Exhibit 10.6.1
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
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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.
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 fess 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.
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: _________________________ By: ________________________________
Name: Name:
Title: Title:
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.