Document:

Exhibit 10.24 

July 29, 2004

MedQuist Inc.

Steve Rusckowski

Chief Executive Officer

1000 Bishops Gate Blvd.

Suite 300

Mt. Laurel, NJ  08054-4632

Dear Steve:

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

PHASE
I

I.              SCOPE OF WORK:

1.                                       Effective
July 30, 2004 Nightingale Will Assign Howard S. Hoffman To Assume The Position
Of Interim Chief Executive Officer of MedQuist For A Period Of Three
Months.  While Mr. Hoffmann Will Devote
The Vast Majority Of His Time During This Period To Medquist.  You Are Aware Of And Acknowledge That Mr.
Hoffmann Has Committed Up To One Day Per Week Over The Next Six Weeks On
Another Non-Conflicting Nightingale Engagement. 
In Addition, Mr. Hoffmann Will Be Out On Vacation On August 13 And On
August 27.  He Will, Of Course, Make
Every Effort To Ensure That The Work Is Properly Delegated And Proceeds
Smoothly During His Absence.

PHASE
II

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

II.            discussion

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

 

MedQuist Engagement
Letter.max

 

 

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

III.           cost estimate

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

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

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

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

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

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

IV.           advance deposit

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

 

 

V.            performance fees

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

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

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

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

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

VI.           INDEMNIFICATION

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

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

VII.         confidentiality of client information

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

 

 

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

VIII.        advertising

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

IX.           caveat

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

*  * 
*  *  * 
*  *  * 
*  *

 

 

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

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

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

	
  

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Howard S.
  Hoffman

  	
   

  
	
   

  	
   

  
	
   

  	
  Howard S.
  Hoffman

  
	
   

  	
  Managing Partner

  

 

READ, UNDERSTOOD AND AGREED TO BY:

MedQuist Inc.

	
  By:

  	
       /s/ Stephen H.
  Rusckowski

  	
   

  
	
   

  	
   

  
	
  Title:

  	
           CEO

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
           July
  30, 2004

  	
   

  
				

 

 

 

EXHIBIT
I

NIGHTINGALE
& ASSOCIATES, LLC

COMPENSATION
AND FEE ARRANGEMENTS

I.              professional time fees and expenses

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

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

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

II.            CONTINGENT
peRfORMANCe fees

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

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

 

 

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

III.           other engagement terms and conditions

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

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

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

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

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

*  * 
*  *  * 
*  *  * 
*  *

 

 

EXHIBIT
II

RELEASE
AND INDEMNIFICATION

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

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

	
  Dated: July 

  	
   

  	
  , 2004

  
	
   

  
	
  MedQuist Inc.

  
	
   

  
	
    /s/
  Stephen H. Rusckowski

  	
   

  
	
  By

  
	
   

  
	
    STEPHEN
  H. RUSCKOWSKI

  	
   

  
	
  Print Name

  
	
   

  
	
         CEO

  	
   

  
	
  TitleExhibit 10.24.1

December 16, 2004

Mr. Gregory M. Sebasky

President

MedQuist Inc.

1000 Bishops Gate Blvd.

Suite 300

Mt. Laurel, NJ  08054-4632

Dear Greg:

In response to various discussions, Nightingale &
Associates, LLC (“Nightingale”) has been asked to submit this proposed
Amendment to our Engagement Letter with MedQuist Inc. (“MedQuist” or the “Company”)
dated July 29, 2004.  This Amendment
describes our understanding of the scope of work of a proposed Phase II
assignment as well as provides revisions to the cost structure for the
additional work.  All other terms and
conditions for the retention of Nightingale, as detailed in the July 29, 2004
Engagement Letter, including but not limited to the Release and Indemnification
agreement, will remain in force and effect.  It is our continued understanding that
Nightingale will be engaged by MedQuist and will report to the Company’s Board
of Directors.

I.                                         SCOPE
OF WORK:

Effective November 1, 2004 Nightingale will extend the
term of Howard Hoffmann’s role as MedQuist’s Interim Chief Executive Officer on
a month to month basis for a period of up to six months.  Ongoing advisory work, if any, following
termination of Mr. Hoffmann’s role as Interim Chief Executive Officer will be
subject to negotiation of a mutually agreeable Scope of Work and Fee Structure.

II.                                     COST
ESTIMATE:

Nightingale will no longer invoice Mr. Hoffmann’s time
on an hourly basis nor will there be a Performance Fee associated with Phase II
work.  Instead, Nightingale’s fees for
Mr. Hoffmann’s role as Interim Chief Executive Officer will be a fixed rate of
$200,000 per month payable in arrears.  If
the Mr. Hoffmann’s role is terminated during the course of a month, Nightingale’s
fees for the final month will be prorated based on the actual number of calendar
days elapsed during the month up to and including Mr. Hoffmann’s final day of
work.

 

 

Nightingale will continue to make available the
services of Mr. Eugene A. Reilly to perform selected services in connection
with the Company’s remediation activities.  Mr. Reilly’s professional time fee services
have been and will continue to be invoiced to MedQuist at his prevailing hourly
rate of $350/hour.  Per your request,
attached is an analysis of the Mr. Reilly’s time spent on the project to date
as well as a recap of the tasks performed to date.  Mr. Reilly’s ongoing responsibilities include
completion of the Work Type Cleanup in LINKS as well as the Account Number
Rollup analysis.  Both of these projects
should be completed in January 2005.  Ongoing
work beyond that time will be a function of available, qualified resources
within the Company and the nature of ongoing critical analysis requirements, if
any.  Should it become necessary to
utilize the services of additional Nightingale personnel on the project, it is
agreed that Nightingale will invoice professional time fees for such personnel
at their prevailing hourly rates.  Nightingale
agrees that it will confer with the Board of Directors before adding additional
personnel to the project team.

In addition to professional time fees, out-of-pocket
expenses are billed at cost, and generally range from 10% to 20% of
professional time fees, depending on the amount of travel involved.  Out-of-pocket expenses consist primarily of
transportation, meats, lodging, telephone, specifically assignable secretarial
and office assistance, and report production.

III.                                 ADVANCE
DEPOSIT

Nightingale requires an Advance Deposit for all
assignments of the type described above.  Given this situation, Nightingale will not
require an increase of its existing Advance Deposit of $75,000 that has been
paid by the Company.  At the completion
of the project and at the direction of the Company, Nightingale will either
apply the Advance Deposit to any outstanding invoices or, if there are no
unpaid invoices owing to Nightingale, promptly return the Deposit to the
Company.

*  * 
*  *  * 
*  *  * 
*  *  *

 2
 

 

 

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

We look forward to continue working with you and the
Company.

	
  

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Howard S.
  Hoffman

  	
   

  
	
   

  	
   

  
	
   

  	
  Howard S.
  Hoffman

  

 

READ, UNDERSTOOD AND AGREED TO BY:

MedQuist Inc.

	
  By:

  	
      /s/ Gregory M. Sebasky

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
      President

  	
   

  
	
   

  	
   

  
	
  Date:

  	
      1-7-2005

  	
   

  
				

 

 3

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