Exhibit 10.24

July 29, 2004

MedQuist Inc.
Steve Rusckowski
Chief Executive Officer
1000 Bishops Gate Blvd.
Suite 300
Mt. Laurel, NJ  08054-4632

Dear Steve:

In response to our discussions, Nightingale is pleased to submit this Engagement
Letter which sets forth our current understanding of the scope of services of
the assignment as well as the general terms and conditions for the retention of
Nightingale and Associates, LLC (“Nightingale”) by MedQuist Inc. (“MedQuist” or
the “Company”).  It is our understanding that Nightingale will be engaged by
MedQuist and will report its findings, conclusions and recommendations to the
Company’s Board of Directors.

PHASE I

I.              SCOPE OF WORK:

1.                                       EFFECTIVE JULY 30, 2004 NIGHTINGALE
WILL ASSIGN HOWARD S. HOFFMAN TO ASSUME THE POSITION OF INTERIM CHIEF EXECUTIVE
OFFICER OF MEDQUIST FOR A PERIOD OF THREE MONTHS.  WHILE MR. HOFFMANN WILL
DEVOTE THE VAST MAJORITY OF HIS TIME DURING THIS PERIOD TO MEDQUIST.  YOU ARE
AWARE OF AND ACKNOWLEDGE THAT MR. HOFFMANN HAS COMMITTED UP TO ONE DAY PER WEEK
OVER THE NEXT SIX WEEKS ON ANOTHER NON-CONFLICTING NIGHTINGALE ENGAGEMENT.  IN
ADDITION, MR. HOFFMANN WILL BE OUT ON VACATION ON AUGUST 13 AND ON AUGUST 27. 
HE WILL, OF COURSE, MAKE EVERY EFFORT TO ENSURE THAT THE WORK IS PROPERLY
DELEGATED AND PROCEEDS SMOOTHLY DURING HIS ABSENCE.

PHASE II

Any Phase II activities will be entirely dependent upon the scope of continuing
activities and will be subject to specific request, approval and authorization
of the Company in advance of commencement.

II.            DISCUSSION

Nightingale approaches all assignments such as the one under discussion as a
team effort with the management and employees of the Company involved.  It would
be our intention and practice to utilize Company management and employees to
undertake fact finding and analysis on our mutual behalf to the greatest extent
possible.

 

MedQuist Engagement Letter.max

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In addition, we would utilize work done by the Company or its professionals and
other consultants, to the extent it may be available, in order to avoid or
minimize duplication of work.

III.           COST ESTIMATE

Nightingale will invoice for the utilization of Mr. Hoffmann’s time on an hourly
basis at the rate of $525 per hour subject to a cap of $100,000 per month on a
cumulative basis over the three month period.

Should it become necessary to utilize the services of additional Nightingale
personnel on the project, it is agreed that Nightingale will invoice
professional time fees for such personnel at their prevailing hourly rates. 
Nightingale agrees that it will confer with the Board of Directors before adding
additional personnel to the project team.

In addition to professional time fees, out-of-pocket expenses are billed at
cost, and generally range from 10% to 15% of professional time fees, depending
on the amount of travel involved.  Out-of-pocket expenses consist primarily of
transportation, meals, lodging, telephone, specifically assignable secretarial
and office assistance, and report production.

Invoices will be submitted bi-weekly for professional time fees plus expenses,
and are due and payable upon presentation via wire transfer per Addendum A
attached.  Prompt payment of Nightingale invoices is a prerequisite for
Nightingale’s continued work on an engagement.

Exhibit I, attached, is a summary of Nightingale professional time billing
rates, and terms and conditions for engagement of our firm, and is an integral
part of this Engagement Letter.

Nightingale fully understands that the Company desires to keep costs to a
minimum, commensurate with achieving the objectives of the assignment and given
a reasonable degree of comfort relative to the judgments, conclusions, and
recommendations involved.  Every effort will be made to keep costs to a minimum.

IV.           ADVANCE DEPOSIT

Nightingale requires an Advance Deposit for all assignments of the type
described above.  Given this situation, Nightingale requires an Advance Deposit
of $75,000 that must be paid simultaneously with beginning project work. 
Separate wiring instructions for placing client’s funds in escrow are attached
hereto as Addendum B.  At the completion of the project and at the direction of
the Company, Nightingale will either apply the Advance Deposit to any
outstanding invoices or, if there are no unpaid invoices owing to Nightingale,
promptly return the Advance Deposit to the Company.

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V.            PERFORMANCE FEES

For information, Nightingale charges a Performance Fee, in addition to
professional time fees, for selected types of assignments.  Assignments where
performance fees are charged include acquisitions, divestitures, mergers,
refinancings, operational turnarounds, interim management, and asset recovery
management.

The rationale for requiring Performance Fees for the types of engagements noted
above is that Nightingale, by virtue of our experience, skills, and
capabilities, is usually in a position to provide unique and material
“value-added” to our clients in these types of assignments.  In addition,
Nightingale can usually materially assist in structuring, negotiating, and
closing agreements, arrangements and transactions on more favorable terms for
our clients than would otherwise be the case.

Nightingale’s Performance Fee potential for its Phase I activities is $300
thousand payable as follows:

Mandatory Payment:                                   $150,000 due and payable on
October 29, 2004

Discretionary Payment:                       Up to $150,000 due and payable by
November 12, 2004.  The determination of the amount payable for this component
of Nightingale’s Performance Fee will be at the complete discretion of the
Company’s Board of Directors.

VI.           INDEMNIFICATION

Given the nature of this assignment, Nightingale will require a release in the
form of a “Release and Indemnification” agreement from the Company prior to
undertaking the project.  A copy of the “Release and Indemnification” agreement
we require is attached as Exhibit II.

The rationale for this requirement is that, to the extent that any adversarial
issues or proceedings occur between parties.  Nightingale, by its very presence
and activities, could be caught in the “cross fire”.  Of course, the indemnity
excludes gross negligence and/or willful misconduct on the part of Nightingale
or any of its officers, associate or staff.

VII.         CONFIDENTIALITY OF CLIENT INFORMATION

Nightingale recognizes and acknowledges that the firm and its officers and staff
have access to proprietary and confidential information in most, if not all,
client assignments.  Nightingale agrees with the Company that all such
non-public information received by the firm, its officers, and staff from the
Company will be held and treated in strict

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confidence, and will not knowingly be disclosed by Nightingale, its officers,
and staff to third parties.

VIII.        ADVERTISING

Nightingale shall have the right to include MedQuist in the list of
Nightingale’s clients in any business development materials or advertisements
used by Nightingale in the normal course of business.

IX.           CAVEAT

Given the nature and complexity of our work, there can be no assurance that
unforeseen problems may not be encountered.  In addition, it is likely that
difficult and complex judgments and conclusions will have to be made on a rapid
basis without full and complete information and analysis readily available. 
Accordingly, Nightingale undertaken its assignments on a “Best Efforts” basis
only, and makes no representations, warranties or guarantees relative to
outcome, performance or results.

*  *  *  *  *  *  *  *  *  *

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Nightingale will be working on other client assignments and firm matters during
the period we will be working on this assignment.  However, we fully expect to
be able to arrange our schedules so that work on this matter will proceed at a
mutually satisfactory pace.

If this Engagement Letter conforms to your understanding of the terms and
conditions of our retention, please have the appropriate party signify agreement
by signing and returning the enclosed extra copy of this Engagement Letter.

We look forward to working with the Company on this challenging assignment.

Sincerely,

 

 

 

/s/ Howard S. Hoffman

 

 

 

 

Howard S. Hoffman

 

Managing Partner

 

READ, UNDERSTOOD AND AGREED TO BY:

MedQuist Inc.

By:

     /s/ Stephen H. Rusckowski

 

 

 

Title:

         CEO

 

 

 

 

Date:

         July 30, 2004

 

 

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EXHIBIT I

NIGHTINGALE & ASSOCIATES, LLC

COMPENSATION AND FEE ARRANGEMENTS

I.              PROFESSIONAL TIME FEES AND EXPENSES

Nightingale & Associates, LLC charges professional time fees on an hourly basis
for all assignments.  The prevailing Professional time fees for Principals range
fro $450 - $525 per hour.  For Managing Directors the range is from $350 - $450
per hour and for Associates the range is from $250 - $375 per hour.

The rates quoted in the Engagement Letter are typically held throughout the life
of the assignment.  However, on long-term assignments of six months or more,
changing market conditions may require an adjustment to Nightingale’s billing
rates.  Therefore, Nightingale reserves the right to adjust its rates during the
performance of work on an assignment upon 30 days written notice to the client
after six months of work on an assignment.

Out-of-pocket expenses are billed at cost, and generally range from 10% to 15%
of professional time fees, depending on the amount of travel involved. 
Out-of-pocket expenses consist primarily of travel and transportation, meals,
lodging, telephone, secretarial and office assistance, report production and, in
the case of some acquisition, divestiture, and related assignments, advertising,
mailing, and related costs.  Out-of-pocket expenses also apply to Nightingale
staff members who reside out of the area when working out of Nightingale’s
office in Stamford, CT on a client project.  For assignments undertaken for
clients domiciled in the State of Connecticut, a 6% professional services tax on
professional time fees and Performance Fees also applies.

II.            CONTINGENT PERFORMANCE FEES

For certain types of assignments, including divestitures, interim management,
operational turnarounds, asset recovery management, licensing, acquisitions,
mergers, joint ventures, and refinancings, Nightingale charges a Performance Fee
in addition to hourly professional time fees.

The rationale for the Performance Fee is that Nightingale can usually materially
assist a client achieve far more favorable results and returns than would
otherwise be the case.  Nightingale brings unique skills and creativity, along
with proven and highly successful experience, to those transaction, turnaround
and interim management oriented assignments where Performance Fees are charged. 
Nightingale’s performance and contribution in all such assignments undertaken to
date has, to the best of our knowledge, exceeded the expectations of our clients
and knowledgeable outside observers.

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The Performance Fee is based upon the size, circumstances, and complexity of
each particular situation, and is established and agreed to by mutual consent
between the client and Nightingale prior to formal engagement.

III.           OTHER ENGAGEMENT TERMS AND CONDITIONS

·                                          Nightingale works under a policy
whereby the services of our firm can be terminated by the client, or by
Nightingale, at any time upon oral notice, followed by written confirmation.

·                                          The client is responsible for
professional time fees and expense charges up to the time of notification of
termination.  In addition, Performance Fee payments, if applicable, are due and
payable on a pro rata basis in the event of unilateral termination by the
client.

·                                          Should Nightingale resign during the
course of an assignment, we agree to remain active and provide reasonable
assistance during a designated transition period to phase in, on an orderly
basis, a replacement organization of the client’s choosing.

·                                          For most types of assignments,
including Company Viability Evaluations for third parties, Interim Management,
Operational Turnaround, Crisis Management and Asset Recovery Management
assignments.  Nightingale requires a broad Indemnity Agreement from the client
or other financially responsible party.

·                                          The rationale for requiring an
Indemnity Agreement is that by their very nature, Viability Evaluations, Interim
Management, Operational Turnaround, Crisis Management and Asset Recovery
Management assignments require a great many decisions and operating judgments to
be made on a day to day basis, and the firm necessarily acts as the Agent or
representative of its client.  To the extent any real or potential adversarial
issues or proceedings are related to the situation, Nightingale, by its very
presence, could be caught in the “crossfire”.

*  *  *  *  *  *  *  *  *  *

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EXHIBIT II

RELEASE AND INDEMNIFICATION

The undersigned, MedQuist Inc. (the “Company”), acknowledging that Nightingale 7
Associates, LLC (“Nightingale”) has been engaged to render services to the
Company, for and on behalf of itself and its subsidiaries, and the successors
and assigns of the Company and its subsidiaries, hereby waives and releases any
and all claims or causes of action that it may now have or which may arise in
the future against any “Consultant Party” (which shall consist of, collectively,
Nightingale and each of its contractors and subcontractors, and all of the
employees, officers, directors, shareholders and principals of Nightingale)
arising out of or relating in any way to “Covered Services” (which shall consist
of services rendered by any Consultant Party pursuant to the attached agreement
relating to the Company or any aspect of its business or assets whether such
services consist of consulting services, management services, or any other type
of services) including, without limitation, any loss or claim thereof arising or
allegedly incurred as a result of actions taken or omitted to be taken by the
Company, its shareholders, or any other party, based in any way upon any
recommendations or suggestions by any Consultant, Party relating to the Company
or any aspect of its business or assets, but excluding from the foregoing waiver
and release any claim or cause of action arising out of any act of gross
negligence or willful misconduct of any Consultant Party.

The Company further hereby agrees to indemnify and hold harmless any Consultant
Party from each of the judgments, suits, costs, expenses and disbursements of
any kind or nature whatsoever which may be imposed upon, incurred by or asserted
against any of the Consultant Parties arising out of or relating in any way to
Covered Services pursuant to the attached agreement including, without
limitation, any loss or claim thereof arising or allegedly incurred as a result
of actions taken or omitted to be taken by the Company, its shareholders, or any
other party, based in any way upon any recommendations or suggestions by any
Consultant Party relating to the Company or any aspect of its business or
assets; but excluding from the foregoing indemnification obligation any matter
arising out of any act of gross negligence or willful misconduct of any
Consultant Party.

Dated: July

 

, 2004

 

MedQuist Inc.

 

  /s/ Stephen H. Rusckowski

 

By

 

  STEPHEN H. RUSCKOWSKI

 

Print Name

 

       CEO

 

Title

 

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