Exhibit 10.1


 


SEPARATION
AGREEMENT


 


This Separation
Agreement is made this 10th day of December 2004, by and between MedQuist
Inc. (hereinafter the “Company”) and John W. Quaintance (hereinafter “Quaintance”),
currently Chief Operating Officer of the Company.


 


WHEREAS,
Quaintance and the Company have agreed that Quaintance will resign from his
employment with the Company as of January 31, 2005; and


 


WHEREAS,
the parties desire to set forth the terms and conditions relating to Quaintance’s
resignation of employment with the Company.


 


NOW
THEREFORE, the parties, intending to be legally bound, in consideration of the
mutual promises and undertakings set forth herein, do hereby agree as follows:


 


1.                                       Quaintance agrees to resign
from his employment as Chief Operating Officer and resign his duties as an
Officer of the Company effective January 31, 2005 (the “Resignation
Date”).


 


2.                                       In accordance with his
Employment Agreement entered into as of the 22nd of May 2000, by and
between the Company and Quaintance (the “Employment Agreement”), Quaintance
will continue to perform the services that are appropriate for a person in his
position as well as provide all reasonable assistance to the Company in
transitioning the responsibilities of his position.  The Company reserves the right to relieve
Quaintance of his obligation to report to the office prior to the
Resignation Date, provided however, that Quaintance remains obligated to
continue to cooperate on an as-needed basis with any requests from the Board or
from a successor COO to assist in the transition of responsibilities.  Quaintance
will receive all accrued but unpaid salary through the Resignation Date, $33,155.60,
which is the cash
equivalent of all accrued but unused paid time off through the Resignation
Date, and unreimbursed expenses incurred through the Resignation Date.  Quaintance will be eligible to receive the
portion of the Discretionary Bonus for 2004 that is dependent upon the
financial performance of the Company for calendar year 2004, which will be
calculated and, if applicable, paid in accordance with the terms and conditions
of the Discretionary Bonus Plan and mailed to Quaintance at Quaintance’s home
address of record.


 


3.                                       Effective February 1,
2005, Quaintance may elect continued medical and dental coverage for the time
period permitted by COBRA, by completing the applicable COBRA forms when sent
to him.  Upon receipt of the completed
applicable COBRA forms, the Company will make the necessary payments to
continue Quaintance’s medical and/or dental coverage.  Quaintance agrees to notify the Company
immediately if he secures medical and dental coverage through any other source
during this 18 month period.  To the
extent that Quaintance is required to pay a portion of the cost of medical
and/or dental coverage, the Company will reimburse Quaintance for the portion
of the cost of medical and/or dental coverage paid by Quaintance during the 18
month period.  If Quaintance is not
required to pay any part of the cost of other medical and/or dental coverage
during the 18 month period, then the Company will cease making COBRA payments.


 


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4.                                       Quaintance’s stock options,
to the extent vested as of the Resignation Date, shall remain exercisable for
the post-termination exercise period provided in the option award agreements,
such period commencing on the date that the suspension is lifted for the
exercise of options and Quaintance will be notified of said date along with and
in the same manner as all persons with Company stock options.  No additional stock options will vest
following the Resignation Date. 
Quaintance’s participation in all Company benefit plans shall cease as
of the Resignation Date. The options as to which the exercise period is
extended pursuant to the Agreement may be subject to the provisions of section 409A
of the Internal Revenue Code and the regulations issued thereunder and, as
such, Quaintance may incur income tax and/or penalties as a result of such
extension.


 


5.                                       The Company and Quaintance
agree that the time period set out in Section 9(a) of the Employment
Agreement is hereby reduced to
eighteen (18) months.  Except as
specifically modified here, Section 9
of the Employment Agreement (Restrictive Covenants and Confidentiality;
Injunctive Relief) and Section 10 (Survival), shall apply in full force
and effect.


 


6.                                       Release.


 


a.                                       Quaintance
hereby forever releases and discharges the Company, the Company’s past,
present, or future parent, affiliated, related, and/or subsidiary entities, and
all of their past, present and future directors, shareholders, officers,
general or limited partners, employees, agents, attorneys and representatives
for actions or omissions taken by any or all of them on behalf of the Company
in each of their respective capacities, and the employee benefit plans in which
Quaintance is or has been a participant by virtue of his employment with the
Company (collectively, the “Company Releasees”), from, and agrees hereby
forever not to sue the Company Releasees with respect to, any and all claims,
debts, demands, accounts, judgments, rights, causes of action, equitable
relief, damages, costs, charges, attorneys’ fees, complaints, obligations,
promises, agreements, controversies, suits, expenses, any form of compensation
(including but not limited to salary, bonuses, commissions or related fees),
responsibility and liability of every kind and character whatsoever, whether in
law or equity, known or unknown, asserted or unasserted, suspected or
unsuspected, which Quaintance has or may have had against the Company Releasees
based on any events or circumstances arising or occurring on or prior to the
date of this Agreement arising directly or indirectly out of, relating to, or
in any other way involving in any manner whatsoever, (i) Quaintance’s
Employment Agreement or stock option agreements; (ii) Quaintance’s employment
with the Company or his separation of employment, (iii) Quaintance’s status at
any time as a holder of any securities of the Company, or (iv) without
limitation, any and all claims arising under federal, state, or local laws
relating to employment or securities, including without limitation claims of
wrongful discharge, breach of express or implied contract, fraud,
misrepresentation, defamation, or liability in tort, claims of any kind that
may be brought in any court or administrative agency, any claims arising under
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act (“ADEA,” a law which prohibits discrimination on the basis of age),
the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee
Retirement Income Security Act, the Family and Medical Leave Act, the
Securities Act of 1933, the Securities Exchange Act of 1934, the Sarbanes-Oxley
Act, The New Jersey Law Against Discrimination, New Jersey Conscientious
Employee Protection Act, The New Jersey Wage Payment and Collection Law and
similar state or local statutes, ordinances, and regulations; provided,
that, 


 


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notwithstanding anything to the contrary set forth herein, this general
release shall not extend to (x) benefit claims under employee pension and
deferred compensation benefit plans in which Quaintance was a participant by
virtue of his employment with the Company; (y) indemnification rights
Quaintance may have by virtue of his status as a former officer in accordance
with applicable law and the Company’s by-laws and that certain Undertaking
dated September 10, 2004; and (z) any obligation of the Company under this
Separation Agreement.


 


b.                                      Except
for the survival and continuation of Quaintance’s obligations as set forth in Section 5
of this Separation Agreement, the Company fully, forever, irrevocably and
unconditionally releases, remises, settles and discharges Quaintance from any
and all manner of claims, charges, complaints, debts, liabilities, demands,
actions, causes of action, suits, rights, covenants, contracts, controversies,
agreements, promises, omissions, damages, obligations and expenses of any kind,
whether known or unknown, which it had, now has, or hereafter may have against
Quaintance arising from, or relating in any way to Quaintance’s employment by
the Company, except for actions by Quaintance that constitute fraud or other
intentional misconduct.


 


c.                                       Quaintance
understands that the release of claims he has given, as set forth in Section 6a
of this Agreement, includes a release of claims arising under the ADEA.  Quaintance understands and warrants that he
has been given a period of 21 days to review and consider this Agreement.  By his signature below, Quaintance warrants
that he has consulted with an attorney as to the terms of this Agreement.  Quaintance further warrants that he
understands that he may accept and return the Agreement prior to the expiration
of this 21-day review period, and, if he chooses to do so, he warrants that he
used as much of the 21-day review period as he required and returned the
Agreement knowingly and voluntarily and without any pressure or coercion on the
part of the Company or any of its representatives.


 


d.                                      Quaintance
further warrants that he understands that he has seven (7) days after signing
this Agreement to revoke the Agreement by notice in writing to the Company’s
Human Resources Manager at Mount
Laurel, New Jersey, 08054-4632.  This Agreement shall be binding, effective,
and enforceable upon both parties upon the expiration of this seven (7) day
revocation period without the Company having received such revocation, but not
before such time.


 


7.                                       Provided that (i) Quaintance
has executed this Agreement, (ii) the time period in Section 6c has
expired, and (iii) he has performed the duties requested of him in Section 1
satisfactorily and has not engaged in any intentional wrongdoing or other gross
misconduct prior to the Resignation Date, on or before February 15, 2005,
the Company shall pay to Quaintance, as consideration for executing this
Agreement, a lump sum payment in a total amount equal to $582,450.00, less
applicable withholding, which will be mailed to Quaintance at Quaintance’s
home address of record.


 


8.                                       The parties acknowledge that
the sums and benefits set forth in Sections 3, 4, and 7 above represent amounts
in addition to anything of value to which Quaintance is otherwise entitled and
are provided in consideration for the execution of this Agreement.


 


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9.                                       In response to any inquiries
from future or prospective employers concerning Quaintance, it is agreed that
the Company will provide the letter of referral attached hereto as Exhibit A
and further agrees not to provide any information that is not consistent with
the attached letter of referral.


 


10.                                 Quaintance agrees that he
will cooperate fully with the Company and its counsel with respect to
any matter (including litigation, investigation, or governmental proceeding)
which relates to matters with which Quaintance was involved during the period
in which he was employed or engaged as a consultant by the Company, including
full disclosure of all relevant information and truthfully testifying on the
Company’s behalf in connection with any such proceeding or investigation.  Quaintance will render such cooperation in a
timely manner and at such times and places as may be mutually agreeable to the
parties.  Upon submission of appropriate
documentation, Quaintance shall be reimbursed by the Company for reasonable
travel, lodging, meals, and telecommunications expenses incurred in cooperating
with the Company under the terms of this provision.  Except as required by operation of law,
Quaintance agrees that he will promptly notify the Company if he is contacted
for an interview or if he receives a subpoena in any matter relating in any way
to his employment with
the Company and, in such event, the Company, upon request from Quaintance,
agrees to provide in its discretion reasonable access to information and
documents within its control.  Quaintance
further agrees that he will not initiate any communication with a member of the
press regarding his employment with the Company and that if he is contacted by
the press for any such information, he will decline comment and refer the
person seeking information to the Company.


 


11.                                 The
parties agree that the terms of this Agreement shall remain completely
confidential, and that they will not disclose the terms of this Agreement to
any person, except that this Section shall not prohibit the parties from
disclosing the fact and terms of this Agreement to immediate family or to
personal or company accountants and/or financial or legal advisors.  The Company is not prohibited from disclosing
the facts and terms of this settlement to those Company employees who have a “need
to know” about the Agreement as determined by the Company.  The parties understand and agree that such
information may be disclosed to the aforementioned individuals only on the
condition that such individuals in turn agree to keep such information
completely confidential, and not to disclose it to others.  This Section shall not prohibit the
parties from disclosing the fact or details of this Agreement to any federal,
state or local authority or government agency, nor does it prohibit the parties
from complying with a valid court order or any law or regulation that compels
disclosure.


 


12.                                 Quaintance agrees that
except as set forth in this Agreement, Quaintance is not entitled to any other
compensation or benefits from the Company arising from his status as an
employee of the Company, including any severance benefits that may be available
under the Employment Agreement or any severance arrangement of the Company.


 


13.                                 Quaintance and the Company
affirm that this Agreement, including the provisions of the Employment
Agreement as incorporated in Section 5 above, set forth the entire
agreement between the parties with respect to the subject matter contained
herein and supersede all prior or contemporaneous agreements or understandings
between the parties with respect to the subject matter contained herein.  Further, there are no representations,
arrangements or understandings, either oral or written, between the parties,
which are not fully expressed herein.  


 


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Finally, no alteration or
other modification of this Agreement shall be effective unless made in writing
and signed by both parties.


 


14.                                 This Agreement may be
executed in one or more counterparts by facsimile, each of which shall be
deemed to be an original but all of which together shall constitute one and the
same instrument.


 


15.                                 Any notice authorized or
required to be given or made by or pursuant to this Agreement shall be made in
writing and either personally delivered or mailed by overnight express mail
addressed as follows:


 


	
  If to Quaintance:

  	
  John W. Quaintance 

  233 South 6th Street 

  Apt. 1902 

  Philadelphia, PA 19106

  
	
   

  	
   

  
	
  with a copy to:

  	
  Alan B. Epstein, Esq. 

  Spector, Gadon & Rosen 

  1635 Market St., 7th Floor 

  Philadelphia, PA 19103

  
	
   

  	
   

  
	
  If to the Company:

  	
  MedQuist Inc. 

  1000 Bishops Gate 

  Mount Laurel, NJ 08054-4632 

  Attn: Gregory M. Sebasky

  
	
   

  	
   

  
	
  with a copy to:

  	
  Barry Abelson, Esquire 

  Pepper Hamilton LLP  

  3000 Two Logan Square 

  Eighteenth and Arch Streets 

  Philadelphia, PA 19103-2799

  



 


Either
party may change the address to which such notices are to be addressed by
giving the other party notice in the manner indicated above.


 


16.                                 The parties acknowledge that
they have carefully reviewed this Agreement with the assistance of counsel,
that they have entered into this Agreement voluntarily and knowingly and
without reliance on any promises not expressly contained herein, that they have
been afforded an adequate time to review carefully the terms of this Agreement,
and that this Agreement shall not be deemed void or voidable by claims of
duress, deception, mistake of fact or otherwise.  Nor shall the principle of construction
whereby all ambiguities are to be construed against the drafter be employed in
the interpretation of this Agreement. 
This Agreement should not be construed for or against any party.


 


17.                                 This Agreement shall be
governed by and all questions relating to its validity, interpretation,
enforcement and performance shall be construed in accordance with the laws of
the State of New Jersey.  The exclusive
choice of laws set forth in this Section shall not 


 


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be deemed to preclude the
enforcement of any judgment obtained in any forum or the taking of any action
under this Agreement to enforce such judgment in any appropriate jurisdiction.


 


18.                                 Quaintance affirms that he
has carefully read the foregoing Agreement, that he fully understands the
meaning and intent of this document and that he intends to be bound by the
promises contained in this Agreement for the aforesaid consideration.


 


IN WITNESS
WHEREOF, Quaintance and the authorized representative of the Company have
executed this Agreement on the dates indicated below:


 


 


	
  By:

  	
  /s/ John W. Quaintance

  	
   

  	
  Dated:  December 9,
  2004

  
	
   

  	
  John W. Quaintance

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Gregory M. Sebasky

  	
   

  	
  Dated:  December 9,
  2004

  
	
   

  	
  Gregory M. Sebasky

  	
   

  
	
   

  	
  MedQuist Inc.

  	
   

  



 


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EXHIBIT A


 


[TO BE RETYPED ON COMPANY LETTERHEAD]


 


January   , 2005


 


To whom in may concern:


 


John W. Quaintance began
his employment with MedQuist Inc. on June 7, 1986.  In February 2004, Mr. Quaintance was
appointed Chief Operating Officer of the Company.  In his role as Chief Operating Officer, Mr.
Quaintance was responsible for all activities supporting implementation and
delivery of MedQuist’s transcription technology and services to its clients.
His primary accountability was for profit, customer satisfaction, and customer
relationships for over 2000 customers in North America.


 


As of the date of Mr.
Quaintance’s  resignation from MedQuist
on January 31, 2005, his base annual salary was $240,000.


 


We wish Mr. Quaintance
the best of luck in his future endeavors.


 


Sincerely,


 


 


Gregory M. Sebasky


 


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