Agreement

(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 o