Document:

exv10w34

CONFIDENTIAL
PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND FILED SEPARATELY
WITH
THE SECURITIES AND EXCHANGE COMMISSION

Exhibit 10.34

AMENDMENT NO. 7 TO LICENSING AGREEMENT

     THIS AMENDMENT NO. 7 TO LICENSING AGREEMENT (this “Amendment No. 7”), by and between MedQuist
Inc. (“MedQuist”), acting on behalf of its wholly owned subsidiaries (direct and indirect), Nuance
Communications, Inc. (“Nuance”) successor-in-interest to Philips Speech Recognition Systems GmbH
(“PSP”), is dated November 10, 2009 (the “Amendment Effective Date”). Capitalized terms not
otherwise defined in this Amendment shall have the meanings given to them in the Agreement (as that
term is defined below).

BACKGROUND

     WHEREAS, MedQuist and PSP entered into that certain Licensing Agreement dated May 22, 2000 (as
amended by Amendment No.1 to Licensing Agreement dated January 1, 2002, Amendment No. 2 to
Licensing Agreement dated December 10, 2002, Amendment No.3 to Licensing Agreement dated August 10,
2003, Amendment 4 to Licensing Agreement dated September 1, 2004, Amendment No.5 to Licensing
Agreement dated December 30, 2005 and Amendment No.6 dated January 1, 2007 (hereinafter referred to
as the “Agreement’);

     WHEREAS, Nuance, as successor in interest to PSP is assigned the rights and obligations of the
Agreement; and

     WHEREAS, the parties desire to amend the Agreement as set forth herein.

AGREEMENT

     NOW THEREFORE, in consideration of the mutual agreements and covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, it is mutually agreed and covenanted by and between the parties to this Amendment
No.7, as follows:

	1.	 	Amendment to Section 1. — Definitions.

	 	i)	 	Unless otherwise defined in this Amendment No. 7, capitalized terms used in
this Amendment No. 7 shall have the meanings given to them in the Agreement.

	2.	 	Section 7.1 of the Agreement is stricken in entirety and restated as follows:
	 
	 	 	“7.1 Initial Term and Renewal Terms. Unless earlier terminated pursuant to this Section 7,
this Agreement shall, when signed by duly authorized representatives of both parties, remain
valid as follows:
	 
	 	 	7.1.1 This Agreement shall become effective on the Effective Date and continue until June
30, 2015 (the “Initial Term”).
	 
	 	 	7.1.2 Following the Initial Term, and subject to Section 7.1.3 and 7.1.4, the Agreement may
be renewed, for two (2) successive terms of five (5) years each (each a “Renewal Term”). To
renew the Agreement for each Renewal Term, MedQuist must indicate its intent to renew the
Agreement by providing a written notice to Nuance, to be provided no less than six (6)
months prior to the end of the then-current Initial Term or Renewal Term (each a “Notice
Period”).
	 
	 	 	7.1.3 The parties agree that the same terms and conditions of this Agreement in effect at
the end of the then-current Initial Term or Renewal Term, will apply upon a renewal of this
Agreement as provided herein, except for the pricing (ASR Line Rate) for the Licensed
Product and any Services, which new pricing must be determined and agreed to in writing by
the parties, based upon Nuance’s standard market prices for the Licensed Product Fees and
Services, in effect at the end of the then-current Initial Term or Renewal Term.
	 
	 	 	7.1.4 The parties shall negotiate new pricing upon receipt of MedQuist’s written notice by
Nuance pursuant to Section 7.1.2. In the event that, within thirty (30) days following
MedQuist providing Nuance with

 

 

	 	 	written notice of MedQuist’s intent to renew pursuant to Section 7.1.2, (i) Nuance does not
respond to such notice, or (ii) the parties are unable to agree in writing to new pricing as
per Section 7.1.3 for the Licensed Product and any Services for the proposed Renewal Term,
this Agreement will terminate on the date that is two (2) years from the end of the then
current Initial Term, or Renewal Term (the “Termination Period”). During the Termination
Period, all terms and conditions of this Agreement in effect at the end of the then-current
Initial Term or Renewal Term, will continue to apply.”
	 
	3.	 	Section 7.2.3 is stricken in its entirety.
	 
	4.	 	Facsimile Signature; Counterparts. This Amendment may be executed by facsimile and in two or
more counterparts, each of which shall constitute one and the same instrument.
	 
	5.	 	Except as amended by this Amendment No. 7, the Agreement shall continue in full force and
effect.

          IN WITNESS WHEREOF, MedQuist and Nuance have executed this Amendment No. 7 as of the Amendment
Effective Date by their duly authorized representatives.

SO AGREED AND SIGNED:

	 	 	 	 	 	 	 

	MEDQUIST INC.	 	NUANCE COMMUNICATIONS, INC.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Peter Masanotti
	 	By:
	 	/s/ Richard D. Booth
	 

	 	 
	 	 	 	 
	Name:

	 	Peter Masanotti
	 	Name:
	 	Richard D. Booth
	Title:

	 	President & CEO
	 	Title:
	 	Vice President, Finance
	 
	 	 	 	 	 	 
	Date:

	 	November 10, 2009
	 	Date:
	 	November 10, 2009

2

 

CONFIDENTIAL PORTIONS OF THIS DOCUMENT

HAVE BEEN REDACTED AND FILED SEPARATELY

WITH THE SECURITIES AND EXCHANGE COMMISSION

AMENDMENT NO. 6 TO LICENSING AGREEMENT

          THIS AMENDMENT NO. 6 TO LICENSING AGREEMENT (this “Amendment”), by and between MedQuist Inc.
(“MedQuist”), acting on behalf of its wholly owned subsidiaries (direct and indirect), and Philips
Speech Recognition Systems GmbH (“PSP”), is effective as of January 1, 2007 (the “Effective Date”).
Capitalized terms not otherwise defined in this Amendment shall have the meanings given to them in
the Agreement (as that term is defined below).

BACKGROUND

          WHEREAS, MedQuist and PSP entered into that certain Licensing Agreement dated as of May 22,
2000 (as amended by that certain Amendment No. 1 to Licensing Agreement dated as of January 1,
2002, that certain Amendment No. 2 to Licensing Agreement dated as of December 10, 2002 (“Amendment
No. 2”), that certain Amendment No. 3 to Licensing Agreement dated as of August 10, 2003, that
certain Amendment No. 4 to Licensing Agreement dated as of September 1, 2004 (“Amendment No. 4”),
and that certain Amendment No. 5 to Licensing Agreement dated as of December 30, 2005 (“Amendment
No. 5”)

          (as so amended, the “Agreement”)); and

          WHEREAS, the parties desire to amend the Agreement as set forth herein.

AGREEMENT

          NOW THEREFORE, in consideration of the mutual agreements and covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, it is mutually agreed and covenanted by and between the parties to this Amendment, as
follows:

Article I

Amendment to Licensing Agreement

Paragraph 1.1. The following paragraph of Section 2.1 of the Agreement shall be
deleted in its entirety:

“During the Term, as long as MedQuist is full compliance with its obligations
hereunder, Philips undertakes not to grant a license of the Licensed Product and
Contexts, or similar products, to a competitor of MedQuist providing outsourced
medical transcription services in the USA. However, Philips explicitly reserves the
right to license the Licensed Product, Contexts and similar products to others, such
as, but not limited to distributors and third party endusers who wish to use such
products (including SpeechMagic 3.0 and 3.1) for non-outsourced medical
transcription or other services. For purposes of this Agreement, the term
“outsourced” means that the healthcare provider utilizes medical transcriptionists
that are not engaged or employed by the healthcare provider nor his hospital
organization (i.e., if a hospital records department or a doctor uses their own
employees or independent contractors or so-called statutory employees for their own
transcriptions and the transcription service is performed with technology owned by
or licensed to the hospital or doctor, the service is not outsourced).”

Paragraph 1.2. The following sentence of Section 2 of Amendment No. 1 shall be
deleted in its entirety:

 

 

“The words “in the USA” in the first sentence of the second paragraph of Section 2.1
of the Original Licensing Agreement are hereby deleted and replaced with “in North
America. With respect to the Service Bureau Services, Philips hereby grants to
MedQuist a right of first refusal for any sales opportunity that Philips has in
North America to sell the Licensed Product to a third party for Service Bureau
Services.”

Paragraph 1.3. The following sentences of Section 3 of Amendment No. 4 shall be
deleted in their entirety:

“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 so 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 an make up this difference through the purchase of
prepaid licenses.”

Paragraph 1.4. Section 6.1 of the Agreement shall be amended and restated in its
entirety as follows:

“In order that the relationship contemplated by this agreement shall be mutually
advantageous, and in recognition of the particular expertise and commitment
necessary to properly use and support the Licensed Product, MedQuist agrees during
the Term to comply with the following requirements: MedQuist shall (i) conduct
business sin a manner that does not reflect negatively at any time on the good name,
goodwill and reputation of Philips; (ii) avoid deceptive, misleading or unethical
practices that are or might be determined to Philips, its product or the public; and
(iii) make no false or misleading representations with regard to Philips or its
products. Furthermore, during the Term, MedQuist shall not use a competing Product
(defined below) in production use to replace the Licensed Product in the DocQment
Enterprise Platform unless MedQuist complies with the Philips Notification and
Response Process (defined below). “Competing Product” means a third party product
competing with the Licensed Product; provided that the Licensed Product is
competitive in technological performance and commercial terms and compared on a
like-for-like basis, in light of current industry standards, with such third party
product. “Philips Notification and Response Process” means that prior to MedQuist
replacing the Licensed Product in the DocQment Enterprise Platform with production
use of a Competing Product, MedQuist shall inform Phillips in writing of its
intentions with reasonably detailed reasons for such determination and shall give
Phillips a minimum period of three (3) months from such notice to submit a
technologically and commercially competitive offer before replacing the Licensed
Product.”

Paragraph 1.5. Effective as of the Effective Date, Schedule D to the
Agreement shall be of no further force or effect. Notwithstanding anything in the
Agreement to the contrary (including without limitation Sections 1 and 2 of
Amendment No. 5), MedQuist shall, until the termination or
expiration of the Agreement, pay PSP license fees for use of the Licensed Product in
accordance with the following table:

 

			
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	 	 	ASR Line rate
	ASR Lines in calendar	 	applicable to all
	month (“Subject Lines”)	 	Subject Lines
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]
	[***]
	 	[***]

For purposes of this Paragraph 1.5, the term “ASR Lines” shall be defined as
the aggregate number of ASR lines processed by the Licensed Product as reported by
MedQuist’s DocQment Enterprise Platform. MedQuist shall provide PSP with no less
than fifteen (15) days prior written notice of any change in the coursing algorithms
or setting used to calculate ASR Lines.

For the avoidance of doubt, the following are illustrations of the license fees
payable pursuant to the foregoing table:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	License fees payable to
	 	 	 	 	 	 	Applicable ASR Line	 	PSP for use of use of the
	Calendar month	 	Subject Lines	 	rate	 	Licensed Product
	3/1/07 to 3/31/07
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	6/1/07 to 6/30/07
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	10/1/07 to 10/31/07
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 

PSP shall be responsible for the maintenance and support of the Licensed
Product until the termination or expiration of the Agreement. In addition to PSP’s
obligations with respect to new releases under the Agreement, if PSP releases a new
version of SpeechMagic, PSP 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 PSP until the grant
of the license under the Agreement expires.

Article II

MISCELLANEOUS

Paragraph 2.1. Entire Agreement. This Amendment contains the entire agreement and
understanding between the parties with respect to the subject matter of provisions
of the Agreement amended hereby.

Paragraph 2.2. Full Force and Effect. Except as modified by this Agreement, the
Agreement shall remain in full force and effect unmodified. To the extent the terms
of the Agreement are inconsistent with the terms of this Amendment, the terms of
this Amendment shall control.

 

			
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Paragraph 2.3. No Waiver. Except as specifically set forth herein, the execution,
delivery and performance of this Agreement shall not operate as a waiver of any
right, power of remedy of the parties hereto under the Agreement and the related
agreements executed in connection therewith or constitute a waiver of any provision
thereof,

Paragraph 2.4. Governing Law. The Amendment shall be governed by the laws of the
State of New York.

Paragraph 2.5. Facsimile Signature; Counterparts. This Agreement may be executed by
facsimile and in two or more counterparts, each of which shall constitute one and
the same instrument.

[The remainder of this page was intentionally left blank]

4

 

          IN WITNESS WHEREOF, MedQuist and PSP have executed this Amendment as of the dates set forth
below by their duly authorized representatives.

	 	 	 	 	 	 	 
	MEDQUIST, INC.	 	PHILIPS SPEECH RECOGNITION SYSTEMS GMBH
	 
	 	 	 	 	 	 
	By:

	 	/s/ Linda L.E. Reino
	 	By:
	 	/s/ illegible
	 

	 	 
	 	 	 	 
	Name:

	 	Linda L.E. Reino
	 	Name:	 	 
	Title:

	 	C.O.O.
	 	Title:
	 	Managing Director
	 
	 	 	 	 	 	 
	February 13, 2007	 	January 31, 2007

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CONFIDENTIAL PORTIONS OF THIS DOCUMENT

HAVE BEEN REDACTED AND FILED SEPARATELY

WITH THE SECURITIES AND EXCHANGE COMMISSION

AMENDMENT NO. 5 TO LICENSING AGREEMENT

          This Amendment No. 5 (“Amendment No. 5”) to Licensing Agreement is made as of December 30,
2005, by and between MedQuist Transcription, Ltd. (“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 Recognition Systems GmbH (“Philips”), and Austrian corporation, with its registered
place of business at Triesterstrasse 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,
Amendment No. 3 dated as of August 10, 2003, and Amendment No. 4 dated as of September 1, 2004 (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 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 January 1, 2006, the license fees for the Licenses Product payable by MedQuist
to Philips shall be as set forth in Schedule D (the “Fees”) attached to Amendment No. 4, as amended
by Amendment No. 5. 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, in the
same day as the execution of Amendment No. 5, US$1 million as a prepayment for future License Fees
for the Licensed Product Thereafter, any amounts due as per the statements to be delivered to
Philips pursuant to Section 42 of the Licensing Agreement shall be credited against such
pre-payment until the amount of the prepayment equals $0 All License Fees prior to January 1,2006
shall be as set forth in Schedule D of the License Agreement as in effect prior to the date of the
Amendment No. 5.

          2) It is hereby agreed that the Philips’ line fees to MedQuist, commencing January 1, 2006
shall be as follows:

          a) [***] per line in 2006, until the cumulative lines processed exceeds [***].

          b) [***] per line for all lines processed after the first [***]

          Consistent with this change, the Parties agree and acknowledge that the following bullet point
under Schedule D to Amendment No. 4 under the heading “Service Bureau Service including Correction
Services”:

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
pie-payment is satisfied in full.

 

			
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is removed in its entirety, and replaced with the following:

For 2006 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.

3) Generally

          Except as amended by this Amendment No 5, the Licensing Agreement shall remain in full force
and effect, unamended hereby.

          IN WITNESS WHEREOF, the Parties have caused this Amendment No. 5 to be duty executed by their
authorized representatives.

	 	 	 	 	 	 	 
	PHILIPS SPEECH RECOGNITION SYSTEMS	 	MedQuist Transcriptions Ltd.
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 
	Name:

	 	Gerald Strausberger
	 	Name	 	 
	Title:

	 	CFO
	 	Title:	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Robert E. Thornton	 	 	 	 
	 

	 	 	 	 	 	 
	Name:

	 	Robert E. Thornton	 	 	 	 
	Title:

	 	Commercial Director	 	 	 	 

 

			
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2

 

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

 

			
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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.

	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:	 	 
	 

	 	 
	 	 	 	 
	Name:

	 	M. Wassink
	 	Name:
	 	Gregory M. Sebasky
	Title:

	 	Managing Director
	 	Title:
	 	President

 

			
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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 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”:

 

			
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	 	 	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.

 

			
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omitted and filed separately with the Securities and Exchange Commission

4

 

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.

 

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

 

 

	 	•	 	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.
	 
	 	•	 	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:	 	 
	 

	 	 	 	 	 	 
	Name:

	 	M.H. Wassink
	 	Name:	 	 
	Title:

	 	 	 	Title:
	 	Managing Director

 

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

2

 

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.

3

 

APPENDIX B

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

	 	 	 

	M1 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

4

 

CONFIDENTIAL PORTIONS OF THIS DOCUMENT

HAVE BEEN REDACTED AND FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION

AMENDMENT NO. 2 TO LICENSING AGREEMENT

          This Amendment No. 2 (“Amendment No. 2) to Licensing Agreement is made as of 2002, December
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 Computerstrasse 6,
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 of January 2002 (as 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. 2;

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

Section. Definitions.

	 	(i)	 	Unless otherwise defined in this Amendment No. 2, capitalized terms used in
this Amendment No. 2 shall have the meanings given to them in the Licensing Agreement.

The following definitions are added to Section 1 of the Licensing Agreement:

	 	(ii)	 	Service Bureau Services as defined in Amendment No. 1 will be further defined as:
	 
	 	 	 	“Service Bureau Services including Correction Services,” where the correction
activity is part of the Service and is done by MedQuist; and “ASP with Speech
Recognition,” where MedQuist does not do the Correction.
	 
	 	(iii)	 	“In-house solution” is the total software solution including Speech
Recognition software that helps customers to increase the efficiency of the document
creation process. Currently MedQuist sells XXXX and YYYYY as the in-house solution for
Radiology. As part of this Amendment No. 2, Philips shall develop an “In-house”
solution (iii) that is functionally equivalent to those products.
	 
	 	(iv)	 	“In house licenses business” is the business model where MedQuist sells and
implements the in-house solution with the integrated Licensed Product within the IT
environment of Customer.
	 
	 	(v)	 	“Transfer Price” is the price for a product or service to be paid by MedQuist
to Philips.

Schedule D — Pricing

The first paragraph of Schedule D to Amendment No. 1 is hereby deleted and replaced
with the following:

	 	(i)	 	All License fees shall be based on a per payroll line basis. A payroll line is
defined as 65 black/white characters.
	 
	 	 	 	From and after December 1, 2002, the license fees for the Licensed Product will be as follows:

1

 

	 	•	 	Service Bureau Service including Correction Services:

	 	•	 	For 2002, the lines fee will be free of charge,
and Philips acknowledges that it shall not be entitled to payment for
the invoice of $231,000 previously submitted.
	 
	 	•	 	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
lines going through its New Transcription Platform (“NTP”) using
automated speech recognition (“ASR”).
	 
	 	•	 	If MedQuist does not meet its forecast, then
MedQuist will pay $1,056,000. Payment will be made at end of the year
2003.
	 
	 	•	 	For 2004 the same is valid as in 2003.
Therefore, if the forecast amount is not met, MedQuist will pay Philips
at the end of 2004 the amount of $3,600,000.
	 
	 	•	 	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.

	•	 	ASP with Speech Recognition:

	 	•	 	For 2003 and 2004 the line fee will be [***] per line. In 2005, the line fee
will be [***] for all lines.
	 
	 	•	 	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 50% 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 will, in cooperation with MedQuist and Philips Medical Systems, develop
a Philips in-house solution for the Radiology business based on the requirements and
specifications of MedQuist.
	 
	 	•	 	Delivery of this in-house solution is planned in Q4 2003. Upon signing of this
Agreement, MedQuist and Philips will work in good faith to establish reasonable terms
and conditions of a development agreement (“Development Agreement”) including
milestones, deliverables and other customary terms and conditions for the in-house
radiology solution and a payment schedule for any amounts due after the signing of this
Agreement.

 

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

2

 

	 	•	 	MedQuist will pay Philips $1.2M in 2003 in installments based upon the delivery
by Philips on jointly agreed milestones.
	 
	 	•	 	On signing of this Agreement, MedQuist will pay Philips 35% of that amount. The
balance shall be payable as agreed upon in the Development Agreement.
	 
	 	•	 	Until the Philips In-house solution (the replacement for [***]) is available,
the Philips Speech engine will be for free under the express condition that it is
bundled with [***]. (This special arrangement does NOT apply to any other vendor
solutions.). For every user license, MedQuist will pay upfront per quarter, the
Quarterly maintenance of $73.50 per user.
	 
	 	•	 	Upon delivery of the Philips In-house solution, MedQuist gets exclusivity for
distribution only for this solution in North America for 1 (one) year after the product
is commercially usable. The exclusivity will be reviewed annually based on business
results (meeting the forecast) in that year. If the exclusivity is cancelled within 36
months after a commercially usable product is delivered, then Philips will pay to
MedQuist (as liquidated damages for loss of exclusivity and not as a penalty) an early
termination fee equal to US $33,333.33 for each month remaining in the 36 month term
after the effective date of termination. By way of example, if Philips terminates the
exclusivity at the end of 24 months after delivery, then Philips will pay a termination
fee equal to 12 times US $33,333.33.
	 
	 	•	 	Transfer Price of the “In-house solution” needs to be agreed, and it is hereby
agreed that this will be lower than the Transfer Price of [***] including a Speech
Recognition engine.

The Fees do not include sales, use, excise and similar taxes, or the cost of shipping or insurance,
for which MedQuist is responsible. All charges for additional services shall be on commercial terms
and conditions that are reasonably acceptable to both parties.

All dollar amounts specified in this agreement are US dollars.

	 	 	 	 	 	 	 	 	 

	PHILIPS SPEECH PROCESSING GmbH	 	MedQuist Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Marcel Wassink
 

	 	By:
	 	/s/ Ethan H. Cohen
 

	 	 
	Name: Marcel Wassink	 	Name: Ethan H. Cohen	 	 
	Title: Managing Director	 	Title: EVP & CTO	 	 
	PSP SRS	 	 	 	 	 	 

 

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

3

 

AMENDMENT NO. 1 TO LICENSING AGREEMENT

          This Amendment No. 1 (“Amendment No. 1”) to Licensing Agreement is made as of January 1, 2002
by and between MedQuist Inc. (“MedQuist”), a New Jersey corporation with its principal place of
business at Five Greentree Centre, Suite 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 Computerstrasse 6,
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 (the
“Original Licensing Agreement”) relating to the integration and use of certain Philips speech
recognition technology into MedQuist’s business; and

          WHEREAS, the Parties desire to amend the Original 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. 1; and

          WHEREAS, simultaneously with, and as a condition to, entering into this Amendment No. 1, the
parties are entering into a Support Agreement (the “Support Agreement”).

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

1. Section 1. — Definitions.

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

(ii) The following definitions set forth in Section 1 of the Original Agreement are deleted: Level
2 Support and Level 3 Support.

(iii) The definition of Licensed Product set forth in Section 1 of the Original Agreement is
modified by deleting “and (ii)” and inserting, “(ii) the correction SDK and (iii)”.

(iv) The following definition shall be added to Section 1 of the Original Agreement: “Service
Bureau Services” shall mean the licensing of remote access to Licensee’s software and hardware
dictation and transcription systems (e.g., SpeechMachines).

2. Section 2. — Scope of License Grant, Ownership and Proprietary Rights.

(i) The first paragraph of Section 2.1 of the Original Licensing Agreement is deleted in its
entirety and replaced with the following:

Subject to the terms and conditions set forth in this Agreement, Philips grants to MedQuist
during the term of this Agreement: (i) a personal, non-assignable, non-transferable,
indivisible, non-exclusive (except as provided herein) license, without right to
sub-license, to use the Licensed Product in Object Code and Documentation only (except as
provided in Section 6) for MedQuist’s internal use at its sites anywhere in the world,
solely in connection with MedQuist’s network and in connection with providing Services; and
(ii) a personal, non-assignable, non-transferable, indivisible, non-exclusive (except as
provided herein) license, without right to sub-license, to use the Licensed Product in
Object Code and Documentation only (except as provided in Section 6) for use in connection
with providing Service Bureau Services anywhere in the world.

4

 

The words “in the USA” in the first sentence of the second paragraph of Section 2.1 of the Original
Licensing Agreement are hereby deleted and replaced with “in North America. With respect to the
Service Bureau Services, Philips hereby grants to MedQuist a right of first refusal for any sales
opportunity that Philips has in North America to sell the Licensed Product to a third party for
Service Bureau Services.”

3. Section 4 — Pricing.

(i) The second sentence of Section 4.1 of the Original Licensing Agreement is hereby deleted in its
entirety and replaced with the following:

From and after January 1, 2002, the license fees for the Licenses Product payable by
MedQuist to Philips are set forth in Schedule D (the “Fees”). “Fees”) attached to Amendment
No. 1. All license fees prior to January 1, 2002 shall be as set forth in Schedule D
attached to the Original Agreement.

(ii) Upon execution of this Agreement, MedQuist shall pay to Philips all amounts due and owing
under the Original License Agreement through December 31, 2001 (i.e., $US 716,000).

(iii) Section 4.5 of the Original Licensing Agreement is hereby deleted in its entirety.

4. Schedule C- Warranties, Indemnification and Limitation on Liability Provisions. Any reference to
the United States, USA or similar shall be changed to North America.

5. Schedule E — Support. Schedule E (“Support”) of the Original Licensing Agreement is hereby
deleted in its entirety. Simultaneous with the execution of this Amendment No. 1, the Parties shall
enter into an SLA Agreement in the form attached to this Amendment No. 1.

6. Software Escrow. In the event that: (i) Philips seeks to sell or transfer the Licensed Products
to a third party that is not a direct or indirect majority owned subsidiary of Koninklijke Philips
Electronics N.V. (an “affiliate”), or (ii) Philips seeks to sell or otherwise transfer all or
substantially all of its business or assets to a non-affiliate or if beneficial ownership of a
controlling interest in its capital stock is to be sold or otherwise transferred to a
non-affiliate, it shall first give MedQuist at least 60 days prior written notice and the parties
shall enter into a software escrow agreement and place the Licensed Products in escrow on
commercially reasonable terms prior to completing any such sale or transfer. MedQuist shall be
responsible for the fees to the escrow agent.

7. HIPPA Business Associate. At the request of MedQuist, Philips shall execute a business
associate, chain of trust and other confidentiality agreement to the extent reasonably required
under the terms of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).
Notwithstanding the foregoing, Philips shall not be responsible for MedQuist’s failure to comply
with HIPAA as a result of the manner in which MedQuist uses the Licensed Product.

8. Miscellaneous. The Original Licensing Agreement shall continue in full force and effect, except
for the amendments set forth in this Amendment No. 1. Reference to the Agreement in the Original
Licensing Agreement shall mean the Original Licensing Agreement as amended hereby. In the event of
any inconsistency or conflict between this Amendment No. 1 and the Original Agreement, the
provisions of this Amendment No. 1 shall govern and control. This Amendment No. 1 may be executed
in several counterparts, all of which taken together shall constitute one single agreement between
the Parties. The Parties agree to accept facsimile signatures with originals being exchanged
afterwards.

5

 

          IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to be duly executed by their
authorized representatives.

	 	 	 	 	 	 	 	 	 

	PHILIPS SPEECH PROCESSING GmbH	 	MedQuist Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Tom Stock
 

	 	By:
	 	/s/ David A. Cohen
 

	 	 
	Name: Tom Stock	 	Name: David A. Cohen	 	 
	Title: General Manager	 	Title: Chairman & CEO	 	 

6

 

SCHEDULE “D “

Pricing and Fees

From and after January 1, 2002, License fees shall be based on a per payroll line basis. A payroll
line is 65 black/white characters. MedQuist shall pay $US .024 per payroll line for the first 500
million payroll lines per calendar year and $US .01 per payroll line for all lines in excess of 500
million in that calendar year. MedQuist shall only be charged for lines produced using the Licensed
Product that are used to produce a final report billable by MedQuist to its client (e.g., MedQuist
will not be charged for testing and developing the Licensed Products or adapting a system to a
dictator). If MedQuist sends a report to a Medical Editor along with text produced by SpeechMagic
and the Medical Editor deletes this text before producing a final report billable by MedQuist,
MedQuist must still pay the License fees to PSP.

MedQuist shall pay a one time licensing fee of $US 150,000 for unlimited seat licenses for its use
of the Correction SDK, which shall be due upon execution of Amendment No. 1. After the termination
of the Agreement: (i) MedQuist and its end users of the software may continue to use installed
copies of the Correction SDK software; (ii) PSP shall no longer be obligated to support the
Correction SDK software unless the parties mutually agree upon the terms and conditions of a new
support agreement and (iii) MedQuist may not install any new copies of the Correction SDK software
unless the parties mutually agree upon the terms and conditions of a new licensing agreement for
such additional installations.

ALL CHARGES FOR ADDITIONAL SERVICES shall be on commercial terms and conditions that are reasonably
acceptable to both parties.

7

 

CONFIDENTIAL

LICENSING AGREEMENT

          This Agreement (the “Agreement”) is made as of the 22nd day of May, 2000 by and between
MedQuist Inc. (“MedQuist”), a New Jersey corporation, with its principal place of business at Five
Greentree Centre, Suite 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 Computerstrasse 6, 1101 Vienna,
Austria (MedQuist and Philips, each a “Party” and, collectively, the “Parties”).

WITNESSETH

          WHEREAS, the parties hereto have executed a Tender Offer Agreement of this even date, and this
Agreement shall have effect from and after the date the tender contemplated by the Tender Offer
Agreement is completed (the “Effective Date”);

          WHEREAS, Philips has developed certain speech recognition and processing technology and is in
the business of licensing and further developing that technology for integration into speech
enabled products and services; and WHEREAS, MedQuist is in the business of providing the Services
(as defined hereinafter); and WHEREAS, Philips has developed certain software required for the use
and continuous improvement of the Contexts (as defined below), together with a background lexicon
database to enable the recognition of words included in such database and their automated
speech-to-text transformation and MedQuist wishes to obtain a license to use such software for
MedQuist’s business; and

          WHEREAS, MedQuist and Philips desire to enter into a business relationship, whereby the
Parties intend to provide for the integration and use of certain Philips speech recognition
technology into MedQuist’s business through a cooperative effort governed by this Agreement,
subject to the terms and conditions of this Agreement.

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

Section 1.

Definitions

1.1 Words shall have their normally accepted meanings as employed in this Agreement. The terms
“herein” and “hereof”, unless specifically limited, shall have reference to the entire Agreement.
The word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the
word “includes” and “including” are not limiting and the singular includes the plural and vice
versa. The following terms shall have the described meaning.

1.2 “Agreement” shall mean this present document including, as an integral part, its appendices,
initialed or signed by the Parties and attached hereto, and any modifications and updates made from
time to time in accordance with the provisions hereof.

1.3 “Confidential Information” shall have the meaning set forth in Section 8 of this Agreement.

1.4 “Context” shall mean a specific speech recognition software module, which can be added to the
Licensed Product, containing a specialized class of Language Resources optimized for a specific
user or application group or customer (e.g. gynecologists; radiologists; Ear-Nose-Throat
specialists; etc.).

1.5 “Customer(s)” shall mean any individual or entity purchasing MedQuist’s Services.

8

 

1.6 “Derivative Works” shall have the meaning ascribed thereto in 17 U.S.C. 101 et seq.

1.7 “Documentation” shall mean all visually or electronically readable materials, in English,
developed by Philips for use in connection with the Licensed Product and all revisions thereto, and
new documentation issued to reflect changes made in the Licensed Products.

1.8 “Effective Date” shall mean the date set forth in the preamble of this Agreement.

1.9 “IP Rights” shall mean any patent, copyright, trade secret, trademark, design, and mask work,
or other intellectual property rights.

1.10 “Language Resources” shall mean the databases of words initially provided by Philips to
MedQuist which also incorporates phonetics and statistics to enable the recognition and
speech-to-text transformation of words included in such database.

1.11 “Level 1 Support” shall mean support which is provided by the internal MedQuist support unit
to the MedQuist operational unit in response to an initial phone call which identifies and
documents a Problem and includes initial responses to such internal calls, database searches for
previously reported problems, installation of Patches and Maintenance Releases and the hand off of
unresolved Problems to Level 2 Support. Level 1 Support is performed by licensees themselves.

1.12 “Level 2 Support” shall mean support that includes, to the extent possible, the recreation and
resolution of Problems reported to Philips and for which Philips shall initiate a resolution within
a response time commensurate with the severity level described in Schedule E.. This would normally
result either in a solution to the licensee by way of Patches or otherwise, or in a hand off of
unresolved problems to Level 3 Support.

1.13 “Level 3 Support” shall mean support that includes, to the extent possible, the resolution of
Problems and the provision of Patches by Philips, all in accordance with good engineering practices
and for which Philips shall initiate a resolution within a response time commensurate with the
severity level described in Schedule E.

1.14 “Licensed Product” shall mean (i) the SpeechMagic 4.0 software, in the format developed by
Philips in conjunction with which the Contexts will operate and (ii) other software tools, all as
are described in Schedule A. In case a Context is added to the Licensed Product, then the term
“Licensed Product” shall include that Context.

1.15 “Maintenance Release” shall mean any version of the Licensed Product, which includes a number
of Patches (and sometimes minor new functionality), which is recommended by Philips to be installed
by existing licensees and indicated as an increase after the decimal (e.g. 4.1, 4.2, 4.3).

1.16 “Major Release” shall mean a new version of the Licensed Product subsequent to the initial
delivery in which Philips has incorporated one or more new functions, features or new technology of
the Licensed Product developed by Philips and which provides a new capacity which the previous
releases or versions of the Licensed Product did not have, together with new or revised
Documentation which properly describes the upgraded Licensed Product and which is identified by a
change in the release designation (e.g. 5.0, 6.0, 7.0).

1.17 “Object Code” shall mean computer programs for the Licensed Product assembled or compiled in
magnetic or electronic binary form on software media, which are readable and usable by machines,
but not generally readable by humans without reverse-assembly, reverse-compiling, or reverse-
engineering the Licensed Product.

1.18 “Patches” shall mean solutions or workarounds to Problems reported by MedQuist or other
licensees to Philips via the hotline service.

1.19 “Problem(s)” shall mean any error, problem, or defect resulting from (1) incorrect functioning
of the Licensed Product, or (2) an incorrect or incomplete statement or diagram in Documentation,
in the case of each of (1) and (2), only if such error, problem or defect renders the Licensed
Products inoperable, causes the Licensed

9

 

Products to fail to meet the product description thereof (but not related to the success rate of
the Licensed Product), or causes the Documentation to be inaccurate or incomplete in any material
respect.

1.20 “Services” shall mean outsourced medical transcription activities provided by MedQuist to
third party customers.

1.21 “Work Made for Hire” shall have the meaning ascribed thereto in 17 U.S.C. @ Sec. 101 et seq.

Section 2.

Scope of License Grant, Ownership and Proprietary Rights

2.1 Subject to the terms and conditions set forth in this Agreement, Philips grants to MedQuist
during the term of this Agreement, a personal, non- assignable, non-transferable, indivisible,
non-exclusive (except as provided herein) license, without the right to sub-license, to use the
Licensed Product in Object Code and Documentation only (except as provided in Section 6) for
MedQuist’s internal use at its sites, solely in connection with MedQuist’s network and in
connection with providing Services MedQuist accepts the grants made by Philips under this Section
2.1.

During the Term, as long as MedQuist is in full compliance with its obligations hereunder, Philips
undertakes not to grant a license of the Licensed Product and Contexts, or similar products, to a
competitor of MedQuist providing outsourced medical transcription services in the USA. However,
Philips explicitly reserves the right to license the Licensed Product, Contexts and similar
products to others, such as, but not limited to distributors and third party endusers who wish to
use such products (including SpeechMagic 3.0 and 3.1) for non-outsourced medical transcription or
other services. For purposes of this Agreement, the term “outsourced” means that the healthcare
provider utilises medical transcriptionists that are not engaged or employed by the healthcare
provider nor his hospital organisation (i.e. if a hospital records department or a doctor uses
their own employees or independent contractors or so-called statutory employees for their own
transcriptions and the transcription service is performed with technology owned by or licensed to
the hospital or doctor, the service is not outsourced).

2.2 Nothing herein is intended to, or shall be deemed to, convey to MedQuist any title or ownership
interest in the Licensed Product, the Contexts, the Documentation or any Derivative Works of any of
the foregoing. MedQuist acknowledges that, as between MedQuist and Philips, Philips is and shall
continue to be the owner of each of the foregoing, as it exists and as it may be altered, modified
or further developed, whether or not authorized, and IP Rights associated therewith. Each
Derivative Work, including portions thereof and all copies thereof, in whatever medium, fixed or
embodied, shall be considered a “Work Made for Hire” and Philips shall own all right, title and
interest therein. MedQuist hereby assigns, and upon creation of each Derivative Work automatically
and irrevocably assigns, to Philips ownership of all of MedQuist’s right, title and interest in and
to such Derivative Work insofar as any such Derivative Work, by operation of law, may not be
considered a “Work Made for Hire” and MedQuist hereby agrees to disclose to Philips all Derivative
Works promptly upon creation during the term of this Agreement. MedQuist reserves no rights,
whatsoever, in the Derivative Works.

2.3 MedQuist agrees not to exceed the scope of the license granted in Section 2.1 and shall not
copy (except as technically necessary to use the Licensed Product in accordance with the license
granted), alter, decompile, disassemble, reverse engineer or otherwise attempt to learn any source
code, structure, algorithms or ideas underlying the Licensed Product, nor shall it modify,
translate or create derivative works (other than as expressly permitted herein) based on the
Licensed Product, except that nothing in this Section 2.3 shall preclude integration of the
Licensed Product with MedQuist’s technology infrastructure as contemplated by Section 3.1.

2.4 Without limiting the generality of Section 2.2 hereof, Philips is being granted full access to
(a) modifications to the Contexts generated automatically in the information technology
infrastructure of MedQuist, (b) medical documents in MedQuist’s possession and (c) user sound data
in MedQuist’s possession. Philips shall also have the right to copy, modify and use such data under
customary confidentiality obligations in order for Philips to improve existing Contexts and
generate new ones. MedQuist will receive such Contexts on or before the date that they are
generally made available to other supported licensees of Philips. In addition, MedQuist will
receive during the Term on a quarterly basis a royalty of 3.5% (three and a half percent) of the
license fees received by Philips

10

 

from other licensees for each Context developed on the basis of such access to MedQuist’s specific,
Context related information described in the first sentence of this Section 2.4, provided such
Context uses text data from MedQuist

2.5 MedQuist will not delete any Trademarks, trade names or copyright notices present in or
displayed by the Licensed Product. Neither party will claim any right to use any of the Trademarks
of the other party except pursuant to this Agreement and its use of each Trademark will inure to
the benefit of the Trademark-owning party. Neither party (i) will act in any manner that might
reasonably injure the rights or goodwill of the other party with respect to the other’s Trademarks,
(ii) will not challenge the validity or ownership of the other’s Trademarks, and (iii) will protect
the other’s Trademarks as necessary and appropriate. MedQuist expressly acknowledges that all of
Philips’ Trademarks with their associated goodwill, copyrights, trade secrets and proprietary
rights falling within the scope of this Agreement are and shall remain the property of Philips.
Philips similarly acknowledges that all of the MedQuist Trademarks with their associate goodwill,
copyrights, trade secrets and proprietary rights falling within the scope of this Agreement are and
shall remain the property of MedQuist.

2.6 Each Party reserves all rights in its proprietary information and IP Rights that are not
explicitly granted to the other Party under this Agreement. Nothing herein is intended to, or shall
be deemed to, convey to Philips any title or ownership interest in or license to the software
MedQuist licenses to its clients (whether owned by or licensed to MedQuist for sublicensing
purposes).

Section 3.

Delivery.

3.1 Philips shall deliver the Licensed Product in Object Code form and related Documentation to
MedQuist in accordance with Schedule A. MedQuist will be responsible for integrating the Licensed
Product into MedQuist’s existing information technology infrastructure. However, Philips will
provide consultancy support to MedQuist covering integration, customization and start up activities
in order to ensure the speedy and efficient introduction of this new technology. Up to fifteen
man-years of such support activities is included within the initial sign up fee described in
Section 4 below, to be consumed no later than December 31, 2001 on the basis of a timeschedule and
workplan to be mutually agreed within 45 days after the Effective Date. In addition, as part of
such sign up fee, Philips will provide Licensed Product and Level 1 Support services training
sufficient in order for MedQuist’s employees to become familiar with the use of the Licensed
Products and to be able to execute internally Level 1 Support services.

3.2 Subject to MedQuist’s compliance with applicable Fee obligations set forth in this Agreement,
Major Releases of the Licensed Product shall be added to this Agreement and delivered to MedQuist
at the time such Major Releases are made available to other supported licensees of Philips at no
additional cost to MedQuist.

Section 4.

Pricing

4.1 The initial sign up fee payable by MedQuist to Philips shall be US $2.25 million payable in
accordance with Schedule D (but not earlier than the Effective Date). The minimum annual as well as
ongoing license fees for the Licensed Product payable by MedQuist to Philips are set forth in
Schedule D (the “Fees”). The Fees (including the initial sign up fee) do not include sales, use,
excise and similar taxes, nor the cost of shipping or insurance, for which MedQuist is responsible.

4.2 During the term of this Agreement and any extension thereof, MedQuist shall send a statement to
Philips within ten (10) days following the last day of each calendar quarter certifying, in summary
form, (i) the use of the Licensed Products and the basis for the Fees calculations set forth in
Schedule D hereto and (ii) the Fees due for such period. Appropriate payments for each calendar
quarter shall be made within 60 days after the date of such statement, and in no event later than
the last day of the calendar quarter following the quarter covered by such statement. Upon
MedQuist’s request, Philips shall send an invoice covering the Fees so stated.

11

 

4.3 MedQuist shall maintain for at least three (3) years its records, contracts and accounts
relating to Licensed Product and its use thereof, and will permit examination thereof as well as
access to the Licensed Product upon reasonable request and during normal business hours by
authorized representatives of Philips. In addition, Philips may at its own expense audit the books
of account of MedQuist relating to this Agreement at the place where such books are kept, in order
to investigate compliance with the payment obligations hereunder; such audits may not take place
more than twice a year, unless an audit has revealed underpayments to Philips. Any such audit shall
be conducted by an independent professional auditor reasonably acceptable to both parties, on at
least ten (10) working days prior written notice and during normal business hours. A copy of the
report made by such auditor shall be provided to both Parties at the same time. If during the
course of such audit, it is discovered that any payment owed to Philips hereunder was not made or
was miscalculated and the discrepancy in MedQuist’s favor is five percent (5%) or more in any given
period of 3 months or more (a “Payment Default”), the cost of such audit shall be borne by
MedQuist. Furthermore, MedQuist shall immediately remedy such Payment Default, together with
interest at the rate of 10% per annum (or such lower rate as may be the maximum allowable by law)
calculated from the date such payment was due until such payment is actually made.

4.4 MedQuist shall submit to Philips, once per calendar year, a written statement by its external
auditors, who shall be independent certified accountants, confirming that the quarterly statements
submitted by MedQuist to Philips for the preceding calendar year, were true, complete and accurate
in every respect. MedQuist shall use all commercially reasonable efforts to cause such statement to
be submitted within 120 days following the end of the fiscal year.

4.5 For Level 2 and Level 3 Support services rendered by Philips in accordance with Schedule E,
MedQuist will pay Philips fees as set forth on Schedule D.

Section 5.

Warranties, Indemnity and Liability Limitations

5.1 Schedule C sets forth the warranties and indemnification obligations of MedQuist and Philips in
connection with this Agreement.

Section 6.

Further obligations of the Parties

6.1 In order that the relationship contemplated by this Agreement shall be mutually advantageous,
and in recognition of the particular expertise and commitment necessary to properly use and support
the Licensed Product, MedQuist agrees during the Term to comply with the following requirements:
MedQuist shall (i) conduct business in a manner that does not reflect negatively at any time on the
good name, goodwill and reputation of Philips; (ii) avoid deceptive, misleading or unethical
practices that are or might be detrimental to Philips, its product or the public; (iii) make no
false or misleading representations with regard to Philips or its products; (iv) not purchase,
license or use a product competing with the Licensed Product during the Term; and (v) for any and
all of its present and future speech technology needs, first invite Philips to submit a competitive
offer. In case MedQuist is dissatisfied with such offer and subsequently receives a more attractive
offer from a third party, MedQuist will afford Philips a final opportunity to match such third
party offer.

6.2 Philips hereby grants to MedQuist a most favored customer status, meaning that in case Philips
affords a third party/medical outsourcing transcription service provider outside the USA a license
of the Licensed Product on terms and conditions which, taken as a whole, are more favorable to such
third party than those set forth herein are to MedQuist, Philips will notify MedQuist within thirty
days of agreeing to those better terms and MedQuist will then have a 30 day period to decide
whether or not it wishes to replace these terms and conditions with those contained in the third
party agreement.

6.3 In case MedQuist wishes Philips to develop additional enhancements, modifications or features
to the Licensed Product, Philips is willing to negotiate same on reasonable, commercial terms and
conditions and to undertake such activities, provided the parties hereto can agree on timeschedule,
workplan, pricing and licensing

12

 

conditions in connection with such possible development activities. Philips shall not transfer
ownership on any development work under any circumstances, but is willing to discuss extending the
exclusivity hereunder to such development work or provide up to a 3 month lead time in such case.

6.4 Within twenty (20) days after receiving MedQuist’s request pursuant to Section 6.3., Philips
shall notify MedQuist of Philips’s proposed prices, timeschedule, licensing conditions and other
terms and conditions for performing such development work (unless Philips has declined, as set
forth hereinafter). If MedQuist provides notice (“Acceptance Notice”) accepting Philips’s price and
other performance terms, Philips shall perform such work at the accepted price and on the accepted
performance terms. If either (i) Philips declines any work requested pursuant to this Section 6.3,
or (ii) MedQuist provides notice that it does not accept Philips’s price and performance terms,
then MedQuist may engage a third party to perform such work, provided that such third party
acknowledges that it has no license or right to any part of the Licensed Product nor access to the
source codes. Whenever MedQuist shall use such a third party developer, Philips shall allow such
third party such access to the Licensed Product as shall be reasonably necessary to complete such
work and shall cooperate with such third party, provided that such access and cooperation shall be
subject to such third party (i) executing reasonable and appropriate security and confidentiality
agreements with Philips, (ii) abiding by Philips’ internal policies applicable to all third party
developers, and (iii) agreeing to reimburse Philips for Philips’ internal and out-of-pocket
expenses incurred in providing such access and cooperation.

6.5 If MedQuist reasonably determines that Philips cannot or chooses not to provide changes which
are required for the Licensed Product to remain in compliance with all applicable laws by thirty
(30) days prior to a deadline imposed by governmental authority, MedQuist shall have the right to
contract with a third party for such work or to do such work itself. The provisions of Section 6.3
relating to contracting with a third party shall apply to such a contract with a third party under
this Section 6.4.

6.6 Upon reasonable advance written notice to Philips, MedQuist may request, and if it so requests
Philips shall use its good faith efforts to accommodate, prioritization of supporting such changes
over any other software development work performed by or on behalf of Philips.

6.7 In case Philips intends to introduce speech technology applications to outsourcing service
companies like MedQuist in other fields (e.g. law; insurance), it will first discuss such plans
with MedQuist in order to jointly investigate whether or not MedQuist is optimally positioned to
exploit such technology in such other fields as well.

Section 7.

Term and Termination

7.1 Unless earlier terminated pursuant to this Section 7, this Agreement will have an initial term
of five (5) years from the Effective Date. After the expiration of the initial term, this Agreement
will thereafter continue for subsequent five year terms, unless earlier terminated as provided
below. Neither party will be liable for terminating this Agreement in accordance with its terms.

7.2 This Agreement can be terminated as follows:

7.2.1 Philips shall have the right to terminate this Agreement for cause immediately in the
event that (i) MedQuist defaults in any payment due to Philips and such default continues
for a period of thirty (30) business days after written notice to MedQuist; (ii) MedQuist
fails to perform any material obligation, duty or responsibility or is in default with
respect to any material term or condition undertaken by it under this Agreement and such
default continues for a period of thirty (30) business days after written notice to
MedQuist; or (iii) a receiver is appointed for MedQuist or its property, or it makes an
assignment for the benefit of its creditors, or any proceedings are commenced by, for or
against it under any bankruptcy, insolvency or debtor’s relief law, or it is liquidated or
dissolved. In case the tender for MedQuist shares is not consummated in accordance with the
terms of the Tender Offer Agreement, this Agreement shall have no effect, unless confirmed
by both the parties hereto.

13

 

7.2.2 MedQuist shall have the right to terminate this Agreement immediately in the event
that (i) Philips fails to perform any material obligation, duty or responsibility or is in
default with respect to any material term or condition undertaken by it under this Agreement
and such default continues for a period of thirty (30) business days after written notice to
Philips; or (ii) a receiver is appointed for Philips or its property, or it makes an
assignment for the benefit of its creditors, or any proceedings are commenced by, for or
against it under any bankruptcy, insolvency or debtor’s relief law, or it is liquidated or
dissolved or (iii) Philips defaults in any payment due to MedQuist and such default
continues for a period of thirty (30) days after written notice to Philips.

7.2.3 Either Party shall have the right to terminate this Agreement (both at the end of the
initial term and during or at the end of any subsequent term) at its sole discretion upon at
least a two (2) years prior written notice to the other Party, the first possibility to
issue such notice shall be no sooner than at the end of the initial term (i.e. the term of
the license will be at least 7 years).

7.3 Upon the termination of this Agreement, all fees owed by one Party to the other Party pursuant
to this Agreement shall be paid within ten (10) days after the date of termination.

7.4 Upon the termination of this Agreement, all licenses granted hereunder shall terminate. Each
Party shall return to the other Party, erase, or destroy all copies of the other Party’s
Confidential Information in its possession or reasonably obtainable and shall certify same has been
done.

7.5 Sections 5, 7.3, 7.4, 8, 9 and 10 shall survive the termination of this Agreement.

Section 8.

Confidential Information

8.1 The Parties agree all information and materials received by one Party from the other Party
(“Disclosing Party”), including Licensed Product, Documentation, Contexts, Language Resources, the
terms of this Agreement and any information and materials about the other Party’s business,
product, technologies, customers, patient information and suppliers identified by the Disclosing
Party as confidential and proprietary to, and trade secrets of, the other Party are referred to as
“Confidential Information”.

8.2 Each Party agrees to hold all Confidential Information of the Disclosing Party in strict
confidence, not to disclose it to others and not to allow any unauthorized person access to it,
either before or after termination of this Agreement.

8.3 Each Party agrees to restrict dissemination of the Confidential Information of the other Party
to only those persons within its organization who must have access to such information to enable
the Party receiving Confidential Information to perform its obligations under this Agreement.

8.4 A Party (the “Receiving Party”) shall not be liable for the disclosure or other use of
Confidential Information which (a) is in the public domain at the time of disclosure through no
fault of such Receiving Party, (b) becomes rightfully known to such Receiving Party from a third
party under no obligation to maintain confidentiality, (c) becomes publicly available through no
fault of or failure to act by such Receiving Party in breach of this Agreement, (d) was
independently developed or already known by such Receiving Party prior to the Parties having access
to one another’s Confidential Information, as proven with documentary evidence, or (e) is required
by court order or by governmental authority to be disclosed, provided that such Receiving Party
promptly notifies the Disclosing Party that it may be required to make a disclosure and uses
reasonable efforts to make such disclosure subject to a protective order or confidentiality
agreement.

14

 

Section 9.

Publicity

9.1 The Parties will jointly draft and approve any press release and other announcements to the
public relating to the Licensed Product and the intended cooperation set forth herein; neither
Party shall issue any other press release or make any other public announcement relating to this
Agreement without the prior written consent of the other Party.

Section 10.

General Terms

10.1 This Agreement is not transferable or assignable without the prior written consent of the
other Party hereto, except by merger, reorganization, consolidation, or sale of all or
substantially all of the Party’s assets.

10.2 This Agreement shall be governed by and construed in accordance with the domestic laws of the
State of New York, without regard to its choice of law rules.

10.3 This Agreement, including the Schedules, contains the complete agreement between the Parties
with respect to the subject matter herein and supersedes all previous and collateral agreements
relating thereto.

10.4 This Agreement may only be amended and obligations under this Agreement may only be waived by
a written instrument signed by both Parties. No failure or delay by any Party in exercising any
right under this Agreement shall operate as a waiver.

10.5 Nothing contained in this Agreement shall be construed as making either Party the agent of the
other Party, as granting to the other Party the right to enter into any contract on behalf of the
other Party, or as establishing a partnership or a relationship of principal or agent between the
Parties.

10.6 If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect.

10.7 The headings of sections, portions or paragraphs of the Agreement are for convenience only and
shall not affect the interpretation of the respective rights and obligations of the Parties.

10.8 Neither Party shall be liable on account of or lose its rights under this Agreement because of
any delay or failure in performance (other than payment) caused by governmental restrictions, war,
civil commotion, riots, strikes, lock outs and acts of God such as fire and flood or other similar
cases that are beyond the control of the Parties.

10.9 All notices, consents and approvals given under this Agreement shall be in writing and shall
be delivered in person, by first class or express mail or by facsimile confirmed by telephone to
the address set forth below:

	 	 	 

	If to Philips:

	 	If to MedQuist:
	Philips Speech Processing GmbH

	 	MedQuist Inc.
	Computerstrasse 6

	 	Five Greentree Centre, Suite 311
	A-1101 Vienna, Austria

	 	Marlton, NJ 08053
	Facsimile: + 43.1.602-3359

	 	Facsimile: (856) 596-3351

15

 

	 	 	 

	with a copy to:
	 	 
	 
	 	 
	Office of the General Counsel

	 	Office of the General Counsel
	Philips Speech Processing

	 	MedQuist, inc.
	64 Perimeter Center East,

	 	Five Greentree Centre, Suite 311
	Atlanta, Georgia 31146-467300

	 	Marlton, NJ 08053
	Facsimile: (770) 821-2700

	 	Facsimile: (856)797-5949

or at such other address as either Party may from time to time advise the other Party in
accordance herewith.

10.10 In no event shall Philips have any liability under this Agreement including but not limited
to direct or indirect damages of any kind or nature, in the aggregate, in excess of the payments
actually received by Philips under this Agreement, whether arising by contract, tort, strict
liability or otherwise and in no event shall either party be liable for any indirect damages,
including any consequential (including, but not limited to, loss of profits or revenues, loss of
use of or damage to any associated equipment, cost of capital, cost of substitute products,
facilities or services, downtime cost, or claims of customer), special, indirect or incidental
damages.

10.11 This Agreement may be executed in several counterparts, all of which taken together shall
constitute one single Agreement between the Parties. The parties agree to accept facsimile
signatures with originals being exchanged afterwards.

Section 11.

Dispute Resolution

11.1 General. Except as otherwise provided in this Agreement, disputes between Philips and
MedQuist relating to the interpretation or application of this provisions of this Agreement shall
be resolved in accordance with this Section 11.

11.2 Informal Dispute Resolution. Any dispute between the parties arising out of or with
respect to this Agreement, either with respect to the interpretation of any provision of this
Agreement or with respect to the performance by Philips or MedQuist, shall be resolved as provided
in this Section 11.2.

Prior to the initiation of formal dispute resolution procedures, the parties shall first attempt to
resolve their dispute informally, as follows:

(A) Representatives for each party (designated within 30 days after notice of the dispute is
given (the “Representatives”)) shall meet for the purpose of endeavoring to resolve such
dispute. They shall meet as often as the parties reasonably deem necessary in order to
gather and furnish to the other all information with respect to the matter in issue which
the parties believe to be appropriate and germane in connection with its resolution. The
Representatives shall discuss the problem and negotiate in good faith in an effort to
resolve the dispute without the necessity of any formal proceeding.

If, within fifteen (15) days after a matter has been identified for resolution pursuant to
this Section 11.2, either of the Representatives concludes in good faith that amicable
resolution through continued negotiation by them does not appear likely, the matter shall be
referred to the Supervisory Committee of the Board of Directors of MedQuist upon formal
written notification to such effect by either Representative (provided such Supervisory
Committee is then in existence), in an attempt to mediate the dispute; in case such
mediation fails, the matter will be escalated by formal written notification to the
respective chief executive officers of the Parties. The parties will use their respective
best efforts to cause the MedQuist CEO and the Philips CEO to meet to attempt to resolve the
dispute.

Formal proceedings for the resolution of a dispute may not be commenced until the earlier
of: (i) the date on which the MedQuist CEO and the Philips CEO conclude in good faith that
amicable resolution through

16

 

continued negotiation of the matter does not appear likely; or (ii) thirty (30) days after
the dispute has been referred to the MedQuist CEO and the Philips CEO.

The provisions of this Section 11 shall not be construed to prevent a party from
instituting, and a party is authorized to institute, formal proceedings earlier to avoid the
expiration of any applicable limitations period.

11.3 Arbitration. If the parties are unable to resolve any controversy arising under this
Agreement as contemplated by Section 11.2, then such controversy shall be submitted to mandatory
and binding arbitration at the election of either Party (the “Disputing Party”) pursuant to the
following conditions: (i) The Disputing Party shall notify the American Arbitration Association
(“AAA”) and the other Party in writing describing in reasonable detail the nature of the dispute
(the “Dispute Notice”). The parties shall each select a neutral arbitrator in accordance with the
rules of AAA and the two (2) arbitrators selected shall select a third neutral arbitrator. The
three (3) arbitrators so selected are herein referred to as the “Panel.” The Panel shall allow
reasonable discovery as permitted by the Federal Rules of Civil Procedure, to the extent consistent
with the purpose of the arbitration. The Panel shall have no power or authority to amend or
disregard any provision of this Section 11. The arbitration hearing shall be commenced promptly and
conducted expeditiously, with each of Philips and MedQuist being allocated one-half of the time for
the presentation of its case. Unless otherwise agreed to by the parties, an arbitration hearing
shall be conducted on consecutive days. Should any arbitrator refuse or be unable to proceed with
arbitration proceedings as called for by this Section, such arbitrator shall be replaced by an
arbitrator selected in accordance with the rules of the AAA and consistent with this Section 11.
The Panel rendering judgment upon disputes between parties as provided in this Section 11 shall,
after reaching judgment and award, prepare and distribute to the parties a writing describing the
findings of fact and conclusions of law relevant to such judgment and award and containing an
opinion setting forth the reasons for the giving or denial of any award. The award of the
arbitrator shall be final and binding on the parties, and judgment thereon may be entered in a
court of competent jurisdiction. Arbitration hearings hereunder shall be held in New York, New York
or other mutually agreeable location.

The Panel shall be instructed that time is of the essence in the arbitration proceeding. The Panel
shall render its judgment or award within fifteen (15) days following the conclusion of the
hearing. Recognizing the express desire of the parties for an expeditious means of dispute
resolution, the Panel shall limit or allow the parties to expand the scope of discovery as may be
reasonable under the circumstances.

11.4 Litigation. In the event of a breach of the confidentiality obligations set forth in
this Agreement, or in the event a party makes a good faith determination that a breach of the terms
of this Agreement by the other party is such that the damages to such party resulting from the
breach will be so immediate, so large or severe, and so incapable of adequate redress after the
fact that a temporary restraining order or other immediate injunctive relief is a necessary remedy,
then such party may file a pleading with a court seeking immediate injunctive relief. If a party
files a pleading with a court seeking immediate injunctive relief and this pleading is challenged
by the other party and the injunctive relief sought is not awarded in substantial part (or in the
event of a temporary restraining order is vacated upon challenge by the other party), the party
filing the pleading seeking immediate injunctive relief shall pay all of the costs and attorneys’
fees of the party successfully challenging the pleading. Philips and MedQuist each consent to venue
in New York, New York and to the nonexclusive jurisdiction of competent New York state courts or
federal courts located in New York, for all litigation which may be brought, subject to the
requirement for arbitration hereunder, with respect to the terms of, and the transactions and
relationships contemplated by, this Agreement.

          IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their
authorized representatives.

	 	 	 	 	 	 	 	 	 

	PHILIPS SPEECH PROCESSING GmbH	 	MedQuist Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ C. Vohringer
 

	 	By:
	 	/s/ David A. Cohen
 

	 	 
	Name: C. Vohringer	 	Name: David A. Cohen	 	 
	Title: General Manager	 	Title: Chief Executive Officer	 	 

17

 

SCHEDULE “A”

List of Licensed Product, Contexts and Documentation

SpeechMagic 4.0 and future Major Releases

All Philips proprietary Contexts

The Context Customization Tool

 

SCHEDULE “B”

Description of Philips Trademarks

The terms and conditions under which MedQuist can use the trademarks indicated below in accordance
with Corporate Guidelines will be communicated separately to MedQuist by the Royal Philips
Electronics, Corporate Intellectual Property Dept. within thirty days of the Effective Date

2

 

SCHEDULE “C”

Warranties, Indemnification and Limitation on Liability Provisions

	1.	 	Warranties of Both Parties.

	 	1.1	 	As a material inducement to the other Party to enter into this Agreement, each
of the Parties warrants to the other that:

	 	(i)	 	it is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and it is in good standing
and qualified to do business in every jurisdiction where the nature of its
business or the lease or ownership of property requires it to be so qualified
or where failure to so qualify may materially affect its ability to perform its
obligations hereunder;
	 
	 	(ii)	 	it has the full power and authority to execute, deliver and
perform this Agreement;
	 
	 	(iii)	 	this Agreement has been duly authorized, executed and
delivered by such Party and is its legal, valid and binding obligation
enforceable against it in accordance with its terms, except as enforcement may
be limited by bankruptcy, moratorium, insolvency or other similar laws
affecting creditors’ rights generally, or by general principles of equity;
	 
	 	(iv)	 	its obligations hereunder shall be performed by personnel with
the requisite skill, training, experience and abilities to perform such
obligations hereunder in a diligent and professional manner; and
	 
	 	(v)	 	its performance hereunder shall not violate or be in conflict
with (a) its governing documents, (b) any judgment, decree or order to which it
is a party, (c) any agreement, contract, understanding, indenture or other
instrument to which it is a party, or (d) any applicable law, rule or
regulation.

	2.	 	Additional Philips’ Warranties.

	 	2.1	 	Philips further warrants that:

	 	(i)	 	as of the date of this Agreement, it is not involved in any
litigation where a claim of patent, copyright or trade secret infringement has
been made against the Licensed Product; and
	 
	 	(ii)	 	the Intellectual Property Department of Philips Electronics
North America Corporation is responsible for intellectual property matters of
Philips in the United States and that, as of the date of this Agreement, the
Intellectual Property Department has not received any assertions, threats, or
claims from any third party that the Licensed Product infringes any IP Rights
of any third party.

	3.	 	Indemnification.

	 	3.1	 	Philips Indemnification.

	 	 	Subject to the provision set forth herein below, Philips shall defend, at its expense, any
action brought against MedQuist based on a claim that the Licensed Product, when used in
accordance with the terms of this Agreement and for its intended use, infringes a United
States copyright or trademark, trade secrets, patents or other IP Rights, provided Philips
is notified promptly in writing by MedQuist of the claim, is given sole control of the
defense and settlement for so long as it diligently pursues such defense, and is provided
all reasonable assistance by MedQuist in connection therewith. Philips shall pay any costs,
settlements and damages finally awarded against MedQuist in connection with the claims. If
the Licensed

3

 

	 	 	Product is finally adjudged to so infringe, or in Philips’s opinion such a
claim is likely to succeed, Philips will, at its option: (i) procure for MedQuist the right
to continue using the Licensed Product in the USA; (ii) modify or replace the infringing
Licensed Product so there is no infringement (provided the Licensed Product’s performance is
not materially adversely affected thereby); or (iii) refund the license fees thereof to
MedQuist, less a reasonable allowance for amortization, depreciation and use.

	 	3.2	 	In the case of a third party claim of infringement asserted against a Philips
trademark, Philips may instruct MedQuist to use a different trademark.
	 
	 	3.3	 	Philips will have no liability for any claim of infringement of any third party
IP Right that arises as a result of (i) MedQuist’s use of the Licensed Product as
furnished by Philips with other software, product or data if such claim would have been
avoided by exclusive use of the Licensed Product, (ii) modification of the Licensed
Product as furnished by Philips by anyone other than Philips if such claim would have
been avoided by use of the unmodified Licensed Product; (iii) third party software or
(iv) use of other than the most current release of the Licensed Product as furnished by
Philips if the claim could have been avoided by the use of the most current release.
Licensing of the Licensed Products by Philips does not convey any license, by
implication, estoppel or otherwise, under patent claims covering combinations of the
Licensed Products with other devices or elements.
	 
	 	3.4	 	THE FOREGOING STATES PHILIPS’ ENTIRE LIABILITY TO MEDQUIST FOR INFRINGEMENT OF
COPYRIGHTS, PATENTS, OR OTHER INTELLECTUAL PROPERTY RIGHTS. SUCH LIABILITY EXTENDS ONLY
TO THE ACTIVITIES OF MEDQUIST UNDER THIS AGREEMENT AND NOT TO (i) ANY USE OR OTHER
ACTIVITIES OF END USERS, CUSTOMERS OR OTHER THIRD PARTIES OR (ii) LIABILITIES INCURRED
BY MEDQUIST ARISING FROM ANY OTHER ACTIVITIES OF END USERS, CUSTOMERS OR OTHER THIRD
PARTIES. IN NO EVENT SHALL PHILIPS’ LIABILITY TO MEDQUIST EXCEED A SUM EQUAL TO THE
TOTAL LICENSE FEES PAID BY MEDQUIST TO PHILIPS HEREUNDER DURING A 12 MONTH PERIOD
IMMEDIATELY PROCEEDING THE DATE THAT PHILIPS IS NOTIFIED IN WRITING BY MEDQUIST OF SUCH
CLAIM. EXCEPT AS SPECIFICALLY PROVIDED HEREIN, PHILIPS WILL NOT BE LIABLE FOR ANY LOSS
OR DAMAGE OF WHATEVER KIND (INCLUDING, IN PARTICULAR, ANY INCIDENTAL, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES, LOSS OF TURNOVER OR PROFITS) SUFFERED BY MEDQUIST OR ANY
OTHER PERSON AS A RESULT OF THE INFRINGEMENT OF ANY PATENT, COPYRIGHT, OR OTHER
INTELLECTUAL PROPERTY RIGHT.
	 
	 	4.1	 	MedQuist agrees to indemnify, defend and hold harmless Philips against any suit
or proceeding brought against Philips incident to any infringement or claimed
infringement of any patent, copyright or other intellectual property right arising out
of (i) compliance with any MedQuist furnished specification or designs; (ii)
unauthorized modification of the Licensed Product or any part thereof by MedQuist;
(iii) use of the Licensed Product by MedQuist in connection or combination with
software or hardware not provided by Philips under this agreement, where the claim
arises by the combination with the other software or hardware with which the Licensed
Product is combined; (iv) the use of the Licensed Product by MedQuist in a manner other
than as recommended in the Documentation; or (v) the use of any non-current release of
the Licensed Product by MedQuist where the current release avoids said infringement,
and has been made available to MedQuist along with written notice that the current
release avoids a potential issue of infringement. Subject to the limitations contained
in Section 4 of this Schedule C, MedQuist shall pay all settlements and damages awarded
as a final judgment by a court of competent jurisdiction, provided MedQuist is promptly
notified by Philips in writing of any such claim and, at MedQuist’s expense is given
full and exclusive control of said suit, and all reasonable requested assistance from
Philips.
	 
	 	4.2	 	THE FOREGOING STATES MEDQUIST’S ENTIRE LIABILITY TO PHILIPS FOR INFRINGEMENT OF
COPYRIGHTS, PATENTS OR OTHER PROPRIETARY RIGHTS. IN

4

 

	 	 	 	NO EVENT WILL MEDQUIST’S LIABILITY
TO PHILIPS EXCEED A SUM EQUAL TO THE LICENSE FEES AND PURCHASE PRICES INVOICED TO
MEDQUIST BY PHILIPS HEREUNDER DURING A 12 MONTH PERIOD IMMEDIATELY PRECEDING THE DATE
MEDQUIST IS NOTIFIED IN WRITING BY PHILIPS OF SUCH A CLAIM. EXCEPT AS SPECIFICALLY
PROVIDED HEREIN, MEDQUIST WILL NOT BE LIABLE FOR ANY LOSS OR DAMAGE OF WHATEVER KIND
(INCLUDING, IN PARTICULAR, ANY INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES,
LOSS OF TURNOVER OR PROFIT) SUFFERED BY PHILIPS OR ANY OTHER PERSON AS A RESULT OF THE
INFRINGEMENT OF ANY PATENT, COPYRIGHT, OR OTHER INTELLECTUAL PROPERTY RIGHT.

	5.	 	Limited Product Warranty.

	 	5.1	 	Philips represents, undertakes and warrants to MedQuist that the Licensed
Product will perform substantially in conformance with the documentation accompanying
such Licensed Product for a period of ninety (90) days from the date of shipment and
acceptance of the Licensed Product and documentation by MedQuist. Philips does not,
however, warrant that (a) the operation of such Licensed Product will be uninterrupted
or error free; (b) the Licensed Product meets certain success rates or performance
levels; nor (c) that the Licensed Product will meet the requirements of MedQuist or any
third party. If the Licensed Product fails to perform substantially in conformance with
the documentation accompanying the Licensed Product during the warranty period set
forth herein, then Philips, upon receipt of written complaint to that effect, will
undertake all commercial endeavors to correct that non-conformity in accordance with
good software engineering practices, or, if unable to do so, will replace the
nonconforming Licensed Product with a functionally equivalent Licensed Product.
	 
	 	5.2	 	In order to obtain service under the terms of the warranty provided in Section
5.1 hereof, before the expiration of the appropriate warranty period, MedQuist must
notify Philips in writing of the defective or non-conforming item. Philips reserves the
right to charge MedQuist for any and all costs incurred by Philips in connection with
allegedly defective warranty claims hereunder that Philips reasonably determines not to
be non-conforming or defective as described above and under such circumstances MedQuist
will pay Philips such costs promptly after its receipt of an invoice therefor.
	 
	 	5.3	 	The warranty provided in Section 5.1 hereof shall not apply if failure of the
Licensed Product covered by such warranty to perform substantially in conformance with
the documentation accompanying the Licensed Product has resulted from accident, abuse,
modification, misapplication, improper use or faulty equipment.
	 
	 	5.4	 	EXCEPT FOR THE LIMITED WARRANTY SPECIFIED IN 5.1 THROUGH 5.3 HEREOF, THE
LICENSED PRODUCT AND SERVICES ARE PROVIDED “AS IS”. FURTHERMORE, THE WARRANTIES AND
REMEDIES PROVIDED BY SECTIONS 5.1 THROUGH 5.3 ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES EXPRESS OR IMPLIED, AND PHILIPS MAKES NO OTHER WARRANTIES OF ANY KIND,
EXPRESS, IMPLIED, ORAL OR WRITTEN. IN ADDITION PHILIPS DISCLAIMS ANY IMPLIED WARRANTIES
OF INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. PHILIPS SHALL NOT
BE LIABLE FOR ANY INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING BUT
NOT LIMITED TO LOSS OF ANTICIPATED PROFITS OR BENEFITS. NO PHILIPS AUTHORIZED
REPRESENTATIVE, AGENT OR EMPLOYEE IS AUTHORIZED TO MAKE ANY MODIFICATIONS, EXTENSION OR
ADDITION TO THE WARRANTIES PROVIDED IN SECTIONS 5.1 THROUGH 5.3. PHILIPS MAKES NO
WARRANTY AS TO (A) DEFECTS IN LICENSED PRODUCT OTHER THAN THOSE WHICH MATERIALLY AFFECT
PERFORMANCE IN ACCORDANCE WITH THE APPLICABLE PRINTED PRODUCT DOCUMENTATION
MENTIONED ABOVE, AND (B) AS TO DEFECTS THAT APPEAR IN THE LICENSED PRODUCT USED IN
VIOLATION OF THE LICENSE GRANTED HEREIN.

5

 

SCHEDULE “D”

Pricing and Fees

Initial Sign-up fee (15 man years, as described hereinafter)

     15 x 150k US$ = 2.25 M US$

			
	     payable:	 	500k$ on 20 September 2000

500k$ on 20 December 2000

500k$ on 20 March 2001

250k$ on 20 June 2001

250k$ on 20 September 2001 250k$ on 20 December 2001

2/nd/ and 3/rd/ level Support

2000: 0

2001: 1 person at 200k US$ / year

2002: 2 persons at 400k US$ / year

2003 (and onwards)-3 persons at 600k US$ / year

Support payable per Quarter, no later than by the middle of the second month

License Fees

License Fees are based on a per use basis following the formula below.

Note:

PAYROLL lines are the lines that serve as basis to pay the transcriptionists (Payroll-Line is 65
black/white characters)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Year 2005
	 	 	Year 2000	 	Year 2001	 	Year 2002	 	Year 2003	 	Year 2004	 	and beyond
	Estimated
Penetration of SR
applied as a
percentage of
Pay-roll lines (A)
	 	 	0	%	 	 	4	%	 	 	13	%	 	 	25	%	 	 	45	%

	 	 	 

	Cost per Pay-roll line via
Speech Recognition from MedQuist to
PSP (equals revenue to PSP)

	 	* 500 Million Payroll Lines via
Speech Recognition in a year at
0,012 US$  per Line (a new count
starts each year as from Jan. 1st)
and for each Payroll Line via Speech
Recognition in such year ** 500
Million Lines at 0,010 US$  per Line

6

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	75% of	 	 	75% of	 	 	50% of	 	 	25% of	 	 	 	 
	 	 	 	 	 	 	Estimated	 	 	Estimated	 	 	Estimated	 	 	Estimated	 	 	 	 
	 	 	 	 	 	 	Penetration (A)	 	 	Penetration (A)	 	 	Penetration (A)	 	 	Penetration (A)	 	 	 	 
	 	 	 	 	 	 	x Total Volume	 	 	x Total Volume	 	 	x Total Volume	 	 	x Total Volume	 	 	No Guarantee.	 
	 	 	 	 	 	 	in Pay-roll lines	 	 	in Pay-roll lines	 	 	in Pay-roll lines	 	 	in Pay-roll lines	 	 	License fee is	 
	 	 	 	 	 	 	(both via Speech	 	 	(both via Speech	 	 	(both via Speech	 	 	(both via Speech	 	 	based on	 
	 	 	 	 	 	 	Recognition and	 	 	Recognition and	 	 	Recognition and	 	 	Recognition and	 	 	ACTUAL Pay-	 
	 	 	 	 	 	 	directly to	 	 	directly to	 	 	directly to	 	 	directly to	 	 	roll LINES via	 
	 	 	 	 	 	 	transcriptionist)	 	 	transcriptionist)	 	 	transcriptionist)	 	 	transcriptionist)	 	 	Speech	 
	Guaranteed	 	 	 	 	 	in Year 2001 x	 	 	in Year 2002 x	 	 	in Year 2003 x	 	 	in Year 2004 x	 	 	Recognition x	 
	License	 	 	 	 	 	Cost per line	 	 	Cost per line	 	 	Cost per line	 	 	Cost per line	 	 	Cost per line	 
	fees	 	0%	 	 	formula (B)	 	 	formula (B)	 	 	formula (B)	 	 	formula (B)	 	 	formula (B)	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	*	 	less than ** more than

ALL CHARGES FOR ADDITIONAL SERVICES (e.g. development, consultancy, training etc) will be on
commercial Terms &Conditions to be negotiated in good faith

15 Man years of pre-committed payment at Philips’ internal, fully loaded cost basis.

7

 

This payment is for three kind of services:

	1)	 	Development / Project Management / Consultancy for a MedQuist optimized Correction Editor.
	 
	 	 	The current Correction Editor of Philips has been developed for European circumstances and
may well need to be adapted to the speed and customs (habits) of MedQuist transcriptionists
who are used to using short-hand codes. (E.g. 1) if stopped at a mis-recognized word by just
typing over this word, the original word disappears, preventing the correctionist from first
having to delete this word, or 2) if stopped at a certain word and a period is pressed on
the keyboard then this period will follow this word and the next word will be capitalized;
etc.).
	 
	 	 	Philips will be actively involved in the design and specification phase, and undertake the
development and testing of the modifications.
	 
	 	 	The jointly to be agreed specifications will serve as the input for the jointly to be agreed
project plan. In the project plan also the acceptance criteria must be defined.
	 
	 	 	No later than June 2000 Josef Reisinger, product manager Professional Dictation will come to
MedQuist to start the Specification Process.
	 
	 	 	Philips will employ new and existing resources to this Project on a dedicated basis.
	 
	2)	 	Consultancy Development / Project Management / Consultancy for Integration of SR into MedQuist
IT infrastructure.
	 
	 	 	Although this activity is under responsibility of MedQuist, a close (technical) co-operation
is needed to make sure sound- and text-files are flowing from one database to the other.
Also some customizations/adaptations are expected on the Speech Recognition system to
accommodate the MedQuist system.
	 
	 	 	No later than June 2000, Dieter Hoi, Development Project Leader SpeechMagic and Josef
Reisinger will come to MedQuist to start planning the integration process.
	 
	3)	 	Start-up services.
	 
	 	 	In addition to the normal 2/nd/ and 3/rd/ line support Philips will provide technical
expertise on site during start-up time to minimize down-time risks.
	 
	 	 	The best person(s) for this will be identified later.
	 
	 	 	The 15 man-year is a minimum commitment to Philips to be invoked before December 2001. The
commitment is on so called fully loaded cost basis. When resources are needed after or in
addition to the 15 man-years having been spent (a monthly report on spent time will be
provided to MedQuist) or after December 2001, whichever comes first, the cost for these
additional services will be on Commercial Terms and Conditions to be negotiated.

8

 

Schedule E

SUPPORT

	1.	 	Philips offers to MedQuist Support as described in this Schedule E. Philips agrees to make
available Support for a period of one year from the date of discontinuation of a certain
release of the Licensed Product. In case Philips opts not to continue offering such Support
services, MedQuist will receive access to the source code for internal error correction
purposes. Support shall include the following:

	 	(a)	 	Supply of routine Patches, Maintenance Releases and Documentation updates and -
corrections;
	 
	 	(b)	 	Problem diagnosis and resolution including Level 2 and Level 3 Support.

	2.	 	MedQuist can only obtain Support services by payment of a quarterly fee described in Schedule
D.
	 
	3.	 	If MedQuist has paid for Support services pursuant to Schedule D:

	 	(a)	 	Upon receiving notice from the appointed MedQuist internal Level 1 Support unit
of a Problem, Philips shall verbally acknowledge receipt of such notice, and confirm
the same by fax or e-mail within 24 hours thereafter. Such acknowledgment shall contain
a unique number identifying the particular problem for tracking purposes. Philips shall
provide MedQuist with a status of any Patch, bug or error logged for MedQuist provided
that MedQuist identifies the particular Problem by the tracking number assigned to it
by Philips. Each Problem logged for MedQuist shall remain open until closure
notification is agreed to by MedQuist.
	 
	 	(b)	 	Philips shall provide prompt written notice to MedQuist of all defects,
malfunctions, Patches, bugs, viruses, and/or other anomalies in the Licensed Products
which become known to Philips, in case Philips believes that such conditions are likely
to result in actual or potential degradation of the functionality or performance of the
Licensed Products.
	 
	 	(c)	 	Philips shall make all reasonable efforts to provide a Patch for the Licensed
Product(s) according to the following “restoration time” schedule:

	 	(1)	 	Severity 1 — within four (4) normal Business hours of receipt
of notice of existence of a Problem by the appointed MedQuist internal Level 1
Support unit.
	 
	 	(2)	 	Severity 2 — within one (1) business day of receipt of notice
of existence of Problem by the appointed MedQuist internal Level 1 Support
unit.
	 
	 	(3)	 	Severity 3 and Severity 4 — if not a Minor Release, within
twenty (20) working days of acknowledging the receipt of the Problem the
appointed MedQuist internal Level 1 Support unit and thereafter in all other
instances resolved in a Major Release of the supported Licensed Product.

	 	(d)	 	In the event Philips does not respond to a verifiable MedQuist reported Problem
within the time schedule and guidelines, as provided for in this Schedule E or if
MedQuist in MedQuist’s good faith determination, believes the progress of Philips in
attempting to resolve the Problem or in responding to the information request is not
being made in accordance with Philips’s Problem plan, then MedQuist may escalate the
Problem to a higher severity level.

	5	 	Upon MedQuist’s request and subject to availability, Philips shall furnish qualified
personnel for on-site assistance to MedQuist to resolve Problems. In such event, MedQuist
shall pay Philips at its then current time and materials rates, which shall be consistent with
customary and reasonable industry rates therefor,
for the time of such personnel and reimburse Philips for reasonable travel and living
expenses of such personnel incurred in rendering such assistance.

9

 

	6.	 	Severity:

	 	(a)	 	“Severity 1” shall mean a Problem which critically impacts MedQuist’s ability
to continue its business in the ordinary course.
	 
	 	(b)	 	“Severity 2” shall mean a Problem where a major function of the supported
Licensed Product is unusable and significantly impacts MedQuist’s ability to do
business but MedQuist’s can continue to perform its business as necessary.
	 
	 	(c)	 	“Severity 3” shall mean a Problem which does not seriously impact MedQuist’s
business.
	 
	 	(e)	 	“Severity 4” shall mean a Problem not covered above, including supported
Licensed Product enhancement requests.

MedQuist will ensure that escalation to Level 2 Support is only being received by Philips from the
appointed MedQuist internal Level 1 Support unit. Level 2 Support will only communicate to such
appointed MedQuist internal Level 1 Support unit.

10exv10w35

Exhibit 10.35

Portions of this exhibit were omitted and filed separately with the Secretary of the
Securities and Exchange Commission (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.

THIRD AMENDED AND RESTATED OEM SUPPLY AGREEMENT

     THIS THIRD AMENDED AND RESTATED OEM SUPPLY AGREEMENT (the “Agreement “ or “Third Amended and
Restated Agreement”) is entered into by and between MedQuist Inc., a New Jersey corporation
(“MedQuist”), and Nuance Communications, Inc. (hereinafter “Nuance”), a successor in interest to
Philips Speech Recognition Systems GmbH “PSP”), and made effective as of November 10, 2009 (the
“Third Amended and Restated Agreement Effective Date”), amending and restating that certain
Amendment 1 to Second Amended and Restated OEM Supply Agreement dated December 31, 2008, and
Second Amended and Restated OEM Supply Agreement made effective as of October 1, 2008 (“Second
Amended and Restated Agreement Effective Date”), which amended and restated the Amended and
Restated OEM Supply

 

 

Agreement made and entered into as of the 21st day of September, 2007 (“Amended and Restated
Agreement Effective Date”), which amended and restated that certain OEM Supply Agreement made and
entered into as of the 23rd day of September, 2004 (the “Original Effective Date”), by and between
PSP and MedQuist.

     MedQuist and Nuance hereinafter also collectively referred to as the “Parties” and individually as
a “Party”.

RECITALS

     WHEREAS, MedQuist and PSP entered into that certain OEM Supply Agreement (the “Original
Agreement”) as of the Original Effective Date;

     WHEREAS, MedQuist and PSP entered into that certain Amended and Restated OEM Supply
Agreement as of the Amended and Restated Agreement Effective Date;

     WHEREAS, MedQuist and PSP entered into that certain Second Amended and Restated OEM Supply
Agreement as of the Second Amended and Restated Agreement Effective Date as amended by Amendment 1
to Second Amended and Restated OEM Supply Agreement;

     WHEREAS, Nuance, as successor in interest to PSP is assigned the rights and obligations of
the Second Amended and Restated Agreement as amended by Amendment 1 to Second Amended and
Restated OEM Supply Agreement;

     WHEREAS, the Nuance and MedQuist desire to amend and restate the Second Amended and Restated
OEM Supply Agreement to extend and clarify certain matters as set forth herein.

     NOW THEREFORE, in consideration of the mutual agreements and covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, it is mutually agreed and covenanted by and between the parties to this Agreement, as
follows:

1. Definitions.

     1.1 “Documentation” means user manuals, training materials, product descriptions, product
specifications, technical manuals, license agreements, supporting materials, and like
information related to the Products, which Documentation may be distributed in print,
electronic, video, or other formats.

 

			
	******* 	 -  	 Material has been omitted and filed separately with the Commission.

 

 

     1.2 “End User” means the final retail purchasers or MedQuist licensees at the sites where the
Products are installed.

     1.3 “Products” means, individually or collectively as appropriate, the Software,
Documentation, developed products and hardware, supplies, accessories, and other commodities
related to any of the foregoing, provided or to be provided by Nuance pursuant to this Agreement,
as described in Schedule B attached to this Agreement, as modified from time to time.

     1.4 “Affiliate” shall mean any corporation, limited liability company, partnership or other
legal entity, present or future, which is owned or controlled or owns or controls or is under
common control with, directly or indirectly, a Party to this Agreement, as the case may be, as long
as such ownership or control exists and where control means ownership or control of more than fifty
percent (50%) of voting stock in the case of a stock-issuing entity, or more than fifty percent
(50%) of voting control of a non-stock-issuing entity.

     1.5 “Software” means certain computer programs and software (collectively, the “Programs”),
which Programs may incorporate certain third-party software products provided or to be provided
by Nuance pursuant to this Agreement.

     1.6 “Source Code” means the underlying instructions for a computer written in programming
languages, including all embedded comments, as well as procedural code such as job control language
statements, in a form readable by human beings when displayed on a monitor or printed on paper,
etc. and that must be translated (using off-the-shelf commercially available software compilers,
linkers and assemblers or other items delivered with such code or reasonably available including
documentation) into a form that is directly executable by a computer by a process generally known
as compiling or assembly, along with any related documentation, including annotations, flow charts,
schematics, statements of principles of operations, software summaries, software design, program
logic, program listings, functional specifications, logical models and architecture standards,
describing the data flows, data structures, and control logic of the software. For purposes of this
Agreement, mere access to the Source Code in the Nuance online controlled environment is not a
sufficient provision or transfer of Source Code hereunder.

     1.7 “Intellectual Property Rights” shall mean any and all patents, utility certificates,
utility models, industrial design rights, copyrights, database rights, trade secrets, any
protection offered by law to information, semiconductor IC topography rights and all
registrations, applications, renewals, extensions, combinations, divisions, continuations or
reissues of any of the foregoing.

2. Grant of License, Co-ownership and Territorial restrictions

     2.1 Source Code. Nuance agrees that, during the Term of this Agreement, for any new Version
of the Product developed pursuant to an SMA, (other than Nuance Modifications as per Section 15)
it shall deliver to MedQuist the Source Code and related documents, at the time of delivery.

     2.2 Subject to the terms of this Agreement and notwithstanding the Parties’ co-ownership
rights under Sections 15 and 17, Nuance and MedQuist agree as follows: (i)

 

			
	*******	 	- Material has been omitted and filed separately with the Commission.

2

 

MedQuist’s exclusive territory for offering for sale, licensing, selling, delivering and servicing
the Products, and for authorizing others to do so, directly and through one or more tiers of
distributors, dealers, and resellers (collectively, the “Dealers”), shall be within the territory
set forth on Schedule A to this Agreement (“Territory”); provided further that such rights are
nonexclusive for the specified nonexclusive Territory on Schedule A.

     2.3 Nuance reserves all rights related to the Products that Nuance does not expressly grant
MedQuist in this Agreement. Outside MedQuist’s exclusive Territory, Nuance may offer for sale,
sell, license, deliver, and service the Products, and may authorize others to offer for sale,
sell, license, deliver, and service the Products, without providing any rights or compensation to
MedQuist. During and after the Term, inside MedQuist’s exclusive Territory, Nuance and any
Affiliate: (i) may not offer for sale, sell, license, deliver or service the Products; or (ii)
authorize others to offer for sale, sell, license, deliver, or service the Products.

     2.4 MedQuist is authorized to appoint Dealers within the Territory defined in Schedule A to
offer for sale, sell, sublicense, deliver, and service the Products at its discretion and without
approval from Nuance. During the Term, MedQuist will give Nuance written notice of the identity of
any Dealer that MedQuist intends to appoint in the non-exclusive Territory. MedQuist will ensure
that all Dealers appointed by MedQuist are sufficiently trained and competent to sell and support
the Product in their respective territories.

3. Term.

3.1 Term. Unless earlier terminated pursuant to Section 20, this Agreement shall, when signed by
duly authorized representatives of both parties, remain valid as follows:

3.1.1 This Agreement shall become effective on the Effective Date and continue until June 30, 2015
(the “Initial Term”).

3.1.2 Following the Initial Term, and subject to Section 3.1.3 and 3.1.4, the Agreement may be
renewed, for two (2) successive terms of five (5) years each (each a “Renewal Term”). To renew
the Agreement for each Renewal Term, MedQuist at its sole option must indicate its intent to
renew the Agreement by providing a written notice to Nuance, to be provided no less than six
(6) months prior to the end of the then-current Initial Term or Renewal Term (each a “Notice
Period”).

3.1.3 The parties agree that the same terms and conditions of this Agreement in effect at the end
of the then-current Initial Term or Renewal Term, will apply upon a renewal of this Agreement as
provided herein, except for the prices and Fees, as per Schedule C, which new pricing or Fees
must be determined and agreed to in writing by the parties, based upon Nuance’s standard market
prices or Fees, in effect at the end of the then-current Initial Term or Renewal Term.

3.1.4 The parties shall negotiate new pricing upon receipt of MedQuist’s written notice by Nuance
pursuant to Section 3.1.2. In the event that within thirty (30) days following MedQuist providing
Nuance with written notice of MedQuist’s intent to renew pursuant to Section 3.1.2, (i) Nuance
does not respond to such notice from MedQuist, or (ii) the parties are unable to agree in writing
to new pricing as per Section 3.1.3 for the proposed Renewal

 

			
	*******	 	- Material has been omitted and filed separately with the Commission.

3

 

Term, the Agreement will terminate on the date that is two (2) years from the end of the then
current Initial Term, or Renewal Term (the “Termination Period”). During the Termination Period,
all terms and conditions of this Agreement in effect at the end of the then-current Initial Term
or Renewal Term, will continue to apply.

4. Fees.

     4.1 Product Co-Ownership Fee. In consideration of Nuance’s grant of co-ownership of the
Products in accordance with the terms of this Agreement, Nuance agrees and acknowledges that
MedQuist has paid Nuance a Product co-ownership fee in cash in the
amount of ******* (the “Product Co-Ownership Fee”), as follows: 100% on the date Nuance delivered a
duly-executed original of the Amended and Restated OEM Supply Agreement and a copy of the Source
Code of the Products to MedQuist. All Products have been delivered by Nuance.

          4.1.1 Prices. During the Term, MedQuist will pay Nuance, in further consideration of Nuance’s
grant of co-ownership rights of the Products in accordance with the terms of this Agreement, the
Revenue Share Fees set forth on Schedule C.

     4.2 Payment Terms. During the Term, MedQuist will pay Nuance Prices set forth on Schedule C
to this Agreement, on a calendar monthly basis, ******* from the end of each such calendar month.
The foregoing does not alter the reporting requirement of Section 6.2.

4.3 Software Maintenance Fee.

          4.3.1 During the Term, MedQuist will use reasonable commercial efforts to sell its End
Users a software maintenance agreement (an “SMA”). Such SMA will provide that the
subscribing End User will obtain, directly from MedQuist:

               4.3.1.1 Software Releases. As used in this Agreement, “Software Release” means a new Version
of the Products delivered to MedQuist for internal or external user testing or commercial
availability. For the purposes of this Agreement “Version” or “Versions” is used to refer to
Product Patch Releases, and Point Releases, that may include bug fixes, updates, and upgrade
versions that may be generally released by Nuance, if and when available, as a part of a SMA.
Software Releases are typically numbered sequentially (e.g., Release 4.x, Release 6.x).

               4.3.1.2 Patch Releases. As used in this Agreement, “Patch Release” means a change Nuance
makes to a Software Release, which is an internal change designed to correct minor anomalies or
defects in the Software (colloquially referred to as “bugs”), or otherwise to provide minor
improvements to performance without changing the Software’s basic design, structure, or
functionality. Patch Releases are typically numbered to signify modifications to a version of
Software Release (e.g., Version 4.1.05, Version 4.1.06).

               4.3.1.3 Point Releases. As used in this Agreement, “Point Release” means a modification or
enhancement ( referred to as an “Upgrade”) to a Software Release that: (i) enables the Software
Release to perform new or different functions; (ii) increases the capability of the Software; or
(iii) enables the Software to function on new or different hardware or in a new or different
software environment without changing its basic design, structure or functionality. Point Releases
are typically numbered as versions of a Software Release (e.g., Version 4.1, Version 4.2, etc.).

 

			
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               4.3.1.4 Technical Support which includes the following:

MedQuist is responsible for providing First and Second Level Support to its End-Users. “First and
Second Level Support” shall mean basic help-desk functions typically including initial call
handling, call logging, assignment of call priority, queue placement, initial problem diagnostic
services for identifying problems and generic application faults, analysis, and where possible,
problem resolution, detailed product problem analysis (including any problem duplication),
detailed problem diagnostic services for identifying complex problems and application faults,
application of any service releases or end-user-specific fixes and interface.

MedQuist Obligations

MedQuist shall be responsible for providing First and Second Level Support to
the End-Users as follows:

To receive Patch Releases as they become available
during the SMA term and deploy for its End-Users;

To comply with Nuance’s
procedures for Problem reporting from time to time;

To reproduce the Problem where possible, on their own test system in order to identify the Problem;
and to provide all reasonably necessary test material and log files to make it possible to
reproduce the Problem on Nuance’s site, such as sound-files and image of the installed software.
MedQuist will cooperate with Nuance in order to reproduce (duplicate) the Problem, to report to
Nuance how to reproduce the Problem and to help indicate that the Problem is located in the
Product.

To test Patch Releases and, once satisfied, or if alternative solutions or workarounds to the
Problem have been identified report that back to Nuance hotline that the Problem is really
solved

In order to facilitate the above Support, MedQuist will be permitted to use Nuance’s hotline
service for problem reporting.

For purposes of this Agreement, “Problem” means a material failure of the Product to conform to
the specifications set forth in the Documentation, resulting in the inability to use, or
restriction in the use of, the Product.

Nuance Obligations

Third Level Support is included in the SMA fees. Nuance shall be responsible for Third
Level Support with the following responsibilities:

Technical Support Hours, Monday — Friday, from 9.00 A.M. to 5.00 P.M. CET,
excluding public holidays.

Time and Material “overtime rates” available at the current prevailing hourly billable rates.

 

			
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Supply to MedQuist Third Level Support services during Nuance’s normal business hours which
include correction of errors found by MedQuist in a supported release of the Product (a) installed
at any End-User’s testing area or at a pilot site or sites; or (b) installed by End-Users;

          4.3.2 SMA contracts MedQuist sells will begin upon date of the license by MedQuist to its End
User, and will be renewable on an annual basis. SMA’s with respect to End User licenses shall be
purchased for all copies of the Software licensed to such End User. In the event that MedQuist
allows an End User to terminate or cancel an SMA before the end of the term of such SMA, MedQuist
will provide notice of such termination to Nuance, and Nuance will refund to MedQuist the pro-rata
portion of fees paid to Nuance for such SMA within thirty (30) days after MedQuist provides such
notice.

          4.3.3 For each SMA contract that MedQuist sells, it will pay Nuance the following sums *******
after the reporting date for the Prices are due per Section 6.3:

               4.3.3.1 For sums owed for the period beginning July 1, 2006, through the remainder of the
Term of this Agreement: maintenance fees (the “Maintenance Fees”) equal to ******* . MedQuist’s
obligation to pay the Maintenance Fees shall cease upon the earlier of: (i) the end of the Term;
or (ii) MedQuist’s termination of Nuance’s maintenance and support obligations hereunder pursuant
to Section 4.3.5.

          4.3.4 All sums owed set forth in Section 4.3.3 of this Agreement: (i) will be calculated
based on the Prices and without regard to any discounts available to MedQuist; and (ii) will be
amortized on a straight-line basis for each month over the term of the SMA.

          4.3.5 Nuance will provide the services to maintain the current code base of the Products, as
per Section 4.3 until the earlier of: (i) ******* ; or (ii) MedQuist’s termination of Nuance’s
maintenance and support obligations hereunder via thirty (30) days advance written notice to
Nuance. Nuance maintenance obligation above includes supporting any code related to MedQuist
integrations of the Products to PACS, RIS and HIS vendors, delivered under this Agreement by
Nuance as a part of Additional Consulting Services and made a part of the Product.

     4.4 Additional Consulting Services. During the Term, Nuance will provide to MedQuist, upon
MedQuist’s request from time to time, additional consulting/development/training services (using
the hourly rates set forth in SCHEDULE C) (“Additional Consulting Services”) subject to the
mutual agreement of Nuance and MedQuist.

5. Order Placement.

     5.1 Upon MedQuist’s request, Nuance will provide MedQuist with the Products as described in
this Agreement, including without limitation the accompanying Schedules.

     5.2 Nuance delivered to MedQuist a “gold master” of the then-current Version of the
Software: (i) within seven (7) days after the execution and delivery of the Amended and Restated
OEM Supply Agreement; and (ii) Nuance will deliver a “gold master” of the then-current Version of
the Software promptly on the commercial availability of each Software Release. Software MedQuist
distributes under this Agreement will be copies of the gold master Nuance most

 

			
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recently furnished to MedQuist pursuant to this Agreement or, as determined by MedQuist, such
other subsequent Versions created by MedQuist following the transfer set forth in Section

	6.	 	Payment.

     6.1 MedQuist will pay such sums owed free and clear of, and without offset or deduction for,
any and all state and local use, sales, property, and similar taxes, levied or assessed on or in
respect of such payments (other than any tax measured by or attributable to MedQuist’s gross or
net income), as and when the same are due.

     6.2 By thirty (30) days after the end of each calendar month, MedQuist will furnish to Nuance
a written statement showing, in such detail as Nuance may reasonably request, the quantities of
Products actually sold and delivered (including Software), during the immediately-preceding month.

     6.3 MedQuist will, throughout the Term of this Agreement and for one (1) year following the
expiration or termination of this Agreement, maintain a full and accurate record of the number of
copies of the Products actually sold and delivered (including Software) in such detail as may
enable Nuance to verify the amount of Prices due under this Agreement. So as to permit
verification, MedQuist will permit Nuance to examine such records on reasonable advance written
notice, during normal business hours at MedQuist’s offices at reasonable intervals no more
frequently than two (2) times per calendar year. Nuance will bear all costs and expenses for such
an examination, except in those cases in which the examining accountant ascertains a discrepancy
of more than five percent (5%) during the audited period to the disadvantage of Nuance between
payments actually made and payments due, in which event MedQuist will reimburse Nuance all
reasonable costs and expenses for such audit.

     6.4 Nuance reserves the right to charge an interest rate of the lesser of: (i) eight
percent (8%) per annum; or (ii) the maximum amount permitted by applicable law, on past-due
sums MedQuist owes under this Agreement.

7. Development Services.

     7.1 Nuance delivered a beta ready version of version 1.2 “Lite” Software to MedQuist for
internal and external user testing on or before ******* , including a full copy of the Source
Code thereto (“Beta Deliverable”). Nuance delivered a commercial version 1.2 “Lite” Software to
MedQuist on or before ******* , including a full copy of the Source Code thereto (“Commercial
Deliverable”). This enabled MedQuist to showcase a new version of the Software at ******* and to
make the version commercially available by no later than *******.

8. Limited Warranty.

     8.1 Nuance warrants that, for a period of ninety (90) days after the delivery date (the
“Warranty Period”), the Software will perform in all material respects in accordance with the
Documentation accompanying the Software. If any copy of the Software is found not to perform
materially in accordance with the Documentation, Nuance will correct such error or malfunction or
(at Nuance’s sole option) replace such Software free of charge as soon as is reasonably
practicable, provided that: (i) the Software has been used in accordance with instructions for
use; (ii) no alteration, modification or addition has been made to the Software without Nuance’s
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written consent; and (iii) Nuance has been promptly notified of the alleged non-conformity within
the Warranty Period specified.

     8.2 MedQuist will send each claim of MedQuist under this warranty to Nuance in accordance
with the notice provisions of this Agreement. Each such claim will state generally the nature of
the alleged non-conformity. If Nuance determines in its sole discretion to repair the Software (or
such portion of it as is giving rise to the non-conformity), MedQuist will afford Nuance a
reasonable time in which to do so. Any Software so repaired or replaced will be warranted for such
period of time as is remaining in the original Warranty Period.

     8.3 This Limited Warranty is subject to the terms of Section 12 below. This Limited Warranty
is Nuance’s only obligations and the exclusive remedy of the End User with respect to the Nuance
supported Products and Nuance’s only warranty with respect to the Products to the End User. Nuance
will have no responsibility whatsoever with respect to the Products if the failure is due to
accident, abuse, or misapplication on the part of MedQuist or the End User.

     8.4 MedQuist may offer any warranty that Nuance makes hereunder to any End Users provided
that warranty claims by MedQuist’s End Users will be made solely against MedQuist and not Nuance.
The warranties contained in this Agreement are solely for the benefit of MedQuist.

9. Notification of Upgrades and Updates.

     9.1 Nuance will notify MedQuist of any revisions and updates to the Software with respect to
the development, maintenance and other Nuance services provided hereunder that affect the
operation, performance, or cost of such Software.

     9.2 MedQuist will apply any revisions or updates to the Nuance supported Software as soon as
reasonably practicable after receipt of notification from Nuance.

10. MedQuist’s Representations and Undertakings. MedQuist represents and undertakes with
Nuance that:

     10.1 It will use commercially reasonable efforts to promote, market, and
sell the Products during the term of this Agreement;

     10.2 It has the resources, facilities, and financial ability to market, distribute and provide
first line customer support for the Product and fulfill all of its obligations under this
Agreement;

     10.3 It will not incur any liability on behalf of Nuance, pledge or purport to pledge
Nuance’s credit, or purport to act as an agent of Nuance or make any contract binding on Nuance;

     10.4 It will permit Nuance or any independent third party Nuance retains to enter MedQuist’s
premises at a time MedQuist agrees to for the purpose of reviewing records related to this
Agreement (including, without limitation, verifying the number of Software sublicenses granted by
or through MedQuist and obtaining information concerning any Product complaints);

     10.5 Third party software, as defined in Schedule E to this Agreement (the “Third Party
Software”), that is provided by Nuance to MedQuist and distributed with the Software will not be

 

			
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used in conjunction with any other programs or software whatsoever;

     10.6 It will obtain and maintain at its sole risk, cost, and expense, all governmental
approvals required for or applicable to its distribution and other activities contemplated by
this Agreement, and will be responsible at its sole risk, cost, and expense for complying with
all applicable governmental statues, regulations, and ordinances (collectively, the “Laws”)
related to such activities; and

     10.7 It will, before the delivery of the Products to an End User, ensure that such End User
enters into a software license agreement with MedQuist that will accompany each copy of the
Software in substantially the form set forth on Schedule F to this Agreement or such other end user
license agreement as determined by MedQuist from time to time (the “End User License Agreement”).
MedQuist will, from time to time, provide Nuance with a copy of any such updates to MedQuist’s
standard End User License Agreement as such applies to the Nuance supported Products.

11. Nuance’s Obligations. Nuance covenants, warrants, and agrees that it:

     11.1 Has the necessary approvals and licenses to grant to MedQuist the co-ownership, right
to use, sublicense, and distribute the Software in accordance with the terms of this Agreement.

     11.2 Has the resources, facilities, and financial ability to develop and provide second line
support for the Products and to fulfill all of its obligations under this Agreement.

     11.3 Will provide initial 2 days of training in the use of the Products to technical staff
of MedQuist at no additional charge, at the place agreed on by both parties. Nuance and MedQuist
will mutually limit the number of personnel participating in training sessions. On MedQuist’s
request, Nuance will provide a similar training program for all upgrades to the Software. Each
first technical training for a new version will be done free of charge; for any subsequent
training, Nuance and MedQuist will agree on a reasonable price.

     11.4 Will at all times during the Term of this Agreement and where applicable, following
termination hereof, observe and perform the terms and conditions set out in this Agreement.

12. Exclusion Of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 8 OF THIS AGREEMENT,
NUANCE MAKES NO WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, WHATSOEVER, AS TO THE PRODUCTS AND
THE DOCUMENTATION. NUANCE EXPRESSLY DISCLAIMS, ANY AND ALL WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSES, ACCURACY, SATISFACTORY QUALITY, NON-INFRINGEMENT, COURSE OF
DEALING, OR COURSE OF PERFORMANCE.

13. Limited Liability. IN NO EVENT WILL EITHER PARTY OR ANY OF ITS AFFILIATES, SUBSIDIARIES,
OR LICENSORS BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL,
MULTIPLIED, ENHANCED, OR PUNITIVE DAMAGES, INCLUDING, WITHOUT LIMITATION, LOSS

 

			
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OF REVENUE, PROFITS, OR GOODWILL, BUSINESS INTERRUPTION, OR LOST IN CONNECTION WITH THIS
AGREEMENT OR THE PRODUCT, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING
NEGLIGENCE), STRICT PRODUCT LIABILITY, OR OTHERWISE, EVEN IF SUCH PARTY, ITS AFFILIATES, ITS
SUBSIDIARIES, OR ITS LICENSORS HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND EVEN IF
ANY LIMITED REMEDY SPECIFIED IN THIS AGREEMENT IS DEEMED TO HAVE FAILED ITS ESSENTIAL PURPOSE.
SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR
INCIDENTAL DAMAGES, SO THIS LIMITATION MAY NOT APPLY IN THOSE JURISDICTIONS. IF ANY CLAIM IS MADE
AGAINST A PARTY, INCLUDING WITHOUT LIMITATION CLAIMS AS A RESULT OF THE SUBSTANTIAL
NONCONFORMANCE OF THE SOFTWARE TO THE DOCUMENTATION OR OTHERWISE, THE PARTY’S TOTAL LIABILITY FOR
DAMAGES WILL BE LIMITED, IN THE AGGREGATE, TO ITS ACTUAL DIRECT DAMAGES, AND IN ANY EVENT WILL
NOT EXCEED THE TOTAL OF ALL AMOUNTS MEDQUIST IS OBLIGATED TO PAY NUANCE
UNDER THIS AGREEMENT. SOME JURISDICTIONS MAY NOT ALLOW LIMITATIONS OF LIABILITY FOR CERTAIN
TYPES OF DAMAGE OR CERTAIN CLAIMS, SO SUCH LIMITATION MAY NOT APPLY IN SUCH JURISDICTION.

14. Intellectual Property Indemnification. Nuance will indemnify, defend, and hold harmless
MedQuist, and MedQuist’s directors, officers, shareholders, employees, agents, and attorneys, and
MedQuist’s affiliates and their directors, officers, shareholders, partners, members, employees,
agents, and attorneys, and the End Users, and the successor, and assigns of any or all of them,
from all third-party Claims for infringement, misappropriation or violation of copyrights,
trademarks, trade secrets, or other proprietary rights associated with any portion of the Product,
or any other material delivered under this Agreement; provided that: (i) MedQuist promptly notifies
Nuance in writing of the Claim; (ii) Nuance has sole control of the defense and all related
settlement negotiations with respect to the Claim; provided however, that MedQuist has the right,
but not the obligation, to participate in the defense of any such Claim through counsel of its own
choosing (at MedQuist’s sole expense), which right will not detract from Nuance’s sole right to
control such defense; and (iii) MedQuist cooperates fully to the extent reasonably necessary, and
executes all documents reasonably necessary for the defense of such Claim. “Claim” will mean all
loss, losses, liabilities, damage, damages, claims, taxes, and all related costs and expenses;
including, without limitation, reasonable attorneys’ fees and costs of investigation, litigation,
settlement, judgment, interest, and penalties. If MedQuist provides Nuance with notice of a Claim,
MedQuist may withhold any further payments due to Nuance pursuant to this Agreement, and deposit
the same in an interest-bearing escrow account with a commercial bank. On the resolution of any
claim, the amounts in escrow, including accrued interest thereon, will be distributed to Nuance
after deductions of amounts Nuance is required to pay MedQuist under this Section 14. If MedQuist’s
or its End Users’ use of any portion of the Product or any other material delivered under this
Agreement is enjoined in an action by reason of a Claim of infringement, violation
or misappropriation of any third party’s patents, copyrights, trademarks, trade secrets or other
proprietary rights, or Nuance reasonably believes that it will be so enjoined, then Nuance will, at
its sole option and expense, in addition to its other obligations in this
Section 14: (i) procure for MedQuist and its End Users the right to continue using the Product or
any portion thereof; (ii) replace the same with software of equivalent functions and efficiency
that is not subject to an action described in this section; or (iii) modify the applicable
Software so that there is no longer any infringement or breach,

 

			
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provided that such modification does not adversely affect the functional capabilities of the
Product as set out in this Agreement. If neither (i), (ii), or (iii) may be accomplished despite
Nuance’s reasonably diligent efforts, MedQuist may terminate this Agreement with regard to the
portion of the Product that is alleged to infringe, violate, or misappropriate a third party’s
rights, and MedQuist shall, during the Term of this Agreement, be entitled to a pro-rata refund of
the total of all amounts MedQuist has paid and is obligated to pay Nuance under clauses 4.1 and 4.4
of this Agreement after the Amended and Restated Agreement Effective Date, with respect to such
portion. Nuance will have no liability respecting any claim of infringement or breach as aforesaid
to the extent such claim is based on the combination, operation, or use of the Software with other
equipment, software, apparatus, devices, or things not supplied by Nuance or in a manner not
substantially consistent with Nuance’s specifications and instructions.

Notwithstanding anything to the contrary provided in this Agreement, Nuance shall not be liable
for and the obligations of Nuance in this Section will not apply to the extent of the use of the
Product other than in accordance with its specifications or normal intended use; or any Claim
based on or related to any modification or adaptation of the Product by any person other than
Nuance unless made on Nuance’s behalf.

In no event shall Nuance’s liability under this Section 14 exceed, in the aggregate, the total of
all amounts MedQuist has paid and is obligated to pay Nuance under this Agreement.

This Section 14 states the entire liability of Nuance for any type of infringement or breach
whatsoever of Intellectual Property Rights of third parties related to the manufacture, sale,
operation, or use of the Product.

15. Product Co-Ownership. As of the execution and delivery of the Amended and Restated OEM Supply
Agreement, the Second Amended and Restated Agreement Effective Date or the Third Amended and
Restated Agreement Effective Date, Nuance and MedQuist jointly own all right title and interest in
and to the Products (including object and Source Code for the SpeechQ for Radiology application and
the SpeechQ for Radiology Integration SDK) and the Intellectual Property Rights therein and all
derivatives, modifications, enhancements, corrections, additions, and extensions to the Products
(and Source Code) provided by Nuance hereunder (including but not limited to the beta version of
version 1.2 “Lite” Software and the commercial version of SpeechQ for Radiology version 1.2
“Lite”), without any right or duty of accounting to or consulting with the other party (excluding
the obligations of Section 4.2 during the Term) and in relation to which each party shall, and does
hereby, assign and convey to the other all rights, titles and interests necessary to give full
effect to such joint ownership. Each party shall, and does hereby, assign and convey to the other
all rights, titles and interests necessary to give full effect to such joint ownership of the
Products (including Source Code); Nuance covenants and agrees that Nuance has all of the right,
title and interest to the Products necessary to effectuate the foregoing and no further transfer or
assignments from any other Nuance Affiliate or any third party are necessary to effectuate the
foregoing. Upon the request of MedQuist, Nuance shall take such further actions, at MedQuist’s
expense, as may be reasonably appropriate or necessary to confirm such rights. Nuance represents,
warrants and covenants that: (i) it has and will have the full and sufficient right to assign and
grant the rights granted to MedQuist pursuant to this Agreement free and clear of any liens, claims
or encumbrances and (ii) to Nuance’s knowledge, none of the Products at the Amended and Restated
Agreement Effective Date or at the Second Amended and Restated Agreement Effective Date infringes
any Intellectual Property Rights of any third party, nor has any claim of such infringement been
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remedy for MedQuist for any breach of the warranty in subsection (ii) of the preceding sentence is
set forth in Section 14 of this Agreement. Nuance agrees that, on and after the Amended and
Restated Agreement Effective Date, MedQuist may make further derivatives, modifications,
enhancements, corrections, additions, and extensions to the Products (“MedQuist Modifications”)
and that MedQuist will be the sole and exclusive owner of the MedQuist Modifications without a
duty to disclose or provide such to Nuance, and Nuance agrees to do nothing inconsistent with such
ownership by MedQuist and nothing herein grants any license to such MedQuist Modifications to
Nuance. MedQuist agrees that Nuance may make further derivatives, modifications, enhancements,
corrections, additions, and extensions to the Products separate and apart from the development,
maintenance and other Nuance services provided hereunder (“Nuance Modifications”) and that Nuance
will be the sole and exclusive owner of the Nuance Modifications without a duty to disclose or
provide such to MedQuist, and MedQuist agrees to do nothing inconsistent with such ownership by
Nuance and nothing herein grants any license to such Nuance Modifications to MedQuist; provided
that the foregoing shall not relieve Nuance of any of its development, maintenance and other
Nuance service obligations hereunder. The provisions of this Section shall survive the termination
or expiration of this Agreement. On or after the Third Amended and Restated Agreement Effective
Date, MedQuist may make MedQuist Modifications to market the Products to medical specialties,
other than radiology, subject to its rights under Section 15 and Section 17.5.

16. Legal Compliance.

     16.1 Neither party may download or otherwise export or re-export the Software or any
underlying information or technology except in full compliance with all United States and other
applicable laws and regulations. In particular, but without limitation, none of the Software or
underlying information or technology may be downloaded or otherwise exported or re-exported: (i)
into (or to a national or resident of) Cuba, Iran, Iraq, Libya, North Korea, Syria, or Sudan (as
such list is updated by the US Government from time to time); or (ii) to anyone on the U.S.
Treasury Department’s list of Specially Designated Nationals or the U.S. Commerce Department’s
Table of Deny Orders.

     16.2 In accordance with the Federal Center for Devices and Radiological Health regulations,
in order to permit tracing in the event of recall, each party will retain distribution records for
the Products for a period of five (5) years from the date of termination or expiration of this
Agreement.

     16.3 Each party is aware of and will advise its End Users to comply with Section 1 12B(b) of
the Social Security Act (42 U.S.C. 1320a-7b) (the “Act”) when seeking reimbursement from any
governmental entity for products supplied under this Agreement. Specifically, each party
acknowledges that the Act may require proper disclosure of any discounts, rebates, credits,
reimbursements, and other programs Nuance or MedQuist provide in connection with delivery of the
Products.

     16.4 Neither party will ship, transfer, or export any of the Products, or any derivative
thereof, directly or indirectly, into any country except as permitted by the U.S. Export
Administration Act and the regulations thereunder, or use any of the Products for any purpose
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17. Intellectual Property Rights.

     17.1 With respect to the co-owned Products, in the event that either MedQuist or Nuance, or
both, wish to pursue a patent in any Product technology or any component thereof provided
hereunder, they shall cooperate with each other in preparing and submitting one or more patent
applications. Where the Parties agree to, and do, share equally in the cost of prosecuting these
patent applications in any Product technology or any component thereof provided hereunder, the
Parties shall jointly own any resulting patent without any right or duty of accounting to or
consulting with the other party. Where the Parties agree that one of them shall pay more than half
of the cost of prosecuting the patent application, and it does so, that Party shall own the patent
and shall grant to the other party, absent any other written agreement between the Parties, a non
exclusive, perpetual, transferable, worldwide, irrevocable, royalty-free, fully paid-up license to
use, copy, modify and prepare derivative works of the patent (including, without limitation, the
right to make, have made, use, import, offer for sale and sell or otherwise provide or dispose of
products and services using or incorporating the same) or to practice any process in connection
therewith, with the right to sublicense the same.

     17.2 The Parties shall cooperate with each other and execute such other documents as may be
necessary and appropriate to achieve the objectives of this Section and Section 15. Each of the
joint owners of the Products shall have the right to assign its rights and interest in any jointly
owned Product (including the Intellectual Property Rights therein) to an Affiliate or to an
acquirer of (or a part of) the joint owner’s business, as part of a bona fide and solvent
divestiture carried out at arm’s length basis, to which the jointly owned Product is relevant. For
purposes of this Agreement, the terms joint ownership and co-ownership are used interchangeably to
mean joint ownership by Nuance and MedQuist.

     17.3 In no event shall either Party be precluded from independently developing for itself, or
for others, anything, whether in tangible or non-tangible form, which is competitive with, or
similar to, the co-owned Products. In addition, both Parties shall be free to use its general
knowledge, skills and experience, and any ideas, concepts, know-how, and techniques that are
acquired or used in the course of providing or receiving the co-owned Products hereunder.

     17.4 Nuance grants MedQuist a limited, nonexclusive right to use Nuance’s trademarks and
trade names (the “Marks”) in connection with the advertising, marketing and sale of the Products.
To the extent necessary in connection with the foregoing, Nuance shall cause its applicable
Affiliates to grant similar rights to MedQuist as set forth in this Section with respect to any
Marks used by Nuance but held in the name of any such Affiliates. MedQuist will not use Nuance’s
trade names or abbreviations (with the exception of a logo or mark or graphic design Nuance
provides which indicates MedQuist is an authorized value-added reseller of Nuance) in MedQuist’s
corporate title or name, or in any manner that may result in confusion as to separate and distinct
identities of Nuance and MedQuist. MedQuist agrees that it has no right, title, or interest in or
to the Marks except the limited right of use set forth in this Agreement. MedQuist will not use
any Mark in any way except as Nuance may authorize. MedQuist will submit to Nuance representative
samples of all labels, advertising, promotional and marketing materials, and other items that use
or bear any Mark for Nuance’s approval prior to publication or distribution. MedQuist will use the
Marks only in the forms Nuance designate, will not alter or modify any Mark, and will include an
appropriate trademark notice ® or TM with each use of any Mark. On expiration or
termination of this Agreement, the license granted

 

			
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13

 

under this Section 17.4 will automatically terminate and MedQuist will immediately cease and
desist all use of the Marks licensed under this Agreement.

     17.5 MedQuist intends to market the Products described in this Agreement under the trademark
“SpeechQTM” and certain trademarks, trade names, service marks, logotypes, and other commercial
symbols related thereto (collectively, the “SpeechQ Marks”). Nuance further acknowledges and
agree that: (i) there is substantial and valuable goodwill in the SpeechQ Marks; (ii) as between
Nuance and any of its Affiliates on the one hand, and MedQuist and any of its Affiliates on the
other, MedQuist owns all rights to the SpeechQ Marks and all goodwill related to them; (iii)
neither Nuance nor any of its Affiliates will contest MedQuist’s ownership of the SpeechQ Marks,
or the validity of the SpeechQ Marks, at any time during or after the Term of this Agreement; and
(iv) neither Nuance nor any of its Affiliates will misappropriate the SpeechQ Marks, infringe on
MedQuist’s rights in the SpeechQ Marks, or use the SpeechQ Marks without MedQuist’s prior written
consent, at any time during or after the Term of this Agreement.

     17.6 Any advertising, publicity, release or other disclosure of information concerning this
Agreement should be released only after receiving a prior written approval by both parties except
as required by law.

     17.7 Neither Party, unless approved by both Parties in writing, is allowed to link, combine or
otherwise use the co-owned Products with any open source software, if such linkage, combination or
use would create a risk, or have the “viral” effect, of requiring the disclosure or licensure of
the co-owned Products as open source under the GNU General Public License or under the terms of any
other comparable viral open source license. In the event an action is performed resulting in the
co-owned Products being licensed under the GNU General Public License or under the terms of any
other comparable viral open source license without approval by both Parties, the Party causing this
action shall indemnify the other Party against and hold the other Party harmless from any and all
damages and/or costs arising from or in connection with any breach of the provisions of this
Section 17.7 and shall reimburse any and all costs and expenses incurred by the other Party in
defending any claim, demand, suit or proceeding arising from or in connection with such breach. The
indemnification in this Section is not subject to the limitations set forth in Sections 13 or 14 of
this Agreement.

18. Confidential Information. Each party to this Agreement has imparted and may from time to time
impart to the other certain confidential information related to the performance of this Agreement,
and the Products or the marketing or support thereof (including specifications therefor), and each
party may otherwise obtain confidential information concerning the business and affairs of the
other pursuant to this Agreement. Each party hereby agrees that it will use such confidential
information solely for the purposes of this Agreement and that it will not disclose, whether
directly or indirectly, to any third party such information other than as required to carry out the
purposes of this Agreement. In the event of and prior to such disclosure, the disclosing party will
obtain from such third parties duly binding agreements to maintain in confidence the information to
be disclosed to the same extent at least as such party is so bound hereunder. The foregoing
provision will not prevent the disclosure or use by a party of any information which is or
hereafter, through no fault of such party, becomes public knowledge or to the extent permitted by
law, provided that each party has a reasonable opportunity to prevent or limit such disclosure.

 

			
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MedQuist will return to Nuance all confidential information received pursuant to this Agreement
or otherwise in its possession or control on termination of this Agreement, or forthwith on the
request of Nuance.

19. Remedies on Breach. Each party acknowledges that the unauthorized use or disclosure of
any confidential information will cause irreparable harm to the other for which damages will be an
inadequate remedy, and the each party hereby agrees that, in additional to all other remedies
available to it at law and in equity, it will have the right to obtain injunctive relief.

20. Termination. 20.1 Either party may terminate this Agreement on written notice
to the other if any of the following events occur:

          20.1.1 If any proceeding in bankruptcy, receivership, liquidation or insolvency is
commenced against the other party or its property, and the same is not dismissed within ninety
(90) days; or

          20.1.2 If the other party makes any assignment for the benefit of its creditors, becomes
insolvent, commits any act of bankruptcy, ceases to do business as a going concern, or seeks any
arrangement or compromise with its creditors under any statute or otherwise.

     20.2 Nuance may terminate this Agreement on written notice to MedQuist if any of the following
events occur:

          20.2.1 In the event that a material breach by MedQuist remains uncured for more than
thirty (30) days following Nuance’s delivery of written notice to MedQuist specifying the
nature of the breach; or

     20.3 MedQuist may terminate this Agreement on written notice to Nuance in the event that a material
breach by Nuance remains
uncured for more than thirty (30) days following MedQuist’s delivery of written notice to Nuance
specifying the nature of the breach.

21. Obligations On Termination. On the expiration or termination of this Agreement:

     21.1 Nuance will be under no obligation to refund to MedQuist any Prices paid pursuant to
this Agreement so long as Nuance has fulfilled all of its obligations under this Agreement
related to such Prices; including, without limitation, delivery of the applicable Product and
fulfilling the warranty obligations for such Products as specified hereunder;

     21.2 Subject to Section 4.3.5., Nuance will continue to perform its support obligations to
MedQuist for the duration of all SMAs between MedQuist and the End Users entered into before such
expiration or termination (but, in accordance with Section 4.3.5, in no event beyond *******
unless otherwise separately agreed by Nuance and MedQuist), where support fees have been paid to
Nuance;

     21.3 Any End User licenses granted before the expiration or termination of this
Agreement will continue to survive after the effective date of termination provided that
MedQuist

 

			
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15

 

has paid all amounts owing hereunder (and pursuant to MedQuist’s co-ownership rights hereunder,
MedQuist may grant additional End User licenses to the Products after such expiration or
termination, subject to the Territory restrictions in Section 2, and provided such End User
licenses to the Products do not impose any maintenance, support or service obligations or any
other obligations on Nuance); and

     21.4 The following provisions shall survive termination or expiration of this
Agreement: 1, 2.2 (including the Territorial restrictions therein), 2.3, 6.3, 11.4, 12,
13, 14, 15, 17, 18, 19, 20, 21 and 22.

22. Miscellaneous.

     22.1 Force Majeure. The term “Force Majeure” will be defined as an act of God; severe weather
conditions; strikes; war, terror or other violence; law or proclamation, demand, or requirement of
any governmental agency; or any other similar act or condition whatsoever, beyond the reasonable
control of the parties to this Agreement. If the performance of this Agreement by either party or
any obligation under this Agreement is prevented, restricted, or interfered with by reason of a
Force Majeure event, the party whose performance is so affected, on giving prompt notice to the
other party, will be excused from such performance to the extent of such Force Majeure event;
provided, however, that the party so affected will take all reasonable steps to avoid or remove
such causes of nonperformance and will continue performance under this Agreement with dispatch
whenever such causes are removed.

     22.2 Relationship of MedQuist to Nuance. Neither party is an agent, employee, fiduciary,
partner, or representative of the other, and has no authority or power to bind or contract in the
name of or to create any liability against the other in any way or for any purpose. It is
understood that MedQuist is an independent contractor with rights confirmed by this Agreement to
market, distribute, and support the Product on its own accord and responsibility in the
Territory.

     22.3 Waiver. Failure or neglect by either party to enforce at any time any of the provisions
of this Agreement will not be construed nor will be deemed to be a waiver of either party’s rights
under this Agreement nor in any way affect the validity of the whole or any part of this Agreement
nor prejudice either party’s rights to take subsequent action.

     22.4 Agreement. This Agreement, including the Schedules attached to this Agreement, states the
completed agreement between the parties concerning this subject and supersedes earlier oral and
written communications between the parties concerning this subject. No addition, amendment to, or
modification of this Agreement will be effective unless it is in writing and signed by both
parties. This Agreement takes precedence over and supersedes any previous agreements between the
parties regarding the subject matter hereof, even if such agreements are still in effect as of the
date of the Third Amended and Restated Agreement.

     22.5 Assignment. This Agreement is personal to the Parties, and therefore, it may not be
assigned by either Party whether voluntarily or involuntarily or by operation of law, in whole or
in part, to any party without the prior written consent of the other Party, which consent will not
be unreasonably withheld. No such assignment by either Party, howsoever occurring, will relieve
the Parties of their obligations under this Agreement. Notwithstanding the foregoing, either Party
may assign this Agreement without consent: (a) if this Party undergoes a change of control,
whether by means of a sale or issuance of shares or otherwise; (b) to any of its Affiliates or (c)
to

 

			
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16

 

any purchaser of substantially all of the assets or the business of this respective Party.

     22.6 Notices. Any notice required or permitted under the terms of this Agreement or
required by Law will, unless otherwise provided, be in writing and will he delivered in person,
sent by registered mail or air mail as appropriate, properly posted and fully prepaid, in an
envelope properly addressed; or sent by next-day delivery via a courier that has the ability to
track deliveries and confirm receipts to the respective parties, as follows:

	 	 	 	 	 

	 

	 	To Nuance:
	 	Nuance Communications, Inc.
	 

	 	 	 	Attn: Legal Department
	 

	 	 	 	1 Wayside Rd
	 

	 	 	 	Burlington, MA 01803
	 
	 	 	 	 
	 

	 	To MedQuist:
	 	MedQuist Inc.
	 

	 	 	 	1000 Bishops Gate Blvd. #300 
	 

	 	 	 	Mount Laurel, NJ 08054
	 

	 	 	 	Attn: Chief Legal Officer

     with a simultaneous copy, which will not constitute notice, to:

	 	 	 	 	 

	 

	 	 	 	David Gould, Esq.
	 

	 	 	 	Buchanan Ingersoll & Rooney PC
	 

	 	 	 	One Oxford Centre
	 

	 	 	 	301 Grant Street, 20th Floor
	 

	 	 	 	Pittsburgh, PA 15219-1410
	 

	 	 	 	Fax: 412-562-1041

or to such other address as may from time to time be designated by written notice hereunder. Any
such notice will be in the English language and will be considered to have been given at the time
when actually delivered if delivered by hand, on the next business day following sending by
courier or in any other event within seven (7) days after it was mailed in the manner provided in
this
Section 22.6.

     22.7 Headings. The headings of the sections of this Agreement are inserted for convenience of
reference only and are not intended to be part of or to affect the meaning or interpretation of
this Agreement.

     22.8 Severability. In the event that any or any part of the terms, conditions, or provisions
contained in this Agreement arc determined by any competent authority to be invalid, unlawful, or
unenforceable to any extent, such term, condition, or provision will to that extent be severed
from the remaining terms, conditions, and provisions, which will continue to be valid and
enforceable to the fullest extent permitted by law.

     22.9 Governing Law. The parties hereby agree that this Agreement will be governed by and
construed and interpreted in accordance with the laws of the State of New York and the laws of
the United States applicable in the State of New York, The parties agree that the U.N. Convention
on Contracts for the International Sale of Goods does not apply to this Agreement.

 

			
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     22.10 No Damages for Termination or Expiration. NUANCE WILL NOT BE LIABLE TO MEDQUIST FOR
DAMAGES OF ANY KIND, INCLUDING BUT NOT LIMITED TO INCIDENTAL OR CONSEQUENTIAL DAMAGES, SOLELY ON
ACCOUNT OF NUANCE’S TERMINATION OR EXPIRATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS.
MEDQUIST WAIVES ANY RIGHT IT MAY HAVE TO RECEIVE ANY COMPENSATION OR REPARATIONS ON TERMINATION
(OTHER THAN IN THE CASE OF A TERMINATION OF THIS AGREEMENT BY MEDQUIST FOR CAUSE UNDER SECTION
20.3 OF THIS AGREEMENT) OR EXPIRATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS UNDER THE
LAW OF ANY TERRITORY, STATE, OR OTHERWISE. Nuance will not be liable to MedQuist on account of
termination (other than in the case of termination of this Agreement by MedQuist for cause under
Section 20.3 of this Agreement) or expiration of this Agreement in accordance with its terms for
reimbursement or damages for the loss of goodwill, prospective profits, or anticipated income, or
on account of any expenditures, investments, or commitments made by MedQuist, or for any other
reason whatsoever, based on or growing out of such expectation or termination.

     22.11 Authority. Each of the parties hereby represents that it has full power and authority
to enter into and perform its respective obligations under this Agreement, and does not know of
any contracts, agreements, promises, or undertaking, that would prevent the full performance and
compliance with this Agreement.

[SIGNATURES CONTAINED ON FOLLOWING PAGE]

 

			
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18

 

     IN WITNESS WHEREOF, the parties have duly executed and delivered this Amended and Restated
Agreement as of the Third Amended and Restated Agreement Effective Date.

	 	 	 	 	 	 	 	 	 

	MEDQUIST INC.	 	NUANCE COMMUNICATIONS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Peter Masanotti
	 	By:
	 	/s/ John Shagoury	 	 
	 

	 	 

Name: Peter Masanotti
	 	 	 	 

Name: John Shagoury
	 	 
	 

	 	Title: President & CEO
	 	 	 	Title: President, Healthcare	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Date: November 10, 2009
	 	 	 	Date: November 10, 2009	 	 

 

			
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SCHEDULE A

TERRITORY

Description of Territory:

MedQuist’s exclusive Territory shall be all that area within North America.

“North America” shall specifically include, without limitation: (i) the United States of America;
(ii) the Dominion of Canada; (iii) those islands in the Caribbean Basin beginning with Bermuda to the north and extending to
Grenada and Barbados in the south, as the borders of such countries are configured as of the
Effective Date of this Agreement.

The United States of America shall expressly include: (i) the following dependent areas of the
United States of America: American Samoa, Baker Island, Guam, Howland Island, Jarvis Island,
Johnston Atoll, Kingman Reef, the Midway Islands, Navassa Island, the Northern Mariana Islands,
Palmyra Atoll, Puerto Rico, the U.S. Virgin Islands, and Wake Island; (ii) those areas leased by
the United States from separate sovereign nations, including without limitation Guantanamo Bay,
Cuba;

The Dominion of Canada shall expressly include Hans Island, in the Kennedy Channel between
Ellesmere Island and Greenland, which area is subject to a border dispute between the
Dominion of Canada and the Kingdom of Denmark.

MedQuist’s non-exclusive Territory shall be all that area of Australia and the United Kingdom.

“Australia” shall specifically include, without limitation (i) the Australian continent; (ii)
the major island of Tasmania; (iii) the Australian controlled islands in the Southern, Indian
and Pacific Oceans; and (iv) New Zealand (including the North Island and the South Island and
the other islands controlled by New Zealand, most notably Stewart Island/Rakiura and the
Chatham Islands).

“United Kingdom” shall specifically include, without limitation: (i) the United Kingdom of Great
Britain and Northern Ireland (including England, Northern Ireland, Scotland and Wales); (ii) The
Crown Dependencies of the Channel Islands and the Isle of Man; and (iii) the British Overseas
Territories.

 

			
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PRODUCTS

Description of Products:

	 	 	The Products that are the subject of this Agreement are:

     1. “SpeechQ for Radiology”, together with its components; front-end Integration SDK, and
SpeechLink.

 

			
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SCHEDULE C

PRICES

Prices may be adjusted from time to time based upon the mutual agreement of the need for such
a change by both MedQuist and Nuance.

The Prices consist of a revenue share part for the Product (“Revenue Share Fee”) for the
items listed below, jointly referred to as “Prices” in this Agreement.

Table 1 Prices

	 	 	 
	Revenue Share Fee items	 	Revenue Shares Fee payable to Nuance
	Per Link

	 	*******
	 
	 	 
	Report Station per Concurrent Transcription User Fee*

	 	*******
	 
	 	 
	Report Station per Concurrent Dictation User Fee*

	 	*******
	 
	 	 
	Test Server Package

	 	*******

 

			
	*	 	For every transcription user or workstation, a Report Station needs to be purchased.

A concurrent user is a user that is logged into the Software: For e.g: If the number of
concurrent users is limited to 10, then the 11th users that wants to log into the system has to
wait until one user logs off. The number of concurrent users must be tracked by the Software.

For end-customers who have no SMA contracts, Nuance and MedQuist will agree on a case by case
basis on a recommended end-user upgrade price for patches and point releases, and Nuance will get
******* of that price.

Development/Consulting/Training Services: ******* . Beginning January 1, 2011, Nuance reserves
the right to update these fees to Nuance’s then current published rates for these services.

 

			
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SCHEDULE E

THIRD PARTY SOFTWARE

*******

 

			
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SCHEDULE F

END USER LICENSE AGREEMENT

END USER LICENSE AGREEMENT for MEDQUIST ‘Branded’ SOFTWARE

THIS END USER LICENSE AGREEMENT (“EULA”) is between MEDQUIST TRASCRIPTIONS, LTD. (“MedQuist”),
having a business address of 1000 Bishops Gate Blvd., Suite 300, Mt. Laurel, NJ 08054, and
CUSTOMER.

1. DEFINITIONS.

	 	a)	 	“Software” shall mean separate MedQuist ‘branded’ computer programs, (whether or
not included within or separately from any data processing unit), provided now or later
by MedQuist, its parent, subsidiaries, or affiliates and not otherwise so provided
under a separate license agreement, which can be read and used directly by a machine or
device, and shall include without limitation, data, instructions, and media.
“Non-branded Software” shall mean Software bearing a trademark other than MedQuist’s.
	 
	 	b)	 	“Documentation” shall mean the separate MedQuist ‘branded’ operator, user, or
installation instruction sets, provided now or later, and in whatever form, by
MedQuist, its parent, subsidiaries, or affiliates and not otherwise provided under a
separate license agreement. “Non-branded Documentation” shall mean Documentation
bearing a trademark other than MedQuist’s.
	 
	 	c)	 	“Authorized Users” are those employees and contractors of Customer who are
permitted access to the Products subject to the terms and restrictions contained in
this Agreement.

2. LICENSE OF RIGHTS.

	 	a)	 	Customer is granted a non-exclusive, non-assignable, non-transferable, permanent,
revocable license of rights to use and display each of the Software and Documentation,
whether separately or combined, with others of the Software or Documentation, only in
data processors which are in Customer’s exclusive possession and designated by Customer
for such use in its internal business, with such Software or Documentation, or such
combined Software or Documentation.
	 
	 	b)	 	Customer is granted a non-exclusive, non-assignable, non-transferable,
permanent, revocable license of rights to use the Documentation only in direct
connection with such Software or Documentation use and display, internally in its own
business.
	 
	 	c)	 	The Software is licensed for use by Customer under one of the following methods:
(i) Workstation Based License which authorizes the Customer to use the Software only on
the identified workstation provided that the Software may be used on a replacement
workstation upon written notice to MedQuist; (ii) Concurrent Use License which limits
Customer’s use of the Software to a specific number of concurrent users; or (iii) Named
User License which limits Customer’s use of the Software to a specific number of
identified users provided that Customer may replace existing named users with different
named users upon notice and consent of MedQuist.

3. OWNERSHIP.

	 	a)	 	Customer acknowledges that the Software and Documentation, including without
limitation all ideas, procedures, processes, systems, methods of operation, concepts,
principles, discoveries, and inventions, are the exclusive property of MedQuist or
its licensors and acknowledges their exclusive rights to the application,
manufacture, development, use, display, reproduction, modification, and the transfer
of the Software and Documentation and to all worldwide patent and copyright rights to
and in the Software or Documentation. Customer shall not prepare a derivative work or
a compilation from such Software or Documentation, or modify, combine, or copy the
Software or Documentation in any manner, including without limitation decompiling or
disassembling the Software or Documentation to any third party, in whole or part, in
any form or in any manner, unless expressly permitted in writing by MedQuist. The
sole exception allowed is the copying of the Software or Documentation when loading
the Software or Documentation within the internal memory of Customer’s data
processor, and when an essential step in the utilization of the Software or
Documentation in conjunction with such data processor. No other manner of copying is
permitted. Customer shall reproduce and include all copyright notices provided with
the Software or Documentation on all copies, compilations, or derivative works of the
Software or Documentation produced by the Customer, as may be authorized under this
Paragraph 3.
	 
	 	b)	 	Customer acknowledges the proprietary rights in the trademarks shown on the
Software and Documentation delivered to the Customer, and Customer shall deal with
and treat such trademarks according to applicable trademark law.
	 
	 	c)	 	Customer shall limit access to the Software or Documentation to Authorized Users.
Customer shall advise such Authorized Users of the terms of this EULA and shall take
all necessary steps to ensure compliance with the EULA terms, by such Authorized Users.
Customer is not authorized to share the license set forth hereunder with any third
party entities without the express written permission of MedQuist. Customer shall

 

			
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	 	 	 	be fully liable to the extent that the terms of this Agreement are breached by any
Authorized Users, employees or third party service providers.
	 
	 	d)	 	Customer agrees to keep the Software and Documentation at the location(s) of its
designated data processors, as set forth in Paragraph 2 above. Customer agrees to return
the Software or Documentation delivered by MedQuist under this EULA immediately upon
Customer relinquishing possession of any of said data processors, except to the extent
that the Software
or Documentation has been transferred to replacement data processors possessed by
Customer or to third parties in accordance with Paragraph 5 below.

	4.	 	INDEMNITY. Customer shall defend, indemnify, and hold MedQuist harmless from any and all
claims, actions, losses, damages, (including reasonable legal fees), obligations,
liabilities, and liens (including, without limitation, any of the foregoing arising out of
or imposed in connection with latent or other defects, or under the doctrine of “strict
liability”), arising out of the purchase, lease, possession, operation, condition, return,
or use of the Software or Documentation, or by operation of law, excluding, however, any of
the foregoing resulting solely and directly from the acts of MedQuist.
	 
	5.	 	ASSIGNMENT. This EULA is not assignable by Customer unless permitted in writing by
MedQuist and any attempt at assignment without such permission shall be void. This EULA is
assignable in whole or part by MedQuist without consent of Customer. Customer agrees to
execute all documents and consents requested by MedQuist to complete any assignment by
MedQuist.
	 
	6.	 	WARRANTY.

	 	a)	 	MedQuist warrants that it has and conveys good title to the Software. MedQuist
warrants that the Software will perform to the specifications identified within the user
Documentation current at the time of Software sale for ninety (90) days from the date of
shipment. Documentation and media containing Software or Documentation are provided “AS
IS” without warranty of any kind, either expressed or implied. MedQuist does not warrant
that the functions contained in the Software or Documentation will meet Customer’s
requirements or that the operation of the Software or Documentation will be
uninterrupted or error free. Should the Documentation prove defective, Customer alone
assumes the entire cost of all necessary correction.
	 
	 	b)	 	MedQuist’s warranty of Software shall be void and of no effect if: (a) the Software
is not properly stored, installed, or maintained in accordance with MedQuist’s
recommendations or standard industry practice; (b) the Software is not operated under
normal conditions and in accordance with MedQuist’s recommendations or standard industry
practice; (c) the defect has arisen from damages occurring to the Software subsequent to
MedQuist’s delivery or is related to the use of unauthorized hardware or software; or (d)
failure of the Software due to (i) inadequate electrical power, air-conditioning, or
humidity-control, (ii) accident or disaster, including without limitation, fire, flood,
water, wind, and lightning, (iii) neglect, including without limitation, power
transients, abuse or misuse, and failure of the Customer to follow MedQuist’s published
operating instructions, (iv) unauthorized modification or repair of Software by persons
other than authorized representatives of MedQuist, or (v) use of the Software for
purposes other than those for which designed.
	 
	 	c)	 	MedQuist’s warranty of Software does not include (a) performing services connected
with relocation of Software or adding or removing interfaces, accessories, attachments or
other devices, (b) repair of damage due to other than normal wear, (c) electrical work
external to the Software, (d) any maintenance of interfaces, accessories, attachments, or
other devices not furnished by MedQuist, or (e) any issues resulting from an unsupported
service.
	 
	 	d)	 	THE WARRANTY MADE BY MEDQUIST HEREIN, IS EXCLUSIVE AND IS MADE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY, AND IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, AND ANY
WARRANTY ARISING OUT OF ANY COURSE OF DEALING, CUSTOM, OR USAGE OF TRADE. IN NO EVENT,
SHALL MEDQUIST BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGE.S OR
ECONOMIC LOSS UNDER ANY LEGAL THEORY ASSERTED, EVEN IF MEDQUIST HAS BEEN ADVISED OF THE
POSSIBILITY THEREOF.
	 
	 	e)	 	ALL NON-BRANDED SOFTWARE AND NON-BRANDED DOCUMENTATION ARE PROVIDED HEREUNDER ON
AN “AS IS” BASIS. NON-MEDQUIST MANUFACTURERS OR SUPPLIERS MAY PROVIDE WARRANTIES FOR
THEIR SOFTWARE OR DOCUMENTATION AND ALL WARRANTY QUESTIONS OR PROBLEMS WITH RESPECT TO
SUCH SOFTWARE OR DOCUMENTATION SHOULD BE ADDRESSED DIRECTLY TO SUCH NON-MEDQUIST
MANUFACTURER OR

 

			
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	 		 	SUPPLIER. CUSTOMER EXPRESSLY ASSUMES ALL LIABILITY FOR ALL AND ANY LOSSES, DAMAGES, AND
COSTS (INCLUDING COURT COSTS AND LEGAL FEES) IN CONNECTION WITH, OR RELATED TO, SUCH
NON-BRANDED SOFTWARE OR NON-BRANDED DOCUMENTATION. THE ENTIRE RISK AS TO THE
QUALITY OR PERFORMANCE OF SUCH NON-BRANDED SOFTWARE OR NON-BRANDED DOCUMENTATION IS WITH
CUSTOMER.

7. LIMITATION OF REMEDY.

	 	a)	 	If any Software is found to be defective within the warranty period, MedQuist’s only
obligation, and Customer’s exclusive and sole remedy, as MedQuist may choose in
MedQuist’s sole best judgment, shall be either (a) the repair or replacement of such
defective Software by MedQuist, or (b) the return of such defective Software to MedQuist
and a refund to Customer of its license fee. Customer acknowledges and agrees that
MedQuist’s right to refund Customer’s license fee shall not be diminished or restricted
in any way or for any reason. The provision of such remedy shall be conditioned upon
notification, and substantiation as may be required by MedQuist, that such Software has
been stored, installed, maintained, and operated in accordance with MedQuist’s
recommendations or standard industry practice. Unless otherwise directed by MedQuist, all
such defective Software shall be returned to MedQuist’s warehouse, or to such other
location as MedQuist shall select, all at MedQuist’s expense.
	 
	 	b)	 	Except for MedQuist’s obligations set out in Section 14 (a) above, MedQuist shall
have no obligation, liability, or responsibility to Customer or any other party with
respect to any claim or cause of action arising in connection with, or related to, this
EULA, whether legal or equitable, including, without limitation, any claim or cause of
action in contract or in tort (whether in negligence or in strict liability)..Customer
acknowledges and agrees MedQuist’s total obligation and liability for any such claim or
cause of action shall be limited to an amount in the aggregate which shall not exceed the
total price paid by Customer for the specific Software or Documentation which are the
subject matter of and directly related to such claim or cause of action. Customer
expressly assumes all liability for all and any losses, damages, and costs (including
court costs and legal fees) in excess of such amount. No claim or causes of action,
regardless of form, may be brought more than one (1) year after such claim or cause of
action arises.
	 
	 	c)	 	The purpose of the above stated remedy is to correct any defects or to refund the
license fee paid. Customer acknowledges and agrees that such exclusive remedy is an
essential term in the bargain represented by this EULA and that such remedy shall, in view
of the consideration paid to MedQuist, operate as a full satisfaction to Customer for any
and all claims related thereto. In further view of the foregoing, Customer acknowledges
and agrees that in the event a court of competent jurisdiction or an arbitration panel
rules this exclusive remedy does not give the Customer the benefit of its bargain or that
such exclusive remedy fails for any reason, then any such ruling with regard to such
exclusive remedy or any such failure of such exclusive remedy, shall not effect or modify
in any way, any limitation or exclusion of warranties, and all such limitations and
exclusions shall continue in full force and effect.

	8.	 	GOVERNING LAW. This Agreement shall be governed by the laws of the state listed in Customer’s
address on the Final Terms of Sale referenced by the Product Sales Agreement within which this
EULA is incorporated. Any term or condition prohibited by law shall, to the extent prohibited,
be ineffective without affecting the other terms and conditions.
	 
	9.	 	MERGER. All parties acknowledge and agree that in entering into this transaction, they have
not relied upon any representations regarding this EULA, other than those explicitly set forth
herein. Further, the parties expressly admit that any term or condition which is, or may be
asserted, as material by any party and which is not expressly stated in this EULA, shall not
be part of this EULA and shall not be binding on any parties hereto. Each party waives all
defenses, with regard to any such asserted material, term, or conditions not expressly stated
within this EULA.
	 
	10.	 	FORCE MAJEURE. If either party to this EULA is temporarily unable to perform its
obligations because of causes reasonably beyond its control, then no liability to the other
party or right to terminate shall exist for failure of that party to perform during such
period.
	 
	11.	 	WAIVER. MedQuist’s failure to insist on strict performance of this EULA or to enforce a
default upon the occurrence of any single, repeated, or continuing violation of any
particular term or condition hereof, shall not be considered a waiver of MedQuist’s right
to insist on strict performance of this EULA or to enforce a default with respect to the
violation of any other term or condition or, at any later time or upon any subsequent
occurrence, with respect to that particular term or condition.
	 
	12.	 	MODIFICATION. No waiver, change, or amendment of any term or condition of this EULA is
effective against MedQuist unless made in writing and signed by an authorized official of
MedQuist.

 

			
	*******	 	- Material has been omitted and filed separately with the Commission.

3

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