Exhibit 10.1


	
  

  	
   

  	
  

  Corporate Offices 

  1000 Bishops Gate Blvd, Suite 300 

  Mount Laurel, NJ 08054-4632

  



 


August 10, 2006


Linda Reino

c/o MedQuist Inc.

1000 Bishops Gate Blvd., Suite 300

Mt. Laurel, NJ 08054




Dear Linda:


                           On behalf of MedQuist
Inc. (the “Company”), this Agreement describes the terms of your new
employment as the Company’s Chief Operating Officer, which will commence on
October 2, 2006 (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 $310,000;


(2)   participate in MedQuist’s
Management Bonus Plan, commencing in 2007. 
Your target bonus in this plan will be 45% of your base salary for 2007
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;


(3)   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
previously provided to you);









 



(4)   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;


(5)   if Employee’s employment is
terminated by the Company without Cause the severance pay and benefits are
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 80,000 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 $60,000 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
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 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
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 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 her 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 her 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, 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.                     Other
Agreements.  Employee represents and
warrants to the Company that there are no restrictions, agreements or
understandings whatsoever to which she is a party that would prevent or make
unlawful her 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 her duties to
the Company.


b.                     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.









 



c.                     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.


d.                     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.


e.                     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.


f.                      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 her, now or in the future, from directors or officers of the
Company in the event of the Company’s insolvency.


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


h.                     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.


i.                      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) her employment duties or to follow
the lawful directives of her superiors; (2) misconduct or gross negligence by
Employee in the course of employment; (3) conduct of Employee involving any
type of disloyalty to the Company or its subsidiaries, including, without
limitation: 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:

  	
   

  	
   

  	
   

  	
   

  
	
  ________________________

  	
   

  	
   

  	
   

  	
   

  
	
  Linda Reino