Exhibit 10.1

 

October 26, 2005

 

Via Overnight Mail and Facsimile

Mr. R. Scott Bennett

6 Kenwood Court

Malvern, PA 19355

 

Dear Scott:

 

On behalf of MedQuist Inc. (the “Company”), this Agreement describes the terms
of your new employment as the Company’s Senior Vice President - Sales &
Marketing, which must commence on a date mutually agreed to in writing by you
and the Company (the “Employment Commencement Date”).  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 7, below.

 

1.                                       TERM.  THE COMPANY SHALL EMPLOY
EMPLOYEE HEREUNDER FOR A THREE (3) YEAR TERM COMMENCING ON THE EMPLOYMENT
COMMENCEMENT DATE HEREOF (THE “TERM”), WHICH TERM WILL BE AUTOMATICALLY EXTENDED
FOR ADDITIONAL ONE (1) YEAR PERIODS BEGINNING ON THE THIRD ANNIVERSARY OF THE
EMPLOYMENT 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 SECTIONS 3 OR 5 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 $240,000,
SUBJECT TO REVIEW AND ADJUSTMENT ANNUALLY DURING THE TERM;

 

(2)                                  SIGNING BONUS OF $150,000 TO BE PAID WITHIN
THIRTY (30) DAYS OF EMPLOYMENT COMMENCEMENT DATE.  IN THE EVENT THAT YOU
VOLUNTARILY RESIGN FROM THE COMPANY WITHIN YOUR FIRST 12 MONTHS OF EMPLOYMENT,
THIS SIGNING BONUS MUST BE REPAID ON A PRO RATA BASIS.

 

(3)                                  PARTICIPATE IN MEDQUIST’S MANAGEMENT BONUS
PLAN, COMMENCING IN 2006.  YOUR TARGET BONUS IN THIS PLAN WILL BE 45% OF YOUR
BASE SALARY FOR 2006 AND FOLLOWING YEARS.  THE TARGET BONUS IS THE PAYMENT
AMOUNT THAT THE EMPLOYEE SHALL BE ELIGIBLE TO RECEIVE IF THE COMPANY AND
EMPLOYEE BOTH ATTAIN THE PRE-ESTABLISHED BONUS PLAN TARGET OBJECTIVES.  THE
ACTUAL BONUS AWARD MAY BE HIGHER OR LOWER THAN THE TARGET BONUS AMOUNT BASED
UPON ACHIEVEMENT OF THE OBJECTIVES BY EMPLOYEE AND THE COMPANY.  MANAGEMENT
BONUS PLAN TARGET OBJECTIVES SHALL BE DEVELOPED ON OR BEFORE FEBRUARY 28TH OF
EACH YEAR OF THE MANAGEMENT BONUS PLAN.  PAYMENT OF $54,000, WHICH IS EQUAL TO
HALF OF YOUR ANNUAL TARGET BONUS FOR THE YEAR ENDING DECEMBER 31, 2006, IS
GUARANTEED;

 

--------------------------------------------------------------------------------

 

(4)                                  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);

 

(5)                                RECEIVE RELOCATION SUPPORT IN ACCORDANCE WITH
THE COMPANY RELOCATION POLICY.  THIS RELOCATION OFFER WILL BE IN EFFECT FOR THE
FIRST TWENTY-FOUR (24) MONTHS OF YOUR EMPLOYMENT;

 

(6)                                IF EMPLOYEE’S EMPLOYMENT IS TERMINATED BY THE
COMPANY WITHOUT CAUSE, THE SEVERANCE PAY AND BENEFITS DESCRIBED BELOW IN
SECTION 5.

 

B.                                    LONG TERM INCENTIVES.  IN ADDITION, FROM
TIME TO TIME, THE BOARD MAY REVIEW THE PERFORMANCE OF THE COMPANY AND EMPLOYEE
AND, IN ITS SOLE DISCRETION, MAY GRANT STOCK OPTIONS, SHARES OF RESTRICTED STOCK
OR OTHER EQUITY-BASED INCENTIVES TO EMPLOYEE TO REWARD EXTRAORDINARY PERFORMANCE
AND/OR TO ENCOURAGE EMPLOYEE’S FUTURE EFFORTS ON BEHALF OF THE COMPANY.  THE
GRANT OF ANY SUCH EQUITY INCENTIVES WILL BE SUBJECT TO THE TERMS OF THE
COMPANY’S EQUITY-BASED PLANS AND WILL BE EVIDENCED BY A SEPARATE AWARD AGREEMENT
BY AND BETWEEN THE COMPANY AND EMPLOYEE.

 

(1)                                UPON JOINING MEDQUIST, YOU WILL BECOME
ENTITLED TO A SPECIAL STOCK OPTION GRANT OF 60,000 SHARES OF NON-QUALIFIED STOCK
OPTIONS (“SPECIAL OPTION GRANT”) TO PURCHASE COMPANY COMMON STOCK, NO PAR VALUE
(“COMMON STOCK”), PURSUANT TO THE COMPANY’S STOCK OPTION PLAN ADOPTED MAY 29,
2002 (THE “OPTION PLAN”).  THE GRANT DATE OF THE SPECIAL OPTION GRANT WILL OCCUR
ON THE LATER OF (I) THE DATE THE COMPANY BECOMES CURRENT IN ITS REPORTING
OBLIGATIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934; OR (II) THE FIRST DATE
THEREAFTER WHEN THE FORM S8 REGISTRATION STATEMENT FOR THE OPTION PLAN COMPLIES
WITH THE REQUIREMENT OF THE SECURITIES EXCHANGE COMMISSION PROVIDED THAT YOU ARE
STILL AN EMPLOYEE ON THE GRANT DATE.  THE OPTION PRICE FOR THE SPECIAL OPTION
GRANT SHALL BE EQUAL AT LEAST TO THE FAIR MARKET VALUE OF THE COMPANY’S COMMON
STOCK AS OF THE GRANT DATE.  THE SPECIAL OPTION GRANT WILL BE SUBJECT TO ALL OF
THE TERMS AND CONDITIONS OF THE OPTION PLAN AND THE STOCK OPTION AGREEMENT THAT
WILL BE ISSUED IF AND WHEN THE GRANT BECOMES EFFECTIVE.  YOUR RIGHT TO EXERCISE
THE OPTION WILL VEST IN EQUAL 20% INSTALLMENTS ON EACH OF THE FIRST FIVE
(5) ANNIVERSARIES OF THE GRANT DATE.  IN THE EVENT OF A “CHANGE OF CONTROL” (AS
DEFINED BELOW) OF THE COMPANY WHILE YOU ARE AN EMPLOYEE, YOUR SPECIAL OPTION
GRANT MAY, FROM AND AFTER THE DATE WHICH IS SIX MONTHS AFTER THE CHANGE OF
CONTROL (BUT NOT BEYOND THE EXPIRATION DATE OF THE OPTION), BE EXERCISED FOR UP
TO 100% OF THE TOTAL NUMBER OF SHARES THEN SUBJECT TO THE SPECIAL OPTION GRANT
MINUS THE NUMBER OF SHARES PREVIOUSLY PURCHASED UPON EXERCISE OF SUCH OPTION (AS
ADJUSTED FOR ANY CHANGE IN THE OUTSTANDING SHARES OF THE COMMON STOCK OF THE
COMPANY IN ACCORDANCE WITH THE TERMS OF THE OPTION PLAN) AND YOUR VESTING DATE
WILL ACCELERATE ACCORDINGLY.  A “CHANGE OF CONTROL” SHALL BE DEEMED TO HAVE
OCCURRED UPON THE HAPPENING OF ANY OF THE FOLLOWING EVENTS:

 

(I)                                     A CHANGE WITHIN A TWELVE-MONTH PERIOD IN
THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING VOTING STOCK OF THE COMPANY; OR

 

(II)                                  ANY OTHER EVENT DEEMED TO CONSTITUTE A
“CHANGE OF CONTROL” BY THE COMPANY’S BOARD OF DIRECTORS.

 

--------------------------------------------------------------------------------

 

(2)                                  CONTINGENT UPON EMPLOYEE’S CONTINUED
ATTAINMENT OF PERFORMANCE OBJECTIVES, THE COMPANY AGREES TO DELIVER A LONG TERM
INCENTIVE VALUE OF $120,000 ANNUALLY THROUGH ONE OF THE FOLLOWING, AS DETERMINED
IN THE COMPANY’S SOLE DISCRETION: (I) A STOCK OPTION GRANT PURSUANT TO THE
OPTION PLAN, (II) A RESTRICTED STOCK GRANT OR (III) A CASH-BASED LONG TERM
INCENTIVE PROGRAM TO BE DEVELOPED.  THE LONG TERM INCENTIVE VALUE OF COMPANY
STOCK WILL BE CALCULATED BASED ON AN INDUSTRY ACCEPTED STOCK VALUATION
METHODOLOGY. 

 

3.                                       EMPLOYMENT-AT-WILL.  NOTHING CONTAINED
IN THIS AGREEMENT IS INTENDED TO CREATE AN EMPLOYMENT RELATIONSHIP WHEREBY
EMPLOYEE WILL BE EMPLOYED OTHER THAN AS AN “AT-WILL” EMPLOYEE.  EMPLOYEE’S
EMPLOYMENT BY THE COMPANY MAY BE TERMINATED BY EMPLOYEE OR THE COMPANY AT ANY
TIME; PROVIDED, HOWEVER, THAT WHILE EMPLOYED BY THE COMPANY, THE TERMS AND
CONDITIONS OF EMPLOYEE’S EMPLOYMENT BY THE COMPANY WILL BE AS HEREIN SET FORTH;
AND PROVIDED FURTHER, THAT SECTION 4 OF THIS AGREEMENT WILL SURVIVE THE
TERMINATION OF EMPLOYEE’S EMPLOYMENT.

 

4.                                       COVENANTS.

 

A.                                       NON-SOLICITATION.  WHILE EMPLOYED BY
THE COMPANY AND FOR THE TWELVE (12) MONTH 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 TWELVE (12) MONTH 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 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; AND

 

(III)                                 ANY OBLIGATION OF THE COMPANY TO PROVIDE
SEVERANCE PAY OR BENEFITS (WHETHER PURSUANT TO SECTION 5 OR OTHERWISE) WILL
CEASE.

 

(3)                                IN ADDITION TO THE REMEDIES SPECIFIED IN
SECTION 4(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 4, 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.

 

5.                                       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 4(F)(2)(III), IF
EMPLOYEE’S EMPLOYMENT IS TERMINATED BY THE COMPANY WITHOUT CAUSE, EMPLOYEE WILL
BE ENTITLED TO (A) CONTINUED PAYMENT OF HIS BASE SALARY (AT THE RATE IN EFFECT
UPON TERMINATION) FOR A PERIOD OF 12 MONTHS; (B) A PAYMENT EQUAL TO THE AVERAGE
OF THE LAST THREE BONUSES FROM THE MEDQUIST MANAGEMENT BONUS PLAN RECEIVED BY
EMPLOYEE.  IN THE EVENT THAT THERE ARE NOT THREE FULL YEARS OF EMPLOYMENT, THEN
THE AVERAGE OF THE LAST TWO YEARS WILL APPLY.  IF LESS THAN TWO YEARS, THE
TARGET BONUS WILL BE PAID; AND NOTWITHSTANDING THE FOREGOING, NO AMOUNT WILL BE
PAID OR BENEFIT PROVIDED UNDER THIS SECTION 5 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, WHICH RELEASE SHALL NOT
CONFLICT WITH ANY OF THE TERMS OF THIS AGREEMENT WITHOUT THE MUTUAL WRITTEN
CONSENT OF EMPLOYEE AND COMPANY, AND (Y) SUCH RELEASE BECOMES IRREVOCABLE.  ANY
SEVERANCE PAY OR BENEFITS PROVIDED UNDER THIS SECTION 5 WILL BE IN LIEU OF, NOT
IN ADDITION TO, ANY OTHER SEVERANCE ARRANGEMENT MAINTAINED BY THE COMPANY.

 

6.                                       MISCELLANEOUS.

 

A.                                                                                      
ARBITRATION.  EXCEPT A CONTROVERSY OR CLAIM ARISING OUT OR RELATING TO SECTION 4
OF THIS AGREEMENT, ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE BREACH OF ANY COVENANT OR AGREEMENT CONTAINED HEREIN, SHALL BE
COMMENCED BY FILING A NOTICE (THE “NOTICE”) FOR ARBITRATION WITH THE AMERICAN
ARBITRATION ASSOCIATION (“AAA.”), WITH A COPY TO THE OTHER PARTY HERETO.  SUCH
CONTROVERSY OR CLAIM SHALL BE DECIDED BY ARBITRATION IN PHILADELPHIA,
PENNSYLVANIA, IN ACCORDANCE WITH THE EMPLOYMENT ARBITRATION RULES OF THE AAA.
THEN OBTAINING.  THE DECISION AND THE AWARD OF DAMAGES RENDERED BY THE
ARBITRATOR SHALL BE FINAL AND BINDING AND JUDGMENT MAY BE ENTERED UPON IT IN ANY
COURT HAVING JURISDICTION THEREOF.

 

B.                                                                                     
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.

 

C.                                                                                      
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.

 

D.                                                                                     
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.

 

--------------------------------------------------------------------------------

 

E.                                                                                      
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.

 

F.                                                                                        
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.

 

G.                                                                                     
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.

 

H.                                                                                     
SUCCESSORS AND ASSIGNS.  THIS AGREEMENT IS BINDING ON THE COMPANY’S SUCCESSORS
AND ASSIGNS.

 

I.                                                                                         
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.

 

J.                                                                                         
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.

 

7.                                       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 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 4 OF THIS AGREEMENT.

 

--------------------------------------------------------------------------------

 

To acknowledge your agreement to and acceptance of the terms and conditions of
this Agreement, please sign below in the space provided within five (5) days of
the date of this Agreement and return a signed copy to my attention.  If the
Agreement is not signed and returned within (5) days, the terms and conditions
of this Agreement will be deemed withdrawn.

 

 

Sincerely,

 

 

 

MEDQUIST INC.

 

 

 

 

 

By:

 

 

 

 

Frank W. Lavelle

 

 

President

 

 

Accepted and Agreed:

 

 

 

 

 

 

R. Scott Bennett

 

 

--------------------------------------------------------------------------------