Exhibit 10.1

 

February 24, 2005

 

Via Overnight Mail

 

Frank Lavelle

4 Iddings Lane

Newtown Square, PA 19073

 

Dear Frank:

 

On behalf of MedQuist Inc. (the “Company”), this letter describes the terms of
your new employment as the Company’s President, 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-YEAR (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:  (A) EITHER PARTY PROVIDES THE OTHER PARTY WITH AT LEAST NINETY (90)
DAYS’ PRIOR WRITTEN NOTICE OF ITS INTENTION NOT TO RENEW THIS AGREEMENT; (B)
EMPLOYEE RESIGNS PRIOR TO THE EXPIRATION OF THE TERM UPON AT LEAST THIRTY (30)
DAYS’ PRIOR WRITTEN NOTICE; (C) COMPANY TERMINATES EMPLOYEE’S EMPLOYMENT WITHOUT
CAUSE UPON AT LEAST THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE; OR (D) THE
EMPLOYEE’S EMPLOYMENT IS TERMINATED BY THE COMPANY FOR CAUSE.

 

2.                                       RESPONSIBILITIES/REPORTING.  EMPLOYEE
SHALL DEVOTE HIS FULL TIME AND ATTENTION TO THE DUTIES AND RESPONSIBILITIES OF
THE COMPANY’S PRESIDENT AND SHALL REPORT TO THE INTERIM CHIEF EXECUTIVE
OFFICER.  SUBJECT TO THE APPROVAL OF THE COMPANY’S BOARD OF DIRECTORS (THE
“BOARD”), EMPLOYEE SHALL BECOME THE COMPANY’S CHIEF EXECUTIVE OFFICER.  IF AND
WHEN THE BOARD ACTS TO APPOINT EMPLOYEE AS CHIEF EXECUTIVE OFFICER, EMPLOYEE
SHALL, THEREAFTER, REPORT TO THE BOARD.  IN THE EVENT OF SUCH APPOINTMENT AS
CHIEF EXECUTIVE OFFICER, EMPLOYEE SHALL CONTINUE TO BE SUBJECT TO THE TERMS OF
THIS AGREEMENT.  NOTWITHSTANDING THE PRECEDING PROVISIONS OF THIS SUBSECTION,
EMPLOYEE SHALL NOT BE PROHIBITED FROM SERVING ON CORPORATE, INDUSTRY, CIVIC, OR
CHARITABLE BOARDS OR COMMITTEES, SO LONG AS SUCH ACTIVITIES DO NOT INTERFERE
WITH THE PERFORMANCE OF EMPLOYEE’S RESPONSIBILITIES AS AN EMPLOYEE OF THE
COMPANY IN ACCORDANCE WITH THIS AGREEMENT OR VIOLATE SECTION 4 OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT IF EMPLOYEE WISHES TO JOIN ANY SUCH BOARDS OR
COMMITTEES AFTER THE EMPLOYMENT COMMENCEMENT DATE, EMPLOYEE SHALL PROVIDE THE
BOARD WITH ADVANCE WRITTEN NOTICE AND BOARD APPROVAL, WHICH SHALL NOT BE
UNREASONABLY WITHHELD, SHALL BE REQUIRED PRIOR TO EMPLOYEE JOINING ANY SUCH
BOARD OR COMMITTEE.

 

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3.                                       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 A MINIMUM ANNUAL RATE OF
$500,000, SUBJECT TO REVIEW AND ADJUSTMENT ANNUALLY DURING THE TERM;

 

(2)                                  SIGNING BONUS OF $46,000 PAYABLE WITHIN
THIRTY (30) DAYS OF THE EMPLOYMENT COMMENCEMENT DATE;

 

(3)                                  PARTICIPATE IN MEDQUIST’S MANAGEMENT BONUS
PLAN.  EMPLOYEE’S ANNUAL TARGET BONUS IN THIS PLAN WILL BE 50% OF EMPLOYEE’S
ANNUAL BASE SALARY.  THE ANNUAL TARGET BONUS IS THE AMOUNT THAT THE EMPLOYEE
SHALL BE ELIGIBLE TO RECEIVE IF THE COMPANY AND EMPLOYEE ATTAIN THE
PRE-ESTABLISHED BONUS PLAN TARGET OBJECTIVES.  EACH YEAR, 75% OF THE ANNUAL
TARGET BONUS WILL BE BASED UPON ACHIEVEMENT OF FINANCIAL OBJECTIVES PROPOSED BY
COMPANY MANAGEMENT AND APPROVED BY THE BOARD (HEREINAFTER “ANNUAL FINANCIAL
OBJECTIVES”); AND (B) 25% OF THE ANNUAL TARGET BONUS WILL BE BASED UPON
ACHIEVEMENT OF SPECIFIC STRATEGIC AND TACTICAL INITIATIVES PROPOSED BY COMPANY
MANAGEMENT AND APPROVED BY THE BOARD (HEREINAFTER “ANNUAL STRATEGIC
INITIATIVES”).  THE ACTUAL ANNUAL BONUS AWARD MAY BE HIGHER OR LOWER THAN THE
ANNUAL 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.  FOR 2005,
PAYMENT OF THE ANNUAL TARGET BONUS IN THE AMOUNT OF $250,000 IS GUARANTEED;

 

(4)                                  RECEIVE AN ANNUAL DISCRETIONARY BONUS OF UP
TO 50% OF BASE SALARY WHICH SHALL BE PAYABLE AT THE DISCRETION OF THE
COMPENSATION COMMITTEE OF THE BOARD;

 

(5)                                  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);

 

(6)                                  VACATION IN ACCORDANCE WITH THE COMPANY’S
POLICIES; PROVIDED THAT EMPLOYEE SHALL BE ENTITLED TO A MINIMUM OF FOUR (4)
WEEKS OF VACATION ANNUALLY;

 

(7)                                  A CAR ALLOWANCE OF $1,500 PER MONTH;

 

(8)                                  REIMBURSEMENT OF BUSINESS EXPENSES IN
ACCORDANCE WITH COMPANY POLICY;

 

(9)                                  REIMBURSEMENT OF UP TO $7,500 IN LEGAL FEES
ASSOCIATED WITH THE REVIEW AND NEGOTIATION OF THIS AGREEMENT; AND

 

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(10)                            IF EMPLOYEE’S EMPLOYMENT IS TERMINATED BY THE
COMPANY WITHOUT CAUSE, EMPLOYEE TERMINATES FOR GOOD REASON OR DUE TO DISABILITY,
OR THE COMPANY DOES NOT RENEW THE TERM IN ACCORDANCE WITH SECTION 1, THE
SEVERANCE PAY AND BENEFITS DESCRIBED BELOW IN SECTION 5.

 

B.                                      LONG TERM INCENTIVES.

 

(1)                                  ANNUAL OPTION GRANT.  EMPLOYEE SHALL BE
ELIGIBLE FOR ANNUAL GRANTS OF NON-QUALIFIED STOCK OPTIONS (“ANNUAL OPTION
GRANT”) TO PURCHASE COMPANY COMMON STOCK, NO PAR VALUE (“COMMON STOCK”) PURSUANT
TO THE COMPANY’S STOCK OPTION PLAN ADOPTED MAY 29, 2002 OR ANY SUCCESSOR OPTION
PLAN ADOPTED BY THE COMPANY AND APPROVED BY SHAREHOLDERS (THE “OPTION PLAN”). 
THE ANNUAL OPTION GRANT SHALL HAVE A TARGET VALUE, BASED ON AN ACCEPTED OPTION
PRICING METHODOLOGY CHOSEN BY THE COMPANY, OF 100% OF EMPLOYEE’S BASE SALARY FOR
THE YEAR IN WHICH SUCH ANNUAL OPTION GRANT IS MADE, SUBJECT TO THE FOLLOWING:

 

A.                                 EMPLOYEE SHALL BE ELIGIBLE FOR 75% OF THE
ANNUAL OPTION GRANT UPON ACHIEVEMENT OF THE ANNUAL FINANCIAL OBJECTIVES AND AN
ADDITIONAL 25% OF THE ANNUAL OPTION GRANT UPON ACHIEVEMENT OF ANNUAL STRATEGIC
INITIATIVES.  THE ANNUAL OPTION GRANT SHALL BE MADE IN ACCORDANCE WITH THE TERMS
OF THE OPTION PLAN WITHIN THIRTY (30) DAYS AFTER THE COMPANY HAS DETERMINED THAT
THE OBJECTIVES AND INITIATIVES HAVE BEEN MET; PROVIDED THAT, WITH RESPECT TO ANY
YEAR, THE COMPANY SHALL MAKE SUCH DETERMINATION NOT LATER THAN THE END OF THE
FIRST CALENDAR QUARTER FOLLOWING SUCH YEAR.

 

B.                                   FIFTY PERCENT (50%) OF THE OPTIONS SUBJECT
TO THE ANNUAL OPTION GRANT SHALL HAVE AN EXERCISE PRICE EQUAL TO FAIR MARKET
VALUE OF THE COMMON STOCK ON THE DATE OF GRANT; 25% OF SUCH OPTIONS SHALL HAVE
AN EXERCISE PRICE EQUAL TO 125% OF FAIR MARKET VALUE OF THE COMMON STOCK ON THE
DATE OF GRANT; AND 25% OF SUCH OPTIONS SHALL HAVE AN EXERCISE PRICE OF 150% OF
FAIR MARKET VALUE OF THE COMMON STOCK ON THE DATE OF GRANT.

 

C.                                   IF THE EMPLOYEE IS NOT ELIGIBLE FOR THE
ENTIRE TARGET GRANT WITH RESPECT TO ANY YEAR, THE PRECEDING EXERCISE PRICES
SHALL BE APPLIED PROPORTIONALLY TO THAT PORTION OF THE ANNUAL OPTION GRANT THAT
IS MADE.

 

D.                                  EACH ANNUAL OPTION GRANT SHALL VEST IN EQUAL
20% INSTALLMENTS ON EACH OF THE FIRST FIVE (5) ANNIVERSARIES OF THE APPLICABLE
GRANT DATE, SUBJECT TO EMPLOYEE’S CONTINUED EMPLOYMENT WITH THE COMPANY.

 

E.                                    EACH ANNUAL OPTION GRANT SHALL BE SUBJECT
TO THE TERMS AND CONDITIONS OF THE OPTION PLAN AND THE STOCK OPTION AGREEMENT
THAT WILL BE ISSUED IF AND WHEN THE GRANT BECOMES EFFECTIVE.

 

(2)                                  RESTRICTED STOCK IN LIEU OF ANNUAL OPTION
GRANT.  IN LIEU OF ONE OR MORE OF THE ANNUAL OPTION GRANTS PROVIDED FOR IN THE
PRECEDING SUBSECTION (1), THE BOARD MAY ISSUE SHARES OF COMMON STOCK THAT ARE
SUBJECT TO RESTRICTIONS AND A RISK OF FORFEITURE (“RESTRICTED STOCK GRANT”);
PROVIDED THAT ANY SUCH GRANT SHALL BE PURSUANT TO A

 

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PLAN APPROVED BY THE COMPANY’S SHAREHOLDERS (A “RESTRICTED STOCK PLAN”).  IF THE
BOARD DETERMINES TO GRANT A RESTRICTED STOCK GRANT, THE VALUE OF ANY SUCH GRANT
SHALL EQUAL THE VALUE OF THE ANNUAL OPTION GRANT, WHICH SHALL BASED ON AN
ACCEPTED OPTION PRICING METHODOLOGY CHOSEN BY THE COMPANY, TO WHICH EMPLOYEE IS
OTHERWISE ENTITLED.  ANY RESTRICTED STOCK GRANT SHALL BE SUBJECT TO THE VESTING
SCHEDULE SPECIFIED IN SECTION 3.B.(1)D.

 

(3)                                  CASH IN LIEU OF ANNUAL OPTION GRANT OR
RESTRICTED STOCK GRANT.  IF EMPLOYEE HAS EARNED ALL OF PART OF THE ANNUAL OPTION
GRANT PURSUANT TO SECTION 3.B.(1)(A), BUT THE BOARD CHOOSES NOT TO GRANT THE
ANNUAL OPTION GRANT (OR RESTRICTED STOCK GRANT IN LIEU THEREOF) IN ANY YEAR
DURING THE TERM BECAUSE:  (A) THE COMPANY IS NOT CURRENT IN ITS REPORTING
OBLIGATIONS UNDER THE SECURITIES AND EXCHANGE ACT OF 1934; (B) THE FORM S-8
REGISTRATION STATEMENT FOR THE OPTION PLAN OR A RESTRICTED STOCK PLAN DOES NOT
COMPLY WITH THE REQUIREMENT OF THE SECURITIES AND EXCHANGE COMMISSION; AND/OR
(C) THERE ARE NOT A SUFFICIENT NUMBER OF SHARES AVAILABLE UNDER THE OPTION PLAN
OR A RESTRICTED STOCK PLAN, THEN WITHIN 30 DAYS AFTER THE LATER OF (X) THE CLOSE
OF SUCH YEAR OR (Y) THE DATE ON WHICH THE BOARD DETERMINES THE DEGREE TO WHICH
THE ANNUAL STRATEGIC INITIATIVES AND ANNUAL FINANCIAL OBJECTIVES HAVE BEEN
SATISFIED, THE EMPLOYEE SHALL BE ENTITLED TO A CASH PAYMENT OF $250,000, OR
PORTION THEREOF, BASED ON THE ACHIEVEMENT OF THE ANNUAL STRATEGIC INITIATIVES
AND ANNUAL FINANCIAL OBJECTIVES TO WHICH THE ANNUAL OPTION GRANT IS SUBJECT.

 

(4)                                  RESTRICTED STOCK SIGNING BONUS.  WITHIN A
REASONABLE PERIOD OF TIME FOLLOWING THE DATE THAT THE COMPANY AGAIN BECOMES
CURRENT IN ITS REPORTING OBLIGATIONS UNDER THE SECURITIES AND EXCHANGE ACT OF
1934, EMPLOYEE WILL BE GRANTED 35,000 SHARES OF RESTRICTED COMMON STOCK (THE
“RESTRICTED STOCK”).  THE RESTRICTED STOCK SHALL VEST AND THEREAFTER NOT BE
SUBJECT TO FORFEITURE AS FOLLOWS:  40% ON THE SECOND ANNIVERSARY OF EMPLOYEE’S
EMPLOYMENT COMMENCEMENT DATE; 20% ON EACH ANNIVERSARY THEREAFTER.  THE GRANT OF
RESTRICTED STOCK PURSUANT TO THIS SUBSECTION SHALL BE PURSUANT TO A RESTRICTED
STOCK PLAN.  IF THERE IS NOT A RESTRICTED STOCK PLAN, EMPLOYEE WILL BE GRANTED
NON-QUALIFIED OPTIONS TO PURCHASE 100,000 SHARES OF COMMON STOCK PURSUANT TO THE
OPTION PLAN.  SUCH STOCK OPTIONS SHALL BE SUBJECT TO THE SAME VESTING
SCHEDULE TO WHICH THE RESTRICTED STOCK WOULD HAVE BEEN SUBJECT IF GRANTED.  THE
RESTRICTED STOCK SHALL BE SUBJECT TO AN AWARD AGREEMENT WITH TERMS AND
CONDITIONS NOT INCONSISTENT WITH THE PROVISIONS SET FORTH HEREIN, AS WELL AS
SUCH OTHER TERMS AND CONDITIONS TO WHICH GRANTS OF RESTRICTED STOCK ARE
CUSTOMARILY SUBJECT.  ANY GRANT OF RESTRICTED STOCK WILL BE MADE AT FAIR MARKET
VALUE ON THE DATE OF GRANT.  IF SUCH RESTRICTED STOCK OR STOCK OPTION GRANT IS
NOT MADE BY DECEMBER 31, 2005, EMPLOYEE SHALL RECEIVE A CASH PAYMENT OF
$250,000, LESS APPLICABLE WITHHOLDING, IN JANUARY 2006.

 

(5)                                  IN THE EVENT OF A CHANGE IN CONTROL,
EMPLOYEE SHALL BE FULLY VESTED IN ANY RESTRICTED STOCK AND STOCK OPTIONS ISSUED
PURSUANT TO THIS SECTION 3.

 

4.                                       COVENANTS

 

A.                                       NON-SOLICITATION.  WHILE EMPLOYED BY
THE COMPANY AND FOR THE EIGHTEEN (18) MONTH PERIOD FOLLOWING THE CESSATION OF
THAT EMPLOYMENT FOR ANY REASON

 

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(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 THAT IS IN THE SAME BUSINESS
AS THE COMPANY;

 

(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 EIGHTEEN (18) 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

 

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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

 

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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.

 

A.                                     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 THE
COMPANY SHALL HAVE THE RIGHT TO ENFORCE SECTION 4 BY INJUNCTION, SPECIFIC
PERFORMANCE OR OTHER EQUITABLE RELIEF, WITHOUT PREJUDICE TO ANY OTHER RIGHTS AND
REMEDIES THAT THE COMPANY MAY HAVE FOR A BREACH, OR THREATENED BREACH, OF THE
COVENANTS.

 

(2)                                  IN ADDITION TO THE REMEDIES SPECIFIED IN
SECTION 4.F.(1)A AND ANY OTHER RELIEF AWARDED BY ANY COURT, IF EMPLOYEE BREACHES
ANY OF THE COVENANTS:

 

A.                                 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

 

B.                                   THE COMPANY WILL BE ENTITLED TO INJUNCTIVE
OR OTHER EQUITABLE RELIEF TO PREVENT FURTHER BREACHES OF THE COVENANTS BY
EMPLOYEE.

 

(3)                                  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. 

 

A.                                       EXCEPT AS SPECIFIED IN SECTIONS 5.B.
AND 5.C., UPON TERMINATION OF EMPLOYMENT, INCLUDING TERMINATION DUE TO
EMPLOYEE’S DEATH, EMPLOYEE WILL BE ENTITLED

 

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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.

 

B.                                      IF EMPLOYEE’S EMPLOYMENT DOES NOT
AUTOMATICALLY RENEW, IS TERMINATED BY THE COMPANY WITHOUT CAUSE, IF EMPLOYEE
TERMINATES FOR GOOD REASON IN ACCORDANCE WITH SECTIONS 7.F. OR IF EMPLOYEE
TERMINATES DUE TO DISABILITY, EMPLOYEE WILL BE ENTITLED TO THE FOLLOWING:

 

(1)                                MONTHLY PAYMENTS FOR A PERIOD OF 18 MONTHS
FOLLOWING THE TERMINATION DATE IN AN AMOUNT EQUAL TO THE QUOTIENT OBTAINED BY
DIVIDING (X) THE SUM OF (A) 1.5 TIMES THE BASE SALARY PAID IN THE 12-MONTH
PERIOD PRECEDING THE TERMINATION DATE AND (B) THE TOTAL CASH BONUS PAID PURSUANT
TO SECTIONS 3.A.(3) AND (4) IN THE 12-MONTH PERIOD PRECEDING THE TERMINATION
DATE BY (Y) 18; PROVIDED IF EMPLOYEE’S EMPLOYMENT IS TERMINATED BY THE COMPANY
WITHOUT CAUSE PRIOR TO THE FIRST ANNIVERSARY OF THE EMPLOYMENT COMMENCEMENT
DATE, SUCH AMOUNT SHALL NOT BE LESS THAN $1,000,000 PAYABLE OVER THE 18-MONTH
PERIOD.

 

(2)                                REIMBURSEMENT FOR COSTS INCURRED IN OBTAINING
OUTPLACEMENT SERVICES, AT A COST NOT TO EXCEED $100,000, SUBJECT TO PROVISION OF
DOCUMENTATION REASONABLY SATISFACTORY TO THE COMPANY.

 

(3)                                MEDICAL COVERAGE FOLLOWING THE DATE OF
TERMINATION UNTIL THE EARLIER TO OCCUR OF THE EXPIRATION OF 18 MONTHS OR THE
DATE ON WHICH EMPLOYEE IS ELIGIBLE FOR COVERAGE UNDER A PLAN MAINTAINED BY A NEW
EMPLOYER OR A PLAN MAINTAINED BY HIS SPOUSE’S EMPLOYER, AT THE LEVEL IN EFFECT
AT THE DATE OF HIS TERMINATION (OR GENERALLY COMPARABLE COVERAGE) FOR HIMSELF
AND, WHERE APPLICABLE, HIS SPOUSE AND DEPENDENTS, AS THE SAME MAY BE CHANGED BY
THE COMPANY FROM TIME TO TIME FOR EMPLOYEES GENERALLY, AS IF THE EMPLOYEE HAD
CONTINUED IN EMPLOYMENT DURING SUCH PERIOD; PROVIDED, IN ANY CASE, THAT THE
COBRA HEALTH CARE CONTINUATION COVERAGE PERIOD UNDER SECTION 4980B OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, SHALL RUN CONCURRENTLY WITH THE
FOREGOING PERIOD. 

 

(4)                                IMMEDIATE VESTING IN ANY RESTRICTED STOCK AND
STOCK OPTIONS ISSUED PURSUANT TO SECTION 3.

 

C.                                       IN THE CASE OF TERMINATION DUE TO
EMPLOYEE’S DISABILITY, ANY SEVERANCE BENEFITS PAYABLE PURSUANT TO THIS SECTION 5
WILL BE OFFSET BY ANY LONG-TERM DISABILITY BENEFITS TO WHICH EMPLOYEE IS
ENTITLED UNDER THE COMPANY’S LONG-TERM DISABILITY PLAN.

 

D.                                      NOTWITHSTANDING THE PRECEDING PROVISIONS
OF THIS SECTION 5, 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, AND (Y) SUCH RELEASE BECOMES

 

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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.                                       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.

 

F.                                         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.

 

G.                                      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

 

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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.

 

H.                                      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.

 

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

 

J.                                          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.

 

K.                                       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 WILLFUL FAILURE OR REFUSAL TO PERFORM (OTHER THAN
DUE TO ILLNESS OR DISABILITY) HIS EMPLOYMENT DUTIES OR TO FOLLOW THE LAWFUL
DIRECTIVES OF HIS SUPERIORS OR THE BOARD, BUT ONLY AFTER WRITTEN NOTICE AND A
PERIOD OF TIME TO CORRECT OR OTHERWISE REMEDY SUCH CONDUCT OR FAILURE WITHIN A
TIME PERIOD SPECIFIED BY THE BOARD, WHICH SHALL NOT EXCEED 30 DAYS; (2) WILLFUL
MISCONDUCT OR GROSS NEGLIGENCE BY EMPLOYEE IN THE COURSE OF EMPLOYMENT; (3)
CONDUCT OF EMPLOYEE INVOLVING ANY TYPE OF FRAUD, EMBEZZLEMENT, OR THEFT IN THE
COURSE OF EMPLOYMENT; (4) A CONVICTION OF OR THE ENTRY OF A PLEA OF GUILTY OR
NOLO CONTENDERE TO A FELONY OR TO A CRIME INVOLVING MORAL TURPITUDE OR ANY OTHER
CRIME THAT OTHERWISE COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL 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.                                       “CHANGE OF CONTROL” SHALL BE DEEMED TO
HAVE OCCURRED IF ANY PERSON, ENTITY, OR ANY GROUP OF PERSONS OR ENTITIES ACTING
IN CONCERT, OTHER THAN KONINKLIJKE PHILIPS ELECTRONICS N.V., ACQUIRES MORE THAN
50% OF THE OUTSTANDING VOTING STOCK OF THE COMPANY.

 

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D.                                      “COVENANTS” MEANS THE COVENANTS SET
FORTH IN SECTION 5 OF THIS AGREEMENT.

 

E.                                       “DISABILITY” MEANS THE EMPLOYEE’S
ENTITLEMENT TO BENEFITS UNDER THE COMPANY’S LONG-TERM DISABILITY PLAN.

 

F.                                         “GOOD REASON” MEANS (1) A REDUCTION
IN EMPLOYEE’S ANNUAL BASE SALARY BELOW $500,000 WITHOUT EMPLOYEE’S CONSENT, (2)
REQUIRING EMPLOYEE TO BE BASED MORE THAN TWENTY-FIVE (25) MILES FROM THE
COMPANY’S CURRENT OFFICE LOCATION AS OF THE EMPLOYMENT COMMENCEMENT DATE, UNLESS
CLOSER TO THE EMPLOYEE’S RESIDENCE, (3) THE BOARD’S FAILURE TO APPOINT EMPLOYEE
TO CHIEF EXECUTIVE OFFICER UPON THE LATER OF (X) THIRTY (30) DAYS FOLLOWING THE
DEPARTURE OF THE CURRENT INTERIM CHIEF EXECUTIVE OFFICER OR (Y) THE SECOND
ANNIVERSARY OF THE EMPLOYEE COMMENCEMENT DATE, OR (4) SUBSTANTIAL AND MATERIAL
DIMINUTION OF DUTIES; PROVIDED THAT IN EACH CASE WRITTEN NOTICE OF EMPLOYEE’S
TERMINATION FOR GOOD REASON MUST BE DELIVERED TO THE COMPANY WITHIN 30 DAYS
AFTER THE OCCURRENCE OF ANY SUCH EVENT WITH SUCH NOTICE SPECIFYING ONE OR MORE
SPECIFIC REASON(S) IN THIS SECTION 7.F IN ORDER FOR EMPLOYEE’S TERMINATION WITH
GOOD REASON TO BE EFFECTIVE HEREUNDER.

 

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 singed 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:

 

 

 

 

 

Howard Hoffmann, Chief Executive Officer

 

 

Accepted and Agreed:

 

 

 

 

 

 

Frank Lavelle

 

 

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