dealing, usage of trade, or course of performance shall be relevant to supplement, explain, or vary any of the terms of this MFN Rider.
9.4 Amendments.
This MFN Rider may not be amended, modified, supplemented, restated, or waived except by a written instrument duly executed by an authorized representative of each of Quorum and Meridian. No oral agreement, representation, or understanding shall operate to modify or amend this MFN Rider. No waiver of any provision of this MFN Rider shall be effective unless set forth in a written instrument signed by the Party against which such waiver is to be enforced, and any such waiver shall be limited to the specific provision and occurrence so waived and shall not be deemed a waiver of any other provision or any subsequent occurrence.
9.5 Notices.
All notices, requests, demands, consents, waivers, and other communications required or permitted under this MFN Rider shall be in writing and shall be delivered in accordance with the notice provisions set forth in the MDLA. Notices under this MFN Rider shall be addressed as follows (or to such other address as a Party may designate in writing from time to time):
If to Quorum:
Carolyn Whitford General Counsel & Executive Vice President Quorum Insurance Holdings Corp. 1200 Atlantic Street, Suite 3400 Stamford, Connecticut 06901
Email: cwhitford@quoruminsurance.com
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 425 Park Avenue New York, New York 10022
Attention: Leonard Cross / Wendy Schultz
Email: lcross@calderwoodharkness.com / wschultz@calderwoodharkness.com
If to Meridian:
Arthur Pennington General Counsel Meridian Credit intelligence, Inc. 3300 Peachtree Road NE, Suite 2100 Atlanta, Georgia 30326
Email: apennington@meridianci.com
with a copy (which shall not constitute notice) to:
Kessler Pruitt & Ashe LLP 1180 Peachtree Street NE, Suite 3000 Atlanta, Georgia 30309
Attention: Graham Whitley
Email: gwhitley@kpalaw.com
9.6 Severability.
If any provision of this MFN Rider, or the application of any provision to any person, entity, or circumstance, is held by a court of competent jurisdiction or other tribunal to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this MFN Rider, and the remaining provisions of this MFN Rider shall continue in full force and effect. In such event, the Parties shall negotiate in good faith to replace the invalid, illegal, or unenforceable provision with a valid and enforceable provision that, to the maximum extent practicable, achieves the economic, business, and other purposes of the original provision and preserves the Parties' original intent as reflected in this MFN Rider.
9.7 Counterparts.
This MFN Rider may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of this MFN Rider by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document shall have the same effect as delivery of a manually executed original counterpart.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have caused this Most Favored Nation Pricing Rider to be executed by their duly authorized representatives as of the date(s) set forth below.
QUORUM INSURANCE HOLDINGS CORP.
By: ________
Name: ________