THIS SERVICES AGREEMENT (this “
Agreement ”) is dated as of September 19, 2009
and is between MedQuist Inc., a company incorporated in New Jersey
(together with its successors, the “ Company ”),
and CBay Inc., a company incorporated in Delaware (“
CBay ”).
BACKGROUND
1. CBay has expertise in the
areas of management, finance, strategy, acquisitions and other
matters relating to the Company and its business.
2. The Company desires to avail
itself of CBay’s expertise, which the Company believes will
be beneficial to it, and CBay desires to provide the Services (as
defined below) to the Company as set forth in this Agreement in
consideration of the payment of the fees described below.
3. The rendering by CBay of the
Services has been made and will be made on the basis that the
Company will pay, or cause to be paid, the fees described
below.
In consideration of the premises and
agreements contained herein and of other good and valuable
consideration, the sufficiency of which are hereby acknowledged,
the parties agree as follows:
AGREEMENT
SECTION 1. Appointment . The
Company hereby engages CBay to render the Services on the terms and
subject to the conditions of this Agreement.
SECTION 2. Services .
(a) CBay agrees that until the
Termination Date (as defined below), it will render to the Company,
upon the request of the Company’s Chief Executive Officer and
by and through itself and its affiliates (excluding the Company and
its subsidiaries), advisory and consulting services in relation to
the affairs of the Company and its subsidiaries, including, without
limitation, those services set forth on Exhibit A to
this Agreement (collectively, the “ Services
”).
(b) It is understood and agreed
that the Services hereunder will be performed primarily by Robert
M. Aquilina, Michael Seedman and Clyde Swoger, or their
replacements at CBay who are reasonably acceptable to the
Company’s Chief Executive Officer; that these individuals
will devote such time as may be required by the Company’s
Chief Executive Officer, consistent with past practice, to
performing Services hereunder; and that CBay will, in its
reasonable discretion and upon prior consultation with the
Company’s Chief Executive Officer, utilize such other persons
who have the requisite experience and knowledge to perform the
Services as may be necessary from time to time. It is further
understood and agreed that CBay will use commercially reasonable
efforts to make available from time to time the services of Peter
Berger and Frank Baker (or their successors at S.A.C. Private
Capital Group, LLC (“ SAC PCG ”) who are
reasonably acceptable to the Company’s Chief Executive
Officer) to perform Services hereunder as may be required in its or
the Company’s Chief Executive Officer’s reasonable
discretion.
SECTION 3. Services Fee .
(a) In consideration of the
Services rendered by CBay since July 1, 2009 and to be
rendered by CBay pursuant to this Agreement, the Company will pay,
or will cause to be paid, to CBay a quarterly services fee equal to
$350,000 (the “ Services Fee ”), which shall be
payable in arrears. As promptly as possible following the end of
each calendar quarter, CBay shall deliver to the Audit Committee of
the Board of Directors of the Company (the “ Audit
Committee ”) a Services Report in respect of such
calendar quarter, and the Audit Committee shall endeavor to review
and consider for acceptance such Services Report at the meeting of
the Audit Committee held each quarter to review the Company’s
financial statements for such quarter. “ Services
Report ” shall mean a report prepared by CBay describing
in reasonable detail the services provided by CBay under this
Agreement during the quarter, including without limitation a
description of the matters worked on, the name of each person who
performed Services and the approximate percentage of his working
time devoted to performing Services. The Company’s Chief
Executive Officer shall certify that the Services set forth in the
Services Report were performed in the applicable calendar quarter.
If requested by the Audit Committee in connection with its review
of the Services Report as certified by the Company’s Chief
Executive Officer, CBay will make available to the Audit Committee
those personnel who performed the Services described in the
Services Report. The Services Fee for each calendar quarter,
beginning with the calendar quarter ended September 30, 2009,
shall be paid by the Company to CBay in respect of Services
rendered for such quarter on the later of (i) 45 days
after the end of such quarter and (ii) five (5) business
days following the Audit Committee’s acceptance of, in
accordance with this Section 3(a), a Services Report certified
by the Company’s Chief Executive Officer for such period.
(b) In the event the Company or
any of its subsidiaries (i) enters into a business combination
transaction with another entity that is large enough to constitute
a “significant subsidiary” of the Company under any of
the relevant tests contained in Regulation S-X as promulgated
by the United States Securities and Exchange Commission, or
(ii) disposes of an entity that constitutes a
“significant subsidiary” of the Company, the Company
and CBay will enter into good faith discussions to determine
whether an adjustment to the Services Fee is required in light of
any change in the extent of Services required hereunder as a result
of such business combination or disposition. Any adjustment to the
Services Fee pursuant to this Section 3(b) must be approved by the
Audit Committee.
(c) To the extent the Company
cannot pay, or cause to be paid, the Services Fee for any reason,
including by reason of any prohibition on such payment pursuant to
any applicable law or the terms of any debt financing of the
Company or its subsidiaries, the payment by the Company or any of
its subsidiaries to CBay of the Services Fee will be payable
immediately on the earlier of (i) the first date on which the
payment of such deferred Services Fee is no longer prohibited by
law or under any contract applicable to the Company and the Company
is otherwise able to make such payment or cause such payment to be
made, and (ii) total or partial liquidation, dissolution or
winding up of the Company. Notwithstanding anything to the contrary
herein, under any applicable law or under any contract applicable
to the Company or its subsidiaries, any forbearance of collection
of the Services Fee by CBay shall not be deemed to be a
subordination of such payments to any other person, entity or
creditor of the Company or its subsidiaries. If the payment of any
Services Fee is deferred pursuant to this Section 3(c), the
unpaid portion of such Services Fee shall bear interest at an
annual rate of six percent (6%) from the date such payment would
have been made but for this Section 3(c) until paid. CBay may, at
its sole option and discretion, elect to forbear payment of the
Services Fee for any quarter for any period of time specified by
CBay; however, in such event, CBay shall not be entitled to
interest on such Services Fee during the forbearance period
specified by CBay, and the Company’s obligation to pay such
Services Fee at the end of the forbearance period specified by CBay
shall be subject to the first sentence of this Section 3(c),
but if the Company cannot pay the Services Fee at the end of the
forbearance period specified by CBay because of the first sentence
of this Section 3(c), then CBay shall be entitled to interest
on such Services Fee from the end of the forbearance period
specified by CBay until paid.
(d) During the term of this
Agreement, none of Messrs. Aquilina, Baker, Berger, Seedman,
Swoger, any other person providing Services hereunder, nor any
other person employed by SAC PCG or CBay or any of their respective
affiliates (other than the Company and its subsidiaries), shall be
entitled to any fees for serving as a director of the Company or
any of its subsidiaries.
SECTION 4. Reimbursements
.
(a) In addition to the fees
payable pursuant to this Agreement, the Company will pay directly,
or reimburse CBay and each of its affiliates (other than the
Company and its subsidiaries) for, Out-of-Pocket Expenses (as
defined below). For the purposes of this Agreement, the term
“ Out-of-Pocket Expenses ” means the reasonable
out-of-pocket costs and expenses incurred by persons employed by
CBay and its affiliates (other than the Company and its
subsidiaries) in connection with the Services provided by them
under this Agreement, including, without limitation,
transportation, travel-related expenses or any similar expense not
associated with CBay’s or its affiliates’ (other than
the Company and its subsidiaries) ordinary operations.
Notwithstanding the foregoing, Out-of-Pocket Expenses shall not
include, and the Company will not be obligated to pay directly or
reimburse, any of the following, without the prior written
agreement of the Company: (i) fees and disbursements of any
independent professionals and organizations, including independent
accountants, outside legal counsel or consultants, retained by CBay
or any of its affiliates (other than the Company and its
subsidiaries), and (ii) costs of any outside services or
independent contractors such as financial printers, couriers,
business publications, on-line financial services or similar
services, retained or used by CBay or any of its affiliates (other
than the Company and its subsidiaries).
(b) All payments or
reimbursements for Out-of-Pocket Expenses will be made by the
Company within 30 days following delivery by CBay to the
Company and the Chairman of the Audit Committee of an invoice
containi
