Exhibit 10.34

 

STOCK OPTION AGREEMENT

 

1.                                       Grant of Option.  MQ Associates, Inc.,
a Delaware corporation (the “Company”), grants to             (the “Optionee”),
effective               (the “Grant Date”), an option (the “Option”) to purchase
an aggregate of                   shares of the Company’s common stock, par
value $0.001 per share (“Shares” of “Stock”), at a price of         per share
(the “Option Price”).  The Option is granted pursuant to the Company’s 2003
Stock Option Plan (the “Plan”), and is subject to the terms and conditions of
this Agreement and of the Plan.  The Shares subject to the Option are referred
to collectively as the “Option Shares.”  All Option Shares shall be subject to
the MQ Associates, Inc. Employee Stockholders Agreement (the “Stockholders
Agreement”), a copy of which is attached, and no portion of the Option shall be
exercisable until such time as the Optionee has signed or otherwise joined in
the Stockholders Agreement in a manner satisfactory to the Company.  The Option
and all Option Shares are also subject to the terms and conditions of the
Optionee Non-Competition Agreement of even date between the Optionee and the
Company.  This Option is not intended to qualify as an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.  The Optionee shall be a “Covered Optionee” under Section 11 of the
Plan.

 

2.                                       Basic Terms of Option.

 

(a)                                  Term.  The term of the Option (the “Term”)
shall continue from the Grant Date until the date immediately preceding the
tenth anniversary of the Grant Date (the “Expiration Date”), provided the Option
shall only be exercisable as permitted in Sections 2(b) and 2(c) below.

 

(b)                                 Schedule of Exercisability.

 

(i)                                     General.  Except as otherwise
specifically provided in this Agreement and subject to the Optionee’s continuous
service (whether as a director, an independent contractor, or employee) to the
Company or any subsidiary of the Company (collectively, “MedQuest”) until the
date on which the Option or applicable portion thereof is scheduled to become
exercisable, the Option shall become exercisable with respect to the Option
Shares in five equal annual installments on each of the first five anniversaries
of the Grant Date

 

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as provided in the Schedule set forth below, and shall thereafter remain
exercisable until the Expiration Date, subject to Section 2(c) below.

 

DATE EXERCISABLE

 

NUMBER OF OPTION SHARES FOR WHICH THE
OPTION IS TO BECOME EXERCISABLE

 

 

 

First Anniversary of the Grant Date.

 

20% of the total number of the Option Shares.

 

 

 

Second Anniversary of the Grant Date.

 

An additional 20% of the Option Shares.

 

 

 

Third Anniversary of the Grant Date

 

An additional 20% of the Option Shares.

 

 

 

Fourth Anniversary of the Grant Date.

 

An additional 20% of the Option Shares.

 

 

 

Fifth Anniversary of the Grant Date.

 

The remaining 20% percent of the Option Shares.

 

The Committee, in its discretion, may accelerate the exercisability of the
Option or any part thereof at any time and from time to time.  Unless sooner
terminated in accordance with the terms of this Agreement, the entire Option
shall expire on the Expiration Date and may not be exercised in whole or in any
part at any time thereafter.

 

(ii)                                  Partial Acceleration on IPO Prior to First
Anniversary. Notwithstanding the Schedule set forth above, if the Registration
Date (as defined in the Plan) occurs prior to the first anniversary of the Grant
Date (the “First Anniversary”), then immediately prior to the Registration Date,
the Option shall become exercisable with respect to the number of Option Shares
with respect to which the Option is scheduled to become exercisable on the First
Anniversary, provided that the Optionee continues in service with MedQuest until
the Registration Date, and further provided that the Option shall not become
exercisable with respect to any additional Option Shares on the First
Anniversary, but thereafter the exercisability schedule shall revert to that set
forth in Section 2(b)(i) above such that the Option shall become exercisable
with respect to all Option Shares on the fifth (5th) anniversary of the Grant
Date, subject to the Optionee’s continuous service with MedQuest through the
such fifth (5th) anniversary.

 

(c)                                  Exercise Following Termination of Service.

 

(i)                                     General.  Except as otherwise provided
in this Section 2(c) below, if the Optionee’s service to MedQuest terminates for
any reason, the portion of the Option which has not then become exercisable (the
“Nonexercisable Portion”) shall automatically expire and

 

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the portion of the Option, if any, which has become exercisable and has not yet
been exercised (the “Exercisable Portion”) shall continue to be exercisable
until the earlier of (x) the date that is thirty (30) days after the date of
termination of the Optionee’s service to MedQuest or (y) the Expiration Date,
whereupon the Exercisable Portion shall automatically expire to the extent not
then exercised.

 

(ii)                                  Cause or Resignation.  If the Optionee’s
service to MedQuest is terminated for Cause (including any termination if it is
later determined that Cause existed at the time of termination) or by the
Optionee’s voluntary resignation, the entire Option, including the Exercisable
Portion shall expire immediately upon such termination.  For this purpose
“Cause” shall mean the occurrence of any of the following events:

 

(1)                                  fraud, embezzlement or gross
insubordination on the part of the Optionee;

 

(2)                                  the Optionee’s conviction of or plea of
nolo contendere to any felony;

 

(3)                                  the Optionee’s material breach of, or
willful failure or refusal to perform and discharge, his or her duties,
responsibilities or obligations as a director, independent contractor or
employee of MedQuest, as applicable (other than by reason of disability or
death), that is not corrected within thirty (30) days following written notice
from MedQuest to the Optionee specifying the breach, failure or refusal; or

 

(4)                                  any act of willful misconduct by the
Optionee which (A) is intended to result in personal enrichment of the Optionee
at the expense of MedQuest or (B) has a material adverse impact on MedQuest, as
determined by the Board in its reasonable judgment.

 

(iii)                               Death or Disability.  If the Optionee’s
service to MedQuest is terminated by reason of the Optionee’s death or
Disability (defined below), then upon such termination (x) the Option shall
become exercisable with respect to the number of Option. Shares with respect to
which the Option was scheduled to become exercisable on the next two
anniversaries of the Grant Date following the date of termination, (y) the
Nonexercisable Portion

 

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shall automatically expire and (z) the Exercisable Portion shall continue to be
exercisable until the earlier of (A) the second anniversary of the date of such
termination or (B) the Expiration Date, whereupon the Exercisable Portion shall
automatically expire to the extent not then exercised.  A termination for
“Disability” means any termination if at the time of such termination the
Optionee is eligible to receive long-term disability benefits under any
applicable MedQuest plan or program or MedQuest disability insurance policy, or
any other termination that the Committee, in its discretion, determines is a
termination for “Disability.”

 

(iv)                              During a Change in Control Period.  If, during
a Change in Control Period (defined below), the Optionee’s service to MedQuest
is terminated by MedQuest other than for Cause, then immediately upon such
termination, the Option shall become exercisable with respect to all Option
Shares and shall continue to be exercisable until the earlier of (x) the date
that is sixty days after the date of termination or (y) the Expiration Date,
whereupon the Option shall automatically expire to the extent not then
exercised.  As used herein, the term “Change in Control Period” means the twelve
month period commencing on the occurrence of a Change in Control and the term
“Change in Control” means, with respect to the Company, the occurrence of any
one or more of the following events:

 

(1)                                  any “person” (as defined under
Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Act”)) or “group”
(as defined in Section 13(d)(3) of the Act) (not including any person or group
that, as of the date of this Agreement, holds any Voting Stock (defined below)
or rights to acquire Voting Stock (each, a “Current Shareholder”) or any
affiliates of any Current Shareholder) becomes the “beneficial owner” (as
defined in Rule 13d-3 or otherwise under the Act), directly or indirectly
(including as provided in Rule 13d-3(d)(1) of the Act), of capital stock of the
Company the holders of which are entitled to vote for the election of directors
(“Voting Stock”) representing fifty percent (50%) or more of the Company’s then
outstanding Voting Stock (giving effect to the deemed ownership of securities by
such person or group, as provided in Rule 13d-3(d)(1) of the Act, but not giving
effect to any such deemed ownership of securities by another person or group);

 

(2)                                  any consolidation, merger, stock for stock
exchange or similar transaction (any such transaction, a “Merger Transaction”)
in which holders of Voting Stock

 

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immediately prior to the Merger Transaction own, as a group, immediately after
the Merger Transaction, fifty percent (50%) or less of the Voting Stock of the
Company (or, if the Company does not survive the Merger Transaction, voting
securities of the entity surviving such Merger Transaction); or

 

(3)                                  the sale, transfer, or other disposition of
all or substantially all of the assets of the Company through one or more
related transactions.

 

(v)                                 Committee Discretion. Notwithstanding
anything to the contrary in Section 2(c) above, the Committee, in its discretion
but subject to the terms of the Plan, may accelerate the exercisability of all
or any portion of the Option and may extend the period following termination
during which the Exercisable Portion may be exercised.

 

3.                                       Exercise of Option.

 

(a)                                  Exercise Notice.  The Option may be
exercised with respect to all or any part of the Exercisable Portion by written
notice from the Optionee to the Company (“Exercise Notice”) specifying the
number of whole Option Shares with respect to which the Option is being
exercised (the “Exercise Shares”), and the aggregate Option Price for such
Exercise Shares.  The Option may not be exercised for any fractional Share
unless the Committee determines otherwise.

 

(b)                                 Closing; Payment.  Upon receipt of the
Exercise Notice, the Company shall schedule a closing date (the “Exercise Date”)
that is not later than thirty (30) business days following its receipt of the
Exercise Notice.  On or before the Exercise Date (x) the Optionee shall deliver
to the Company full payment for the Exercise Shares either (A) in cash, by
certified or bank check payable to the order of the Company, (B) by tendering
Shares (other than Restricted Shares) already owned by the Optionee for at least
six (6) months prior to the Exercise Date (“Old Shares”) or (C) by payment in
such other form as the Committee, in its discretion, may permit, in an amount
equal to the product of the Option Price and the number of Exercise Shares to be
purchased (such amount, the “Exercise Price”), (y) the Optionee shall join in
and become a party to the Stockholders Agreement by written instrument in form
and substance

 

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satisfactory to the Committee (and with respect to the Optionee, all references
in the Stockholders Agreement to “employment” shall be deemed to refer to
service as a director, independent contractor or employee and all references to
“termination of employment” and terms of similar import shall mean termination
of the Optionee’s service to MedQuest as a director, independent contractor or
employee, as applicable), and (z) the Optionee and the Company shall enter into
a subscription agreement with respect to the Exercise Shares (the “Subscription
Agreement”) in form and substance satisfactory to the Committee.  To the extent
that Old Shares are tendered in payment of the Exercise Price, the fair market
value, as reasonably determined by the Committee, of the Old Shares tendered
will be credited against payment of the Exercise Price. After the Registration
Date, the Company will make available a procedure for, and will permit, broker
assisted “cashless” exercise of the Option to the extent permitted by applicable
law.

 

(c)                                  Delivery of Shares.  Upon payment of the
Exercise Price, the Optionee’s delivery of the Subscription Agreement, and the
Optionee’s joining in and becoming a party to the Stockholders Agreement, the
Company shall make prompt delivery of a certificate or certificates representing
the Exercise Shares, registered in the name of the Optionee and bearing an
appropriate legend as provided in Section 8(b) below; provided however, that if
the Company or its counsel determines that compliance with any applicable law or
regulation requires that the Company take any action prior to the issuance of
the Exercise Shares to the Optionee, then the Exercise Date shall be extended
for such period as may be necessary to complete such action and no Shares shall
be issued unless and until the Company’s counsel has determined that the Company
has complied with all applicable securities laws, the listing requirements of
any securities exchange on which stock of the same class as the Stock is then
listed, and any other law or regulation applicable to such issuance.  The
Company may require that the Optionee furnish or execute such other documents as
the Company shall reasonably deem necessary to (i) evidence such exercise,
(ii) determine whether registration is then required under applicable securities
law, and (iii) comply with or satisfy the requirements of applicable securities
law or other applicable law.

 

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4.                                       Nontransferability of Option.

 

(a)                                  Restrictions Generally.  This Option is
personal to the Optionee and neither the Option nor any of the rights of the
Optionee hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) except by the laws of descent and
distribution, nor shall the Option or any rights with respect thereto be subject
to execution, attachment or similar process.  Upon any attempted transfer,
assignment, pledge, hypothecation or other disposition of the Option or of any
rights with respect thereto contrary to the provisions of this Agreement, or
upon the placement or levy of any attachment or similar process on the Option or
any of the Optionee’s rights hereunder, the Option and all such rights shall
expire and become null and void, unless the Committee, in its discretion,
determines otherwise.

 

(b)                                 Permitted Transfers.  Notwithstanding
anything to the contrary in Section 4(a) above, a Optionee may, with the consent
of the Company, which shall not be unreasonably withheld, Transfer by gift all
or any portion of an Option to a trust or trusts (or other entity approved by
the Committee in its discretion) for the exclusive benefit of one or more
members of such Optionee’s Immediate Family, provided that the Option shall
continue to be subject to all of the terms and conditions of this Agreement and
the Plan as if no such Transfer had occurred and the Optionee and the transferee
shall execute and deliver to the Company such instruments or agreements as the
Company may reasonably require to confirm the foregoing.  As used herein,
“Immediate Family” means, with respect to any person, such person’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, brother, sister,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
sister-in-law, including adoptive relationships (or other family relationships
specifically approved by the Committee).

 

5.                                       No Special Rights.  The Optionee shall
have no rights as a shareholder with respect to any Option Shares unless and
until a certificate representing such Option Shares is duly issued and delivered
to the Optionee and the Optionee joins in and becomes a party to the
Stockholders Agreement.  No adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificate is
issued.  Nothing herein or in the Plan shall be deemed to confer on the Optionee
any right to continue in service with MedQucst (whether as a director,
independent contractor, employee or otherwise) or limit in any way the right of
MedQuest to terminate such service at any time.

 

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6.                                       Adjustment Transactions.  The Option
and all rights and obligations under this Agreement are subject to Section 10 of
the Plan, the terms of which are incorporated herein by this reference.

 

7.                                       Withholding Taxes.  The Company’s
obligation to deliver Shares upon the exercise of the Option is subject to the
Optionee’s satisfaction of all applicable federal, state and local income and
employment tax withholding requirements, if any.  Whenever Shares are to be
issued pursuant to the Option, the Company may require the Optionee to remit to
the Company an amount in cash sufficient to satisfy any applicable federal,
state and local income and employment tax withholding requirements as a
condition to the issuance of such Shares.

 

8.                                       Investment Representations; Legend.

 

(a)                                  Representations.  The Optionee represents,
warrants, covenants and agrees that:

 

(i)                                     The Option has been, and any Exercise
Shares will be, acquired for the Optionee’s account for investment only and not
with a view to, or for sale in connection with, any distribution thereof.  The
Optionee agrees that the Optionee will not, directly or indirectly, offer,
transfer, sell, pledge, hypothecate or otherwise dispose of all or any part of
the Option or any Exercise Shares (or solicit offers to buy, purchase or
otherwise acquire or take a pledge of all or any part of the Option or any
Exercise Shares), except in compliance with the Securities Act of 1933 (the
“Securities Act”) and any applicable riles and regulations thereunder, and in
compliance with applicable state securities laws.

 

(ii)                                  The Optionee has had such opportunity as
he or she has deemed adequate to obtain from representatives of the Company such
information as is necessary to permit the Optionee to evaluate the merits and
risks of his or her investment in the Company.

 

(iii)                               The Optionee is able to bear the economic
risk of holding Shares acquired pursuant to the exercise of the Option for an
indefinite period.

 

(iv)                              The Optionee understands that (A) the Exercise
Shares acquired will not be registered under the Securities Act and are
“restricted securities” within the meaning

 

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of Rule 144 under the Securities Act; (B) such Shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available;
(C) in any event, the exemption from registration under Rule 144 will not be
available for at least one year after issuance of the Exercise Shares, and even
then will not be available unless a public market then exists for the Shares,
adequate information concerning the Company is then available to the public and
other terms and conditions of Rule 144 are complied with; and (D) there is now
no registration statement on file with the Securities and Exchange Commission
with respect to any stock of the Company and the Company has no obligation or
current intention to register any Exercise Shares under the Securities Act.

 

(v)                                 In respect of any Option Shares purchased
upon exercise of all or any part of the Option, the Optionee shall be entitled
to the rights and subject to the obligations created under the Stockholders
Agreement to the extent set forth therein.

 

By making payment of the Exercise Price, the Optionee shall be deemed to have
remade and reaffirmed, as of the Exercise Date, all of the representations,
warranties, covenants and agreements made in this Section. 8.

 

(b)                                 Legend on Stock Certificates.  All stock
certificates representing Exercise Shares shall have affixed thereto a legend
substantially in the following form, in addition to any other legends required
by applicable state law:

 

The shares represented by this certificate are subject to the provisions of a
subscription agreement, dated as of                   and neither this
certificate nor the shares represented by it are assignable or otherwise
transferable except in accordance with the provisions of such subscription
agreement, as the same may be amended from time to time, a copy of the current
form of which is on file with the Secretary of the Company.  The shares
represented by this certificate are subject to the provisions of a certain
Optionee Non-Competition Agreement, a copy of which is on file with the
Secretary of the Company. The shares represented by this certificate are
entitled to certain of the benefits and are bound by certain of the obligations
set forth in an Employee Stockholders Agreement among the Company and certain of
its shareholders, as the same may be amended from

 

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time to time, a copy of the current form of which is on file with the Secretary
of the Company.

 

The shares of stock represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred, sold or otherwise
disposed of in the absence of an effective registration statement with respect
to the shares evidenced by this certificate, filed and made effective under the
Securities Act of 1933, or an opinion of counsel satisfactory to the Company to
the effect that registration under such Act is not required.

 

9.                                       Miscellaneous.

 

(a)                                  Except as provided herein, this Option may
not be amended or otherwise modified unless evidenced in writing and signed by
the Company and the Optionee.

 

(b)                                 Any notices or other communications required
or permitted under this Option Agreement (“Notices”) shall be in writing and
shall be either personally delivered, sent by express or first class mail
(postage prepaid), return receipt requested, or sent by nationally recognized
overnight courier service (overnight delivery, charges prepaid), addressed as
follows:

 

If to the Company:                                             MQ
Associates, Inc.

4300 North Point Parkway

Alpharetta, Georgia 30022

Attention:

 

If to the Optionee:                                               To the
Optionee’s address as set forth in MedQuest’s payroll records.

 

Either party may change its address for Notices by written Notice to the other
given in accordance with this Section 9(b).  Notices shall be deemed given when
delivered personally, three days after deposit in the U.S. mail, or two business
days after deposit with a nationally recognized overnight courier service, as
applicable.

 

(c)                                  The Option and the rights and obligations
of the Company and the Optionee hereunder are subject to the terms and
conditions of the Plan.  In the event of any conflict between the terms of the
Plan and the terms of this Option Agreement, the terms of the

 

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Plan shall govern.  Capitalized terms used and not otherwise defined herein
shall have the meanings given such terms in the Plan.

 

(d)                                 The provisions of Section 4(b) of the Plan
are specifically incorporated herein.  Any Committee interpretation of the
provisions of the Plan or this Option Agreement shall be final and binding on
all parties.

 

(e)                                  This Option Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware.

 

(f)                                    The Optionee shall keep the terms of this
Option Agreement strictly confidential, other than as may be necessary to
enforce his or her rights hereunder or as otherwise required by law.

 

MQ ASSOCIATES, INC.

 

 

By:

 

 

 

 

 

OPTIONEE’S ACCEPTANCE

 

The undersigned hereby accepts the foregoing Option, acknowledges receipt of a
copy of the Company’s 2003 Stock Option Plan and agrees to the terms and
conditions of both.

 

 

Optionee

 

 

 

 

 

 

 

 

Printed Name

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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