June 24, 2010

Anthony D. James
c/o MedQuist Inc.
1000 Bishops Gate Blvd., Suite 300
Mount Laurel, NJ 08064

Dear Anthony:

On behalf of MedQuist Inc. (the “Company”), this Agreement describes the terms
of the change in your employment status with the Company, to be the Company’s
Co-Chief Operating Officer, reporting directly the Company’s CEO and commencing
on June 24, 2010 (the “Change in Employment Status Commencement Date”). In
Employee’s role as Co-Chief Operating Officer, among other things, he shall
manage the Company’s global medical transcription and medical editing operations
performed by the Company’s employees and authorized subcontractors. For purposes
of this Agreement, you are referred to as the “Employee.” Other capitalized
terms used in this Agreement have the meanings defined in Section 6, below.

1. Term and Location. The Company shall employ Employee hereunder for a three
(3) year term commencing on the Change in Employment Status Commencement Date
hereof (the “Term”), which Term will be automatically extended for additional
one (1) year periods beginning on the third anniversary of the Change in
Employment Status Commencement Date and upon each subsequent anniversary thereof
unless either party provides the other party with at least ninety (90) days
prior written notice of its intention not to renew this Agreement unless
terminated earlier pursuant to Section 4 of this Agreement.

2. Consideration.

a. Compensation. As consideration for all services rendered by Employee to the
Company and for the Covenants contained herein, Employee will be entitled to:

(1) base salary at an annual rate of $270,000, which base salary will be
reviewed for increase from time to time during the Term at the discretion of the
Company, but in no circumstance will be lowered;

(2) participate in MedQuist’s Management Incentive Plan for 2010. Your target
incentive in this plan will be 50% of your base salary for 2010 and following
years; provided, however that your incentive for 2010 shall be prorated based
upon your date of hiring by the Company – April 22, 2010. Your target incentive
in the MedQuist’s Management Incentive Plan will be reviewed for increase from
time to time during the Term at the discretion of the Company, but in no
circumstance will be lowered. The target incentive is the payment amount that
the Employee shall be eligible to receive if the Company and Employee both
attain the pre-established incentive plan target objectives. The actual
incentive award may be higher or lower than the target incentive amount based
upon achievement of the objectives by Employee and the Company. Management
Incentive Plan target objectives shall be developed on or before February 28th
of each year of the Management Incentive Plan;

(3) participate in the same employee benefit plans available generally to other
full-time employees of the Company, subject to the terms of those plans (as the
same may be modified, amended or terminated from time to time); (benefits
information package enclosed); and

(4) if Employee’s employment is terminated by the Company without Cause or by
Employee for Good Reason (as defined in Section 6) , the severance pay and
benefits described below in Section 4.

b. Long Term Incentives. The Board will provide a long term incentive to
Employee designed to reward extraordinary performance and/or to encourage
Employee’s future efforts on behalf of the Company. The grant of the long term
incentive will be subject to the terms of the Company’s long term incentive
plan, and will be evidenced by a separate award agreement by and between the
Company and Employee.

3. Covenants.

a. Non-Solicitation. While employed by the Company and for the two (2) year
period following the cessation of that employment for any reason (and without
regard to whether such cessation was initiated by Employee or the Company),
Employee will not do any of the following without the prior written consent of
the Company:

(1) solicit, entice or induce, either directly or indirectly, any person, firm
or corporation who or which is a client or customer of the Company or any of its
subsidiaries to become a client or customer of any other person, firm or
corporation;

(2) influence or attempt to influence, either directly or indirectly, any
customer of the Company or its subsidiaries to terminate or modify any written
or oral agreement or course of dealing with the Company or its subsidiaries
(except in Employee’s capacity as an employee of the Company); or

(3) influence or attempt to influence, either directly or indirectly, any person
to terminate or modify any employment, consulting, agency, distributorship,
licensing or other similar relationship or arrangement with the Company or its
subsidiaries (except in Employee’s capacity as an employee of the Company).

b. Non-Disclosure. Employee shall not use for Employee’s personal benefit, or
disclose, communicate or divulge to, or use for the direct or indirect benefit
of any person, firm, association or company other than Company, any
“Confidential Information,” which term shall mean any information regarding the
business methods, business policies, policies, procedures, techniques, research
or development projects or results, historical or projected financial
information, budgets, trade secrets, or other knowledge or processes of, or
developed by, Company or any other confidential information relating to or
dealing with the Business operations of Company, made known to Employee or
learned or acquired by Employee while in the employ of Company, but Confidential
Information shall not include information otherwise lawfully known generally by
or readily accessible to the general public. The foregoing provisions of this
subsection shall apply during and after the period when the Employee is an
employee of the Company and shall be in addition to (and not a limitation of)
any legally applicable protections of Company interest in confidential
information, trade secrets, and the like. At the termination of Employee’s
employment with Company, Employee shall return to the Company all copies of
Confidential Information in any medium, including computer tapes and other forms
of data storage.

c. Non-Competition. While employed by the Company and for the one (1) year
period following the cessation of that employment for any reason (and without
regard to whether such cessation was initiated by Employee or the Company),
Employee shall not directly or indirectly engage in (as a principal,
shareholder, partner, director, officer, agent, employee, consultant or
otherwise) or be financially interested in any Business which is involved in
business activities which are the same as or in direct competition with business
activities carried on by the Company, or being definitively planned by the
Company at the time of termination of Employee’s employment. Nothing contained
in this subsection shall prevent Employee from holding for investment up to
three percent (3%) of any class of equity securities of a company whose
securities are publicly traded on a national securities exchange or in a
national market system.

d. Intellectual Property & Company Creations.

(1) Ownership. All right, title and interest in and to any and all ideas,
inventions, designs, technologies, formulas, methods, processes, development
techniques, discoveries, computer programs or instructions (whether in source
code, object code, or any other form), computer hardware, algorithms, plans,
customer lists, memoranda, tests, research, designs, specifications, models,
data, diagrams, flow charts, techniques (whether reduced to written form or
otherwise), patents, patent applications, formats, test results, marketing and
business ideas, trademarks, trade secrets, service marks, trade dress, logos,
trade names, fictitious names, brand names, corporate names, original works of
authorship, copyrights, copyrightable works, mask works, computer software, all
other similar intangible personal property, and all improvements, derivative
works, know-how, data, rights and claims related to the foregoing that have been
or are conceived, developed or created in whole or in part by the Employee
(a) at any time and at any place that relates directly or indirectly to the
business of the Company, as then operated, operated in the past or under
consideration or development or (b) as a result of tasks assigned to Employee by
the Company (collectively, “Company Creations”), shall be and become and remain
the sole and exclusive property of the Company and shall be considered “works
made for hire” as that term is defined pursuant to applicable statutes and law.

(2) Assignment. To the extent that any of the Company Creations may not by law
be considered a work made for hire, or to the extent that, notwithstanding the
foregoing, Employee retains any interest in or to the Company Creations,
Employee hereby irrevocably assigns and transfers to the Company any and all
right, title, or interest that Employee has or may have, either now or in the
future, in and to the Company Creations, and any derivatives thereof, without
the necessity of further consideration. Employee shall promptly and fully
disclose all Company Creations to the Company and shall have no claim for
additional compensation for Company Creations. The Company shall be entitled to
obtain and hold in its own name all copyrights, patents, trade secrets,
trademarks, and service marks with respect to such Company Creations.

(3) Disclosure & Cooperation. Employee shall keep and maintain adequate and
current written records of all Company Creations and their development by
Employee (solely or jointly with others), which records shall be available at
all times to and remain the sole property of the Company. Employee shall
communicate promptly and disclose to the Company, in such form as the Company
may reasonably request, all information, details and data pertaining to any
Company Creations. Employee further agrees to execute and deliver to the Company
or its designee(s) any and all formal transfers and assignments and other
documents and to provide any further cooperation or assistance reasonably
required by the Company to perfect, maintain or otherwise protect its rights in
the Company Creations. Employee hereby designates and appoints the Company or
its designee as Employee’s agent and attorney-in-fact to execute on Employee’s
behalf any assignments or other documents deemed necessary by the Company to
perfect, maintain or otherwise protect the Company’s rights in any Company
Creations.

e. Acknowledgments. Employee acknowledges that the Covenants are reasonable and
necessary to protect the Company’s legitimate business interests, its
relationships with its customers, its trade secrets and other confidential or
proprietary information. Employee further acknowledges that the duration and
scope of the Covenants are reasonable given the nature of this Agreement and the
position Employee holds or will hold within the Company. Employee further
acknowledges that the Covenants are included herein to induce the Company to
enter into this Agreement and that the Company would not have entered into this
Agreement or otherwise employed or continued to employ the Employee in the
absence of the Covenants. Finally, Employee also acknowledges that any breach,
willful or otherwise, of the Covenants will cause continuing and irreparable
injury to the Company for which monetary damages, alone, will not be an adequate
remedy.

f. Enforcement.

(1) If any court determines that the Covenants, or any part thereof, is
unenforceable because of the duration or scope of such provision, that court
will have the power to modify such provision and, in its modified form, such
provision will then be enforceable.

(2) The parties acknowledge that significant damages will be caused by a breach
of any of the Covenants, but that such damages will be difficult to quantify.
Therefore, the parties agree that if Employee breaches any of the Covenants,
liquidated damages will be paid by Employee in the following manner:

(i) any Company stock options, stock appreciation rights, restricted stock units
or similar equity incentives or other long term incentives then held by
Employee, whether or not then vested, will be immediately and automatically
forfeited;

(ii) any shares of restricted stock issued by the Company, then held by Employee
or his permitted transferee and then subject to forfeiture will be immediately
and automatically forfeited;

(iii) any obligation of the Company to provide severance pay or benefits
(whether pursuant to Section 4 or otherwise) will cease; and

(3) In addition to the remedies specified in Section 3(f)(2) and any other
relief awarded by any court, if Employee breaches any of the Covenants:

(i) Employee will be required to account for and pay over to the Company all
compensation, profits, monies, accruals, increments or other benefits derived or
received by Employee as a result of any such breach; and

(ii) the Company will be entitled to injunctive or other equitable relief to
prevent further breaches of the Covenants by Employee.

(4) If Employee breaches Section 3, then the duration of the restriction therein
contained will be extended for a period equal to the period that Employee was in
breach of such restriction.

4. Termination. Employee’s employment by the Company may be terminated at any
time. Upon termination, Employee will be entitled to the payment of accrued and
unpaid salary through the date of such termination. All salary, commissions and
benefits will cease at the time of such termination, subject to the terms of any
benefit plans then in force or enforceable under applicable law and applicable
to Employee, and the Company will have no further liability or obligation
hereunder by reason of such termination; provided, however, that subject to
Section 3(f)(2), if Employee’s employment is terminated by the Company without
Cause or by Employee for Good Reason, Employee will be entitled to continued
payment of his base salary (at the rate in effect upon termination) for a period
of 12 months; and notwithstanding the foregoing, no amount will be paid or
benefit provided under this Section 4 unless and until (x) Employee executes and
delivers a general release of claims against the Company and its subsidiaries in
a form prescribed by the Company, and (y) such release becomes irrevocable. Any
severance pay or benefits provided under this Section 4 will be in lieu of, not
in addition to, any other severance arrangement maintained by the Company. No
severance benefits will be paid to Employee in the event that Employee resigns
his employment without Good Reason.

5. Miscellaneous.

a. Other Agreements. Employee represents and warrants to the Company that there
are no restrictions, agreements or understandings whatsoever to which he is a
party that would prevent or make unlawful his execution of this Agreement, that
would be inconsistent or in conflict with this Agreement or Employee’s
obligations hereunder, or that would otherwise prevent, limit or impair the
performance by Employee of his duties to the Company.

b. Entire Agreement; Amendment. This Agreement contains the entire agreement and
understanding of the parties hereto relating to the subject matter hereof, and
merges and supersedes all prior and contemporaneous discussions, agreements and
understandings of every nature relating to the employment of Employee by the
Company. This Agreement may not be changed or modified, except by an agreement
in writing signed by each of the parties hereto.

c. Waiver. Any waiver of any term or condition hereof will not operate as a
waiver of any other term or condition of this Agreement. Any failure to enforce
any provision hereof will not operate as a waiver of such provision or of any
other provision of this Agreement.

d. Governing Law. This Agreement shall be governed by, and enforced in
accordance with, the laws of the State of New Jersey without regard to the
application of the principles of conflicts of laws.

e. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been herein contained.

f. Wage Claims. The parties intend that all obligations to pay compensation to
Employee be obligations solely of the Company. Therefore, intending to be bound
by this provision, Employee hereby waives any right to claim payment of amounts
owed to him, now or in the future, from directors or officers of the Company in
the event of the Company’s insolvency.

g. Successors and Assigns. This Agreement is binding on the Company’s successors
and assigns.

h. Section Headings. The section headings in this Agreement are for convenience
only; they form no part of this Agreement and will not affect its
interpretation.

i. Counterparts. This Agreement may be executed in multiple counterparts, each
of which will be deemed to be an original and all of which together will
constitute but one and the same instrument.

j. Indemnification. Employee shall be indemnified for acts performed in good
faith as an officer, director or employee of the Company in the manner provided
in the Company’s charter and by-laws, and shall be covered by director and
officer liability insurance coverage for such acts to the same extent that any
such coverage is provided to the Company’s executive officers.

6. Definitions. Capitalized terms used herein will have the meanings below
defined:

a. “Business” means electronic transcription services and other health
information management solutions services businesses in which the Company or its
subsidiaries are engaged anywhere within the United States.

b. “Cause” means the occurrence of any of the following: (1) Employee’s refusal,
willful failure or inability to perform (other than due to illness or
disability) his employment duties or to follow the lawful directives of his
superiors; (2) misconduct or gross negligence by Employee in the course of
employment; (3) conduct of Employee involving any type of disloyalty to the
Company or its subsidiaries, including, without limitation: fraud, embezzlement,
theft or dishonesty in the course of employment; (4) a conviction of or the
entry of a plea of guilty or nolo contendere to a crime involving moral
turpitude or that otherwise could reasonably be expected to have an adverse
effect on the operations, condition or reputation of the Company, (5) a material
breach by Employee of any agreement with or fiduciary duty owed to the Company;
or (6) alcohol abuse or use of controlled drugs other than in accordance with a
physician’s prescription.

c. “Covenants” means the covenants set forth in Section 3 of this Agreement.

d. “Good Reason” shall mean (i) any substantial and sustained diminution of
Employee’s duties, including but not limited to the removal of Employee’s
assigned division of the Company’s operations or (ii) Employee not being
assigned direct responsibility for the management and oversight of the
international transcription and editing operations of the Company and its
affiliates in the event that the Company, by acquisition, merger or otherwise,
directly acquires ownership of its international transcription and editing
operations; provided that any of the events described in clauses (i) and
(ii) shall constitute Good Reason only if the Company fails to cure such event
within 15 days after receipt from Executive of written notice of the event which
constitutes Good Reason; provided, further, that “Good Reason” shall cease to
exist for an event on the 30th day following the later of its occurrence or
Employee’s knowledge thereof, unless Employee has given the Company written
notice thereof prior to such date.

To acknowledge your agreement to and acceptance of the terms and conditions of
this Agreement, please sign below in the space provided within two (2) days of
the date of this Agreement and return a signed copy to my attention. If the
Agreement is not signed and returned within two (2) days, the terms and
conditions of this Agreement will be deemed withdrawn.

 
Sincerely,
MedQuist Inc.
By: /s/ Peter Masanotti
 
Peter Masanotti
President & CEO

Accepted and Agreed:

/s/ Anthony D. James
Anthony D. James

Date Accepted: June 24, 2010