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INDEMNIFICATION AGREEMENT
This
Indemnification Agreement (“Agreement”), dated
December 11, 2007, is entered into by and between MedQuist
Inc. (the “Company”), and Mark Schwarz
(“Indemnitee”).
WHEREAS,
the Company desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve the Company and
its subsidiaries as directors, officers and in other
capacities;
WHEREAS,
the Company and Indemnitee recognize the continued difficulty in
obtaining liability insurance for the directors, officers,
employees and other agents of the Company, the significant
increases in the cost of such insurance and the general reductions
and limitations in the coverage of such insurance;
WHEREAS,
the Company and the Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors,
officers, employees and other agents serving corporations to
expensive litigation risks at the same time as the availability and
coverage of liability insurance has been severely limited;
WHEREAS,
the Company has adopted bylaws (the “Bylaws”) providing
for the indemnification of directors, officers, employees and other
agents of the Company, including persons serving at the request of
the Company in such capacities with other corporations or
enterprises, as authorized by New Jersey law;
WHEREAS,
the Bylaws and New Jersey law, by their non-exclusive nature,
permit agreements between the Company and its directors, officers,
employees and other agents with respect to indemnification of such
persons; and
WHEREAS,
in order to induce Indemnitee to accept a position with the Company
as a director, officer or in another capacity or capacities and/or
continue to provide services to the Company as a director, officer
or in another capacity or capacities, the Company wishes to provide
for the indemnification of, and the advancement of expenses to,
Indemnitee to the maximum extent now or hereafter permitted by
law;
NOW,
THEREFORE, the Company and Indemnitee hereby agree as follows.
1.
Indemnification .
(a)
Third Party Proceedings . The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to be
made a party to any threatened, pending or completed action, suit,
proceeding or any arbitration or other alternative dispute
resolution mechanism, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any
subsidiary of the Company, or by reason of the fact that Indemnitee
is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys’ fees), judgments, fines and amounts
paid in settlement (if such settlement is approved in advance by
the Company, which approval shall not be unreasonably withheld)
actually and reasonably incurred by Indemnitee in connection with
such action, suit or proceeding if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe Indemnitee’s conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not
act in good faith and in a manner which Indemnitee reasonably
believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that Indemnitee’s conduct was
unlawful.
(b)
Proceedings By or in the Right of the Company . The Company
shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Company or any
subsidiary of the Company to procure a judgment in its favor by
reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company,
or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys’ fees) and,
to the fullest extent permitted by law, amounts paid in settlement,
actually and reasonably incurred by Indemnitee in connection with
the defense or settlement of such action or suit if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed
to be in or not opposed to the best interests of the Company,
except that no indemnification shall be made in respect of any
claim, issue or matter as to which Indemnitee shall have been
adjudged to be liable to the Company unless and only to the extent
that the New Jersey court or the court in which such action or suit
was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity
for such expenses which the New Jersey court or such other court
shall deem proper.
(c)
Mandatory Payment of Expenses . To the extent that
Indemnitee has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections
1(a) or (b) hereof, or in defense of any claim, issue or
matter therein, Indemnitee shall be indemnified against expenses
(including attorneys’ fees) actually and reasonably incurred
by Indemnitee in connection therewith.
2. Advancement of
Expenses; Notice; Indemnification Procedure .
(a)
Advancement of Expenses . The Company shall advance all
expenses incurred by Indemnitee in connection with the
investigation, defense, settlement or appeal of any civil or
criminal action, suit or proceeding referenced in Section 1(a) or
(b) hereof (but not amounts actually paid in settlement of any
such action, suit or proceeding). Indemnitee hereby undertakes to
repay such amounts advanced only if, and to the extent that, it
shall ultimately be determined that Indemnitee is not entitled to
be indemnified by the Company as authorized hereby.
(b)
Notice of Indemnification Claim; Cooperation by Indemnitee .
Indemnitee shall, as a condition precedent to his or her right to
be indemnified under this Agreement, give the Company notice in
writing as soon as practicable of any claim made against Indemnitee
for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the General
Counsel of the Company at the address indicated on the signature
page of this Agreement (or such other address as the Company shall
designate in writing to Indemnitee). Notice shall be deemed
received as provided in Section 13 hereof. Indemnitee also
shall provide the Company such information and cooperation as the
Company may reasonably require and as shall be within
Indemnitee’s power.
(c)
Indemnification Procedure . Any indemnification and/or
advances provided for in Sections 1 and 2 hereof shall be made
no later than thirty (30) days after receipt of the written
request of Indemnitee. If a claim under this Agreement, under any
statute, or under any provision of the Company’s Certificate
of Incorporation or Bylaws providing for indemnification, is not
paid in full by the Company within thirty (30) days after a
written request for payment thereof has first been received by the
Company, Indemnitee may at any time thereafter bring an action
against the Company to recover the unpaid amount of the claim. It
shall be a defense to any such action brought by Indemnitee (other
than an action brought to enforce a claim for expenses incurred in
connection with any action, suit or proceeding in advance of its
final disposition) that Indemnitee has not met the standards of
conduct which make it permissible under applicable law for the
Company to indemnify Indemnitee for the amount claimed.
Notwithstanding the foregoing, Indemnitee shall be entitled to
receive advancements of expenses pursuant to Section 2(a) hereof
unless and until such defense may be finally adjudicated by court
order or judgment from which no further right of appeal exists. It
is the intention of the parties that if the Company contests
Indemnitee’s right to indemnification, the question of
Indemnitee’s right to indemnification shall be for the court
to decide, and neither the failure of the Company (including its
Board of Directors, any committee or other subgroup of the Board of
Directors, independent legal counsel, or its stockholders) to have
made a determination that indemnification of Indemnitee is proper
in the circumstances because Indemnitee has met the applicable
standard of conduct required by applicable law, nor an actual
determination by the Company (including it Board of Directors, any
committee or other subgroup of the Board of Directors, independent
legal counsel, or its stockholders) that Indemnitee has not met
such applicable standard of conduct, shall create a presumption
that Indemnitee has or has not met the applicable standard of
conduct.
(d)
Notice to Insurers . If, at the time of the receipt of a
notice of a claim pursuant to Section 2(b) hereof, the Company has
director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to
the insurer in accordance with the procedures set forth in the
applicable policy. The Company shall thereafter take all action it
deems reasonably necessary or advisable to cause such insurers to
pay, on behalf of the Indemnitee, all amounts payable as a result
of such proceeding in accordance with the terms of such
policies.
(e)
Selection of Counsel . In the event the Company shall be
obligated under Section 2(a) hereof to pay the expenses of any
proceeding against Indemnitee, the Company shall be entitled to
assume the defense of such proceeding, with counsel approved by
Indemnitee (such approval not to be unreasonably withheld), upon
the delivery to Indemnitee of written notice of its election to do
so. After delivery of such notice, approval of such counsel by
Indemnitee and the retention of such counsel by the Company, the
Company will not be liable to Indemnitee under this Agreement for
any fees of counsel subsequently incurred by Indemnitee wi
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