1025-00009 · Calderwood & Harkness LLP · Closing

closing-confirmation-letter.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law

100 Pearl Street, Suite 800 Hartford, CT 06103 Tel: (860) 555-7200	Fax: (860) 555-7201
1221 Avenue of the Americas, 34th Floor New York, NY 10020 Tel: (212) 555-4100	Fax: (212) 555-4101

www.calderwoodharkness.com

May 6, 2024

Patricia Okonkwo, Esq. General Counsel Quorum Insurance Holdings Corp. 280 Constitution Plaza, Suite 1400 Hartford, CT 06103

Re: Closing Confirmation — Enterprise SaaS Subscription Agreement between Quorum Insurance Holdings Corp. and Clearpoint Analytics, Inc. (ClaimsIQ™ Platform) Matter No. 1025-00009

Dear Ms. Okonkwo:

1. Purpose and Confirmation of Closing

Calderwood & Harkness LLP is pleased to write to confirm the successful closing of the enterprise Software-as-a-Service subscription transaction (the "Transaction") between Quorum Insurance Holdings Corp. ("Quorum" or the "Company") and Clearpoint Analytics, Inc. ("Clearpoint"), pursuant to which Quorum has licensed and subscribed to the ClaimsIQ™ claims-processing and analytics platform (the "Platform") on the terms set forth in the executed transaction documents described in Section 2 below.

The Transaction closed and became effective as of April 26, 2024 (the "Closing Date"). We are writing to confirm that, as of the date of this letter, all closing deliverables required under the transaction documents and the parties' agreed-upon closing checklist have been satisfied in full. Accordingly, Calderwood & Harkness's engagement file for this matter has been designated as closed and completed (status: closed_completed) as of May 6, 2024.

The Calderwood & Harkness engagement team for this matter consisted of the following professionals:

• Renata Vasquez, Partner — Responsible Partner

• Bernard Crawford, Partner — Billing Partner

• Nathan Ikeda, Associate — Lead Associate

• Gabrielle Moss, Associate — Working Associate

We set forth below, for your records and convenience, a comprehensive summary of the executed transaction documents, the closing deliverables received and confirmed, and the key post-closing obligations and dates of which Quorum should remain aware going forward.

2. Summary of Executed Transaction Documents

The following documents were negotiated, finalized, and duly executed in connection with the Transaction (collectively, the "Transaction Documents"):

2.1 Enterprise SaaS Subscription Agreement

The Enterprise SaaS Subscription Agreement (the "SaaS Agreement" or the "Agreement") was executed on April 26, 2024 by and between Quorum Insurance Holdings Corp., as Licensee, and Clearpoint Analytics, Inc., as Licensor. The SaaS Agreement was signed by you, Patricia Okonkwo, in your capacity as General Counsel of Quorum, on behalf of Quorum, and by Anita Rajan, Chief Executive Officer and Co-Founder of Clearpoint, on behalf of Clearpoint.

The principal commercial and legal terms of the SaaS Agreement are summarized as follows:

Term. The initial subscription term is five (5) years, commencing on the Closing Date of April 26, 2024 and expiring on April 25, 2029, unless earlier terminated in accordance with the Agreement. The Agreement provides for automatic renewal for successive one (1)-year renewal terms unless either party delivers written notice of non-renewal no fewer than one hundred eighty (180) days prior to the expiration of the then-current term.

Subscription Fees and Escalation. The total contract value over the initial five-year term is Seven Million Dollars ($7,000,000), reflecting an annual contract value ("ACV") of One Million Four Hundred Thousand Dollars ($1,400,000) per year. Beginning in Year 2 and continuing through Year 5, the annual subscription fee is subject to a Consumer Price Index-based escalator, capped at three and one-half percent (3.5%) per annum. The escalator is applied to the prior year's subscription fee on each anniversary of the Closing Date.

User Entitlements and Overage. The Agreement entitles Quorum to up to one thousand two hundred (1,200) named users across Quorum and its subsidiaries, specifically including Quorum Property & Casualty Insurance Company, Quorum Specialty Underwriters, Inc., and Quorum Digital Solutions LLC. Any usage in excess of the 1,200-user entitlement is subject to an overage rate of One Hundred Fifty Dollars ($150.00) per user per month, invoiced quarterly in arrears.

Deployment Locations. The Platform is authorized for deployment across Quorum's claims-processing locations in Hartford, Connecticut; Dallas, Texas; and Jacksonville, Florida, together with remote access capabilities for Quorum's field adjusters operating from other locations.

Governing Law and Dispute Resolution. The SaaS Agreement is governed by and construed in accordance with the laws of the State of Connecticut, without regard to conflicts-of-law principles. The Agreement provides for a tiered dispute resolution mechanism consisting of (i) mandatory mediation administered by Pinnacle Dispute Resolution Services in Hartford, Connecticut, followed, if mediation is unsuccessful, by (ii) binding arbitration administered by the American Arbitration Association ("AAA") in Hartford, Connecticut, in accordance with the AAA's then-current Commercial Arbitration Rules.

Indemnification and Liability Caps. The Agreement contains mutual indemnification provisions, structured as follows:

(a) Data-Breach Indemnification. Clearpoint's obligation to indemnify Quorum for losses arising out of a data breach attributable to Clearpoint's acts or omissions is uncapped.

(b) intellectual Property / General Indemnification. Each party's indemnification obligations with respect to intellectual property infringement claims and other general indemnification matters are capped at two times (2×) the total contract value, or Fourteen Million Dollars ($14,000,000).

(c) General Liability Cap. The overall general liability of each party under the Agreement (exclusive of the foregoing indemnification obligations) is capped at one times (1×) the total contract value, or Seven Million Dollars ($7,000,000).

Renewal. As noted above, the Agreement automatically renews for successive one (1)-year terms unless either party provides written notice of non-renewal at least one hundred eighty (180) days prior to the expiration of the then-current term.

2.2 Exhibit A — Statement of Work / Service Description

Exhibit A to the SaaS Agreement (the "SOW" or "Service Description") was incorporated into and made a part of the SaaS Agreement, effective as of April 26, 2024. The SOW describes the scope of the ClaimsIQ™ Platform, including the following principal functional modules and capabilities: claims triage and routing, fraud detection and scoring, analytics dashboards and reporting, and related workflow-automation tools. In addition, the SOW addresses the deployment schedule, phased go-live milestones, user entitlements and role-based access configurations, integration requirements with Quorum's existing Severin Solutions and Aldermere Services Inc. environments, end-user and administrator training programs, and the acceptance testing criteria and procedures applicable to the initial deployment.

2.3 Exhibit B — Service Level Agreement

Exhibit B to the SaaS Agreement (the "SLA") was incorporated into and made a part of the SaaS Agreement, effective as of April 26, 2024. The material terms of the SLA are as follows:

Platform Availability. Clearpoint is obligated to maintain Platform availability of not less than ninety-nine and seven-tenths percent (99.7%) monthly uptime, measured on a calendar-month basis. Scheduled maintenance windows of up to four (4) hours per month, occurring on Sundays between 2:00 AM and 6:00 AM Eastern Time, are excluded from the uptime calculation.

Service Credits. In the event that Platform availability falls below the 99.7% threshold in any given calendar month, Quorum is entitled to a service credit equal to two percent (2%) of the monthly subscription fee (approximately Two Thousand Three Hundred Thirty-Three Dollars ($2,333)) for each one-tenth of one percent (0.1%) shortfall below 99.7%. The maximum aggregate service credit in any single calendar month is capped at fifteen percent (15%) of the monthly subscription fee, or approximately Seventeen Thousand Five Hundred Dollars ($17,500).

Chronic Failure Termination Right. In the event that Platform uptime falls below ninety-nine percent (99.0%) in any three (3) consecutive calendar months, Quorum has the right to terminate the SaaS Agreement upon written notice to Clearpoint and to receive a pro-rata refund of any prepaid and unused subscription fees.

2.4 Exhibit C — Data Processing Addendum

Exhibit C to the SaaS Agreement (the "DPA" or "Data Processing Addendum") was incorporated into and made a part of the SaaS Agreement, effective as of April 26, 2024. The DPA establishes the parties' respective rights and obligations with respect to the processing, storage, and handling of Customer Data. The key provisions of the DPA are as follows:

Data Ownership. Quorum retains sole and exclusive ownership of all Customer Data (as defined in the SaaS Agreement) at all times. No rights in or to Customer Data are transferred or licensed to Clearpoint except the limited processing rights necessary for Clearpoint to perform its obligations under the Agreement.

Aggregated Data. Clearpoint's use of Aggregated Data (i.e., de-identified, anonymized, and aggregated data derived from Customer Data) is subject to Quorum's prior written consent. The DPA expressly prohibits Clearpoint from (i) re-identifying any Aggregated Data or (ii) selling, licensing, or otherwise transferring Aggregated Data to any third party.

Data Portability and Destruction. Upon expiration or termination of the SaaS Agreement, Clearpoint is obligated to provide Quorum with a full export of all Customer Data in ACORD XML and CSV formats within sixty (60) days of the effective date of expiration or termination. Within thirty (30) days following the completion of such data export and Quorum's written confirmation of receipt, Clearpoint shall securely destroy all remaining copies of Customer Data in its possession or control and deliver to Quorum a written certification of destruction executed by an authorized officer of Clearpoint.

Regulatory Compliance. The DPA requires Clearpoint to comply with all applicable data protection and privacy laws and regulations, including without limitation the Connecticut Data Privacy Act ("CTDPA"), the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") with respect to protected health information processed in connection with Quorum's workers' compensation insurance lines, and the National Association of Insurance Commissioners ("NAIC") Insurance Data Security Model Law (Model 668) as adopted and implemented in the State of Connecticut.

Approved Subprocessors. The DPA identifies the following approved subprocessors authorized to process Customer Data on behalf of Clearpoint:

(a) Cobalt Cloud Infrastructure, Inc. — cloud hosting and infrastructure services; and

(b) Redline Document AI, LLC — optical character recognition (OCR) processing services.

In the event Clearpoint proposes to engage any new or replacement subprocessor, Clearpoint is required to provide Quorum with no fewer than thirty (30) days' prior written notice. Quorum retains the right to object to any proposed new subprocessor within such thirty (30)-day period, and Clearpoint may not engage the proposed subprocessor unless and until the objection has been resolved to the parties' mutual satisfaction.

2.5 Exhibit D — Security Requirements

Exhibit D to the SaaS Agreement (the "Security Exhibit") was incorporated into and made a part of the SaaS Agreement, effective as of April 26, 2024. The Security Exhibit sets forth the technical, administrative, and organizational security measures that Clearpoint is required to maintain throughout the term of the Agreement. The key provisions are as follows:

SOC 2 Type II Audit. Clearpoint is required to undergo an annual SOC 2 Type II audit conducted by an independent certified public accounting firm. The current audit is performed by Hawthorne & Ellers, CPAs LLP. Clearpoint must deliver a copy of each annual SOC 2 Type II audit report to Quorum within ninety (90) days following the close of the applicable audit period. Clearpoint's most recent SOC 2 Type II report, covering the audit period from April 1, 2023 through March 31, 2024, was provided as a closing deliverable and is discussed further in Section 4 below.

Penetration Testing. Clearpoint is required to engage an independent third-party security firm to conduct annual penetration testing of the Platform. The current penetration testing provider is Sentinel Cyber Solutions LLC. Clearpoint must deliver an executive summary of each annual penetration test to Quorum within thirty (30) days following the completion of the test.

Insurance Requirements. Clearpoint is required to maintain the following insurance coverage throughout the term of the Agreement, all underwritten by Northern Ridge Mutual Insurance Company:

(a) Commercial General Liability ("CGL") insurance with per-occurrence limits of not less than Five Million Dollars ($5,000,000) and aggregate limits of not less than Ten Million Dollars ($10,000,000);

(b) Technology Errors & Omissions / Cyber Liability insurance with per-occurrence limits of not less than Ten Million Dollars ($10,000,000) and aggregate limits of not less than Twenty Million Dollars ($20,000,000); and

Encryption Standards. Clearpoint is required to encrypt all Customer Data using AES-256 encryption at rest and TLS 1.2 (or higher) encryption in transit.

Breach Notification. In the event of a confirmed data breach involving Customer Data, Clearpoint is obligated to notify Quorum within twenty-four (24) hours of Clearpoint's confirmation of such breach.

2.6 Technology Escrow Agreement

A three-party Technology Escrow Agreement (the "Escrow Agreement") was executed on May 3, 2024, by and among the following parties:

(a) Quorum Insurance Holdings Corp. — as Beneficiary;

(b) Clearpoint Analytics, Inc. — as Depositor; and

The Escrow Agreement governs the deposit and release of source code and related materials for the ClaimsIQ™ Platform.

Deposited Materials. The materials to be deposited into escrow include the ClaimsIQ™ Platform source code, build scripts, technical documentation, and database schemas. Clearpoint is required to make quarterly updates to the deposited materials to ensure that the escrow deposit remains current and corresponds to the production version of the Platform.

Release Conditions. The Escrow Agent shall release the deposited materials to Quorum upon the occurrence of any of the following release conditions:

(i) Clearpoint files a voluntary petition for bankruptcy or is the subject of an involuntary bankruptcy petition that is not dismissed within sixty (60) days of filing;

(ii) Clearpoint ceases to conduct its business in the ordinary course; or

(iii) Clearpoint commits a material breach of the SaaS Agreement that remains uncured for a period of sixty (60) days following receipt of written notice of such breach from Quorum.

Escrow Fees. The annual escrow fee payable to Granite Trust Company, N.A. is Four Thousand Five Hundred Dollars ($4,500), to be split equally between Quorum and Clearpoint at Two Thousand Two Hundred Fifty Dollars ($2,250) per party.

Governing Law. The Escrow Agreement is governed by and construed in accordance with the laws of the State of Connecticut.

3. Confirmation of Year 1 Subscription Payment

We confirm that the Year 1 subscription payment in the amount of One Million Four Hundred Thousand Dollars ($1,400,000) was remitted by Quorum to Clearpoint Analytics, Inc. on May 2, 2024. Pursuant to Section 4.1 of the SaaS Agreement, the initial annual subscription fee was due and payable within thirty (30) days of the Closing Date (i.e., by May 26, 2024). Accordingly, Quorum's payment was timely made and no late payment or other default exists with respect to the Year 1 subscription fee.

4. Additional Closing Deliverables Received

In addition to the executed Transaction Documents described in Section 2 above, the following closing deliverables were received, reviewed, and confirmed by Calderwood & Harkness on behalf of Quorum:

(a) SOC 2 Type II Audit Report. A copy of Clearpoint's SOC 2 Type II audit report covering the audit period from April 1, 2023 through March 31, 2024, as audited and issued by Hawthorne & Ellers, CPAs LLP, was received and reviewed. The report did not identify any material exceptions or qualifications.

(b) Certificates of Insurance. Certificates of insurance issued by Northern Ridge Mutual Insurance Company were received and confirmed to reflect coverage levels meeting or exceeding the requirements set forth in Exhibit D (Security Requirements) of the SaaS Agreement, including CGL ($5M/$10M), Technology E&O/Cyber ($10M/$20M), and Workers' Compensation at statutory limits.

(c) Clearpoint Board Authorization and Officer's Certificate. A certified copy of resolutions adopted by the Board of Directors of Clearpoint Analytics, Inc. authorizing the execution and delivery of the Transaction Documents, together with an officer's certificate executed by Anita Rajan, CEO & Co-Founder, certifying the authority of the signatories and the accuracy of representations made in the SaaS Agreement, was received.

(d) Quorum Officer's Certificate. An officer's certificate executed on behalf of Quorum Insurance Holdings Corp. certifying the authority of the signatories and the accuracy of representations made in the SaaS Agreement was delivered and is on file.

(e) Confirmed Subprocessor List. A confirmed list of approved subprocessors, identifying Cobalt Cloud Infrastructure, Inc. (hosting services) and Redline Document AI, LLC (OCR processing services), was received from Clearpoint and verified against the subprocessor provisions of the Data Processing Addendum (Exhibit C).

All of the foregoing closing deliverables, together with the Transaction Documents, were tracked on the comprehensive closing checklist prepared by Gabrielle Moss. Each item on the closing checklist has been marked as complete as of May 6, 2024. A copy of the final closing checklist is enclosed with this letter for your records.

5. Post-Closing Obligations and Key Dates

Although the closing is now complete and the engagement has been concluded, we wish to draw your attention to the following post-closing obligations and key dates arising under the Transaction Documents. These are intended as a reference guide and do not constitute an exhaustive listing of all contractual obligations:

Quarterly Source Code Escrow Deposits. Clearpoint is obligated to make quarterly updates to the deposited materials held by Granite Trust Company, N.A. pursuant to the Escrow Agreement. The first quarterly deposit following the initial deposit is due approximately ninety (90) days after the execution of the Escrow Agreement on May 3, 2024 (i.e., on or about August 1, 2024), with subsequent deposits due on a rolling quarterly basis thereafter.

Annual SOC 2 Type II Audit Report. Clearpoint is required to deliver its annual SOC 2 Type II audit report to Quorum within ninety (90) days following the close of each applicable audit period. Based on the current audit cycle, the next report (covering the period from April 1, 2024 through March 31, 2025) should be expected by approximately June 29, 2025.

Annual Penetration Test Executive Summary. Clearpoint is required to deliver an executive summary of its annual penetration test, as conducted by Sentinel Cyber Solutions LLC, to Quorum within thirty (30) days following the completion of the test.

CPI Escalator — Year 2 and Beyond. The annual subscription fee for Year 2 and subsequent years is subject to a CPI-based escalator, capped at three and one-half percent (3.5%) per annum. Application of the maximum escalator to the Year 1 ACV of $1,400,000 would result in the following maximum annual contract values:

The Year 2 payment (due on or about April 26, 2025) will be subject to the CPI-based adjustment as determined in accordance with the fee-escalation provisions of the SaaS Agreement.

Non-Renewal Notice Period. Written notice of non-renewal must be delivered no fewer than one hundred eighty (180) days prior to the expiration of the initial five-year term (i.e., on or before approximately October 28, 2028) or any successive one-year renewal term, as applicable.

Subprocessor Management. In the event Clearpoint proposes to engage any new subprocessor, Clearpoint must provide Quorum with at least thirty (30) days' prior written notice, during which period Quorum may exercise its objection right under the DPA.

Data Breach Notification. Clearpoint is obligated to notify Quorum within twenty-four (24) hours of confirming any data breach involving Customer Data.

We recommend that Quorum's legal and information-technology teams establish appropriate calendar reminders and internal tracking mechanisms for the foregoing obligations and dates.

6. Counterparty Counsel

For your records, we note that Clearpoint Analytics, Inc. was represented throughout the negotiation and closing of the Transaction by Whitfield Greer & Associates LLP, with offices at 71 South Dearborn Street, Suite 4400, Chicago, IL 60603. The lead partner for Clearpoint's engagement was Damian Cho, Esq., with associate Leona Burris, Esq. serving as the primary working attorney on the Clearpoint team. All substantive and drafting negotiations were conducted between the Calderwood & Harkness and Whitfield Greer teams on behalf of the respective parties.

7. Retention of Records and Engagement Conclusion

Calderwood & Harkness LLP will retain copies of all executed Transaction Documents and related correspondence in our files in accordance with the firm's applicable record-retention policies. Copies of the fully executed Transaction Documents and the final closing checklist are enclosed with this letter for your records.

We confirm that Calderwood & Harkness's representation of Quorum Insurance Holdings Corp. in connection with the Transaction, Matter No. 1025-00009, is now concluded. The matter status has been confirmed as closed_completed effective May 6, 2024.

Please note that this letter is provided solely for the purpose of confirming the closing of the Transaction and summarizing the Transaction Documents and does not constitute legal advice regarding any future matters, disputes, or obligations. Should any questions arise regarding the interpretation or enforcement of the SaaS Subscription Agreement, the Technology Escrow Agreement, or any of the related Transaction Documents, or should any issues arise in connection with Quorum's ongoing contractual obligations under those agreements, we encourage you to contact Calderwood & Harkness promptly so that we may be of further assistance.

8. Acknowledgments

We wish to express our sincere appreciation for the opportunity to represent Quorum Insurance Holdings Corp. in connection with this Transaction. It was a privilege to work with Quorum's internal team, and we particularly acknowledge the invaluable contributions and collaboration of Patricia Okonkwo, General Counsel; Derek Langston, Chief Information Officer and internal business sponsor for the ClaimsIQ™ initiative; and Malcolm Tsai, Vice President of Procurement.

We also wish to acknowledge the work of Dravello Data Compliance Advisors LLC, and in particular principal consultant Miriam Tanaka, who completed the data-privacy impact assessment dated April 8, 2024. Ms. Tanaka's assessment was instrumental in informing the data-processing and security terms reflected in the DPA (Exhibit C) and the Security Requirements (Exhibit D) of the SaaS Agreement, and her expertise contributed significantly to the favorable outcome of the negotiation on those issues.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Renata Vasquez, Partner Calderwood & Harkness LLP 100 Pearl Street, Suite 800 Hartford, CT 06103 Direct: (860) 555-7218

Email: rvasquez@calderwoodharkness.com

cc:

Derek Langston, Chief Information Officer, Quorum Insurance Holdings Corp. Malcolm Tsai, Vice President of Procurement, Quorum Insurance Holdings Corp. Bernard Crawford, Billing Partner, Calderwood & Harkness LLP Nathan Ikeda, Lead Associate, Calderwood & Harkness LLP Gabrielle Moss, Working Associate, Calderwood & Harkness LLP

Enclosures:

1. Fully executed Enterprise SaaS Subscription Agreement (with Exhibits A through D), dated April 26, 2024

2. Fully executed Technology Escrow Agreement, dated May 3, 2024

3. Closing Checklist (final version), dated May 6, 2024

Contract Year	Period	Maximum ACV
Year 1	April 26, 2024 – April 25, 2025	$1,400,000
Year 2	April 26, 2025 – April 25, 2026	$1,449,000
Year 3	April 26, 2026 – April 25, 2027	$1,499,715
Year 4	April 26, 2027 – April 25, 2028	$1,552,205
Year 5	April 26, 2028 – April 25, 2029	$1,607,523 (approx.)

CALDERWOOD & HARKNESS LLP Attorneys at Law
100 Pearl Street, Suite 800 Hartford, CT 06103 Tel: (860) 555-7200 | Fax: (860) 555-7201
1221 Avenue of the Americas, 34th Floor New York, NY 10020 Tel: (212) 555-4100 | Fax: (212) 555-4101
www.calderwoodharkness.com
May 6, 2024
Patricia Okonkwo, Esq. General Counsel Quorum Insurance Holdings Corp. 280 Constitution Plaza, Suite 1400 Hartford, CT 06103
Re: Closing Confirmation — Enterprise SaaS Subscription Agreement between Quorum Insurance Holdings Corp. and Clearpoint Analytics, Inc. (ClaimsIQ™ Platform) Matter No. 1025-00009
Dear Ms. Okonkwo:
1. Purpose and Confirmation of Closing
Calderwood & Harkness LLP is pleased to write to confirm the successful closing of the enterprise Software-as-a-Service subscription transaction (the "Transaction") between Quorum Insurance Holdings Corp. ("Quorum" or the "Company") and Clearpoint Analytics, Inc. ("Clearpoint"), pursuant to which Quorum has licensed and subscribed to the ClaimsIQ™ claims-processing and analytics platform (the "Platform") on the terms set forth in the executed transaction documents described in Section 2 below.
The Transaction closed and became effective as of April 26, 2024 (the "Closing Date"). We are writing to confirm that, as of the date of this letter, all closing deliverables required under the transaction documents and the parties' agreed-upon closing checklist have been satisfied in full. Accordingly, Calderwood & Harkness's engagement file for this matter has been designated as closed and completed (status: closed_completed) as of May 6, 2024.
The Calderwood & Harkness engagement team for this matter consisted of the following professionals:
• Renata Vasquez, Partner — Responsible Partner
• Bernard Crawford, Partner — Billing Partner
• Nathan Ikeda, Associate — Lead Associate
• Gabrielle Moss, Associate — Working Associate
We set forth below, for your records and convenience, a comprehensive summary of the executed transaction documents, the closing deliverables received and confirmed, and the key post-closing obligations and dates of which Quorum should remain aware going forward.
2. Summary of Executed Transaction Documents
The following documents were negotiated, finalized, and duly executed in connection with the Transaction (collectively, the "Transaction Documents"):
2.1 Enterprise SaaS Subscription Agreement
The Enterprise SaaS Subscription Agreement (the "SaaS Agreement" or the "Agreement") was executed on April 26, 2024 by and between Quorum Insurance Holdings Corp., as Licensee, and Clearpoint Analytics, Inc., as Licensor. The SaaS Agreement was signed by you, Patricia Okonkwo, in your capacity as General Counsel of Quorum, on behalf of Quorum, and by Anita Rajan, Chief Executive Officer and Co-Founder of Clearpoint, on behalf of Clearpoint.
The principal commercial and legal terms of the SaaS Agreement are summarized as follows:
Term. The initial subscription term is five (5) years, commencing on the Closing Date of April 26, 2024 and expiring on April 25, 2029, unless earlier terminated in accordance with the Agreement. The Agreement provides for automatic renewal for successive one (1)-year renewal terms unless either party delivers written notice of non-renewal no fewer than one hundred eighty (180) days prior to the expiration of the then-current term.
Subscription Fees and Escalation. The total contract value over the initial five-year term is Seven Million Dollars ($7,000,000), reflecting an annual contract value ("ACV") of One Million Four Hundred Thousand Dollars ($1,400,000) per year. Beginning in Year 2 and continuing through Year 5, the annual subscription fee is subject to a Consumer Price Index-based escalator, capped at three and one-half percent (3.5%) per annum. The escalator is applied to the prior year's subscription fee on each anniversary of the Closing Date.
User Entitlements and Overage. The Agreement entitles Quorum to up to one thousand two hundred (1,200) named users across Quorum and its subsidiaries, specifically including Quorum Property & Casualty Insurance Company, Quorum Specialty Underwriters, Inc., and Quorum Digital Solutions LLC. Any usage in excess of the 1,200-user entitlement is subject to an overage rate of One Hundred Fifty Dollars ($150.00) per user per month, invoiced quarterly in arrears.
Deployment Locations. The Platform is authorized for deployment across Quorum's claims-processing locations in Hartford, Connecticut; Dallas, Texas; and Jacksonville, Florida, together with remote access capabilities for Quorum's field adjusters operating from other locations.
Governing Law and Dispute Resolution. The SaaS Agreement is governed by and construed in accordance with the laws of the State of Connecticut, without regard to conflicts-of-law principles. The Agreement provides for a tiered dispute resolution mechanism consisting of (i) mandatory mediation administered by Pinnacle Dispute Resolution Services in Hartford, Connecticut, followed, if mediation is unsuccessful, by (ii) binding arbitration administered by the American Arbitration Association ("AAA") in Hartford, Connecticut, in accordance with the AAA's then-current Commercial Arbitration Rules.
Indemnification and Liability Caps. The Agreement contains mutual indemnification provisions, structured as follows:
(a) Data-Breach Indemnification. Clearpoint's obligation to indemnify Quorum for losses arising out of a data breach attributable to Clearpoint's acts or omissions is uncapped.
(b) intellectual Property / General Indemnification. Each party's indemnification obligations with respect to intellectual property infringement claims and other general indemnification matters are capped at two times (2×) the total contract value, or Fourteen Million Dollars ($14,000,000).
(c) General Liability Cap. The overall general liability of each party under the Agreement (exclusive of the foregoing indemnification obligations) is capped at one times (1×) the total contract value, or Seven Million Dollars ($7,000,000).
Renewal. As noted above, the Agreement automatically renews for successive one (1)-year terms unless either party provides written notice of non-renewal at least one hundred eighty (180) days prior to the expiration of the then-current term.
2.2 Exhibit A — Statement of Work / Service Description
Exhibit A to the SaaS Agreement (the "SOW" or "Service Description") was incorporated into and made a part of the SaaS Agreement, effective as of April 26, 2024. The SOW describes the scope of the ClaimsIQ™ Platform, including the following principal functional modules and capabilities: claims triage and routing, fraud detection and scoring, analytics dashboards and reporting, and related workflow-automation tools. In addition, the SOW addresses the deployment schedule, phased go-live milestones, user entitlements and role-based access configurations, integration requirements with Quorum's existing Severin Solutions and Aldermere Services Inc. environments, end-user and administrator training programs, and the acceptance testing criteria and procedures applicable to the initial deployment.
2.3 Exhibit B — Service Level Agreement
Exhibit B to the SaaS Agreement (the "SLA") was incorporated into and made a part of the SaaS Agreement, effective as of April 26, 2024. The material terms of the SLA are as follows:
Platform Availability. Clearpoint is obligated to maintain Platform availability of not less than ninety-nine and seven-tenths percent (99.7%) monthly uptime, measured on a calendar-month basis. Scheduled maintenance windows of up to four (4) hours per month, occurring on Sundays between 2:00 AM and 6:00 AM Eastern Time, are excluded from the uptime calculation.
Service Credits. In the event that Platform availability falls below the 99.7% threshold in any given calendar month, Quorum is entitled to a service credit equal to two percent (2%) of the monthly subscription fee (approximately Two Thousand Three Hundred Thirty-Three Dollars ($2,333)) for each one-tenth of one percent (0.1%) shortfall below 99.7%. The maximum aggregate service credit in any single calendar month is capped at fifteen percent (15%) of the monthly subscription fee, or approximately Seventeen Thousand Five Hundred Dollars ($17,500).
Chronic Failure Termination Right. In the event that Platform uptime falls below ninety-nine percent (99.0%) in any three (3) consecutive calendar months, Quorum has the right to terminate the SaaS Agreement upon written notice to Clearpoint and to receive a pro-rata refund of any prepaid and unused subscription fees.
2.4 Exhibit C — Data Processing Addendum
Exhibit C to the SaaS Agreement (the "DPA" or "Data Processing Addendum") was incorporated into and made a part of the SaaS Agreement, effective as of April 26, 2024. The DPA establishes the parties' respective rights and obligations with respect to the processing, storage, and handling of Customer Data. The key provisions of the DPA are as follows:
Data Ownership. Quorum retains sole and exclusive ownership of all Customer Data (as defined in the SaaS Agreement) at all times. No rights in or to Customer Data are transferred or licensed to Clearpoint except the limited processing rights necessary for Clearpoint to perform its obligations under the Agreement.
Aggregated Data. Clearpoint's use of Aggregated Data (i.e., de-identified, anonymized, and aggregated data derived from Customer Data) is subject to Quorum's prior written consent. The DPA expressly prohibits Clearpoint from (i) re-identifying any Aggregated Data or (ii) selling, licensing, or otherwise transferring Aggregated Data to any third party.
Data Portability and Destruction. Upon expiration or termination of the SaaS Agreement, Clearpoint is obligated to provide Quorum with a full export of all Customer Data in ACORD XML and CSV formats within sixty (60) days of the effective date of expiration or termination. Within thirty (30) days following the completion of such data export and Quorum's written confirmation of receipt, Clearpoint shall securely destroy all remaining copies of Customer Data in its possession or control and deliver to Quorum a written certification of destruction executed by an authorized officer of Clearpoint.
Regulatory Compliance. The DPA requires Clearpoint to comply with all applicable data protection and privacy laws and regulations, including without limitation the Connecticut Data Privacy Act ("CTDPA"), the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") with respect to protected health information processed in connection with Quorum's workers' compensation insurance lines, and the National Association of Insurance Commissioners ("NAIC") Insurance Data Security Model Law (Model 668) as adopted and implemented in the State of Connecticut.
Approved Subprocessors. The DPA identifies the following approved subprocessors authorized to process Customer Data on behalf of Clearpoint:
(a) Cobalt Cloud Infrastructure, Inc. — cloud hosting and infrastructure services; and
(b) Redline Document AI, LLC — optical character recognition (OCR) processing services.
In the event Clearpoint proposes to engage any new or replacement subprocessor, Clearpoint is required to provide Quorum with no fewer than thirty (30) days' prior written notice. Quorum retains the right to object to any proposed new subprocessor within such thirty (30)-day period, and Clearpoint may not engage the proposed subprocessor unless and until the objection has been resolved to the parties' mutual satisfaction.
2.5 Exhibit D — Security Requirements
Exhibit D to the SaaS Agreement (the "Security Exhibit") was incorporated into and made a part of the SaaS Agreement, effective as of April 26, 2024. The Security Exhibit sets forth the technical, administrative, and organizational security measures that Clearpoint is required to maintain throughout the term of the Agreement. The key provisions are as follows:
SOC 2 Type II Audit. Clearpoint is required to undergo an annual SOC 2 Type II audit conducted by an independent certified public accounting firm. The current audit is performed by Hawthorne & Ellers, CPAs LLP. Clearpoint must deliver a copy of each annual SOC 2 Type II audit report to Quorum within ninety (90) days following the close of the applicable audit period. Clearpoint's most recent SOC 2 Type II report, covering the audit period from April 1, 2023 through March 31, 2024, was provided as a closing deliverable and is discussed further in Section 4 below.
Penetration Testing. Clearpoint is required to engage an independent third-party security firm to conduct annual penetration testing of the Platform. The current penetration testing provider is Sentinel Cyber Solutions LLC. Clearpoint must deliver an executive summary of each annual penetration test to Quorum within thirty (30) days following the completion of the test.
Insurance Requirements. Clearpoint is required to maintain the following insurance coverage throughout the term of the Agreement, all underwritten by Northern Ridge Mutual Insurance Company:
(a) Commercial General Liability ("CGL") insurance with per-occurrence limits of not less than Five Million Dollars ($5,000,000) and aggregate limits of not less than Ten Million Dollars ($10,000,000);
(b) Technology Errors & Omissions / Cyber Liability insurance with per-occurrence limits of not less than Ten Million Dollars ($10,000,000) and aggregate limits of not less than Twenty Million Dollars ($20,000,000); and
(c) Workers' Compensation insurance at the applicable statutory limits.
Encryption Standards. Clearpoint is required to encrypt all Customer Data using AES-256 encryption at rest and TLS 1.2 (or higher) encryption in transit.
Breach Notification. In the event of a confirmed data breach involving Customer Data, Clearpoint is obligated to notify Quorum within twenty-four (24) hours of Clearpoint's confirmation of such breach.
2.6 Technology Escrow Agreement
A three-party Technology Escrow Agreement (the "Escrow Agreement") was executed on May 3, 2024, by and among the following parties:
(a) Quorum Insurance Holdings Corp. — as Beneficiary;
(b) Clearpoint Analytics, Inc. — as Depositor; and
(c) Granite Trust Company, N.A. — as Escrow Agent, located at 300 Main Street, Suite 100, Stamford, CT 06901.
The Escrow Agreement governs the deposit and release of source code and related materials for the ClaimsIQ™ Platform.
Deposited Materials. The materials to be deposited into escrow include the ClaimsIQ™ Platform source code, build scripts, technical documentation, and database schemas. Clearpoint is required to make quarterly updates to the deposited materials to ensure that the escrow deposit remains current and corresponds to the production version of the Platform.
Release Conditions. The Escrow Agent shall release the deposited materials to Quorum upon the occurrence of any of the following release conditions:
(i) Clearpoint files a voluntary petition for bankruptcy or is the subject of an involuntary bankruptcy petition that is not dismissed within sixty (60) days of filing;
(ii) Clearpoint ceases to conduct its business in the ordinary course; or
(iii) Clearpoint commits a material breach of the SaaS Agreement that remains uncured for a period of sixty (60) days following receipt of written notice of such breach from Quorum.
Escrow Fees. The annual escrow fee payable to Granite Trust Company, N.A. is Four Thousand Five Hundred Dollars ($4,500), to be split equally between Quorum and Clearpoint at Two Thousand Two Hundred Fifty Dollars ($2,250) per party.
Governing Law. The Escrow Agreement is governed by and construed in accordance with the laws of the State of Connecticut.
3. Confirmation of Year 1 Subscription Payment
We confirm that the Year 1 subscription payment in the amount of One Million Four Hundred Thousand Dollars ($1,400,000) was remitted by Quorum to Clearpoint Analytics, Inc. on May 2, 2024. Pursuant to Section 4.1 of the SaaS Agreement, the initial annual subscription fee was due and payable within thirty (30) days of the Closing Date (i.e., by May 26, 2024). Accordingly, Quorum's payment was timely made and no late payment or other default exists with respect to the Year 1 subscription fee.
4. Additional Closing Deliverables Received
In addition to the executed Transaction Documents described in Section 2 above, the following closing deliverables were received, reviewed, and confirmed by Calderwood & Harkness on behalf of Quorum:
(a) SOC 2 Type II Audit Report. A copy of Clearpoint's SOC 2 Type II audit report covering the audit period from April 1, 2023 through March 31, 2024, as audited and issued by Hawthorne & Ellers, CPAs LLP, was received and reviewed. The report did not identify any material exceptions or qualifications.
(b) Certificates of Insurance. Certificates of insurance issued by Northern Ridge Mutual Insurance Company were received and confirmed to reflect coverage levels meeting or exceeding the requirements set forth in Exhibit D (Security Requirements) of the SaaS Agreement, including CGL ($5M/$10M), Technology E&O/Cyber ($10M/$20M), and Workers' Compensation at statutory limits.
(c) Clearpoint Board Authorization and Officer's Certificate. A certified copy of resolutions adopted by the Board of Directors of Clearpoint Analytics, Inc. authorizing the execution and delivery of the Transaction Documents, together with an officer's certificate executed by Anita Rajan, CEO & Co-Founder, certifying the authority of the signatories and the accuracy of representations made in the SaaS Agreement, was received.
(d) Quorum Officer's Certificate. An officer's certificate executed on behalf of Quorum Insurance Holdings Corp. certifying the authority of the signatories and the accuracy of representations made in the SaaS Agreement was delivered and is on file.
(e) Confirmed Subprocessor List. A confirmed list of approved subprocessors, identifying Cobalt Cloud Infrastructure, Inc. (hosting services) and Redline Document AI, LLC (OCR processing services), was received from Clearpoint and verified against the subprocessor provisions of the Data Processing Addendum (Exhibit C).
All of the foregoing closing deliverables, together with the Transaction Documents, were tracked on the comprehensive closing checklist prepared by Gabrielle Moss. Each item on the closing checklist has been marked as complete as of May 6, 2024. A copy of the final closing checklist is enclosed with this letter for your records.
5. Post-Closing Obligations and Key Dates
Although the closing is now complete and the engagement has been concluded, we wish to draw your attention to the following post-closing obligations and key dates arising under the Transaction Documents. These are intended as a reference guide and do not constitute an exhaustive listing of all contractual obligations:
Quarterly Source Code Escrow Deposits. Clearpoint is obligated to make quarterly updates to the deposited materials held by Granite Trust Company, N.A. pursuant to the Escrow Agreement. The first quarterly deposit following the initial deposit is due approximately ninety (90) days after the execution of the Escrow Agreement on May 3, 2024 (i.e., on or about August 1, 2024), with subsequent deposits due on a rolling quarterly basis thereafter.
Annual SOC 2 Type II Audit Report. Clearpoint is required to deliver its annual SOC 2 Type II audit report to Quorum within ninety (90) days following the close of each applicable audit period. Based on the current audit cycle, the next report (covering the period from April 1, 2024 through March 31, 2025) should be expected by approximately June 29, 2025.
Annual Penetration Test Executive Summary. Clearpoint is required to deliver an executive summary of its annual penetration test, as conducted by Sentinel Cyber Solutions LLC, to Quorum within thirty (30) days following the completion of the test.
CPI Escalator — Year 2 and Beyond. The annual subscription fee for Year 2 and subsequent years is subject to a CPI-based escalator, capped at three and one-half percent (3.5%) per annum. Application of the maximum escalator to the Year 1 ACV of $1,400,000 would result in the following maximum annual contract values:
The Year 2 payment (due on or about April 26, 2025) will be subject to the CPI-based adjustment as determined in accordance with the fee-escalation provisions of the SaaS Agreement.
Non-Renewal Notice Period. Written notice of non-renewal must be delivered no fewer than one hundred eighty (180) days prior to the expiration of the initial five-year term (i.e., on or before approximately October 28, 2028) or any successive one-year renewal term, as applicable.
Subprocessor Management. In the event Clearpoint proposes to engage any new subprocessor, Clearpoint must provide Quorum with at least thirty (30) days' prior written notice, during which period Quorum may exercise its objection right under the DPA.
Data Breach Notification. Clearpoint is obligated to notify Quorum within twenty-four (24) hours of confirming any data breach involving Customer Data.
We recommend that Quorum's legal and information-technology teams establish appropriate calendar reminders and internal tracking mechanisms for the foregoing obligations and dates.
6. Counterparty Counsel
For your records, we note that Clearpoint Analytics, Inc. was represented throughout the negotiation and closing of the Transaction by Whitfield Greer & Associates LLP, with offices at 71 South Dearborn Street, Suite 4400, Chicago, IL 60603. The lead partner for Clearpoint's engagement was Damian Cho, Esq., with associate Leona Burris, Esq. serving as the primary working attorney on the Clearpoint team. All substantive and drafting negotiations were conducted between the Calderwood & Harkness and Whitfield Greer teams on behalf of the respective parties.
7. Retention of Records and Engagement Conclusion
Calderwood & Harkness LLP will retain copies of all executed Transaction Documents and related correspondence in our files in accordance with the firm's applicable record-retention policies. Copies of the fully executed Transaction Documents and the final closing checklist are enclosed with this letter for your records.
We confirm that Calderwood & Harkness's representation of Quorum Insurance Holdings Corp. in connection with the Transaction, Matter No. 1025-00009, is now concluded. The matter status has been confirmed as closed_completed effective May 6, 2024.
Please note that this letter is provided solely for the purpose of confirming the closing of the Transaction and summarizing the Transaction Documents and does not constitute legal advice regarding any future matters, disputes, or obligations. Should any questions arise regarding the interpretation or enforcement of the SaaS Subscription Agreement, the Technology Escrow Agreement, or any of the related Transaction Documents, or should any issues arise in connection with Quorum's ongoing contractual obligations under those agreements, we encourage you to contact Calderwood & Harkness promptly so that we may be of further assistance.
8. Acknowledgments
We wish to express our sincere appreciation for the opportunity to represent Quorum Insurance Holdings Corp. in connection with this Transaction. It was a privilege to work with Quorum's internal team, and we particularly acknowledge the invaluable contributions and collaboration of Patricia Okonkwo, General Counsel; Derek Langston, Chief Information Officer and internal business sponsor for the ClaimsIQ™ initiative; and Malcolm Tsai, Vice President of Procurement.
We also wish to acknowledge the work of Dravello Data Compliance Advisors LLC, and in particular principal consultant Miriam Tanaka, who completed the data-privacy impact assessment dated April 8, 2024. Ms. Tanaka's assessment was instrumental in informing the data-processing and security terms reflected in the DPA (Exhibit C) and the Security Requirements (Exhibit D) of the SaaS Agreement, and her expertise contributed significantly to the favorable outcome of the negotiation on those issues.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Renata Vasquez, Partner Calderwood & Harkness LLP 100 Pearl Street, Suite 800 Hartford, CT 06103 Direct: (860) 555-7218
Email: rvasquez@calderwoodharkness.com
cc:
Derek Langston, Chief Information Officer, Quorum Insurance Holdings Corp. Malcolm Tsai, Vice President of Procurement, Quorum Insurance Holdings Corp. Bernard Crawford, Billing Partner, Calderwood & Harkness LLP Nathan Ikeda, Lead Associate, Calderwood & Harkness LLP Gabrielle Moss, Working Associate, Calderwood & Harkness LLP
Enclosures:
1. Fully executed Enterprise SaaS Subscription Agreement (with Exhibits A through D), dated April 26, 2024
2. Fully executed Technology Escrow Agreement, dated May 3, 2024
3. Closing Checklist (final version), dated May 6, 2024
Contract Year | Period | Maximum ACV
Year 1 | April 26, 2024 – April 25, 2025 | $1,400,000
Year 2 | April 26, 2025 – April 25, 2026 | $1,449,000
Year 3 | April 26, 2026 – April 25, 2027 | $1,499,715
Year 4 | April 26, 2027 – April 25, 2028 | $1,552,205
Year 5 | April 26, 2028 – April 25, 2029 | $1,607,523 (approx.)

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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