Exhibit
10.1





Nightingale & Associates, LLC


Soundview Plaza


1266 East Main Street


Stamford, Connecticut  06902


 


Tel:   203.359.3855


Fax: 203.359.4551


Email: info@nightingale-associates.org


Principals:


Michael R. D’Appolonia


Howard S. Hoffmann


James D. Neidhart


Senior Principals


Pierre Benoit


January 8, 2007


Mr. Stephen H. Rusckowski, Chairman of the Board of Directors


Mr. John Underwood, Chairman of the Compensation Committee


Mr. Frank Lavelle, President


MedQuist Inc.


1000 Bishops Gate Blvd., Suite 300


Mt. Laurel, NJ  08054-4632


Gentlemen:


In response to
various discussions, Nightingale & Associates, LLC (“Nightingale”) has been
asked to submit this proposed Amendment to our Engagement Letter with MedQuist
Inc. (“MedQuist” or the “Company”) dated July 29, 2004 as amended on December
16, 2004 and on September 25, 2006 (collectively, the “Amended Engagement
Letter”).  This Amendment (i) provides
revisions to the cost structure and term associated with the continued
retention of Mr. Howard Hoffmann as the Company’s Interim Chief Executive
Officer.  All other terms and conditions
for the retention of Nightingale, as detailed in the Amended Engagement Letter,
including but not limited to the Release and Indemnification agreement, will
remain in force and effect.  It is our
understanding that Howard Hoffmann, on behalf of Nightingale, will continue to be
engaged by MedQuist as the Company’s Interim Chief Executive Officer and will continue
to report to the Company’s Board of Directors.


I.              SCOPE OF WORK:


Effective as of January 1, 2007 Nightingale will extend the term of Howard
Hoffmann’s role as MedQuist’s Interim Chief Executive Officer until June 30,
2007.  Following termination of Mr.
Hoffmann’s role as Interim Chief Executive Officer, Mr. Hoffmann will endeavor
to make himself available for ongoing consultancy work on an as needed basis, subject
to negotiation of a mutually agreeable Scope of Work.  It should be noted that Mr. Hoffmann expects to
be working on other client engagements upon his departure as the full time
Interim Chief Executive Officer of MedQuist, and thus his availability for work
beyond June 30, 2007 cannot be guaranteed.


 



   
 






 
  



II.            FEE STRUCTURE:


Fixed Monthly Fee:


Effective as of January 1, 2007, Nightingale’s fees
for Mr. Hoffmann’s role as Interim Chief Executive Officer will be a fixed rate
of $120,000 per month payable in arrears. 
If Mr. Hoffmann’s role is terminated during the course of a month,
Nightingale’s fees for the final month will be prorated based on the actual
number of calendar days elapsed during the month up to and including Mr.
Hoffmann’s final day of work.  Mr.
Hoffmann’s fees for consultancy services following his departure as the Interim
Chief Executive Officer of MedQuist will be billed at an hourly rate of
$525/hour.


2007 Performance Bonus:


Nightingale may be entitled to an additional performance
related bonus payment of up to $480,000, which will be paid no later than July 16,
2007 (the “2007 Performance Bonus”) in connection with Mr. Hoffmann’s service
in 2007 as Interim Chief Executive Officer. 
The amount, if any, of the 2007 Performance Bonus that Nightingale is to
receive will be based on the achievement of certain operational objectives that
have been established by the Board of Directors of MedQuist and Nightingale,
which operational objectives involve confidential strategic, commercial and
financial information, the disclosure of which would result in competitive harm
to the Company.


2006 Discretionary Bonus:


Nightingale remains eligible for the 2006
Discretionary Bonus as described in the September 12, 2006 amendment to our
Engagement Letter (the “September 2006 Amendment”).  Nightingale agrees to extend the date by
which the Committee will inform Nightingale of its determination of the amount,
if any, of the 2006 Discretionary Bonus that is to be paid until fourteen days
following completion of the filing of the Company’s periodic filings covering
the years 2003, 2004 and 2005 and its forms 10-Q for the first three quarters
of 2006 with the Securities and Exchange Commission.  All other terms associated with the 2006
Discretionary Bonus are as described in the September 2006 Amendment.


Availability Guaranty Fee:


Given that this amendment extends Mr. Hoffmann’s role
as MedQuist’s full time Interim Chief Executive Officer, the Availability
Guaranty Fee requirement described in the September 2006 Amendment is no longer
in force and effect.



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Additional Nightingale Personnel:


Nightingale will continue to make available the
services of Mr. Michael C. Yeager and Ms. Jeanine Cobonpue to perform selected
services in connection with the Company’s billing matter and operations related
activities.  Mr. Yeager’s professional
time fee services have been and will continue to be invoiced to MedQuist at his
prevailing hourly rate of $350/hour.  Ms.
Cobonpue’s professional time fee services have been and will continue to be
invoiced to MedQuist at her prevailing hourly rate of $175/hour.  Should it become necessary to utilize the services
of additional Nightingale personnel on the project, it is agreed that
Nightingale will invoice professional time fees for such personnel at their
prevailing hourly rates.  Nightingale
agrees that it will obtain the advance approval of the Board of Directors,
which shall be conveyed by the Board of Directors to Frank Lavelle, before
adding additional personnel to the project team.


In addition to professional time fees, out-of-pocket
expenses are billed at cost, and generally range from 10% to 20% of professional
time fees, depending on the amount of travel involved.  Out-of-pocket expenses consist primarily of
transportation, meals, lodging, telephone, specifically assignable secretarial
and office assistance, and report production.


III.                             ADVANCE DEPOSIT


Nightingale requires an Advance Deposit for all
assignments of the type described above. 
Given this situation, Nightingale will not require an increase of its
existing Advance Deposit of $75,000 that has been paid by the Company.  At the completion of the project and at the
direction of the Company, Nightingale will either apply the Advance Deposit to
any outstanding invoices or, if there are no unpaid invoices owing to
Nightingale, promptly return the Deposit to the Company.


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If this Amendment
conforms to your understanding of the terms and conditions of our retention,
please have the appropriate party signify agreement by signing and returning
the enclosed extra copy of this Amendment.


We look forward to continue working with you and the
Company.


	
  

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Howard S. Hoffmann

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Howard S.
  Hoffmann,

  
	
   

  	
  in the capacity
  as Principal and

  
	
   

  	
  Managing Partner
  of Nightingale &

  
	
   

  	
  Associates, LLC

  



 


 


READ,
UNDERSTOOD AND AGREED TO BY:


MedQuist
Inc.


 


	
  By: 

  	
  /s/ Stephen H.
  Rusckowski

  	
   

  	
   

  
	
   

  	
  Stephen H. Rusckowski

  
	
   

  	
  Chairman of the Board
  of Directors of MedQuist Inc

  
	
   

  	
   

  
	
   

  	
  Date: January 8, 2007

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ John Underwood

  	
   

  	
   

  
	
   

  	
  John Underwood

  
	
   

  	
  Chairman of the
  Compensation Committee of the Board of Directors of MedQuist Inc.

  
	
   

  
	
   

  	
  Date: January 8, 2007

  
	
   

  
	
   

  
	
  By: 

  	
  /s/ Frank W. Lavelle

  	
   

  	
   

  
	
   

  	
  Frank W. Lavelle,
  President

  
	
   

  	
   

  
	
   

  	
  Date: January 8, 2007

  
									



 


 



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