Document:

Exhibit
10.26.3

CONFIDENTIAL PORTIONS OF THIS
DOCUMENT

HAVE BEEN REDACTED AND FILED
SEPARATELY WITH 

THE
SECURITIES AND EXCHANGE COMMISSION

AMENDMENT
NO. 3 TO LICENSING AGREEMENT

This Amendment No. 3 (“Amendment No. 3”) to Licensing
Agreement is made as of 2003, August 10th by and between MedQuist Inc. (“MedQuist”),
a New Jersey corporation with its principal place of business at Five Greentree
Centre, Suit 311, Marlton, NJ 08053, acting on its own behalf-and on behalf of
its wholly owned subsidiaries (direct and indirect) and Philips Speech Processing
GmbH (“Philips”), an Austrian corporation, with its registered place of
business at Triesterstrasse 64, 1101 Vienna, Austria (MedQuist and Philips.
each a “Party” and, collectively, the “Parties”).

WITHNESSETH

WHEREAS, the Parties entered into a Licensing
Agreement, dated as of May 22, 2000, as amended by Amendment No. 1 of January
2002 and Amendment No. 2 of December 2002 (as so amended, the “Licensing Agreement”)
relating to the integration and use of certain Philips speech recognition technology
into MedQuist business; and

WHEREAS, the Parties desire to amend the Licensing Agreement
by modifying the pricing and fees and expanding the license to include additional
applications subject to the terms and conditions of this Amendment No. 3;

NOW, THEREFORE, in consideration of the mutual
promises contained herein, the Parties agree as follows:

Section. Definitions.

(1)                                  Unless
otherwise defined in this Amendment No. 3, capitalized terms used in this
Amendment No. 3 shall have the meanings given to them in the Licensing Agreement.

Schedule D - Pricing

The first clause and bullet of Schedule D as amended
by Amendment No. 2 is hereby deleted and replaced with the following:

(i)            All
License fees shall be based on a per payroll line basis using the same counting
algorithm as that used to calculate the pay of medical transcriptionists,
except that the

 

 

count may be taken after
the document has emerged from the Speech Recognition engine and prior to The
delivery of the document to a medical editor. A payroll line is defined as 65
black & white characters, defined as ASCII 0-126, within the unformatted
document. This includes a maximum of two consecutive spaces from and after
December 1, 2002, the license fees for the Licensed Product will be as follows:

·                  Service
Bureau Service including Correction Services:

·                  For
2003, the lines fee will be free of charge under the express condition that
MedQuist, related to providing Service Bureau Services with Correction
Services, achieves its forecast of [***] going through its New Transcription
Platform (“NTP”) using automated speech recognition (“ASK”). If MedQuist does
not meet its forecast, then MedQuist will pay a penalty fee of [***]. Payment
will be made at end of the year 2003.

·                  For
2004 the same is valid as in 2003. The target for 2004 is an annual run rate of
[***] to be reached no later than in the month of December 2004.  If this amount is not met, MedQuist will pay
Philips at the end of 2004 the amount of [***].

·                  If
in 2003 or in 2004, MedQuist does not meet its forecasted lines, then right of
first refusal as said in section 2 of Amendment No. 1 and related to Service
Bureau Service including Correction Services, will be cancelled.

·                  For
2005 and thereafter, a line fee of [***] is agreed for all lines.

·                  The
foregoing is subject to the Licensed Product scaling and functioning as part of
the NTP in a commercially viable manner at the volume levels set forth in the
above contemplated forecasts, if scaling issues inhibit MedQuist’s ability to achieve
the forecasts, the parties will negotiate in good faith to reach a mutually acceptable
compromise.

In addition, Schedule D is amended by adding the following:

·                  MedQuist
will pay [***] to incorporate the features in Appendix A into SpeechMagic V6.0,
which is the next major release of SpeechMagic.  Payment is to be made in installments in 2003
based on and subject to achieving the mutually agreed upon milestones set forth
on Appendix B.

·                  From
the date PSP delivers a commercially released product to MedQuist, MedQuist
will get a 1-year exclusivity in the North American market for the use of SpeechMagic
V6.0.

 ***  Confidential
material which has been omitted and filed separately with the Securities and Exchange
Commission 

 2
 

 

 

·                  On
a monthly basis, MedQuist will continue to pay separately for Philips’ a
consulting services.

·                  Philips
is responsible for maintenance and support SpeechMagic.

·                  Subject
to applicable law, rules and regulations, including, without limitation, HIPAA.
MedQuist will continue to supply voice and text files to Philips during 2003
and 2004.

Except as amended
by this Amendment No. 3, the Agreement shall remain in full force and affect
including, without limitation, the “bullets” in Amendment No. 2 describing “ASP
with Speech Recognition” and “In house business licenses.”

	
  PHILIPS SPEECH PROCESSING GmbH

  	
   

  	
  MedQuist Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ M.H. Wassink

  	
   

  	
   

  	
  By:

  	
  /s/ Ethan H. Cohen

  	
   

  
	
  Name:

  	
  M.H. Wassink

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
  Managing Director

  	
   

  	
  Title:

  	
   

  
								

 

 3
 

 

 

APPENDIX
A

 

	
  #

  	
   

  	
  Feature

  
	
  1

  	
   

  	
  Wrong speaker detection

  
	
  2

  	
   

  	
  Show occurrences of UGIs (unknown grammar items)

  
	
  3

  	
   

  	
  Fast job propagation in Context Adaptation Server

  
	
  4

  	
   

  	
  The same ‘tagging –This phrase would be tagged for
  adaptation

  
	
  5

  	
   

  	
  Provide enumeration tag

  
	
  6

  	
   

  	
  Context Upgrade

  
	
  7

  	
   

  	
  Increase number of users in one cluster
  (4,000-12,000 users)

  
	
  9

  	
   

  	
  Improvement stability, reliability

  
	
  12

  	
   

  	
  Support of subheadings (study only)*

  
	
  13

  	
   

  	
  On-going maintenance & consulting (MedQuist)

  
	
   

  	
   

  	
  Total

  

 

* PSP and MedQuist may mutually agree to substitute
this feature with a different one.

Note:  Feature
numbers are not consecutive as they are derived from an earlier list provided
by PSP.

 4
 

 

 

APPENDIX
B

The following is the schedule for delivery milestones
for SMV6.0.

	
  Ml 29/8 2003: Functional
  Spec:

  	
   

  	
  deliverable: Functional Spec Document

  
	
   

  	
   

  	
   

  
	
  M2 26/9 2003:
  Technical Spec:

  	
   

  	
  deliverable: Technical Spec Document

  
	
   

  	
   

  	
   

  
	
  M3 22/12 2003;
  Alfa version

  	
   

  	
  deliverable: the Alfa version software

  

 

Payment shall be
made as follows upon completion of each milestone:

[***]

[***]

[***]

 *** 
Confidential material which has been omitted and filed separately with
the Securities and Exchange Commission 

 

 5Exhibit
10.26.4

CONFIDENTIAL PORTIONS OF THIS DOCUMENT

HAVE BEEN REDAcTED AND FILED SEPARATELY 

WITH THE SECURITIES AND EXCHANGE COMMISSION

AMENDMENT
NO. 4 TO LICENSING AGREEMENT

This Amendment No. 4 (“Amendment No. 4”) to Licensing
Agreement is made as of September 1, 2004, by and between MedQuist Inc. (“MedQuist”),
a New Jersey corporation with its principal place of business at 1000 Bishops Gate Blvd.,
Suite 300, Mount Laurel, NJ USA 08054, acting on its own behalf and on behalf
of its wholly owned subsidiaries (direct and indirect) and Philips Speech
Processing GmbH (“Philips”), an Austrian corporation, with its registered place
of business at Trieslerstrasse 64, 1101 Vienna, Austria (MedQuist and Philips,
each a “Party” and, collectively, the “Parties”).

WITNESSETH

WHEREAS, the Parties entered into a Licensing
Agreement, dated as of May 22, 2000, as amended by Amendment No. 1 dated as of
January 1, 2002, Amendment No 2 dated as of December 10, 2002 and Amendment No.
3 of dated as of August 10, 2003 (as so amended, the “Licensing Agreement”)
relating to the integration and use of certain Philips speech recognition
technology into MedQuist business;
and

WHEREAS, the Parties desire to amend the Licensing
Agreement as set forth herein:

NOW, THEREFORE, in consideration of the mutual
promises contained herein, the Parties agree to amend the terms and condition
of the Licensing Agreement as follows:

1.             Amendments
to Section 1. - Definitions.

i.              Unless otherwise defined in this Amendment No. 4, capitalized terms used in
this Amendment No. 4 shall
have the meanings given to them in the Licensing Agreement.

ii.             The term “Licensed
Product,” as defined in Section 1.13 of the Licensing Agreement, shall be
amended by deleting the Term “SpeechMagic 4.0” and replacing it with “SpeechMagic
6.0”.

2.             Amendments
to Section 4. - Pricing (and to Schedule D).

i.              Section 4.1 of the
Licensing Agreement is amended by adding the following at the end thereof:

From and after September 1, 2004, the license fees for
the Licenses Product payable by MedQuist to Philips shall be as set forth in
Schedule D (the “Fees”) attached to this Amendment No. 4. In consideration of
Philips delivery to MedQuist of the Licensed Product (i.e., SpeechMagic 6.0)
and the other promises set forth herein MedQuist shall pay to Philips, within
30 days after the execution

 

 

of Amendment No. 4, [***] as a pre-payment for future
License Fees for the Licensed Product. 
Thereafter, any amounts due as per the statements to be delivered to
Philips pursuant to Section 4.2 of the Licensing Agreement shall be credited
against such pie-payment until the amount of the pre-payment equals [***].  All License Fees prior to September 1, 2004
shall be as set forth in Schedule D of the Licensing Agreement as in effect prior
to the date of this Amendment No. 4.

3.             Delivery
of SpeechMagic 6.0.; Exclusivity.

i.              Philips shall
deliver the Licensed Product (i.e., SpeechMagic Version 6.0) to MedQuist
subject to all of the terms and conditions of the Licensing Agreement.  The Licensed Product shall satisfy the final
functional specifications and technical specifications previously delivered in
writing to MedQuist by Philips pursuant to the requirements of Amendment No. 3,
and shall also include the additional features set forth in Appendix A of
Amendment No. 3, gender recognition and the crossword recognizer.  MedQuist shall be entitled to continued
exclusive use of the Licensed Product in North America pursuant to Section 2.1
of the Licensing Agreement through 2005 and thereafter for successive one (1)
year periods as long as it pays (including pre-paid fees) the cumulative
minimum License Fees to Philips as of the dates indicated below:

	
  Year

  	
   

  	
  Minimum Cumulative License Fees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2004

  	
   

  	
  [***]

  	
   

  
	
  2005

  	
   

  	
  [***]

  	
   

  
	
  2006

  	
   

  	
  [***]

  	
   

  
	
  2007

  	
   

  	
  [***]

  	
   

  
	
  2008

  	
   

  	
  [***]

  	
   

  

 

If the cumulative License Fees incurred and paid by
MedQuist by December 20th of any given
year set forth above fail
to meet the minimum cumulative License Fee amount due by such time, MedQuist can make up this difference
through the purchase of prepaid
licenses.

It is hereby agreed that the PSP’s line fees to MedQuist are as follows:

(1)           [***] for all lines in 2004.

(2)           [***]  per line
for the first [***]  processed starting in 2005.

(3)           [***]  per line for all lines processed after the first
[***]  up to
[***] .

(4)           [***]  per
line for all lines processed after the first [***] .

MedQuist does
NOT pay line fete for evaluation lines since these are not delivered
to the client.

 ***   Confidential material which has been omitted
and filed separately with the Securities and Exchange Commission

 2
 

 

 

4.             Generally

Except as amended by this Amendment No. 4, the
Licensing Agreement shall remain in full force and affect, unamended hereby.

	
  PHILIPS SPEECH PROCESSING
  GmbH

  	
  MedQuest Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ M. Wassink

  	
   

  	
  By:

  	
  /s/ Gregory M. Sebasky

  	
   

  
	
  Name:

  	
  M. Wassink

  	
  Name:

  	
  Gregory M. Sebasky

  
	
  Title:

  	
  Managing
  Director

  	
  Title:

  	
  President

  
						

 3

 

 

SCHEDULE
D

Pricing and Fees

Amendment No. 4

From and after September 1, 2004:

·                   All License fees shall be based on a per payroll
line basis using the same
counting algorithm as that used to calculate
the pay of medical
transcriptionists that are paid by the line, except that the count may be taken
after the document has emerged
from the Speech Recognition engine and prior to the delivery of the document to a medical editor. 
A payroll line is defined as
sixty-five black
& white characters, defined as
ASCII codes 0-255, within the unformatted
document.  This includes a maximum of two consecutive
spaces or tabs.  This count
includes heading symbols (e.g. <(1234/> equals 8
characters), but
it excludes tags (e.g., </red-s/>
equals 0 characters).  The count does not include any characters in the
header, footer or cc: lists, nor does it include any
ADT data. (MedQuist reserves the right
to limit
the payroll count
to ASCII’ codes 0 – 126 so long as it also places this
restriction
on its Medical Transcriptionists.)
The license
fees for the Licensed
Product will be as follows:

·                  Service Bureau
Service including Correction Services:

·                  For 2004, the lines Fee will be free of charge
under the express condition that
MedQuist, related
to providing Service Bureau Services with Correction Services, achieves
an annual run rate of [***] (inclusive
of evaluation
lines) during any month m 2004 and in no event
later than December 31, 2004.  If this amount is not met, MedQuist will pay Philips at the
end of 2004 the amount of [***] .

·                  For 2005 and thereafter, a line fee of [***]  is agreed for all lines; provided, however, the
line Fee shall be [***]  until such time as the entire amount of the pre-payment
is satisfied in full.

·                  The foregoing is
subject to the Licensed Product scaling and
functioning as part of the NTP
in a commercially viable manner
at the volume levels set forth
in the above contemplated forecasts.  If
scaling issues inhibit MedQuist’s
ability to achieve the forecasts, the parties will negotiate in good faith to
reach a mutually acceptable compromise. (Due to the delay of the delivery of 6.0 SM, MedQuist has already encountered some
scalability issues that have delayed the rollout
of ASR.  Although MedQuist is not
requesting a change in the [***] target at this time, this may
be an issue if we find that this
delay prevents MedQuist from
achieving its target for 2004.)

·                  ASP with Speech
Recognition:

·                  For 2004 the line fee will be [***] per line.  Starting in 2005, MedQuist will include these
line counts
in the calculations for Service
Bureau Service including Correction Services. 
Accordingly, starting in 2005 the line fees for ASP with

 ***   Confidential material which has been omitted
and filed separately with the Securities and Exchange Commission

 

 

Speech Recognition will be based on the tiers noted in Section
3i, and these lines will contribute towards achieving the targets in Section 3i.

·                  MedQuist has the
right to provide promotional pricing to any client for up to 90 days for ASP with Speech Recognition
services.  During this time, MedQuist will
not be subject to paying Philips a minimum line rate.  Instead, for clients receiving promotional pricing,
MedQuist will pay Philips [***] of the revenues that it collects as a result of ASP with Speech
Recognition.  The promotional period for any specific client should not exceed 90-days without Phillips’ approval.

·                  “In house
licenses business”:

Philips and MedQuist are currently negotiating
a separate agreement relating to the licensing of SpeechQ for Radiology, which
agreement shall govern and control
the terms of such relationship.

In addition:

·                  On a monthly
basis, MedQuist will pay separately for
Philips’s consulting services at a rate of [***] per hour. hi connection
with Philips obligations under Section 6.3 of the
Licensing Agreement, Philips will make a good faith effort to provide any future enhancements
requested by MedQuist so long as such requests
are reasonable.

·                  Philips shall
continue to
be responsible for maintenance and support of the Licensed
Product through 2005 and, thereafter,
so long as MedQuist
meets the minimum
Fees set forth in Section 3 of Amendment
No. 4. In addition
to Philips obligations with
respect to new releases under the Licensing Agreement, if Philips releases a new version
of SpeechMagic, Philips will ensure that MedQuist can migrate to the new release without a major disruption to MedQuist’s operations.

·                  Subject to applicable laws,
rules and regulations, including,
without limitation, HIPAA, MedQuist will continue to supply voice and text files to
Philips until the grant of the license
hereunder expires.

 ***   Confidential material which has been omitted
and filed separately with the Securities and Exchange Commission

 

 5

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