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Third Amended And Restated Oem Supply Agreement

Supply Agreement

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MEDQUIST INC | Nuance Communications, Inc

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Title: THIRD AMENDED AND RESTATED OEM SUPPLY AGREEMENT
Governing Law: New York     Date: 7/6/2010
Industry: Computer Services     Law Firm: Buchanan Ingersoll     Sector: Technology

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Exhibit 10.12

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.

 

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     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)

 

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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

 

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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 prior

 

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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


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