Exhibit 10.2
Ronald L. Scarboro
MEDQUIST HOLDINGS INC.
RESTRICTED STOCK AWARD AGREEMENT
          THIS RESTRICTED STOCK AWARD AGREEMENT (this “Award” or “Agreement”) is
made by and between MedQuist Holdings Inc. (the “Company”) and Ronald L.
Scarboro (the “Grantee”) as of this 15th day of August, 2011 (the “Effective
Date”).
          WHEREAS, the Company has adopted the MedQuist Holdings Inc. 2010
Equity Incentive Plan (the “Plan”), which Plan is incorporated herein by
reference and made a part of this Agreement. Capitalized terms not otherwise
defined herein shall have the same meanings as in the Plan; and
          WHEREAS, the Committee has determined that it is in the best interests
of the Company and its stock holders to award Restricted Stock to the Grantee,
subject to the Plan and the terms and conditions contained in this Agreement;
and
          NOW, THEREFORE, in consideration of these premises and the agreements
set forth herein, the parties, intending to be legally bound hereby, agree as
follows:
     1. Award of Restricted Stock. The Company hereby awards the Grantee 44,834
shares of Restricted Stock.
     2. Vesting of Restricted Stock. Shares of Restricted Stock are subject to
forfeiture to the Company until they become vested and non-forfeitable in
accordance with this Section 2. While subject to forfeiture, the shares of
Restricted Stock may not be sold, pledged, assigned, otherwise encumbered or
transferred in any manner, whether voluntarily or involuntarily by the operation
of law.
          (a) Provided the Grantee remains in continuous service with the
Company through each applicable vesting date, 8.34% of the total number of
shares of Restricted Stock subject hereto shall become vested and
non-forfeitable on the last day of each full quarter (i.e., September 30,
December 31, March 31 and June 30) following the Effective Date, with the first
vesting date occurring on December 31, 2011.
          (b) Upon cessation of the Grantee’s service by the Company without
Cause or by the Grantee with Good Reason (if applicable), any unvested shares of
Restricted Stock will become fully vested and non-forfeitable on such date of
cessation of service. For purposes of this Agreement, “Good Reason” shall have
the meaning set forth in any employment or consulting agreement between the
Grantee and the Company or an Affiliate in effect at the time of such cessation
of service and, in the absence of any such employment or consulting agreement
(or the absence of any definition of “Good Reason” contained therein), “Good
Reason” shall be inapplicable.
          (c) Upon cessation of the Grantee’s service with the Company for any
reason other than by the Company without Cause or by the Grantee with Good
Reason, any unvested shares of Restricted Stock will immediately and
automatically, without any action on the part of the Company, be forfeited, and
the Grantee will have no further rights with respect to those shares.
          (d) Solely for purposes of this Agreement, employment or service with
the Company will be deemed to include employment or service with any subsidiary
or Affiliate of the Company (for only so long as such entity remains a
subsidiary or Affiliate).

 

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

 

     3. Issuance of Shares.
          (a) The Company will cause the shares of Restricted Stock to be issued
in the Grantee’s name either by book-entry registration or issuance of a stock
certificate or certificates.
          (b) Unless otherwise provided by the Committee in writing, the shares
of Restricted Stock shall not be transferable by Grantee other than by will or
the laws of descent and distribution.
          (c) While the shares of Restricted Stock remains forfeitable, the
Company will cause an appropriate stop-transfer order to be issued and to remain
in effect with respect to the unvested shares of Restricted Stock. As soon as
practicable following the time that any Restricted Stock becomes non-forfeitable
(and provided that appropriate arrangements have been made with the Company for
the withholding or payment of any taxes that may be due with respect to such
share), the Company will cause that stop-transfer order to be removed. The
Company may also condition delivery of certificates for shares of Restricted
Stock upon receipt from the Grantee of any undertakings that it may determine
are appropriate to facilitate compliance with federal and state securities laws.
          (d) If any certificate is issued in respect of shares of Restricted
Stock, that certificate will be legended and held in escrow by the Company or an
agent of the Company. In addition, the Grantee may be required to execute and
deliver to the Company a stock power with respect to those shares of Restricted
Stock. At such time as those shares of Restricted Stock become non-forfeitable,
the Company will cause a new certificate to be issued without that portion of
the legend referencing the previously applicable forfeiture conditions and will
cause that new certificate to be delivered to the Grantee (provided that
appropriate arrangements have been made with the Company for the withholding or
payment of any taxes that may be due with respect to such shares).
     4. Substitute Property. If, while any of the shares of Restricted Stock
remains subject to forfeiture, there occurs a merger, reclassification,
recapitalization, stock split, stock dividend or other similar event or
transaction resulting in new, substituted or additional securities being issued
or delivered to the Grantee by reason of the Grantee’s ownership of the
Restricted Stock, such securities will constitute Restricted Stock for all
purposes of this Agreement and any certificate issued to evidence such
securities will immediately be deposited with the secretary of the Company (or
his or her designee) and subject to the escrow described in Section 3, above.
     5. Rights of Grantee During Restricted Period. The Grantee will have the
right to vote the shares of Restricted Stock and to receive dividends and
distributions with respect to the Restricted Stock; provided, however, that any
cash dividends or distributions paid in respect of the Restricted Stock while
those shares remain subject to forfeiture will be withheld by the Company and
will be delivered to the Grantee (without interest and net of any required tax
withholding) only if and when the Restricted Stock giving rise to such dividends
or distributions become vested and non-forfeitable.
     6. Securities Laws. The Committee may from time to time impose any
conditions on the shares of Restricted Stock as it deems necessary or advisable
to ensure that the Restricted Stock is issued and sold in compliance with the
requirements of any stock exchange or quotation system upon which the shares are
then listed or quoted, the Securities Act of 1933 and all other applicable laws.
     7. Tax Consequences.
          (a) The Grantee acknowledges that the Company has not advised the
Grantee regarding the Grantee’s income tax liability in connection with the
grant or vesting of the Restricted Stock and the Company makes no guarantees
regarding the tax treatment of this Award. The Grantee has had

-2-

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

 

the opportunity to review with his or her own tax advisors the federal, state
and local tax consequences of the transactions contemplated by this Agreement.
The Grantee is relying solely on such advisors and not on any statements or
representations of the Company or any of its agents. The Grantee understands
that the Grantee (and not the Company) shall be responsible for the Grantee’s
own tax liability that may arise as a result of the transactions contemplated by
this Agreement.
          (b) If the Grantee makes an election under Section 83(b) of the Code
with respect to the grant of Restricted Stock, the Grantee agrees to notify the
Company in writing on the day of such election. The amount includible in the
Grantee’s income as a result of that election will be subject to tax
withholding. The Grantee will be required to remit to the Company in cash, or
make other arrangements reasonably satisfactory to the Company for the
satisfaction of such tax withholding amount; failure to do so within three
business days following the making the Section 83(b) election will result in
forfeiture of all Restricted Stock.
          (c) The Grantee shall be required to pay to the Company or any
Affiliate, and the Company or any Affiliate shall have the right and is hereby
authorized to withhold, from any cash, shares of Common Stock, other securities
or other property deliverable under any Award or from any compensation or other
amounts owing to the Grantee, the amount (in cash, Common Stock, other
securities or other property) of any required withholding taxes in respect of
the Restricted Stock and to take such other action as may be necessary in the
opinion of the Committee or the Company to satisfy all obligations for the
payment of such withholding and taxes.
          (d) Without limiting the generality of clause (c) above, the Committee
may, in its sole discretion, permit the Grantee to satisfy, in whole or in part,
the foregoing withholding liability by the delivery of shares of Common Stock
(which are Mature Shares) owned by the Grantee having a Fair Market Value equal
to such withholding liability (but no more than the minimum required statutory
withholding liability).
     8. Restricted Stock Subject to the Plan. By entering into this Agreement
the Grantee agrees and acknowledges that the Grantee has received and read a
copy of the Plan and that this grant of Restricted Stock is subject to the Plan.
The terms and provisions of the Plan as it may be amended from time to time are
hereby incorporated herein by reference. In the event of a conflict between any
term or provision contained herein and a term or provision of the Plan, the
applicable terms and provisions of the Plan will govern and prevail.
     9. Consent to Electronic Delivery. The Grantee hereby authorizes the
Company to deliver electronically any prospectuses or other documentation
related to this Agreement, the Plan and any other compensation or benefit plan
or arrangement in effect from time to time (including, without limitation,
reports, proxy statements or other documents that are required to be delivered
to participants in such plans or arrangements pursuant to federal or state laws,
rules or regulations). For this purpose, electronic delivery will include,
without limitation, delivery by means of e-mail or e-mail notification that such
documentation is available on the Company’s intranet site. Upon written request,
the Company will provide to the Grantee a paper copy of any document also
delivered to the Grantee electronically. The authorization described in this
paragraph may be revoked by the Grantee at any time by written notice to the
Company.
     10. Entire Agreement. This Agreement, including the terms incorporated
herein by reference, represents the entire agreement between 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 subject matter hereof. Notwithstanding anything to the contrary,
this Agreement will not supersede any other restrictive covenant agreement
between the Grantee and the

-3-

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

 

Company or any of its Affiliates, and the Grantee shall be bound both by the
restrictions set forth in such other restrictive covenants agreements and the
restrictions set forth in this Agreement.
     11. Severability. Whenever possible, each provision and term of this
Agreement shall be interpreted in a manner to be effective and valid, but if any
provision or term of this Agreement is held to be prohibited or invalid, then
such provision or term will be ineffective only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions
or terms of this Agreement. If any of the covenants set forth in this Agreement
are held to be unreasonable, arbitrary or against public policy, such covenants
will be considered divisible with respect to scope, time and geographic area,
and in such lesser scope, time and geographic area, will be effective, binding
and enforceable against the Grantee.
     12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws. Any legal proceeding arising out of or relating
to this Agreement will be instituted in a state or federal court in the State of
Delaware, and the Grantee and the Company hereby consent to the personal and
exclusive jurisdiction of such court(s) and hereby waive any objection(s) that
they may have to personal jurisdiction, the laying of venue of any such
proceeding and any claim or defense of inconvenient forum.
     13. Amendment. No change, modification or waiver of any provision of this
Agreement shall be valid unless the same be in writing and signed by the parties
hereto, except for any changes under Sections 9, 12 and 14 of the Plan permitted
to Awards made under the Plan without consent.
     14. Execution. This Agreement may be executed, including execution by
facsimile signature, in one or more counterparts, each of which will be deemed
an original, and all of which together shall be deemed to be one and the same
instrument.
     15. Waiver. Any right of the Company contained in this Agreement may be
waived in writing by the Committee. No waiver of any right hereunder by any
party shall operate as a waiver of any other right, or as a waiver of the same
right with respect to any subsequent occasion for its exercise, or as a waiver
of any right to damages. No waiver by any party of any breach of this Agreement
shall be held to constitute a waiver of any other breach or a waiver of the
continuation of the same breach.
     16. Notices. Any written notices provided for in this Agreement or the Plan
shall be in writing and shall be deemed sufficiently given if either hand
delivered or if sent by fax or overnight courier, or by postage paid first class
mail. Notices sent by mail shall be deemed received three business days after
mailing but in no event later than the date of actual receipt. Notices shall be
directed, if to the Grantee, at the Grantee’s address indicated by the Company’s
records, or if to the Company, to the attention of the secretary of the Company
at the Company’s principal executive office.
     17. No Rights to Employment. Nothing contained in this Agreement shall be
construed as giving Grantee any right to be retained, in any position, as an
employee, consultant or director of the Company or its Affiliates or shall
interfere with or restrict in any way the right of the Company or its
Affiliates, which are hereby expressly reserved, to remove, terminate or
discharge Grantee at any time for any reason whatsoever.
     18. Beneficiary. The Grantee may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by the Committee
and may, from time to time, amend or revoke such designation. Any notice should
be made to the attention of the secretary of the Company at the Company’s
principal executive office. If no designated beneficiary survives the Grantee,
the Grantee’s estate shall be deemed to be Grantee’s beneficiary.

-4-

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

 

     19. Clawback/Forfeiture.
          (a) Grantee’s Conduct. Notwithstanding anything to the contrary
contained herein, if the Company as a result of misconduct or fraud is required
to prepare a financial restatement due to the material noncompliance of the
Company with any financial reporting requirement under the securities laws,
where the Grantee (i) engaged in fraud resulting in such financial restatement,
or (ii) knowingly or through gross negligence engaged in misconduct resulting in
such financial restatement, the Grantee shall forfeit any or all of the shares
of Restricted Stock, whether or not vested, then held by the Grantee and repay
to the Company an amount in cash equal to all or any portion of the sales
proceeds received by the Grantee in connection with the sale or other
disposition of any such shares of Restricted Stock during the three-year period
preceding the date on which the Company first determines that it must prepare
the financial restatement (or, if no proceeds were received by the Grantee in
any such disposition, an amount equal to the aggregate Fair Market Value of the
shares of Restricted Stock so disposed of, determined as of the date of such
disposition). For the avoidance of doubt, the Grantee’s failure to have personal
knowledge of the conduct of any other individual that contributed to a financial
restatement shall not, in and of itself, be sufficient to trigger this
provision.
          (b) Conduct of Others or Errors. Notwithstanding anything to the
contrary contained herein, the Grantee shall repay the Company any amount in
excess of what the Grantee should have received under the terms of the Award for
any reason (including without limitation by reason of a financial restatement,
mistake in calculation or other administrative error) with respect to any sale
or other disposition of any Restricted Stock during the three-year period
preceding the date on which the Company first determines that it must prepare
the financial restatement or otherwise first discovers the mistake or error and
promptly notifies the Grantee.
          (c) Compliance. The Grantee will agree to revise this Section 19 to
the extent necessary for the Company to comply with any regulatory guidance
promulgated under Section 954 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010.
[Signature page follows]

-5-

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

 

\

     IN WITNESS WHEREOF, the Company’s duly authorized representative and the
Grantee have each executed this Restricted Stock Award Agreement on the
respective date below indicated.

            MEDQUIST HOLDINGS INC.
      By   /s/ Roger L. Davenport         Name:   Roger L. Davenport       
Title:   Chairman & CEO        Date:   8.15.2011        GRANTEE
      /s/ Ronald L. Scarboro       Signature      Name: Ronald L. Scarboro     
Date: 8.31.2011    

-6-