Document:

exv10w1

EXHIBIT 10.1

InterDigital

Long-Term Compensation Program

Terms and Conditions

The Company implemented the Long-Term Compensation Program (the “Program”) to encourage management
and executive level employees to exercise their best efforts toward ensuring the success of the
Company. All regular full-time and regular part-time employees (as defined in the Employee
Handbook), at or above a manager or technical equivalent level, are eligible to participate in the
Program.

Compensation Components. As further described below, the Program consists of two compensation
components: (1) a Long-Term Incentive providing performance-based cash bonuses (the “LTI”), and (2)
an award of restricted stock units (“RSUs”).

The LTI component of the Program rewards grantees based on the Company’s achievement of performance
goals established/approved by the Compensation Committee of the Board of Directors.

The RSU awards provide recipients with an opportunity to share in the growth of the Company’s value
in the marketplace and rewards participants based on the achievement of performance goals
established by the Compensation Committee. An RSU is a contractual right to receive a share(s) of
InterDigital Common Stock after completion of a specified time period and, in the case of the
performance-based RSUs, the achievement of certain goals within a specified period.

Program Cycle. The Program consists of overlapping RSU and LTI cycles, each of which are generally
three years in length and recur every other year (a “Program cycle”).

LTI Cash Bonuses. Each participant’s LTI cash bonus target is established as a percentage of the
participant’s annual base salary. Any payout under the LTI is determined by the Compensation
Committee based on the Company’s achievement of certain performance goals, as established at the
start of each Program cycle and measured at the end of each Program cycle. The cash LTI payout may
exceed or be less than the targeted amount, depending on the level of achievement of the
performance goals. No payout may be made if the Company fails to meet the minimum performance
criteria established for the goals during the Program cycle. To be eligible for a cash payout, an
employee must remain continuously employed by the Company (or an Affiliate of the Company) through
the end of the Program cycle and must continue to be employed at least until the time the LTI
payout is made. For purposes of this Program, an Affiliate means any other individual,
corporation, partnership, association, trust or other entity that, directly or indirectly, is in
control of or is controlled by or is under common control with the Company. Payout of the LTI cash
bonus will be made no later than March 15 of the year following the end of each Program cycle.

RSU Terms. For all non-executives, 25% of the total equity award will be in the form of
performance based RSUs (“performance shares”) and 75% will be in the form of time-based RSUs. For
all executive level participants, 50% of the total equity award will be in the form of performance
shares and 50% will be in the form of time-based RSUs. Participants will receive an RSU Award
Agreement setting forth the terms of each RSU grant along with a copy of the prospectus for the
Plan. In the event of any conflict between this summary and the RSU award agreement, the RSU award
agreement will govern.

Time-based RSU awards

For all non-executives, the time-based RSUs granted in connection with each three-year Program
cycle will vest in equal increments on each successive January 1 over the three-year period. For
example, RSUs granted at the beginning of the Program cycle that began in January 2007 will vest as
follows: 25% (one-third) of the total time-vested RSUs on January 1, 2008, 25% on January 1, 2009
and 25% on January 1, 2010. For all executive level participants, the time-based RSUs granted in
connection with each Program cycle will vest 100% at the end of each Program cycle. Settlement for
time-vested RSUs will occur on the first business day following the applicable vest date.

Performance based RSU awards

For all Program participants, the performance shares will vest following the end of the three-year
Program cycle in conjunction with a determination by the Compensation Committee that at least
minimum level of performance was

 

 

achieved relative to the performance goals associated with that cycle. Settlement will occur for
any such performance based RSUs as soon as practicable following vesting as described above, but in
no event later than March 15 of the year in which the relevant cycle ends. To be entitled to the
shares underlying the performance based RSUs, the participant must remain employed through the end
of the Program cycle and also through the date settlement occurs, based on the Compensation
Committee’s determination that at least a minimum level of performance was achieved.

New Program Participants. An employee promoted to a level which qualifies for participation in the
Program for the first time or an employee that is newly hired within the first two years of a
three-year Program cycle, will be eligible to receive a pro-rata LTI cash bonus and RSU award. The
pro-rata target LTI cash bonus and RSU award will be determined based on the amount of time (number
of pay periods) remaining in the first year of Program participation plus the full amount
associated with any ensuing years remaining in each cycle. For example, a non-executive employee
hired October 1st of the first year of a three year Program cycle, would be eligible to
receive 3/12 of that year’s Program eligibility plus full-year eligibility for the second and third
years of the Program cycle. The LTI (cash) and RSU awards will be paid out and vest respectively,
as described under the sections entitled “LTI Cash Bonuses” and “RSU Terms.”

Promotion during Program Cycle. If an employee is promoted during a Program cycle and such
promotion results in an accompanying increase in the Program payout target (LTI target and RSU
award), the benefit of the Program target increase will be realized at the beginning of the
next applicable Program cycle unless the Compensation Committee, in its sole discretion,
authorizes an adjustment at a different time.

Effect of Termination of Employment. In general, any benefits from the Program are forfeited upon
termination of employment by the participant (i.e., the participant voluntarily resigns from
employment). Benefits may be vested to some degree, as explained below, where the participant’s
employment terminates due to his or her death, “disability,” “retirement,” or as a result of the
termination of employment by the Company other than for “cause” (each as defined below).

Partial vesting of time-based RSUs: If a participant’s employment terminates during a year
due to death, disability, or retirement, or is terminated by the Company without cause, time-based
RSUs that would have become vested at the end of that year become vested on a pro-rata basis based
on the portion of the year the participant was employed. Time-based RSUs that would have become
vested at the end of subsequent years are forfeited entirely. Generally, the settlement of the
participant’s time-based RSUs that become vested, as described above, will occur at the same time
as would have been the case had the participant remained employed with the Company, i.e., at the
same time as other active Program participants based on their level of eligibility. In the case of
retirement, as defined by the Company (see “retirement” below), the settlement of the participant’s
time-based RSUs that become vested, as described above, will occur as soon as administratively
practical after termination of employment.

Partial vesting of performance based RSUs and LTI Cash Bonus: If a participant’s
employment terminates for any reason during the first year of a three year Program cycle, the
participant forfeits eligibility to receive any LTI cash bonus and all performance based RSUs
associated with that Program cycle. If, however, during the second or third year of a Program
cycle, a participant’s employment with the Company terminates due to his or her death, disability,
or retirement, or is terminated by the Company without cause, the participant will be eligible to
earn a pro-rata portion of the LTI cash bonus and performance-based RSUs. The pro-rata portion
will be determined by multiplying both the amount of the LTI cash bonus and the number of
performance based RSUs awarded under the Program by a fraction equal to the portion of the Program
cycle that has transpired prior to the cessation of employment over the entire Program cycle. The
conditions for vesting of both the performance based RSUs and the LTI cash bonus in such event will
be the same as set forth above except with respect to the condition of continuous employment. Any
pro-rata cash payment or vesting of performance based RSUs will be made to the employee (or, if
applicable, the employee’s estate) at the same time the cash bonus payments and settlement of the
RSUs would have taken place if the participant had remained employed, as described above.

NOTE: To the extent an LTI payment or settlement of performance based RSUs is determined to be a
form of nonqualified deferred compensation subject to Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), payment may be delayed to a date that is at least six months
following the participant’s termination of employment to the extent it is determined to be
necessary to avoid the detrimental tax treatment applicable to deferred compensation benefits that
are not fully compliant with the distribution rules of Code Section 409A. This will only be
applicable to participants who are determined to be “specified employees” as that term is defined
for purposes of Code Section 409A.

 

 

For purposes of the Program:

* “cause” means: (a) willful and repeated failure of an employee to perform substantially
his or her duties (other than any such failure resulting from incapacity due to physical or
mental illness); (b) an employee’s conviction of, or plea of guilty or nolo contendere to, a
felony which is materially and demonstrably injurious to the Company or an Affiliate; (c)
willful misconduct or gross negligence by an employee in connection with his or her
employment; or (d) an employee’s breach of any material obligation or duty owed to the
Company or an Affiliate.

* “disability” means: (a) a disability entitling the employee to long-term disability
benefits under the applicable long-term disability plan of the Company (or an Affiliate if
employee is employed by such Affiliate); or (b) if the employee is not covered by such a
plan, a physical or mental condition or illness that renders the employee incapable of
performing his or her duties for a total of 180 days or more during any consecutive 12-month
period.

* “retirement” means resignation after attaining a combination of age plus years of service
at the Company (and Affiliates) equal to 70.

Effect of a Terminating Event. If a Terminating Event (meaning either a Change of Control, as
defined below, or a liquidation of the Company) occurs during a Program cycle and while an employee
is actively employed by the Company, then:

* immediately prior to (but contingent on the occurrence of) that Terminating Event, all
time-based RSUs will become fully vested and a distribution of InterDigital shares with
respect to those RSUs will be made;

* at the same time, performance-based RSUs will become fully vested to an extent that is
equal to the greater of (i) the portion of the employee’s performance-based RSUs that would
become vested at the target level, or (ii) the level of performance achieved at the time of
the Terminating Event; and

* an early payment of the employee’s LTI cash bonus will be made in an amount equal to the
greater of (i) the employee’s target LTI cash bonus, or (ii) the level of performance
achieved at the time of the Terminating Event. Payment of this amount will be made not
later than 30 days after the Terminating Event.

For purposes of the Program:

	 	•	 	“Change of Control” means the first to occur of any of the following events:

(a) Any “person,” as such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”) (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the Company, or
any company owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
acquires voting securities of the Company and immediately thereafter is a “50%
Beneficial Owner.” For purposes of this provision, a “50% Beneficial Owner” shall
mean a person who is the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company’s then-outstanding voting
securities;

(b) During any period of two consecutive years commencing on or after the Effective
Date, individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person (as defined above) who
has entered into an agreement with the Company to effect a transaction described in
subsections (a), (c), (d) or (e) of this definition) whose election by the Board or
nomination for election by the Company’s shareholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved (the “Continuing Directors”) cease for any
reason to constitute at least a majority thereof;

 

 

(c) The shareholders of the Company have approved a merger, consolidation,
recapitalization, or reorganization of the Company, or a reverse stock split of any
class of voting securities of the Company, or the consummation of any such
transaction if shareholder approval is not obtained, other than any such transaction
which would result in at least 50% of the combined voting power of the voting
securities of the Company or the surviving entity outstanding immediately after such
transaction being beneficially owned by the persons who were shareholders of the
Company immediately prior to the transaction in substantially the same proportion as
their ownership of the voting power immediately prior to the transaction; provided
that, for purposes of this Section 3.7(c), such continuity of ownership (and
preservation of relative voting power) shall be deemed to be satisfied if the
failure to meet such 50% threshold (or to substantially preserve such relative
ownership of the voting securities) is due solely to the acquisition of voting
securities by an employee benefit plan of the Company, such surviving entity or a
subsidiary thereof; and provided further, that, if consummation of the corporate
transaction referred to in this Section 3.7(c) is subject, at the time of such
approval by shareholders, to the consent of any government or governmental agency or
approval of the shareholders of another entity or other material contingency, no
Change in Control shall occur until such time as such consent and approval has been
obtained and any other material contingency has been satisfied;

(d) The shareholders of the Company accept shares in a share exchange in which the
shareholders of the Company immediately before such share exchange do not or will
not own directly or indirectly immediately following such share exchange more than
50% of the combined voting power of the outstanding voting securities of the
corporation resulting from or surviving such share exchange in substantially the
same proportion as the ownership of the Voting Securities outstanding immediately
before such share exchange;

(e) The shareholders of the Company have approved a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets (or any transaction having a similar
effect); provided that, if consummation of the transaction referred to in this
Section 3.7(e) is subject, at the time of such approval by shareholders, to the
consent of any government or governmental agency or approval of the shareholders of
another entity or other material contingency, no Change in Control shall occur until
such time as such consent and approval has been obtained and any other material
contingency has been satisfied; and

(f) Any other event which the Board determines shall constitute a Change in Control
for purposes of this Plan.

Taxation of Awards. The following is a brief description of the federal income and employment tax
treatment of Program awards. The rules governing these awards are complex and their application
may vary depending upon individual circumstances. Moreover, statutory and regulatory provisions
and their interpretations are subject to change. Employees are, therefore, encouraged to consult
with a personal tax advisor regarding the tax consequences of participation in the Program.

For federal income and employment tax purposes, the full amount of any LTI cash bonus will be
taxable at the time the cash is paid, and will be subject to applicable income and wage tax
withholding requirements.

For federal income tax purposes, the value of shares distributed in respect of RSUs will be
recognized as ordinary income at the time the shares are distributed based on the value of those
shares at that time. If LTI payment or settlement of RSUs is delayed (e.g., in the case of later
payments for certain mid-Program cycle employment terminations), the value of the shares subject to
RSUs may be taxed at the time the RSUs vest, based on the value of those shares at that time.
Further information regarding the taxation of RSUs is contained in the Plan prospectus.

Future Program Cycles. While the Company reserves the right to alter or discontinue the Program at
any time, its present intent is to continue the Program for future cycles. The Company expects
future Program cycles to include both an LTI component and an RSU component. If an employee is
eligible to participate in a future Program cycle, additional information will be distributed at
the start of that cycle.

Administration. The Program is administered by the Compensation Committee. The Compensation
Committee has the right to terminate or amend the Program and its components at any time for any
reason. The Compensation

 

 

Committee also has the authority to select employees to receive awards, to create, amend and
rescind rules regarding the operation of the Program, to determine whether LTI and/or performance
share goals have been achieved, to reconcile inconsistencies, to supply omissions and to otherwise
make all determinations necessary or desirable for the operation of the Program.

Election to Defer Settlement of RSUs. Participants who are eligible to defer settlement of their
RSUs must make such election in the calendar year preceding the date of grant of the RSUs to be
deferred. All determinations regarding eligibility to defer settlement of RSUs shall be made by
the Company, in its sole discretion. Where deferral of settlement of RSUs is linked to payment
following termination of employment of the participant, settlement of the RSUs may be delayed until
at least six months following the participant’s termination of employment if that is necessary to
avoid tax penalties under Code Section 409A. This will only be applicable to participants who are
determined to be “specified employees” as defined for purposes of Code Section 409A.

No Assignment. An employee may not assign, pledge or otherwise transfer any right relating to a
cash or RSU award under the Program and any attempt to do so will be void.

No Right to Continued Employment. Participation in the Program does not give any employee any
right to continue in employment or limit in any way the right of the Company to terminate
employment at any time, for any reason.

Questions. Please contact Gary Isaacs, Chief Administrative Officer, at 610-878-5721 with any
questions regarding the Program.

September 2008exv10w1

Exhibit 10.1

Portions of this exhibit were omitted and filed separately with the Secretary of the Commission
pursuant to an application for confidential treatment filed with the Commission pursuant to Rule
24b-2 under the Securities Exchange Act of 1934. Such portions are marked by a series of
asterisks.

TRANSCRIPTION SERVICES AGREEMENT

          THIS TRANSCRIPTION SERVICES AGREEMENT (this “Agreement”) dated September 15, 2008 is entered
into by and between MEDQUIST TRANSCRIPTIONS, LTD. (the “Company”) and CBAY SYSTEMS & SERVICES, INC.
(“Supplier”).

BACKGROUND

          Supplier provides medical transcription services, and the Company wishes to obtain medical
transcription services from Supplier on the terms set forth herein in order to meet obligations to
the Company’s customers pursuant to agreements between the Company and such customers.

AGREEMENT

     NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained and intending to be legally bound hereby, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

          Section 1.1. Definitions. In this Agreement, and in the Exhibits to this
Agreement, the following terms, whether used in the singular or plural, shall have the respective
meanings set forth below:

          “Account Effective Date” shall mean the date on which any Company customer account
begins to receive Transcription Services from Supplier hereunder.

          “Administrative Safeguards” are administrative actions, policies and procedures to
manage the selection, development, implementation and maintenance of security measures to protect
EPHI and to manage the conduct of its workforce in relation to the production of that information
as defined in 45 CFR §164.304.

          “Affiliate” means any individual or entity directly or indirectly controlling,
controlled by or under common control with, a party to this Agreement. For purposes of this
Agreement, the direct or indirect ownership of over fifty percent (50%) of the outstanding voting
securities of an entity, or the right to receive over fifty percent (50%) of the profits or
earnings of an entity shall be deemed to constitute control.

          “Effective Date” shall be the date first set forth above.

          “Effective Time” means the applicable compliance dates set forth in 45 CFR §164.534
and 45 CFR §165.318.

 

			
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          “EPHI” means “Electronic Protected Health Information” as that term is defined by 45
CFR §164.513.

          “Force Majeure Event” means any cause beyond the reasonable control of any
non-performing party to this Agreement including, without limitation, acts of God or public enemy,
fires, floods, storms, tornadoes, earthquakes, riots, strikes, blackouts, telephone outage, acts of
terrorism, war or war operations, restraints of government, delays by suppliers and/or
manufacturers, governmental acts, staff unavailability due to illness or airline flight delay.

          “HIPAA” means the Health Insurance Portability and Accountability Act of 1996.

          “Laws” means all applicable federal, municipal, state, local or foreign statutes or
laws, and shall be deemed also to refer to all rules and regulations promulgated thereunder, by any
applicable regulatory authority or otherwise, unless context requires otherwise. Any reference to
a particular law or regulation will be interpreted to include any revision of or successor to such
statute, law, rule or regulation regardless of how it is numbered or classified.

          “Line” shall mean *****.

          “PHI” means Protected Health Information as defined in 45 CFR §164.501.

          “Physical Safeguards” means security measures to protect electronic information
systems and related buildings and equipment from natural and environmental hazards and unauthorized
intrusion as defined in 45 CFR §164.304.

          “Proprietary Information” means all non-public information of a confidential or
proprietary nature (whether or not specifically labeled or identified as “confidential”), in any
form or medium, that relates to the business, products, financial condition, services or research
or development of either of the parties to this Agreement and each of its Affiliates, suppliers,
distributors, customers, independent contractors or other business relations, including all trade
secrets, know-how, compilations of data and analyses, techniques, systems, formulae, recipes,
research, records, reports, manuals, documentation, models, data and data bases relating thereto;
inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports
and all similar or related information. Notwithstanding the foregoing, Confidential Information
does not include any information that: (i) is or becomes generally available to the public other
than as a result of an unauthorized disclosure by one of the parties hereto; or (ii) was within the
receiving party’s possession or becomes available to the receiving party, in either case, on a
non-confidential basis from a source other than the furnishing party, provided that such source is
not bound by a confidentiality agreement with the furnishing party or otherwise prohibited from
transmitting the information to the receiving party. Confidential Information of the Company shall
include, without limitation, the Company Content (as defined in Section 6 herein).

          “Technical Safeguards” means the technology and the policy and procedures for its use
that protect EPHI and control access to it as defined in 45 CFR §164.304.

ARTICLE II

SERVICES

 

			
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          Section 2.1 Supplier shall provide medical transcription services to the Company as set
forth in this Agreement (the “Transcription Services”). For the purpose of providing the
Transcription Services, voice files will be securely imported into the Company’s DocQment
Enterprise Platform (DEP) for processing by Supplier. The Company shall provide Supplier with
access to the DEP at no additional cost. All Transcription Services performed for Company under
this Agreement shall be performed solely on the DEP. No voice or data files shall be maintained,
saved, extracted or otherwise retained by Supplier or any of its employees, agents, or Controlled
Entities (as such term is defined in Section 4.4) after the voice file has been transcribed and
returned to Company. Supplier shall take all reasonable precautions to assure that all employees,
agents, and Controlled Entities are aware of the aforementioned requirement, and that all
transcription services are performed solely on the DEP. Company will make a test site available
within the DEP as necessary for Supplier to provide secure training to medical transcriptionists
and editors. Supplier shall provide Transcription Services and customer service support
twenty-four (24) hours a day, seven (7) days a week.  Supplier shall respond within one (1) hour to
any Company customer service support calls.

          Section 2.2 Company shall provide to Supplier lines of transcription following the execution
of this Agreement by issuing an executed order form to Supplier as attached hereto in Exhibit 5
(hereinafter an “Order Form”).

          Section 2.3 *****

          Section 2.4 *****

          Section 2.5 Supplier represents and warrants that it shall not perform Transcription
Services to any individual Company customer through more than one (1) service center.

ARTICLE III

FEES

     Section 3.1 The price(s) to be paid by the Company for Transcription Services provided by the
Supplier hereunder shall be as follows:

	 	 	 	 	 
	Type of	 	 	 	 
	Service	 	Transcription Services for Company Customer Account	 	Price
	A

	 	Transcription performed by Supplier’s transcriptionists
for Company Customers located in the UNITED STATES OF
AMERICA
	 	*****
	 
	 	 	 	 
	B

	 	Transcription performed using the Company’s Automated
Speech Recognition application (with editing performed
by Supplier) for Company Customers located in the
UNITED STATES OF AMERICA
	 	*****
	 
	 	 	 	 
	C

	 	Transcription performed by Supplier’s transcriptionists
for Company Customers located in the UNITED KINGDOM
	 	*****
	 
	 	 	 	 
	D

	 	Transcription performed using the Company’s Automated
Speech Recognition application (with editing performed
by Supplier) for Company Customers located in the
UNITED KINGDOM
	 	*****

 

			
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Bill counts will be based on the formatted document as it appears in the DocQment Enterprise
Platform.

          Section 3.2 Company’s Automated Speech Recognition (“ASR”) application is the DocQment
Enterprise Platform’s workflow technology that routes qualifying dictation through the Company’s
voice recognition engine and delivers the original audio file, along with the ASR recognized text
file, to Supplier’s transcriptionist/editor. Type B Services (as applicable above) may be utilized
for qualifying reports where the individual practitioner performing the dictation and work type
are: (i) eligible for and enabled on the ASR application; and (ii) the recognized text has been
corrected by a qualified medical editor.

          Section 3.3 All prices specified above are exclusive of all excise, sales, use and similar
taxes, export or import duties and shipment, delivery or installation fees. When applicable,
taxes, duties, shipment and installation fees will be invoiced as separate line items and are the
responsibility of Supplier. An invoice will be generated by Supplier and payment is due within
thirty (30) calendar days after the Company’s receipt of the invoice.

          Section 3.4 In the event that any invoiced amount is disputed by the Company, the Company
shall deliver written notice of such disputed amount to Supplier within thirty (30) calendar days
of the date of the invoice. Upon receipt of written notice of a billing dispute, Supplier and
Company shall promptly exchange any backup or other information reasonably necessary to support the
correctness of any disputed amount. The parties shall thereafter have thirty (30) calendar days
(“Company Review Period”) in which to examine such information, and to the extent such information
substantiates payment or reductions in the applicable invoice, such will be applied promptly.
Thereafter, if Supplier and the Company are unable to reach an agreement as to any remaining
disputed amount, Supplier and the Company shall immediately enter into good faith negotiations to
resolve any remaining dispute.

          Section 3.5 Company shall provide initial technical and DocQment Enterprise Platform training
to Supplier personnel at no cost at a venue within the United States to be determined by the
Company; provided, however, that Supplier shall be responsible for all travel, lodging and related
expenses incidental to such training. Any subsequent training shall be provided by the Company at
rates specified by the Company. Supplier shall provide the Company’s personnel with any necessary
training
and technical support relative to Supplier’s business or operations to the extent such is agreed to
by and between the parties, provided, however, that the Company shall be responsible for all
travel, lodging and related expenses of its personnel incidental to such training.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

          Section 4.1 Supplier represents and warrants that it is fully authorized
to enter into this Agreement and that its entry into this Agreement does not violate any
contractual obligation it owes to a third party. Supplier further represents and warrants
that all Transcription Services performed by its personnel under this Agreement will be
performed in a professional and workmanlike manner consistent with industry standards.

          Section 4.2 Supplier shall provide any reasonable operational, technical, production and
quality assurance personnel to support the sales and operations requirements of the Company.
However,

 

			
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should any such request on the part of Company require travel by Supplier’s employees and
agents away from their home station, Company shall be responsible for all such travel, lodging and
related expenses of these personnel to the extent such expenses are submitted and approved by
Company before prior to any billing.

          Section 4.3 Supplier and Company shall ensure that (as either party requires): (i) daily
operational contact is scheduled between the Company and Supplier operations in the United States,
(ii) executive level calls are conducted weekly; and (iii) sales support calls are conducted as
reasonably necessary. The Company and Supplier agree that they shall designate operational, sales,
and administrative personnel as points of contact, and each party shall endeavor to maintain the
communication protocols set forth in this Section.

          Section 4.4 Supplier represents and warrants that all transcriptionists, quality assurance
personnel, technologists, and personnel performing similar functions in connection with the
Transcription Services: (i) are employees of Supplier, wholly-owned Supplier subsidiaries, or those
certain entities identified in Exhibit 4 attached hereto that are controlled by or are
direct franchisees of Supplier (“Controlled Entities”); (ii) will, if located outside of the United
States, work in a secure site and shall not at any time perform transcription services remotely or
outside of the Supplier’s premises or the Controlled Entity’s premises designated for
transcription, (iii) will in all cases have executed and as such be able to evidence to the Company
such business partner agreements, independent contractor agreements, HIPAA confidentiality
agreements and other similar documentation as may be required by the Company; and (iv) perform all
services pursuant to this Agreement in full compliance with the terms of Company’s “International
Labor Vendor Standards and Safeguards for HIPAA Compliance” (as more fully defined and expressly
limited in Section 5.6 herein) and any written modifications of such presented to Supplier during
the term of this Agreement. Supplier further represents and warrants that its Controlled Entities
shall not be permitted to subcontract or assign any services under this Agreement.

          Section 4.5 Supplier acknowledges and agrees that the Company shall be permitted to use any
number of third party transcription services providers in addition to Supplier. Supplier shall
not, for the term of this Agreement and for a period of one (1) year after Supplier ceases to
provide services to Company: (i) provide medical transcription services directly or indirectly
through any of its Affiliates
to any customer account of the Company; or (ii) hire employees, independent contractors, or agents
of any other transcription contractors which Company is under contract with for the provision of
transcription services. Likewise for the term of this Agreement (including any extensions of this
agreement) and for a period of one (1) year after Supplier ceases to provide services to Company,
the Company shall not contract or work with any of Supplier’s Controlled Entities.

ARTICLE V

HIPAA COMPLIANCE

          Section 5.1. Supplier will:

               (a) Not use or further disclose any PHI other than as permitted or required by this
Agreement or as required by law;

 

			
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          (b) Report to the Company’s Corporate Director of Information Privacy and Security any
use or disclosure of the PHI not provided for by this Agreement within forty-eight (48) hours of
becoming aware of the unauthorized use or disclosure;

          (c) Have procedures in place for mitigating, to the maximum extent practicable, any
deleterious effects from the use or disclosure of PHI in a manner contrary to this Agreement;

          (d) Ensure that any agents, Controlled Entities, or other parties authorized to
receive PHI pursuant to this Agreement agree, in writing, to substantially the same restrictions
and conditions that apply to Supplier with respect to such PHI. Supplier shall obtain reasonable
assurances from any such agents or Controlled Entities that: (i) the information being disclosed
will be held confidentially and used or further disclosed only as required by law, (ii) the agents
and Controlled Entities will use the appropriate Administrative, Physical and Technical Safeguards
to prevent the unauthorized use or disclosure of the PHI and EPHI; and (iii) the agent/Controlled
Entity will immediately notify Supplier of any instance of a breach of any of the PHI terms set
forth herein;

          (e) Ensure that all of its employees, agents, representatives and members of its
workforce, whose services may be used to fulfill obligations under the Agreement, are or
shall be appropriately informed of the terms of this Agreement and are under a legal obligation, by
contract or otherwise, sufficient to enable each party to fully comply with all provisions of this
Agreement. Supplier will ensure that its workforce is educated on the Company’s privacy and
security policies (as further defined in Section 5.6 herein) and that sanctions are imposed on any
workforce member that does not comply with those policies and procedures; Supplier will also ensure
that all members of its workforce have signed Protected Health Information Confidentiality
Agreements;

          (f) Make available to the Company such information as the Company may require to
fulfill the Company’s obligations to provide access to, provide a copy of, and account for
disclosures with respect to PHI pursuant to HIPAA and the HIPAA Regulations, including, but not
limited to, 45 CFR §164.524 and §164.528;

          (g) Make the Company’s PHI available as the Company may require to fulfill the
Company’s obligations to amend PHI pursuant to HIPAA and the HIPAA Regulations, including but not
limited to 45 CFR §164.526, and Supplier shall, as directed by the Company, incorporate any
amendments to the Company’s PHI into copies of such PHI maintained by Supplier;

          (h) Make available the information required to provide an accounting of disclosures in
accordance with 45 CFR §164.528;

          (i) Make its internal practices, books, and records relating to the use and disclosure
of PHI received from, or created or received by Supplier on behalf of, the Company available to the
Secretary of the U.S. Department of Health and Human Services for purposes of determining the
Company’s or a Company client’s compliance with HIPAA;

          (j) Upon termination of the Agreement, or any time during the Agreement with respect to
PHI that Supplier maintains in any form, recorded on any medium or stored in any storage system,
including PHI retained or stored by agents/Controlled Entities, at the Company’s direction and if
feasible, return to the Company or destroy all such PHI. A senior officer of Supplier shall
certify in writing to the

 

			
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Company, within thirty (30) days after termination or other expiration of
the Agreement, that all PHI has been returned or disposed of as of provided above and that Supplier
no longer retains any such Protected Health Information in any form;

          (k) If return or destruction of PHI is infeasible, notify the Company in writing within thirty
(30) days after termination or other expiration of the Agreement. Such notification shall include:
(i) a statement that Supplier has determined that it is infeasible to return or destroy the PHI in
its possession; and (ii) the specific reasons for such determination. In addition to providing
such notification, Supplier shall certify within such thirty (30) day period that it will, and will
require its agents and Controlled Entities as applicable, to extend any and all protections,
limitations and restrictions contained in this Agreement to any PHI retained after termination of
the Agreement and to limit any further uses and/or disclosures to those purposes that make the
return or destruction of the PHI infeasible;

          (l) Implement Administrative, Physical and Technical Safeguards that reasonably and
appropriate to protect the confidentiality, integrity and availability of EPHI that Supplier
creates, receives, maintains or transmits on behalf of the Company;

          (m) Report to the Company’s Director of Information Privacy and Security within forty eight
(48) hours, any “security incident” of which it becomes aware, as such term is defined in the HIPAA
Security Rule; and

          (n) Ensure that any agents, including Controlled Entities, to whom it provides EPHI, agree in
writing, to implement reasonable and appropriate safeguards to protect EPHI as required herein.

          (o) Upon request, Supplier will provide to the Company a list of names of agents or Controlled
Entities used to outsource Company’s transcription and or evidence of a written assurances from
those agents or Controlled Entities (as required in 5.1 (d)) that the agents or Controlled Entities
will agree to substantially the same restrictions and conditions that apply to Supplier with
respect to such PHI.

     Section 5.2 Supplier, in its capacity as Business Associate (as that term is defined in the
HIPAA Regulations) to the Company, shall be permitted to use and disclose PHI in a manner that
would not violate the requirements of the HIPAA Regulations as follows: (i) for the proper
management and administration of Supplier; (ii) to carry out the legal responsibilities of Supplier
and to fulfill Supplier’s duties and responsibilities under the Agreement including in part
disclosure to its employees and Controlled Entities; and (iii) to provide data aggregation services
relating to the health care operations of the Company.

     Section 5.3 Notwithstanding anything to the contrary set forth herein, the
Parties may immediately terminate this Agreement, or any specified contracts between the
Company and Supplier, if Supplier has breached a material term of this Article V. The
Company may exercise said right to terminate the Agreement by providing Supplier with written
notice of its intent to terminate, specifying the material breach of the Agreement that
provides the basis for termination. Such termination shall be effective immediately or at
such date as specified in the notice.

     Section 5.4 Supplier acknowledges that the Company in not conveying any right or title in the
PHI to Supplier.

 

			
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     Section 5.5 Notwithstanding anything to the contrary set forth herein, Supplier shall
indemnify, defend and hold harmless the Company and any of the Company’s directors, officers,
employees and agents from and against any claim, liability, or expense (including reasonable
attorneys’ fees), arising out of or relating to any non-permitted use or disclosure of PHI or EPHI
or other breach of this Article V by Supplier or any director, officer, employee or agent of
Supplier.

     Section 5.6 Following the execution of this Agreement, Supplier shall at all times comply in
all material respects with the terms of Company’s “International Labor Vendor Standard and
Safeguards for HIPAA Compliance” and any written modifications of such presented to Supplier during
the Term of this Agreement (the “Company HIPAA Compliance Standards”). Company shall give the
Supplier five (5) business days to consider and accept any modifications to the Company HIPAA
Compliance Standards, and if Supplier does not object to such modifications within the
aforementioned time period, then such modifications shall be considered accepted by Supplier and
incorporated by reference. To the extent that Supplier objects to any modification of the Company
HIPAA Compliance Standards, the parties will discuss in good faith the negotiation of mutually
acceptable terms. However, should the parties not be able to reach agreement of the modifications
within ten (10) days, Company shall have the right to terminate this Agreement with written notice.
The Company HIPAA Compliance Standards shall be hereby incorporated by reference into this
Agreement and a most current version has been supplied by the Company along with the fully executed
Agreement. Company shall be permitted at any time, at Company’s sole cost and expense, reasonable
access to and the ability to examine all information, in any form, which is necessary or
appropriate (as determined by Company in its sole discretion) to review Supplier’s compliance with
the Company HIPAA Compliance Standards (an “Audit”). In the event that the Company in its sole
discretion determines as a result of an Audit that Supplier is not in material compliance with the
Company HIPAA Compliance Standards (a “Negative Finding”), and notwithstanding anything herein to
the contrary, (i) Supplier shall promptly pay to the Company, as liquidated damages and not as a
penalty, (a) all costs and expenses associated with the Audit, and (b) all costs and expenses
incurred by the Supplier in connection with any liability, loss, damage (including, without
limitation, special, exemplary, punitive, consequential or incidental damages), claim or cause of
action relating directly or indirectly to the Negative Finding including, without limitation,
reasonable attorney’s fees, and (ii) the Agreement shall be terminated effective immediately upon
written notice from Company to Supplier and, upon such termination, Supplier shall immediately
return to the Company all Confidential Information (including, without limitation, all PHI) in its
possession or in the possession of its directors, managing directors, officers, employees,
affiliates, stockholders, agents, consultants or other representatives.

ARTICLE VI

INTELLECTUAL PROPERTY MATTERS

          Section 6.1 Any and all designs, artwork, logos, graphics, video, text,
data code and other proprietary or confidential materials supplied by the Company to Supplier
in connection with this Agreement shall remain the sole and exclusive property of the Company
(the “Company Content”). No copyrights, patents, trademarks or other intellectual property
rights shall be transferred from the Company to Supplier with respect to any of the Company
Content. However, the Company hereby grants to Supplier a worldwide, non-exclusive,
unlimited fully paid-up license to use, copy, modify, enhance, create derivative works of and
otherwise use the Company Content in any manner reasonably necessary

 

			
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in connection with the
performance of the Transcription Services hereunder (the “Company Content License”).

          Section 6.2 Nothing in this Agreement shall be construed to grant to Supplier any right to or
interest in any trademark, trade name, trade dress, service mark, copyright, patent, trade secret
or know-how owned or asserted to be owned by the Company (“Intellectual Property”). Supplier’s use
of the Intellectual Property shall be limited to the performance of the Transcription Services as
contemplated hereby. Any other use of the Intellectual Property shall constitute an infringement
thereof
and/or a violation of the Company’s rights resulting in irreparable injury to the Company and
entitling the Company to immediate injunctive relief and to any other remedies at law or equity.

          Section 6.3 Application Service Provider License.

          (a) Through the use of software applications (the “Applications”) hosted on the
Company’s DocQment Enterprise Platform and made available by means of the Internet, Supplier shall
have the ability to access the DocQment Enterprise Platform for the purpose of providing the
Transcription Services described herein. Subject to the terms and conditions set forth herein, the
Company hereby grants to Supplier for the term of this Agreement a non-transferable, non-exclusive
limited right of access to, and use of, the Applications solely for the purposes of performing the
Transcription Services hereunder. From time to time, the Company may require the agreement to and
acknowledgement of an end-user license, terms and conditions and/or other agreements prior to
Supplier accessing the Applications.

          (b) With respect to its use of the Applications, Supplier, at its own cost and
expense, shall: (i) not permit any person or entity, other than the authorized agents and
Controlled Entities of Supplier, to use or gain access to the Applications; (ii) provide reasonable
security devices to protect against unauthorized usage; (iii) not adapt the Applications in any way
or use it to create a derivative work (other than reports that are transcribed or edited using the
Applications); and (iv) not remove, obscure, hinder or alter Company’s (or any other third party’s)
proprietary notices, trademarks, or other proprietary rights notices affixed to or contained in the
Applications.

          (c) The Applications are the exclusive property of the Company and/or the Company’s
licensors, which shall retain all right, title and interest in and to the Applications, including,
without limitation, the intellectual property rights and any other rights under United States and
international copyright, patent, trademark, trade secret or other law. Supplier may not use the
Applications for the benefit of any third parties or allow access to the Applications by any third
party, except as otherwise explicitly authorized hereunder.

          (d) Supplier has developed and may continue to develop proprietary software tools (the
“Tools”) to enhance the productivity of its workforce, and/or better meet HIPAA compliance
requirements. Supplier may at its sole discretion share these Tools with the Company. Should the
Company use these Tools, either with or without compensation to the Supplier, the Company warrants
it will not share these Tools with other labor partners or any third party without the specific
written permission of the Supplier.

 

			
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ARTICLE VII

TERM AND TERMINATION

          Section 7.1. Term. This Agreement shall commence upon the Effective Date and
terminate two (2) years from the Effective Date (the “Expiration Date”), unless sooner terminated
by the Company in accordance with this Article VIII.

          Section 7.2. Termination by the Company or Supplier. Each of the Company and
the Supplier shall have the right to terminate this Agreement with or without cause at any time
upon ninety (90) days prior notice to the other party to the Agreement.

          Section 7.3. Termination for Material Default. The Company may terminate this
Agreement effective immediately upon written notice if Supplier: (a) breaches any obligation under
this Agreement; or (b) (i) files a voluntary petition for bankruptcy, (ii) is adjudicated bankrupt,
(iii) has a court assume jurisdiction of its assets under a federal reorganization act, (iv)
becomes insolvent or suspends business, or (v) makes an assignment of its assets for the benefit of
its creditors.

          Section 7.4. Effect of Termination. Termination of this Agreement shall not
relieve the parties of any obligation accruing prior to such termination, and the provisions of
this Section 7.4 and Articles IV, V, VI, VII, IX, X and XI hereof shall survive the termination of
this Agreement. Any termination of this Agreement shall be without prejudice to the rights of
either party against the other accrued or accruing under this Agreement prior to termination.
Supplier shall immediately pay over to the Company the unused balance of any prepayment made by the
Company pursuant to Section 3.1 hereof.

ARTICLE VIII

INDEMNIFICATION AND INSURANCE

          Section 8.1. Indemnification Obligation. Supplier (the “Indemnifying Party”)
hereby indemnifies and holds the Company harmless from and against any and all liability, loss,
damage, claim or cause of action, and expenses connected therewith, including, without limitation,
reasonable attorney’s fees and expenses, for bodily injury or damage to real or tangible personal
property, to the extent caused directly or indirectly by the Indemnifying Party, its employees or
agents.

          Section 8.2.Insurance. Supplier represents and warrants that during the term
of this Agreement, it shall maintain the types and amounts of insurance set forth below:

          (a) general liability insurance, including contractual liability coverage of all of
Supplier’s obligations under this Agreement and products liability/completed operations coverage
with a minimum limit equal to the minimum limit currently maintained by Supplier on the date
hereof.

          (b) Such insurance shall be evidenced by a certificate of insurance which shall
provide that the Company shall receive thirty (30) days’ prior written notice of cancellation or
material change of such policy.

 

			
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ARTICLE IX

CONFIDENTIALITY AND NONSOLICITATION

          Section 9.1. Confidentiality. Supplier and the Company acknowledge that
Proprietary Information is to be considered highly confidential. Each party shall use Proprietary
Information disclosed to it by or on behalf of the other party only for the purposes contemplated
by this Agreement and shall not disclose such Proprietary Information to any third party without
the prior written consent of the disclosing party. The foregoing obligations shall survive the
expiration or termination of this Agreement for a period of ten (10) years. These obligations
shall not apply to Proprietary Information that:

          (a) is known by the receiving party at the time of its receipt, and not through a
prior disclosure by the disclosing party, as documented by business records;

          (b) is at the time of disclosure, or thereafter becomes, published or otherwise part
of the public domain without breach of this Agreement by the receiving party;

          (c) is subsequently disclosed to the receiving party by a third party who has the
right to make such disclosure;

          (d) is developed by the receiving party independently of Proprietary Information or
other information received from the disclosing party and such independent development is properly
documented by the receiving party; or

          (e) is required to be disclosed by law or court order, provided that notice is
promptly delivered to the other party in order to provide an opportunity to seek a protective order
or other similar order with respect to such Proprietary Information and thereafter discloses only
the minimum information required to be disclosed in order to comply with the request, whether or
not a protective order or other similar order is obtained by the other party.

Nothing herein shall be interpreted to prohibit the Company from publishing the results of its
studies in accordance with industry practices.

          Section 9.2 No Publicity. A party may not use the name of the other party in any
publicity or advertising and may not issue a press release or otherwise publicize or disclose the
existence of this Agreement, any information related to this Agreement or the terms or conditions
hereof, without the prior written consent of the other party. Nothing in the foregoing, however,
shall prohibit a party from making such disclosures as may be necessary or reasonably appropriate
in order to comply with applicable federal, state or provincial securities laws or any rule or
regulation of any nationally recognized securities exchange; in such event, however, the disclosing
party shall use good faith efforts to consult with the other party prior to such disclosure and,
where applicable, shall request confidential treatment to the extent available. However, the
Supplier may disclose to the Controlled Entities, set forth in Exhibit 4, that Supplier is
performing work on behalf of the Company. Any Supplier agreements with such Controlled Entities
shall include
restrictions materially consistent with those set forth in this Section restricting such entities
from further disclosing their relationship with Company.

 

			
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          Section 9.3 Non-Solicitation. So long as this Agreement is in effect and for a period
of twelve (12) months thereafter, Supplier and Company shall not solicit, hire or engage any person
who during the term of this Agreement is or has been an employee, consultant, or transcriptionist
of the other party.

ARTICLE X

RECORDS

          Supplier shall maintain, and shall cause each of its Controlled Entities to maintain, records
with respect to the performance of its obligations under this Agreement. All such records shall be
available for inspection, audit and copying by the Company and its representatives and agents,
including the Company’s auditors, at the Company’s cost and expense upon reasonable request during
normal business hours. All such records shall be maintained during the term of this Agreement, or
such longer period as may be required by relevant Law.

ARTICLE XI

MISCELLANEOUS

          Section 11.1. Assignment, Subcontracting. Notwithstanding anything to the
contrary contained herein, neither this Agreement nor any or all of the rights and obligations of a
party hereunder shall be assigned, delegated, sold, transferred, sublicensed, subcontracted (except
as otherwise provided herein) or otherwise disposed of, by operation of law or otherwise, to any
third party without the prior written consent of the other party, and any attempted assignment,
delegation, sale, transfer, sublicense, subcontract or other disposition, by operation of law or
otherwise, of this Agreement or of any rights or obligations hereunder contrary to this Section
shall be a material breach of this Agreement by the attempting party, and shall be void and without
force or effect; provided, however, that the Company may, without such consent, assign the
Agreement and its rights and obligations hereunder: (i) to an Affiliate, (ii) in connection with
the transfer or sale of all or substantially all of its assets related to, or (iii) in the event of
its merger or consolidation or change in control or similar transaction.

          Section 11.2. Force Majeure. Failure of either party hereto to perform its
obligations under this Agreement shall not subject such party to any liability to the other party
or place it in breach of any term or condition of this Agreement if such failure is caused by a
Force Majeure Event, provided, however, that the party affected shall promptly notify the other
party of the condition constituting a Force Majeure Event and shall exert commercially reasonable
efforts to overcome any such causes and to resume performance of its obligations with all possible
speed. If a condition constituting a Force Majeure Event exists for more than ninety (90)
consecutive days, the parties shall meet to negotiate a mutually satisfactory solution to the
problem, if practicable.

          Section 11.3. Governing Law and Jurisdiction. This Agreement shall be
governed, interpreted and construed in accordance with the laws of the State of New Jersey without
regard to its provisions concerning conflict of laws. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Agreement may be brought against any
of the parties in any state or federal court of competent jurisdiction in the District of the State
of New Jersey. Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.

 

			
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          Section 11.4. Waiver. Any delay or failure in enforcing a party’s rights
under this Agreement or any waiver as to a particular default or other matter shall not constitute
a waiver of such party’s rights to the future enforcement of its rights under this Agreement, nor
operate to bar the exercise or enforcement thereof at any time or times thereafter, excepting only
as to an express written and signed waiver as to a particular matter for a particular period of
time.

          Section 11.5. Independent Relationship. The relationship established between
Company and Supplier under this Agreement is that of independent contractors and nothing contained
in this Agreement will be deemed to establish or otherwise create a relationship of principal and
agent, franchisor and franchisee, joint venturers or partnership between them. Supplier’s employees
are not and shall not be deemed to be employees of the Company. Supplier shall be solely
responsible for the payment of all compensation to its employees, including provisions for
employment taxes, workmen’s compensation and any similar taxes associated with employment of
Supplier’s personnel. Neither party nor any of its agents or employees will have any right or
authority to assume or create any obligations of any kind, whether express or implied, on behalf of
the other party. All financial obligations associated with each respective party’s business are
the sole responsibility of such party.

          Section 11.6.Entire Agreement; Amendment. This Agreement including any
Exhibits and Schedules hereto, sets forth the complete and final agreement and all the covenants,
promises, agreements, warranties, representations, conditions and understandings between the
parties hereto and supersedes and terminates all prior agreements, writings and understandings
between the parties with respect to the subject matter hereof. The parties agree that there are no
covenants, promises, agreements, warranties, representations, conditions or understandings, either
oral or written, between the parties other than as are set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding upon the parties
unless reduced to writing and signed by an authorized officer of each party.

          Section 11.7.Notices. Each notice required or permitted to be given or sent
under this Agreement shall be given by facsimile transmission (with confirmation copy by registered
first-class mail) or by registered or overnight courier (return receipt requested), to the parties
at the addresses and facsimile numbers indicated below.

If to Supplier:

CBay Systems and Services, Inc

2661 Riva Road, Bldg 800

Annapolis, MD 21401

Attention: Managing Director

with a copy to:

 

			
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If to the Company:

MedQuist Transcriptions, Ltd.

1000 Bishops Gate Boulevard, Suite 300

Mt. Laurel, NJ 08054-4632

Facsimile No. 856.206.4215

Attention: President

with a copy to:

MedQuist Transcriptions, Ltd.

1000 Bishops Gate Boulevard, Suite 300

Mt. Laurel, NJ 08054-4632

Facsimile No. 856.206.4215

Attention: Chief Legal Officer

Any such notice shall be deemed to have been received on the earlier of the date actually received
or the date five (5) days after the same was posted or sent. Either party may change its address
or its facsimile number by giving the other party written notice, delivered in accordance with this
section.

          Section 11.8.
Severability. If any provision of this Agreement is declared
invalid or unenforceable by a court having competent jurisdiction, it is mutually agreed that this
Agreement shall continue in effect except for the part declared invalid or unenforceable by order
of such court. The parties shall consult and use their best efforts to agree upon a valid and
enforceable provision which shall be a reasonable substitute for such invalid or unenforceable
provision in light of the intent of this Agreement.

          Section 11.9. Counterparts. This Agreement shall become binding when any one
or more counterparts hereof, individually or taken together, have been executed on behalf of each
of the parties hereto. This Agreement may be executed in any number of counterparts and by
facsimile, each of which shall be an original as against any party whose signature appears thereon,
but all of which taken together shall constitute but one and the same instrument.

 

			
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IN WITNESS WHEREOF, the Company and Supplier have caused this Services Agreement to be executed by
their duly authorized officers as of the day and year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	CBAY SYSTEMS & SERVICES, INC.	 	 	 	MEDQUIST TRANSCRIPTIONS, LTD.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Jason Kolinoski
	 	 	 	By:
	 	/s/ Mark E. Ivie	 	 
	Name:

	 	 

Jason Kolinoski
	 	 	 	Name:
	 	 

Mark E. Ivie
	 	 
	Title:

	 	Chief Operating Officer
	 	 	 	Title:
	 	Interim President & CEO	 	 

[Signature page to Services Agreement by and between MedQuist Transcriptions, Ltd. and Supplier]

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

			
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EXHIBIT 1

 

			
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EXHIBIT 2

QUALITY REVIEW

AMOUNT: Supplier shall perform a random monthly quality review of ***** of all production for each
Client Facility ID in the DocQment Enterprise Platform. Results are to be provided to Company no
later than the 10th of the month following review.

CRITERIA: Random samples encompassing all report types with voice comparison.

ERRORS: Attached hereto as Exhibit 3 is the Quality Score Sheet listing all error types.

STANDARD: Company’s acceptable quality standard is *****.

QUALITY REPORTS

The following report is an illustration of Company’s continuous quality assurance score sheet.
Company utilizes a team of QA auditors to systematically audit documents against the dictated voice
and disseminate the findings.

Calculation formula: Total error points divided by total lines = total error fraction. 1.0 minus
total error fraction = accuracy fraction; multiply by 100 for percentage.

CLASSIFICATION OF ERRORS AND ERROR VALUES

The Association for Healthcare Documentation Integrity (“AHDI”) recommends specific error
categories, error values, and conversion factors for error values in line length situations.
Following the recommendations creates a true definition of quality in the medical transcription
industry and allows for proper comparative assessments. AHDI recommends that the following error
classifications be applied to these error types relative to their impact on patient care.

	 	§	 	Critical Errors: Defined as those that impact patient safety. Specifically, AHDI
identifies the following: medical word misuse, incorrect drug or drug dosage, incorrect lab
values and test names, omitted dictation, patient identification error, including incorrect
choice of the patient name or specific patient visit.
	 
	 	§	 	Major Errors: Defined as those that impact document integrity. Specifically, AHDI
identifies the following: medical word misspelling, English word misspelling, incorrect
verbiage, failure to flag a document, abuse of flagging documents, protocol failures.
	 
	 	§	 	Minor Errors: Specifically, AHDI identifies the following: grammar, punctuation,
typographical errors, formatting errors.
	 
	 	§	 	Dictation Flaws: Specifically, AHDI identifies the following: critical, major, and minor
as defined by patient safety and document integrity impact. It is crucially important to
realize the impact that auditory quality of the dictation has on the transcribed document.
Recognizing and documenting occurrences allows for identification of flaws and an
opportunity for assisting dictators in their quest for patient safety and document
integrity.

DEFINITION OF DICTATED OR TRANSCRIBED ERRORS AND ERROR VALUES

CRITICAL ERRORS (PATIENT SAFETY RISK): A critical error is given the highest negative point value
because of the seriousness of its consequences. With ***** accuracy as a benchmark, a report
containing a critical error should not pass QA. A critical error should be reserved for only those
errors that directly compromise patient safety.

 

			
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§ Error #1: Medical Word Misuse – 3.0 pts

This category includes wrong drug or drug doses, wrong lab values, and/or wrong test names that
directly compromise patient safety. For instance, a wrong disease could be incorrectly attributed
to a patient and then carried in the medical record for life, causing incorrect treatment and
incorrect medical decisions, as well as inaccurate billing of the patient’s accounts. Similarly, a
wrong lab value could result in a patient not receiving treatment or further testing when such
treatment or testing is warranted. If a misuse is repeated throughout the entire report, it should
be counted as only one error in the report, since it reflects one wrong piece of information on the
part of the transcriptionist. This category also includes improper use of abbreviations, acronyms,
and symbols that are not to be used according to the client profile.

§ Error #2: Omitted Dictation – 3.0 pts

This category covers dictated information of a critical nature that was either carelessly omitted
by the transcriptionist or deliberately omitted because the transcriptionist did not understand
what was being said. Examples include omission of an entire laboratory finding because the value
itself could not be heard, deleting negative or normal findings, or omitting entire sentences
because the main part of it could not be understood. Creative transcription is also included in
this category. This refers to “making up” dictation (words and/or phrases) when what is dictated is
not clear. Consideration should be given for difficult authors or dictation of poor quality.

Research, assistance from others, flagging the report, and leaving a blank constitute appropriate
actions rather than omission. This category does not apply to missing words that are
inconsequential, such as articles or conjunctions. It also does not apply to what appear to be
words missed (adjectives, adverbs) from typing too fast, unless they have serious consequences to
the medical meaning. In these types of situations, the error would be downgraded to major or minor,
depending on the consequence to the document. Clipped sentences are allowed if they reflect the
dictator’s style. This category is meant to apply to purposeful and/or serious omissions and/or
fabrication(s).

§ Error #3: Patient Identification Error – 3.0 pts

A patient identification error is one in which the wrong patient information is tied to the
dictation. For example, a report that is dictated for 50-year-old John E. Doe (male) but is
attributed to a chart for 20-year-old Joni Do (female). As with the other critical errors in this
category, the error must directly compromise patient safety in order to be assessed this error
weight (see error #12).

§ Error #4: Upgrade of Major or Minor error due to patient safety impact – 3.0 pts

This category is for major or minor errors from the categories below that directly compromise
patient safety. For example, “failure to flag” is considered a major error worthy of 1.0 pt., but a
right/left discrepancy that poses a risk management issue and is not flagged by the
transcriptionist could be upgraded to a critical error.

MAJOR ERRORS (DOCUMENT INTEGRITY RISK): A major error carries a higher negative point value because
of the impact it has on the integrity of the document. Major errors in this category do not pose a
risk to patient safety. A major error that impacts both the integrity of the document and patient
safety should be upgraded to a critical error.

§ Error #5: Abuse of Flagging/Blanks – 2.0 pts

This category covers blanks left that, through research, the transcriptionist could have resolved.
This is sometimes referred to as “tossing it over the fence” – when a transcriptionist clearly
chooses to leave a blank rather than research a term. The purpose of this category is to limit
abuse of blanks for the sake of speed, which reflects a lazy attitude or desire for higher line
counts in a production environment. Obviously, students and entry-level transcriptionists will
leave more blanks in the beginning and this is preferred to guessing. This error should be used
only in those cases where the blank or flag is truly considered abusive.

 

			
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§ Error #6: Medical Word Misspelling – 1.5 pts

In addition to any medical words or medications that are misspelled, this category includes the use
of an incorrect form of a medical word. An example would be “lingula” instead of “lingular” or
“femur” instead of “femoral.” This also includes failure to use combining forms, and incorrect
entries from text expanders. For instance, an author dictates that the patient is to see physical
therapy (dictated as PT) for follow-up; transcriptionist uses “pt” to expand for “patient” and the
final copy of the report reads, “the patient is to see patient for follow-up.” (However, if an
incorrect expansion results in a critical error, such as incorrect diagnosis, this would be
upgraded to a critical error.)

§ Error #7: English Word Misspelling – 1.5 pts

In addition to misspelling English words, this category refers to misuse errors, which have more
serious consequences, such as nouns, verbs, or important qualifying adjectives and adverbs (e.g.,
elicit/illicit, dissent/descent, affect/effect, apprise/appraise). These errors directly impact the
integrity of the report. For instance: “the risks and complications were given allowed (aloud).”

§ Error #8: Incorrect Verbiage – 1.5 pts

This category refers to dictation that is transcribed differently than dictated, but without
significant impact on the medical meaning. This includes inappropriate/excessive editing. Care
should be taken to remain true to the dictator’s style while still maintaining accuracy. Therefore,
this does not pertain to changes made for the purpose of correcting grammar or word usage. This
also differs from creative transcription (see error #2).

§ Error #9: Failure to Flag – 1.0 pt

This category pertains to times when a report should be flagged for clarification and the
transcriptionist fails to do so. Examples of failure to flag include gender, age or right-vs.-left
discrepancies that should have been recognized by the transcriptionist and flagged but were not.

§ Error #10: Protocol Failure – 1.0 pt

A protocol failure is one in which a transcriptionist fails to follow a specific protocol or
facility preference. For example, a facility may require the date of service be filled in on each
document, and the transcriptionist fails to include this.

§ Error #11: Upgrade of Minor Error due to impact on integrity of document – 1.5 pts

This category is used to upgrade a minor error that compromises the integrity of the document. For
instance, a physician dictates an inflammatory or derogatory remark about the patient that puts the
physician at risk for a lawsuit, and the transcriptionist fails to edit these remarks.

§ Error #12: Downgrade of Critical Error due to less than critical impact – 1.5 pts

This category is used to downgrade a critical error that does not compromise patient safety but
still impacts the integrity of the document. An example would be using the wrong medical word
(medical word misuse) without directly affecting patient safety (stating there is a family history
of “corporal” tunnel syndrome, for example).

§ Error #13: Improper Encounter – 1.5 pts

This category is used when the correct patient is chosen, but the wrong visit or encounter is
selected.

MINOR ERRORS: A minor error is meant to point out recommended areas of improvement for the
transcriptionist. These errors do not compromise patient safety or the integrity of the report. The
primary goal of a minor error designation is instructional.

§ Error #14: Grammar Error – 0.5 pt

Grammar errors may include incorrect subject-verb agreement, incorrect use of medical
abbreviations, use of the wrong part of speech, incorrect use of singular and plural nouns, use of
the wrong verb (e.g., laying/lying) or verb

 

			
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tense, failure to correct redundancies and
inconsistencies, and failure to edit slang or inflammatory remarks when appropriate.

§ Error #15: Miscellaneous/Other – 0.5 pt

This category covers errors that do not fit into the other categories. For instance, improper
capitalization, addition of words that were not dictated but that do not significantly affect the
meaning of the sentence or report, and errors of questionable cause when the recording quality is
poor or a foreign accent is at fault. This category also covers formatting errors.

§ Error #16: Downgrade of Error due to minimal impact – 0.25 pt

This category can be used to downgrade any error that has little to no impact on the integrity of
the report and does not compromise patient safety. An example would be omission of the word “the”
in “The patient was in acute distress.”

§ Error #17: Punctuation and Typos – 0.0 pt

Punctuation errors may include misplaced commas that do not alter the meaning of the sentence and
the improper use of colons or semicolons, quotation marks, and misplaced periods. This category
also includes typographical errors that do not significantly affect the meaning of the dictation.

NEGATIVE DICTATOR EFFECT ERRORS: These errors have no point values but are used to recognize a
transcriptionist’s error or difficulties in the context of poor dictation.

§ Error #18: Critical Negative Dictator Effect – 0.0 pt

This category would be used to point out an error of a critical nature that was clearly attributed
to poor dictation. For example, omitted dictation based on difficulty interpreting a very heavy
accent. Another example would be incorrect patient identification due to inaccurate or insufficient
information given by the dictator. This error may be utilized whether or not the transcriptionist
flagged the document, since the purpose is to determine the difficulty encountered in producing an
accurate document.

§ Error #19: Major Negative Dictator Effect – 0.0 pt

This category would be used to address a documentation error in any of the major categories that
was obviously incurred because of poor dictation quality or inaccurate information given by the
dictator. Once again, this error may be utilized whether or not the transcriptionist flagged the
document, since the purpose is to determine the difficulties in producing an accurate document.

§ Error #20: Minor Negative Dictator Effect – 0.0 pt

This category would be used to draw attention to a minor flaw caused by poor dictation. For
example, the dictator has used the wrong form of a verb, which may or may not have been corrected
by the transcriptionist.

 

			
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EXHIBIT 3

QUALITY SCORE SHEET

CUSTOMER QA AUDIT

	 	 	 	 	 	 	 	 	 	 	 	 	 
	CUSTOMER:	 	REVIEW PERIOD:	 	 	 	 
	 
	Type of Error	 	Points	 	Total Errors	 	Total Points
	Medical Word Misuse
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade of Critical Error due to less than critical impact
	 	 	1.50	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Omitted Dictation
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade of Critical Error due to less than critical impact
	 	 	1.50	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Patient Identification Error
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade of Critical Error due to less than critical impact
	 	 	1.50	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Abuse of Flagging/Blanks
	 	 	2.00	 	 	 	0	 	 	 	0	 
	Upgrade of Major — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Medical Word Misspelling
	 	 	1.50	 	 	 	0	 	 	 	0	 
	Upgrade of Major — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	English Word Misspelling
	 	 	1.50	 	 	 	0	 	 	 	0	 
	Upgrade of Major — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Incorrect Verbiage
	 	 	1.50	 	 	 	0	 	 	 	0	 
	Upgrade of Major — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Failure to Flag
	 	 	1.00	 	 	 	0	 	 	 	0	 
	Upgrade of Major — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Protocol Failure
	 	 	1.00	 	 	 	0	 	 	 	0	 
	Upgrade of Major — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Improper Encounter
	 	 	1.50	 	 	 	0	 	 	 	0	 
	Upgrade of Major — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Grammar Error
	 	 	0.50	 	 	 	0	 	 	 	0	 
	Upgrade of Minor — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Upgrade of Minor — Integrity of Document
	 	 	1.50	 	 	 	0	 	 	 	0	 

 

			
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	CUSTOMER:	 	REVIEW PERIOD:	 	 	 	 
	 
	Type of Error	 	Points	 	Total Errors	 	Total Points
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Miscellaneous/Other
	 	 	0.50	 	 	 	0	 	 	 	0	 
	Upgrade of Minor — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Upgrade of Minor — Integrity of Document
	 	 	1.50	 	 	 	0	 	 	 	0	 
	Downgrade Error — Minimal Impact
	 	 	0.25	 	 	 	0	 	 	 	0	 
	Punctuation/Typos
	 	 	0.00	 	 	 	0	 	 	 	0	 
	Upgrade of Minor — Patient Safety Impact
	 	 	3.00	 	 	 	0	 	 	 	0	 
	Upgrade of Minor — Integrity of Document
	 	 	1.50	 	 	 	0	 	 	 	0	 
	Critical Negative Dictator Effect
	 	 	0.00	 	 	 	0	 	 	 	0	 
	Major Negative Dictator Effect
	 	 	0.00	 	 	 	0	 	 	 	0	 
	Minor Negative Dictator Effect
	 	 	0.00	 	 	 	0	 	 	 	0	 
	Total MedQuist Errors  
	 	 	 	 	 	 	0	 	 	 	0	 

Summary

	 	 	 	 	 
	Total Reports Reviewed    
	 	 	0	 
	Total Lines Reviewed    
	 	 	0	 
	Line Error Rate = Total MedQuist Errors/Total Lines  
	 	 	0.00	 
	MedQuist Line Error Percent = MedQuist Line Error Rate x 100%
	 	 	0.00	%
	MedQuist Line Accuracy Rate = 100% — MedQuist Line Error Percent
	 	 	100.00	%

 

			
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EXHIBIT 4

Controlled Entities

*****

 

			
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-24-

 

EXHIBIT 5

ORDER FORM

The following Order Form is issued pursuant to the terms of Section 2.2 in the Transcription
Services Agreement (the “Agreement”) executed by and between MEDQUIST TRANSCRIPTIONS, LTD. (the
“Company”) and (“Supplier”) and effective as of September 15, 2008:

Proposed Start Date:

Client Added or Cancelled (if applicable):

Facilities Added or Cancelled (if applicable):

Contact Information (if applicable):

	 	•	 	Project Manager -
	 
	 	•	 	Technology -

Implementation Notes (if applicable):

	1.	 	Supplier will

Optional Services (if applicable):

	1.	 	Company elects to

Additional Comments/Discussion (if applicable):

	 	 	 	 	 
	MEDQUIST TRANSCRIPTIONS, LTD.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 

 

			
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-25-

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