Exhibit 10.1


 


October 26, 2005


 


Via Overnight Mail and Facsimile


Mr. R.
Scott Bennett


6
Kenwood Court


Malvern,
PA 19355


 


Dear
Scott:


 


On behalf of MedQuist Inc.
(the “Company”), this Agreement describes the terms of your new
employment as the Company’s Senior Vice President - Sales & Marketing,
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 (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 either party provides the other party with at least ninety (90) days
prior written notice of its intention not to renew this Agreement unless
terminated earlier pursuant to Sections 3 or 5 of this Agreement.


 


2.                                       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
an annual rate of $240,000, subject to review and adjustment annually during
the Term;


 


(2)                                  signing bonus
of $150,000 to be paid within thirty (30) days of Employment Commencement
Date.  In the event that you voluntarily
resign from the Company within your first 12 months of employment, this signing
bonus must be repaid on a pro rata basis.


 


(3)                                  participate in
MedQuist’s Management Bonus Plan, commencing in 2006.  Your target bonus in this plan will be 45% of
your base salary for 2006 and following years. 
The target bonus is the payment amount that the Employee shall be
eligible to receive if the Company and Employee both attain the pre-established
bonus plan target objectives.  The actual
bonus award may be higher or lower than the 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.  Payment of
$54,000, which is equal to half of your annual target bonus for the year ending
December 31, 2006, is guaranteed;


 





















 


(4)                                  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);


 


(5)                                receive
relocation support in accordance with the Company Relocation Policy.  This relocation offer will be in effect for
the first twenty-four (24) months of your employment;


 


(6)                                if Employee’s
employment is terminated by the Company without Cause, the severance pay and
benefits described below in Section 5.


 


b.                                    Long Term
Incentives.  In
addition, from time to time, the Board may review the performance of the
Company and Employee and, in its sole discretion, may grant stock options,
shares of restricted stock or other equity-based incentives to Employee to
reward extraordinary performance and/or to encourage Employee’s future efforts
on behalf of the Company.  The grant of
any such equity incentives will be subject to the terms of the Company’s
equity-based plans and will be evidenced by a separate award agreement by and
between the Company and Employee.


 


(1)                                Upon joining
MedQuist, you will become entitled to a special stock option grant of 60,000
shares of non-qualified stock options (“Special Option Grant”) to purchase
Company common stock, no par value (“Common Stock”), pursuant to the Company’s
Stock Option Plan adopted May 29, 2002 (the “Option Plan”).  The grant date of the Special Option Grant
will occur on the later of (i) the date the Company becomes current in its
reporting obligations under the Securities Exchange Act of 1934; or (ii) the
first date thereafter when the Form S8 Registration Statement for the
Option Plan complies with the requirement of the Securities Exchange Commission
provided that you are still an employee on the grant date.  The option price for the Special Option Grant
shall be equal at least to the fair market value of the Company’s Common Stock
as of the grant date.  The Special Option
Grant will be subject to all of the terms and conditions of the Option Plan and
the Stock Option Agreement that will be issued if and when the grant becomes
effective.  Your right to exercise the
option will vest in equal 20% installments on each of the first five (5) anniversaries
of the grant date.  In the event of a “Change of Control” (as
defined below) of the Company while you are an employee, your Special
Option Grant may, from and after the
date which is six months after the Change of Control (but not beyond the
expiration date of the option), be exercised for up to 100% of the total number
of shares then subject to the Special Option Grant minus the number of shares
previously purchased upon exercise of such option (as adjusted for any change
in the outstanding shares of the Common Stock of the Company in accordance with
the terms of the Option Plan) and your vesting date will accelerate accordingly.
 A “Change of Control” shall be deemed to
have occurred upon the happening of any of the following events:


 


(i)                                     A change within
a twelve-month period in the holders of more than 50% of the outstanding voting
stock of the Company; or


 


(ii)                                  Any other event deemed to constitute a “Change of Control” by the Company’s
Board of Directors.


 





















 


(2)                                  Contingent upon
Employee’s continued attainment of performance objectives, the Company agrees
to deliver a long term incentive value of $120,000 annually through one of the
following, as determined in the Company’s sole discretion: (i) a stock
option grant pursuant to the Option Plan, (ii) a restricted stock grant or
(iii) a cash-based long term incentive program to be developed.  The long term incentive value of Company stock
will be calculated based on an industry accepted stock valuation
methodology.  


 


3.                                       Employment-At-Will.  Nothing contained in this Agreement is
intended to create an employment relationship whereby Employee will be employed
other than as an “at-will” employee. 
Employee’s employment by the Company may be terminated by Employee or
the Company at any time; provided, however, that
while employed by the Company, the terms and conditions of Employee’s
employment by the Company will be as herein set forth; and provided
further, that Section 4 of this Agreement will survive
the termination of Employee’s employment.


 


4.                                       Covenants.


 


a.                                       Non-Solicitation.  While employed by the Company and for the
twelve (12) 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 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;


 


(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
twelve (12) 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 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 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.


 


(2)                                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 if Employee
breaches any of the Covenants, liquidated damages will be paid by Employee in
the following manner:


 


(i)                                     any Company
stock options, stock appreciation rights, restricted stock units or similar
equity incentives then held by Employee, whether or not then vested, will be
immediately and automatically forfeited;


 


(ii)                                  any shares of
restricted stock issued by the Company, then held by Employee or his permitted
transferee and then subject to forfeiture will be immediately and automatically
forfeited; and


 


(iii)                                 any obligation
of the Company to provide severance pay or benefits (whether pursuant to Section 5
or otherwise) will cease.


 


(3)                                In addition to
the remedies specified in Section 4(f)(2) and any other relief
awarded by any court, if Employee breaches any of the Covenants:


 


(i)                                   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


 


(ii)                                the Company
will be entitled to injunctive or other equitable relief to prevent further
breaches of the Covenants by Employee.


 





















 


(4)                                  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.  Employee’s employment by the Company may be
terminated at any time.  Upon
termination, Employee will be entitled 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; provided, however, that subject
to Section 4(f)(2)(iii), if Employee’s employment is terminated by
the Company without Cause, Employee will be entitled to (a) continued
payment of his base salary (at the rate in effect upon termination) for a
period of 12 months; (b) a payment equal to the average of the last three
bonuses from the MedQuist Management Bonus Plan received by Employee.  In the event that there are not three full
years of employment, then the average of the last two years will apply.  If less than two years, the target bonus will
be paid; and notwithstanding the foregoing, 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, which release shall not
conflict with any of the terms of this Agreement without the mutual written
consent of Employee and Company, and (y) such release becomes 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.                                                                                       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.


 


f.                                                                                         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 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.


 


g.                                                                                      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.


 


h.                                                                                      Successors and
Assigns.  This Agreement is binding on
the Company’s successors and assigns.


 


i.                                                                                          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.


 


j.                                                                                          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 refusal, willful failure or inability to perform
(other than due to illness or disability) his employment duties or to follow
the lawful directives of his superiors; (2) misconduct or gross negligence
by Employee in the course of employment; (3) conduct of Employee involving
fraud, embezzlement, theft or dishonesty in the course of employment; (4) a
conviction of or the entry of a plea of guilty or nolo
contendere to a crime involving moral turpitude or that otherwise
could reasonably be expected to have an 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.                                                                                       “Covenants”
means the covenants set forth in Section 4 of this Agreement.


 





















 


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 signed 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:

  	
   

  	
   

  
	
   

  	
   

  	
  Frank
  W. Lavelle

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
  Accepted
  and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  R.
  Scott Bennett