GOVERNANCE AGREEMENT
AMONG
MEDQUIST INC.
AND
KONINKLIJKE PHILIPS ELECTRONICS N.V.
DATED AS OF MAY 22, 2000
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS.......................................................1
Section 1.01. Definitions.................................................1
ARTICLE II PURCHASES AND SALES OF EQUITY SECURITIES..........................3
Section 2.01. Purchases of Equity Securities..............................3
Section 2.02. Transfer of Common Stock....................................3
Section 2.03. Co-Sale Right...............................................4
ARTICLE III CORPORATE GOVERNANCE..............................................5
Section 3.01. Composition of the Board of Directors.......................5
Section 3.02. Election and Removal of Directors...........................7
Section 3.03. Solicitation and Voting of Shares...........................7
Section 3.04. Committees..................................................8
Section 3.05. Certificate of Incorporation and By-Laws....................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES....................................9
Section 4.01. Representations of Purchaser and the Company................9
Section 4.02. Required Filings and Consents..............................10
ARTICLE V DIRECTORS AND OFFICERS LIABILITY INSURANCE.......................10
Section 5.01. Insurance..................................................10
ARTICLE VI MISCELLANEOUS....................................................10
Section 6.01. Notices....................................................10
Section 6.02. Amendments; No Waivers.....................................12
Section 6.03. Severability...............................................12
Section 6.04. Entire Agreement; Assignment...............................12
Section 6.05. Parties in Interest........................................12
Section 6.06. Governing Law and Venue; Waiver of Jury Trial;
Specific Performance.......................................12
Section 6.07. Headings...................................................13
Section 6.08. Counterparts; Facsimile....................................14
Section 6.09. Effective Time; Termination................................14
Section 6.10. Combinations or Divisions of Equity Securities.............14
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GOVERNANCE AGREEMENT
GOVERNANCE AGREEMENT (this "Agreement"), dated as of May 22, 2000,
between Koninklijke Philips Electronics N.V., a corporation organized under the
laws of The Netherlands ("Purchaser"), and MedQuist Inc., a New Jersey
corporation (the "Company").
WHEREAS, Purchaser and the Company have entered into a Tender Offer
Agreement dated as of May 22, 2000 (the "Tender Offer Agreement") pursuant to
which Purchaser will commence a tender offer for 22,250,327 shares of the
Company's common stock, no par value (the "Common Stock"), at a price of $51.00
per share in cash net to the Seller, subject to the terms and conditions set
forth in the Tender Offer Agreement (the "Tender Offer"); and
WHEREAS, Purchaser and the Company desire to establish in this
Agreement certain terms and conditions concerning the corporate governance of
the Company and certain terms and conditions concerning the acquisition and
disposition of securities of the Company by Purchaser and its Affiliates and
Associates (each as defined in Section 1.01 below); and
WHEREAS, to induce the Company to enter into the Tender Offer
Agreement, the Company has requested that Purchaser enter into this Agreement;
and
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, Purchaser and the Company hereby agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
terms have the following meanings:
(a) "Affiliate" has the same meaning as in Rule 12b-2 promulgated
under the Exchange Act.
(b) "Associate" has the same meaning as in Rule 12b-2 promulgated
under the Exchange Act.
(c) "Beneficial owner" and to "beneficially own" has the same
meaning as in Rule 13d-3 promulgated under the Exchange Act.
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(d) "Board of Directors" means the entire Board of Directors of
the Company, as constituted from time to time.
(e) "Director" means a member of the Board of Directors.
(f) "Equity Security" means any (i) Voting Stock, (ii) securities
of the Company convertible into or exchangeable for Voting Stock, and (iii)
options, rights, warrants and similar securities issued by the Company to
purchase Voting Stock.
(g) "Exchange Act" means the Securities Exchange Act of 1934, and
the rules and regulations promulgated thereunder, as amended.
(h) "Independent Director" means a director of the Company (i) who
is not and has never been an officer or employee of the Company, any Affiliate
or Associate of the Company, or an entity that derived 5% or more of its
revenues or earnings in its most recent fiscal year from transactions involving
the Company or any Affiliate or Associate of the Company, (ii) who is not and
has never been an officer, employee or director of Purchaser, any Affiliate or
Associate of Purchaser, or an entity that derived more than 5% of its revenues
or earnings in its most recent fiscal year from transactions involving Purchaser
or any Affiliate or Associate of Purchaser and (iii) who was nominated for such
position by the Nominating Committee in accordance with Section 3.04(a)(i). The
initial Independent Directors shall be John H. Underwood, Richard H. Stowe and
A. Fred Ruttenberg.
(i) "Officer" has the same meaning as in Rule 16a-1(f) promulgated
under the Exchange Act.
(j) "SEC" means the United States Securities and Exchange
Commission.
(k) "Securities Act" means the Securities Act of 1933, and the
rules and regulations promulgated thereunder, as amended.
(l) "Subsidiary" has the same meaning as in Rule 12b-2 promulgated
under the Exchange Act.
(m) "Voting Stock" means shares of capital stock of the Company
(including the Common Stock) having the right to vote generally in any election
of Directors.
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ARTICLE II
PURCHASES AND SALES OF EQUITY SECURITIES
Section 2.01. Purchases of Equity Securities.
(a) Until the third anniversary of the Effective Time, Purchaser
shall not, directly or indirectly through one or more of its Affiliates or
Associates, purchase or otherwise acquire, or propose or offer to purchase or
acquire, or otherwise become the beneficial owner, individually or as a member
of a "group" (as defined for purposes of Section 13d of the Exchange Act), of
any Equity Securities, whether by merger, consolidation, recapitalization,
tender or exchange offer, market purchase, privately negotiated purchase, or
otherwise, if, immediately after such transaction, Purchaser and its Affiliates
or Associates would, directly or indirectly, beneficially own in excess of 75%
of the then outstanding shares of Voting Stock; provided, however, that after
the first anniversary of the Effective Time, subject to the receipt of the
approval of the Supervisory Committee (as defined below), Purchaser or any of
its Affiliates or Associates may acquire, in one transaction or in a series of
related transactions, all, but not less than all, of the Equity Securities of
the Company which are not then, directly or indirectly, beneficially owned by
Purchaser or one or more of its Affiliates or Associates.
(b) Notwithstanding the foregoing, Purchaser shall not be deemed
to be in violation of this Section 2.01 if Purchaser, or its Affiliates or
Associates in the aggregate, inadvertently becomes the direct or indirect
beneficial owner of more than 75% of the then outstanding shares of Voting Stock
and, as soon as commercially practicable, divests itself or themselves of a
sufficient amount of the Equity Securities so that it or they are no longer the
beneficial owner of more than 75% of the then outstanding shares of Voting
Stock.
Section 2.02. Transfer of Common Stock.
(a) Until the first anniversary of the Effective Time, Purchaser
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, sell, transfer or otherwise dispose of any Equity Securities
beneficially owned, directly or indirectly, by Purchaser or its Subsidiaries
except to Purchaser or to any Subsidiary of Purchaser. Until the first
anniversary of the Effective Time, Purchaser will not sell, transfer or
otherwise dispose of any of the capital stock (or any options or warrants to
purchase capital stock or securities convertible or exchangeable for capital
stock (collectively, "Derivative Equity Securities")) of any Subsidiary of
Purchaser that owns Equity Securities if, as a result of such sale, transfer or
other disposition, such Subsidiary would no longer be a Subsidiary, unless
Purchaser shall have first caused any such Equity Securities to be transferred
to another Subsidiary of Purchaser. Notwithstanding anything to the contrary
contained in
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Section 2.02(a), Purchaser may sell, transfer or assign Equity Securities, or
the capital stock or Derivative Equity Securities of its Subsidiaries, or permit
any of its Subsidiaries which beneficially own Equity Securities to sell,
transfer or assign such Equity Securities, so long as after giving affect to any
such sales, transfers or assignments of Equity Securities, Purchaser and its
Subsidiaries, beneficially own at least 60% of the then outstanding shares of
Voting Stock.
(b) Subject to the provisions of Section 2.03, after the first
anniversary of the Effective Time, Purchaser and its Subsidiaries may sell,
transfer or otherwise dispose of any of the Equity Securities beneficially owned
to any person or entity.
(c) Until the third anniversary of the Effective Time, each
certificate evidencing outstanding Equity Securities that is beneficially owned
by Purchaser or its Affiliates or Associates shall be stamped or otherwise
imprinted with a legend substantially in the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET
FORTH IN A STOCKHOLDERS AGREEMENT DATED AS OF MAY
22, 2000, A COPY OF WHICH IS AVAILABLE AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO
REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE
MADE ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH
RESTRICTIONS HAVE BEEN COMPLIED WITH."
(d) Any Affiliate or Associate of Purchaser that is a purported
purchaser, transferee or other recipient of Equity Securities permitted pursuant
to this Article II (other than in open-market purchases) shall, as a condition
precedent to its receipt and ownership of any such Equity Securities, execute an
agreement pursuant to which it becomes legally bound by this Agreement and the
restrictions contained herein.
(e) Proposed transfers of Equity Securities that are not in
compliance with this Article II shall be of no force or effect and the Company
shall not be required to recognize any such transfer or purported transfer.
Section 2.03. Co-Sale Right.
(a) During the period beginning on the first anniversary of the
Effective Time and ending on the third anniversary of the Effective Time,
Purchaser shall not enter into or consummate any transaction (or series of
related transactions) involving the sale
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or transfer of Equity Securities (or the sale or transfer of capital stock or
Derivative Equity Securities of any Subsidiary which beneficially owns Equity
Securities) that would result in (i) any person other than the Purchaser or any
Affiliate or Associate of Purchaser beneficially owning in excess of 10% of the
outstanding Voting Stock (a "Third Party Purchaser") and (ii) Purchaser and its
Affiliates and Associates beneficially owning less than a majority of the then
outstanding Voting Stock, unless:
(i) the Third-Party Purchaser contemporaneously therewith
offers to acquire, or acquires, on the same terms and conditions as are
applicable to Purchaser, its Affiliates or Associates, 100% of the Voting Stock
beneficially owned by persons or entities other than Purchaser, its Affiliates
or Associates, or
(ii) the Third-Party Purchaser offers to purchase, on the same
terms and conditions as are applicable to the Purchaser, its Affiliates or
Associates, pursuant to a tender or exchange offer made in accordance with
applicable law, including Section 14(d)(l) and Regulation 14D of the Exchange
Act, all or a specified percentage of the outstanding shares of Voting Stock; it
being understood that in such event, Purchaser agrees that neither it, nor any
of its Affiliates or Associates will sell to the Third Party Purchaser, its
Affiliates or Associates, any shares of Voting Stock beneficially owned by it
other than pursuant to such contemplated tender or exchange offer.
ARTICLE III
CORPORATE GOVERNANCE
Section 3.01. Composition of the Board of Directors.
(a) The Company shall take any and all action necessary (including
by securing the resignation of persons who were Directors prior to the Effective
Time) so that promptly following the Effective Time, the Board of Directors
shall consist of eleven Directors, of which (i) one Director shall be the Chief
Executive Officer of the Company and one Director shall be another Officer of
the Company designated by the Chief Executive Officer of the Company (together,
the "Management Directors"), (ii) six Directors shall be designated by
Purchaser, all of whom may be directors, officers, employees, Affiliates or
Associates of Purchaser (the "Purchaser Directors"), and (iii) three Directors
shall be Independent Directors. From and after the time the Board of Directors
has been reconstituted in accordance with the preceding sentence, the Board of
Directors shall consist of eleven Directors, of which (i) two Directors shall be
Management Directors, (ii) in accordance with subsection (b) below, six or fewer
Directors shall be Purchaser Directors, and (iii) in accordance with subsection
(c) below, three or more shall be Independent Directors; provided, however, the
Board of Directors shall be empowered in its discretion to increase or decrease,
from time to time, the
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number of Directors so long as (x) there shall be at least two Management
Directors and three Independent Directors, and (y) the relative percentage of
Management Directors, Independent Directors and Purchaser Directors shall be
maintained, in all material respects, as in effect immediately prior to any such
increase or decrease; and, provided, further, that if the Board of Directors
changes the number of Directors constituting the entire Board of Directors, then
the number of Directors and the percentages set forth in subsection (b) below
shall be appropriately adjusted, subject to the immediately preceding
provisions.
(b) Subject to subsection (a) above and subsection (c) below, the
parties agree that:
(i) until the first date that Purchaser and its Subsidiaries
shall not beneficially own, in the aggregate, at least a majority of the
outstanding Voting Stock, Purchaser shall have the right to designate six
Purchaser Directors;
(ii) after the first date that Purchaser and its Subsidiaries
shall beneficially own, in the aggregate, less than a majority but at least 36%
of the outstanding Voting Stock, Purchaser shall have the right to nominate
four, but not more than four, Purchaser Directors;
(iii) after the first date that Purchaser and its Subsidiaries
shall beneficially own, in the aggregate, less than 36% but at least 27% of the
outstanding Voting Stock, Purchaser shall have the right to nominate three, but
not more than three, Purchaser Directors;
(iv) after the first date that Purchaser and its Subsidiaries
shall beneficially own, in the aggregate, less than 27% but at least 18% of the
outstanding Voting Stock, Purchaser shall have the right to nominate two, but
not more than two, Purchaser Directors;
(v) after the first date that Purchaser and its Subsidiaries
shall beneficially own, in the aggregate, less than 18% but at least 5% of the
outstanding Voting Stock, Purchaser shall have the right to nominate one, but
not more than one, Purchaser Director; and
(vi) After the first date that Purchaser and its Subsidiaries
shall beneficially own, in the aggregate, less than 5% of the outstanding Voting
Stock, Purchaser shall have no right to nominate any Directors.
(c) In the event that Purchaser shall have the right to designate
less than six Directors pursuant to subsection 3.01(b) above, the Nominating
Committee shall
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nominate that number of additional Independent Directors as is necessary to
constitute the entire Board of Directors (as constituted at such time) and
Purchaser shall cause such Purchaser Directors to resign promptly so as to
permit the additional Independent Directors to be appointed or elected.
(d) Purchaser shall have the right to designate any replacement
for a Purchaser Director at the termination of such Director's term or upon such
Director's death, resignation, retirement, disqualification, removal from office
or other cause, and the Chief Executive Officer of the Company shall have the
right to designate any replacement for a Management Director at the termination
of such Director's term or upon such Director's death, resignation, retirement,
disqualification, removal from office or other cause.
(e) No individual who is an officer, director, partner or
principal stockholder of any competitor of the Company or any of its
Subsidiaries shall serve as a Director; provided, however, the foregoing shall
not apply to officers, directors, partners or principal stockholders of
Purchaser, its Affiliates or Associates.
(f) The parties hereto acknowledge that no director of the Company
shall be deemed to be the deputy of, or otherwise be required to discharge his
or her duties as a member of the Board of Directors under the direction of, or
with special attention to the interests of, any shareholder of the Company, and
each director shall be required to discharge his or her duties to all
shareholders of the Company.
Section 3.02. Election and Removal of Directors. In connection with the
filling of any vacancy on the Board of Directors, however such vacancy shall
have resulted, Purchaser shall cause each Purchaser Director to vote in favor of
those Directors nominated or designated in accordance with this Article III.
Purchaser shall not take any action or permit any Purchaser Director to take any
action to remove any Director, other than a Purchaser Director, without cause.
Section 3.03. Solicitation and Voting of Shares.
(a) The Company shall use commercially reasonable efforts to
solicit from the stockholders of the Company eligible to vote for the election
of Directors proxies in favor of the nominees designated or nominated in
accordance with this Article III.
(b) Purchaser shall vote or cause to be voted all of its shares of
Voting Stock beneficially owned by it or by any of its Affiliates or Associates
(other than shares of Voting Stock obtained by its Affiliates (other than its
Subsidiaries) or Associates in
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open-market purchases) in favor of nominees designated or nominated in
accordance with this Article III.
(c) Purchaser shall vote or cause to be voted, whether at a
meeting or by execution of a written consent, all of the shares of Voting Stock
beneficially owned by it or by any of its Affiliates or Associates in favor of
the approval of an increase in the maximum number of shares of the Common Stock
which may be issued under the Company's Incentive Stock Option Plan for Officers
and Key Employees to 7,130,000 shares.
Section 3.04. Committees.
(a) Subject to the general oversight and authority of the full
Board of Directors, the Board of Directors shall establish and, during the term
of this Agreement, empower and maintain the committees of the Board of Directors
contemplated by this Section 3.04:
(i) a Nominating Committee, responsible, among other things,
for the nomination, subject to Section 3.01, of the Independent Directors and
consisting solely of two Independent Directors, one Purchaser Director and one
Management Director as selected by the Board of Directors from time to time;
(ii) a Compensation Committee, responsible, among other
things, for the adoption, amendment and administration of all employee benefit
plans and arrangements and the compensation of all Officers of the Company, and
consisting of two Independent Directors and two Purchaser Directors as selected
by the Nominating Committee and the Purchaser, respectively, from time to time;
(iii) a Supervisory Committee, responsible, among other
things, for (A) the general oversight, administration, amendment and
enforcement, on behalf of the Company, of (1) those provisions of the Tender
Offer Agreement that survive Purchaser's purchase of shares pursuant to the
Tender Offer, (2) this Agreement, and (3) that certain License Agreement dated
today's date between an Affiliate of Purchaser and the Company, and (B) the
entry into, general oversight, administration, amendment and enforcement, on
behalf of the Company, of any other agreements or arrangements between the
Company or any of its Subsidiaries, on the one hand, and the Purchaser and any
of its Subsidiaries on the other hand, which would be required pursuant to
Regulation S-K promulgated by the SEC to be disclosed in a registration
statement filed under the Securities Act or in a proxy statement or other report
filed under the Exchange Act; and consisting of at least three Independent
Directors selected by a majority of the Independent Directors; and
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(iv) such other committees as the Board of Directors deems
necessary or desirable; provided that such committees shall not conflict with,
supersede or duplicate the duties or responsibilities of the Committees
established pursuant to this Section 3.04.
(b) Each Committee established pursuant to this Agreement shall
act by the affirmative vote of a majority of its members or by unanimous written
consent.
Section 3.05. Certificate of Incorporation and By-Laws.
(a) The Company and Purchaser shall take or cause to be taken all
lawful action necessary to ensure at all times that the Company's Certificate of
Incorporation and By-Laws are not, at any time, inconsistent with the provisions
of this Agreement.
(b) The Certificate of Incorporation and By-laws of the Company
shall contain provisions no less favorable with respect to indemnification than
are set forth in Article X of the By-laws of the Company as in effect on the
date hereof, which provisions shall not be amended, repealed or otherwise
modified in any manner that would affect adversely the rights thereunder of the
directors, officers, employees, fiduciaries or agents of the Company, unless
such modification shall be required by law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations of Purchaser and the Company. Purchaser
and the Company represent and warrant, to each other as follows:
(a) Authority Relative to This Agreement. It has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by it and the consummation by it of
this Agreement have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on its part are necessary to authorize
this Agreement. This Agreement has been duly and validly executed and delivered
by it and constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(b) No Conflict. The execution and delivery by it of this
Agreement do not, and its performance of its obligations under this Agreement
will not, (i) conflict with or violate the Certificate of Incorporation or
By-Laws (or similar constitutive documents)
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of it or any of its Subsidiaries, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to it or to any of its
Subsidiaries, or by which any of its property or assets or any of the property
or assets of its Subsidiaries is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrances on any of its property or assets or on
any of the property or assets of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which it or any of its Subsidiaries is a party
or by which it or any of its Subsidiaries or any of its property or assets or
any of the property or assets of its Subsidiaries is bound or affected, except
for any such conflicts, violations, breaches, defaults or other occurrences
which could not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on its ability to perform its obligations under
this Agreement (a "Material Adverse Effect").
Section 4.02. Required Filings and Consents. This execution and
delivery by it of this Agreement does not, and the performance of this Agreement
by it will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, state blue sky and takeover laws, and (ii)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on it.
ARTICLE V
DIRECTORS AND OFFICERS LIABILITY INSURANCE
Section 5.01. Insurance. The Company hereby agrees that it shall
maintain the same directors and officers liability ("D&O Insurance") for the
benefit of each Director and officer of the Company, provided, however, that in
the event that Purchaser determines that it can provide such D&O Insurance more
cost effectively than the Company, Purchaser may do so.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by facsimile
transmission,
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overnight courier guaranteeing next business day delivery, or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section):
if to Purchaser, to:
Koninklijke Philips Electronics N.V.
Rembrandt Tower
Amstelplein 1
1096 HA Amsterdam,
The Netherlands
Attention: General Secretary
Facsimile: (011) 31-20-597-7150
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Attention: Stephen M. Kotran
Facsimile: 212-558-3588
if to the Company, to:
MedQuist Inc.
Five Greentree Centre, Suite 311
Mariton, New Jersey 08053
Attention: Chief Executive Officer; and
Senior Vice President and General Counsel
Facsimile: 856-596-3351
with a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Attention: James D. Epstein
Facsimile: 215.981.4750
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Section 6.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of
any amendment, by Purchaser and the Company, or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that no such
amendment or waiver by the Company shall be effective without the approval of
the Supervisory Committee.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder, shall operate as waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 6.03. Severability. 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 so long as the economic or legal
substance of the matters contemplated hereby are not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner.
Section 6.04. Entire Agreement; Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned by operation of law or otherwise without
the written consent of the other parties hereto.
Section 6.05. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
assigns, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
Section 6.06. Governing Law and Venue; Waiver of Jury Trial; Specific
Performance.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW JERSEY
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WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties hereby
irrevocably submit to the jurisdiction of the Federal courts of the United
States of America located in the State of New Jersey solely in respect of the
interpretation and enforcement of the provisions of this Agreement, and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts, and the parties hereto
irrevocably agree that all claims with respect to such action or proceeding
shall be heard and determined in such a Federal court. The parties hereby
consent to and grant any such court jurisdiction over the person of such parties
and over the subject matter of such dispute and agree that mailing of process or
other papers in connection with any such action or proceeding in the manner
provided in Section 6.01 or in such other manner as may be permitted by law
shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND (ii) AGREES THAT THE
PARTIES SHALL BE ENTITLED TO SPECIFIC PERFORMANCE OF THE TERMS HEREOF WITHOUT
THE REQUIREMENT THAT A BOND BE POSTED. EACH PARTY CERTIFIES AND ACKNOWLEDGES
THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 6.06.
Section 6.07. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
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Section 6.08. Counterparts; Facsimile. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 6.09. Effective Time; Termination. This Agreement shall
automatically become effective, without any action on the part of any party
hereto, upon payment by Purchaser for all shares of Common Stock validly
tendered and not withdrawn (subject to the terms and conditions of the Offer (as
defined in the Tender Offer Agreement)) pursuant to the Tender Offer Agreement
(the "Effective Time"), and shall terminate upon the earlier of (i) the mutual
agreement of the parties hereto and (ii) the first date on which Purchaser no
longer, directly or indirectly, beneficially owns at least 5% of the Voting
Stock; provided, however, the provisions of Section 3.04 shall terminate and be
of no further force or effect as of the first date when Purchaser Directors do
not constitute a majority of the Board of Directors.
Section 6.10. Combinations or Divisions of Equity Securities. In the
event that any of the outstanding Equity Securities shall be subdivided into a
greater or combined into a lesser number of such securities, whether by stock
dividend, stock split, reverse stock split, recapitalization, combination of
shares or any similar action, any references to numbers, percentages or
calculations thereof in this Agreement shall be proportionately adjusted
wherever applicable.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first hereinabove written.
KONINKLIJKE PHILIPS ELECTRONICS N.V.
By: /s/ A. Baan
---------------------------------
Name: A. Baan
Title: Executive Vice President
Philips Electronics
By: /s/ J.H.M. Hommen
---------------------------------
Name: J.H.M. Hommen
Title: Executive Vice President
Philips Electronics
MEDQUIST INC.
By: /s/ David A. Cohen
---------------------------------
Name: David A. Cohen
Title: Chairman & CEO
