Exhibit 10.4

MEDQUIST INC.

2002 STOCK OPTION PLAN

1.             PURPOSE OF PLAN

The purpose of this 2002 Stock Option Plan (the “Plan”) is to provide additional
incentive to officers, other key employees, and non-employee directors of
MedQuist Inc., a New Jersey corporation (the “Company”), and each present or
future parent or subsidiary corporation, by encouraging them to invest in shares
of the Company’s common stock, no par value (“Common Stock”), and thereby
acquire a proprietary interest in the Company and an increased personal interest
in the Company’s continued success and progress.

2.             AGGREGATE NUMBER OF SHARES

1,500,000 shares of the Company’s Common Stock shall be the aggregate number of
shares which may be issued under this Plan. Notwithstanding the foregoing, in
the event of any change in the outstanding shares of the Common Stock of the
Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Committee (defined in Section 4 (a)), deems in its sole
discretion to be similar circumstances, the aggregate number and kind of shares
which may be issued under this Plan shall be appropriately adjusted in a manner
determined in the sole discretion of the Committee. Reacquired shares of the
Company’s Common Stock, as well as unissued shares, may be used for the purpose
of this Plan. Common Stock of the Company subject to options which have
terminated unexercised, either in whole or in part, shall be available for
future options granted under this Plan.

3.             CLASS OF PERSONS ELIGIBLE TO RECEIVE OPTIONS

All officers and key employees of the Company and of any present or future
Company parent or subsidiary corporation are eligible to receive an option or
options under this Plan. All non-employee directors of the Company and of any
present or future Company parent or subsidiary corporation are also eligible to
receive an option or options under this Plan. The individuals who shall, in
fact, receive an option or options shall be selected by the Committee, in its
sole discretion, except as otherwise specified in Section 4 hereof. No
individual may receive options under this Plan for more than 80% of the total
number of shares of the Company’s Common Stock authorized for issuance under
this Plan.

Unless otherwise amended by the Committee, each person who is not an employee of
the Company or any Company subsidiary and who is a director of the Company as of
June 1 of each year shall automatically be granted an option to purchase 3,000
shares of the Common Stock. The foregoing automatic grant may be modified or
eliminated from time to time by vote of a majority of the Board of Directors who
are not eligible to receive options pursuant to the foregoing automatic grant.
Notwithstanding the foregoing, in the event of any change in the capitalization
of the Company, such as by stock dividend, stock split, or what the Committee of

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

the Company deems in its sole discretion to be similar circumstances, the number
and kind of shares which may be issued under this Plan shall be automatically
adjusted by the Committee of the Company.

4.             ADMINISTRATION OF PLAN

A.             THIS PLAN SHALL BE ADMINISTERED BY THE COMPANY’S BOARD OF
DIRECTORS OR BY AN OPTION COMMITTEE (“COMMITTEE”) APPOINTED BY THE COMPANY’S
BOARD OF DIRECTORS. THE COMMITTEE SHALL CONSIST OF A MINIMUM OF TWO AND A
MAXIMUM OF FIVE MEMBERS OF THE BOARD OF DIRECTORS, EACH OF WHOM SHALL BE A
“NON-EMPLOYEE DIRECTOR” WITHIN THE MEANING OF RULE 16B-3 (B) (3) UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OR ANY FUTURE CORRESPONDING RULE,
EXCEPT THAT THE FAILURE OF THE COMMITTEE FOR ANY REASON TO BE COMPOSED SOLELY OF
NON-EMPLOYEE DIRECTORS SHALL NOT PREVENT AN OPTION FROM BEING CONSIDERED GRANTED
UNDER THIS PLAN. THE COMMITTEE SHALL, IN ADDITION TO ITS OTHER AUTHORITY AND
SUBJECT TO THE PROVISIONS OF THIS PLAN, DETERMINE WHICH INDIVIDUALS SHALL IN
FACT BE GRANTED AN OPTION OR OPTIONS, WHETHER THE OPTION SHALL BE AN INCENTIVE
STOCK OPTION OR A NON-QUALIFIED STOCK OPTION (AS SUCH TERMS ARE DEFINED IN
SECTION 5(A)), THE NUMBER OF SHARES TO BE SUBJECT TO EACH OF THE OPTIONS, THE
TIME OR TIMES AT WHICH THE OPTIONS SHALL BE GRANTED, THE RATE OF OPTION
EXERCISABILITY, AND, SUBJECT TO SECTION 5 HEREOF, THE PRICE AT WHICH EACH OF THE
OPTIONS IS EXERCISABLE AND THE DURATION OF THE OPTION. THE TERM “COMMITTEE”, AS
USED IN THIS PLAN AND THE OPTIONS GRANTED HEREUNDER, REFERS TO EITHER THE BOARD
OF DIRECTORS OR TO THE COMMITTEE, WHICHEVER IS THEN ADMINISTERING THIS PLAN.

B.             THE COMMITTEE SHALL ADOPT SUCH RULES FOR THE CONDUCT OF ITS
BUSINESS AND ADMINISTRATION OF THIS PLAN AS IT CONSIDERS DESIRABLE. A MAJORITY
OF THE MEMBERS OF THE COMMITTEE SHALL CONSTITUTE A QUORUM FOR ALL PURPOSES. THE
VOTE OR WRITTEN CONSENT OF A MAJORITY OF THE MEMBERS OF THE COMMITTEE ON A
PARTICULAR MATTER SHALL CONSTITUTE THE ACT OF THE COMMITTEE ON SUCH MATTER. THE
COMMITTEE SHALL HAVE THE RIGHT TO CONSTRUE THE PLAN AND THE OPTIONS ISSUED
PURSUANT TO IT, TO CORRECT DEFECTS AND OMISSIONS AND TO RECONCILE
INCONSISTENCIES TO THE EXTENT NECESSARY TO EFFECTUATE THE PLAN AND THE OPTIONS
ISSUED PURSUANT TO IT, AND SUCH ACTION SHALL BE FINAL, BINDING AND CONCLUSIVE
UPON ALL PARTIES CONCERNED. NO MEMBER OF THE COMMITTEE OR THE BOARD OF DIRECTORS
SHALL BE LIABLE FOR ANY ACT OR OMISSION (WHETHER OR NOT NEGLIGENT) TAKEN OR
OMITTED IN GOOD FAITH, OR FOR THE EXERCISE OF AN AUTHORITY OR DISCRETION GRANTED
IN CONNECTION WITH THE PLAN TO A COMMITTEE OR THE BOARD OF DIRECTORS, OR FOR THE
ACTS OR OMISSIONS OF ANY OTHER MEMBERS OF A COMMITTEE OR THE BOARD OF DIRECTORS.
SUBJECT TO THE NUMERICAL LIMITATIONS ON COMMITTEE MEMBERSHIP SET FORTH IN
SECTION 4(A) HEREOF, THE BOARD OF DIRECTORS MAY AT ANY TIME APPOINT ADDITIONAL
MEMBERS OF THE COMMITTEE AND MAY AT ANY TIME REMOVE ANY MEMBER OF THE COMMITTEE
WITH OR WITHOUT CAUSE. VACANCIES IN THE COMMITTEE, HOWEVER CAUSED, MAY BE FILLED
BY THE BOARD OF DIRECTORS, IF IT SO DESIRES.

5.             INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS

A.             OPTIONS ISSUED PURSUANT TO THIS PLAN MAY BE EITHER INCENTIVE
STOCK OPTIONS GRANTED PURSUANT TO SECTION 5(B) HEREOF OR NON-QUALIFIED STOCK
OPTIONS GRANTED PURSUANT TO SECTION 5(C) HEREOF, AS DETERMINED BY THE COMMITTEE.
AN “INCENTIVE STOCK OPTION” IS AN OPTION WHICH SATISFIES ALL OF THE REQUIREMENTS
OF SECTION 422(B) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)
AND THE REGULATIONS THEREUNDER, AND A “NON-QUALIFIED STOCK OPTION” IS AN OPTION
WHICH EITHER DOES NOT SATISFY ALL OF THOSE REQUIREMENTS OR THE TERMS OF THE
OPTION

2

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

PROVIDE THAT IT WILL NOT BE TREATED AS AN INCENTIVE STOCK OPTION. THE COMMITTEE
MAY GRANT BOTH AN INCENTIVE STOCK OPTION AND A NON-QUALIFIED STOCK OPTION TO THE
SAME PERSON, OR MORE THAN ONE OF EACH TYPE OF OPTION TO THE SAME PERSON. THE
OPTION, PRICE FOR OPTIONS ISSUED UNDER THIS PLAN SHALL BE EQUAL AT LEAST TO THE
FAIR, MARKET VALUE (AS DEFINED BELOW) OF THE COMPANY’S COMMON STOCK ON THE DATE
OF THE GRANT OF THE OPTION. THE FAIR MARKET VALUE OF THE COMPANY’S COMMON STOCK
ON ALLY PARTICULAR DATE SHALL MEAN THE LAST REPORTED SALE PRICE OF A SHARE OF
THE COMPANY’S COMMON STOCK ON ANY STOCK EXCHANGE ON WHICH SUCH STOCK IS THEN
LISTED OR ADMITTED TO TRADING, OR ON THE NASDAQ NATIONAL MARKET SYSTEM OR SMALL
CAP NASDAQ, ON SUCH DATE, OR IF NO SALE TOOK PLACE ON SUCH DAY, THE LAST SUCH
DATE ON WHICH A SALE TOOK PLACE, OR IF THE COMMON STOCK IS NOT THEN QUOTED ON
THE NASDAQ NATIONAL MARKET SYSTEM OR SMALL CAP NASDAQ, OR LISTED OR ADMITTED TO
TRADING ON ANY STOCK EXCHANGE, THE AVERAGE OF THE BID AND ASKED PRICES IN THE
OVER-THE-COUNTER MARKET ON SUCH DATE, OR IF NONE OF THE FOREGOING, A PRICE
DETERMINED IN GOOD FAITH BY THE COMMITTEE TO EQUAL THE FAIR MARKET VALUE PER
SHARE OF THE COMMON STOCK.

B.             SUBJECT TO THE AUTHORITY OF THE COMMITTEE SET FORTH IN SECTION
4(A), HEREOF, INCENTIVE STOCK OPTIONS ISSUED PURSUANT TO THIS PLAN SHALL BE
ISSUED IN SUCH FORM AS THE COMMITTEE MAY DETERMINE FROM TIME TO TIME, AND SHALL
CONTAIN SUBSTANTIALLY THE TERMS AND CONDITIONS SET FORTH HEREIN. INCENTIVE STOCK
OPTIONS SHALL NOT BE EXERCISABLE AFTER THE EXPIRATION OF TEN YEARS FROM THE DATE
SUCH. OPTIONS ARE GRANTED, UNLESS TERMINATED EARLIER UNDER THE TERMS OF THE
OPTION, EXCEPT THAT OPTIONS GRANTED TO INDIVIDUALS DESCRIBED IN SECTION 422(B)
(6) OF THE CODE SHALL CONFORM TO THE PROVISIONS OF SECTION 422(C) (5) OF THE
CODE. EACH OF THE OPTIONS GRANTED PURSUANT TO THIS SECTION 5(B) IS INTENDED, IF
POSSIBLE, TO BE AN “INCENTIVE STOCK OPTION” AS THAT TERM IS DEFINED IN SECTION
422(B) OF THE CODE AND THE REGULATIONS THEREUNDER. IN THE EVENT THIS PLAN OR ANY
OPTION GRANTED PURSUANT TO THIS SECTION 5(B) IS IN ANY WAY INCONSISTENT WITH THE
APPLICABLE LEGAL REQUIREMENTS OF THE CODE OR THE REGULATIONS THEREUNDER FOR AN
INCENTIVE STOCK OPTION, THIS PLAN AND SUCH OPTION SHALL BE DEEMED AUTOMATICALLY
AMENDED AS OF THE DATE HEREOF TO CONFORM TO SUCH LEGAL REQUIREMENTS, IF SUCH
CONFORMITY MAY BE ACHIEVED BY AMENDMENT.

C.             SUBJECT TO THE AUTHORITY OF THE COMMITTEE SET FORTH IN SECTION
4(A) HEREOF, NON-QUALIFIED STOCK OPTIONS ISSUED TO NON-EMPLOYEE DIRECTORS,
OFFICERS AND OTHER KEY EMPLOYEES PURSUANT TO THIS PLAN SHALL BE ISSUED IN SUCH
FORM AS THE COMMITTEE MAY DETERMINE FROM TIME TO TIME, AND SHALL CONTAIN
SUBSTANTIALLY THE TERMS AND CONDITIONS SET FORTH HEREIN. NON-QUALIFIED STOCK
OPTIONS SHALL EXPIRE TEN YEARS AFTER THE DATE THEY ARE GRANTED, UNLESS
TERMINATED EARLIER UNDER THE OPTION TERMS.

D.             NEITHER THE COMPANY NOR ANY OF ITS CURRENT OR FUTURE PARENT,
SUBSIDIARIES OR AFFILIATES, NOR THEIR OFFICERS, DIRECTORS, SHAREHOLDERS, STOCK
OPTION PLAN COMMITTEES, EMPLOYEES OR AGENTS SHALL HAVE ANY LIABILITY TO ANY
OPTIONEE IN THE EVENT (I) AN OPTION GRANTED PURSUANT TO SECTION 5(B) HEREOF DOES
NOT QUALIFY AS AN “INCENTIVE STOCK OPTION” AS THAT TERM IS USED IN SECTION
422(B) OF THE CODE AND THE REGULATIONS THEREUNDER; (II) ANY OPTIONEE DOES NOT
OBTAIN THE TAX TREATMENT PERTAINING TO AN INCENTIVE STOCK OPTION; OR (III) ANY
OPTION GRANTED PURSUANT TO SECTION 5(C) HEREOF IS AN “INCENTIVE STOCK OPTION.”

3

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

6.             AMENDMENT, SUPPLEMENT, SUSPENSION AND TERMINATION

Options shall not be granted pursuant to this Plan after the expiration of ten
years from the date the Plan is adopted by the Board of Directors of the
Company. The Board of Directors reserves the right at any time, and from time to
time, to amend or supplement this Plan in any way, or to suspend or terminate
it, effective as of such date, which date may be either before or after the
taking of such action, as may be specified by the Board of Directors; provided,
however, that such action shall not, without the consent of the optionee, affect
options granted under the Plan prior to the actual date on which such action
occurred. If an amendment or supplement of this Plan is required by the Code or
the regulations thereunder to be approved by the shareholders of the Company in
order to permit the granting of “Incentive Stock Options” (as that term is
defined in Section 422 (b) of the Code and regulations thereunder) pursuant to
the amended or supplemented Plan, such amendment or supplement shall also be
approved by the shareholders of the Company in such manner as is prescribed by
the Code and the regulations thereunder. If the Board of Directors voluntarily
submits a proposed amendment, supplement, suspension or termination for
shareholder approval, such submission shall not require any future amendments,
supplements, suspensions or terminations (whether or not relating to the same
provision or subject matter) to be similarly submitted for shareholder approval.

7.             EFFECTIVENESS OF PLAN

This Plan shill become effective on the date of its adoption by the Company’s
Board of Directors, subject however to approval by the holders of the Company’s
Common Stock in the manner as prescribed in the Code and the regulations
thereunder. Options may be granted under this Plan prior to obtaining
shareholder approval, provided such options shall not be exercisable until
shareholder approval is obtained.

8.             GENERAL CONDITIONS

A.             NOTHING CONTAINED IN THIS PLAN OR ANY OPTION GRANTED PURSUANT TO
THIS PLAN SHALL CONFER UPON ANY EMPLOYEE THE RIGHT TO CONTINUE IN THE EMPLOY OF
THE COMPANY OR ANY AFFILIATED OR SUBSIDIARY CORPORATION OR INTERFERE IN ANY WAY
WITH THE RIGHTS OF THE COMPANY OR ANY AFFILIATED OR SUBSIDIARY CORPORATION TO
TERMINATE HIS EMPLOYMENT IN ANY WAY.

B.             NOTHING CONTAINED IN THIS PLAN OR ANY OPTION GRANTED PURSUANT TO
THIS PLAN SHALL CONFER UPON ANY DIRECTOR THE RIGHT TO CONTINUE AS A DIRECTOR OF
THE COMPANY OR ANY AFFILIATED OR SUBSIDIARY CORPORATION OR INTERFERE IN ANY WAY
WITH THE RIGHTS OF THE COMPANY OR ANY AFFILIATED OR SUBSIDIARY CORPORATION, OR
THEIR RESPECTIVE SHAREHOLDERS, TO TERMINATE THE DIRECTORSHIP OF ANY SUCH
DIRECTOR.

C.             CORPORATE ACTION CONSTITUTING AN OFFER OF STOCK FOR SALE TO ANY
PERSON UNDER THE TERMS OF THE OPTIONS TO BE GRANTED HEREUNDER SHALL BE DEEMED
COMPLETE AS OF THE DATE WHEN THE COMMITTEE AUTHORIZES THE GRANT OF THE OPTION TO
THE SUCH PERSON, REGARDLESS OF WHEN THE OPTION IS ACTUALLY DELIVERED TO SUCH
PERSON OR ACKNOWLEDGED OR AGREED TO BY HIM.

D.             THE TERMS “PARENT CORPORATION” AND “SUBSIDIARY CORPORATION” AS
USED THROUGHOUT THIS PLAN, AND THE OPTIONS GRANTED PURSUANT TO THIS PLAN, SHALL
(EXCEPT AS OTHERWISE PROVIDED IN THE OPTION FORM) HAVE THE MEANING THAT IS
ASCRIBED TO THAT TERM WHEN CONTAINED IN SECTION 422(B) OF

4

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

THE CODE AND THE REGULATIONS THEREUNDER, AND THE COMPANY SHALL BE DEEMED TO BE
THE GRANTOR CORPORATION FOR PURPOSES OF APPLYING SUCH MEANING.

E.             REFERENCES IN THIS PLAN TO THE CODE SHALL BE DEEMED TO ALSO REFER
TO THE CORRESPONDING PROVISIONS OF ANY FUTURE UNITED STATES REVENUE LAW.

F.              THE USE OF THE MASCULINE PRONOUN SHALL INCLUDE THE FEMININE
GENDER WHENEVER APPROPRIATE.

5

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