AMENDED AND RESTATED STOCK OPTION
AGREEMENT
To: Peter Masanotti
Grant Date: September 30,
2008
Pursuant to MedQuist’s Stock Option Plan
(the “Plan”) adopted May 29, 2002 and pursuant to
this Amended and Restated Stock Option Agreement (the
“Agreement”), you are hereby granted an option,
effective as of the grant date, to purchase that number of shares
of common stock, no par value per share (the “Common
Stock”), of MedQuist Inc., a New Jersey corporation
(“MedQuist”), set forth on, and at the exercise price
per share indicated on, the attached Grant Detail Report. Your
option price is intended to equal the higher of (i) the fair
market value of the Common Stock as of the grant date or (ii)
$8.25. Your right to exercise this option will vest with respect to
one-third (1/3) of the shares subject to the option on the first
anniversary of the grant date, and, thereafter will vest
semi-annually with respect to one-sixth (1/6) of the shares subject
to the option on each of the following: the date that is six months
after the first anniversary of the grant date, the second
anniversary of the grant date, the date that is six months after
the second anniversary of the grant date, and the third anniversary
of the grant date.
Notwithstanding anything herein to the contrary,
in the event that your employment with MedQuist or a subsidiary
corporation of MedQuist is terminated by MedQuist without
“Cause” or by you for “Good Reason” (as
such terms are defined in your employment agreement with MedQuist,
dated September 3, 2008 (the “Employment
Agreement”)), the options granted hereunder shall become
immediately exercisable, to the extent not already vested. In the
event of a termination of your employment for any other reason, any
unvested options granted hereunder shall be immediately forfeited.
In addition, upon the occurrence of a Change in Control, the
options granted hereunder shall become immediately exercisable, to
the extent not already vested.
For
purposes of this Agreement, “Change in Control” shall
mean the occurrence of any of the following (i) the sale or
disposition, in one or a series of related transactions, of all or
substantially all, of the assets of MedQuist to any
“person” or “group” (as such terms are
defined in Sections 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended, or any successor thereto (the
“Act”)) other than CBaySystems Holdings Limited
(“CBay”), CBay Inc. or SAC Private Capital Group, LLC
or any of their affiliates (the “Permitted Holders”);
(ii) any person or group, other than the Permitted Holders, is
or becomes the “beneficial owner,” as such term is
defined in Rule 13d-3 under the Act (or any successor rule
thereto) (a “Beneficial Owner”) (except that a person
shall be deemed to have “beneficial ownership” of all
shares that any such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the total voting
power of the voting stock of MedQuist (or any entity which controls
MedQuist), including by way of merger, consolidation, tender or
exchange offer or otherwise; (iii) a reorganization,
recapitalization, merger or consolidation (a “Corporate
Transaction”) involving MedQuist, unless securities
representing 50% or more of the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors of MedQuist or the corporation resulting from
such Corporate Transaction (or the parent of such corporation) are
held subsequent to such transaction by the person or persons who
were the Beneficial Owners of the outstanding voting securities
entitled to vote generally in the election of directors of MedQuist
immediately prior to such Corporate Transaction, in substantially
the same proportions as their ownership immediately prior to such
Corporate Transaction; (iv) during any twelve month period,
individuals who at the beginning of such period constituted the
Board of Directors of MedQuist (the “Board”) (together
with any new directors whose election by such Board or whose
nomination for election by the shareholders of MedQuist was
approved by a vote of a majority of the directors of MedQuist, then
still in office, who were either directors at the beginning of such
period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the
Board, then in office; (v) CBay ceases to own a direct or
indirect majority interest in MedQuist; or (vi) SACPEI CB
Investment, L.P. ceases to remain obligated to file a
Schedule 13D pursuant to the Act in respect of its beneficial
ownership interest in MedQuist.
This
option shall terminate and is not exercisable on or after
September 30, 2018, which is the tenth anniversary of the
grant date (the “Scheduled Termination Date”),
except if terminated earlier as hereafter provided.
You
may exercise your option by giving written notice to the Secretary
of MedQuist on forms supplied by MedQuist at its then principal
executive office, accompanied by payment of the option price for
the total number of shares you specify that you wish to purchase.
The payment may be in cash or any manner permitted under the Plan
and by MedQuist.
Your
option will, to the extent not previously exercised by you,
terminate ninety (90) days after the date you cease to perform
services for MedQuist or a subsidiary corporation of MedQuist,
whether such termination is voluntary or not, but not if your
termination is due to disability, as defined in
Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended (the “Code”), or death (but in no event later
than the Scheduled Termination Date). After that date your service
or employment is terminated, as aforesaid, you may exercise this
option only for the number of shares which you had a right to
purchase and did not purchase on such termination date (except, as
provided above, upon your termination of employment by
MedQuist
