STOCK OPTION AGREEMENT
Exhibit 10.17
To:
Grant Date:
Pursuant to MedQuist’s Stock Option Plan (the “Plan”) adopted May 29, 2002, you are hereby
granted separate options, 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 respective, exercise prices per share indicated
on, the attached Grant Detail Report. Your option price is intended to equal at least the fair
market value of the Common Stock as of the grant date. Your right to exercise this option will
vest in equal 20% installments on each of the first 3 anniversaries of the grant date.
This option shall terminate and is not exercisable on or after
(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 either (i) you cease to perform services for MedQuist or a subsidiary corporation of
MedQuist, or (ii) MedQuist or a subsidiary corporation of MedQuist delivers or receives notice of
an intention to terminate the employment relationship, regardless of whether or not a different
effective date of termination is provided in such notice, 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, a. 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. If you are employed by a subsidiary
corporation of MedQuist, your employment shall be deemed to have terminated on the date your
employer ceases to be a subsidiary corporation of MedQuist, unless you are on that date transferred
to MedQuist or another subsidiary corporation of MedQuist. Your employment shall not be deemed to
have terminated if you are transferred from MedQuist to a subsidiary corporation of MedQuist, or
vise versa, or from one subsidiary corporation of MedQuist to another subsidiary corporation of
MedQuist.
If you die while employed by MedQuist or a subsidiary corporation of MedQuist, your
legatee(s), distributee(s), executor or administrator, as the case may be, may, at any time within
one year after the date of your death (but in no event later than the Scheduled Termination Date),
exercise the option as to any shares which you had a right to purchase and did not purchase during
your lifetime. It your employment by MedQuist or a subsidiary corporation of MedQuist is
terminated by reason of your becoming disabled (within the meaning of Section
22(e)(3) of the Code and the regulations thereunder), you or your legal guardian or custodian may
at any time within one year after the date of such termination (but in no event later than the
Scheduled Terminated Date), exorcise the option as to any shares which you had a right to purchase
and did not purchase prior to such termination. Your executor, administrator, guardian or
custodian must present proof of his authority satisfactory to MedQuist prior to being allowed to
exercise this option.
In the event of any change in the outstanding shares of the Common Stock by reason of a stock
dividend, stock split, combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Committee deems in its sole discretion to be similar
circumstances the number and kind of shares subject to this option and the option price of such
shares will be appropriately adjusted in a manner to be determined in the sole discretion of the
Committee or replaced with equal value as determined in the sole discretion of the Committee.
The option is not transferable otherwise than by will, the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined under the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act, or the rules
thereunder , and is exercisable during your lifetime only by you. Until the option price has been
paid in full pursuant to due exercise of this option and the purchased shares are delivered to you,
you do not have any right, as a shareholder of MedQuist. MedQuist reserves the right not to
deliver to you the shares purchased by virtue of the exercise of this option during any period of
time in which MedQuist. deems in its sole discretion, that such delivery would violate a federal,
state, local or securities exchange rule, regulation or law or any terms of this Agreement, a prior
stock option agreement or a restrictive covenant in favor of MedQuist.
Notwithstanding anything to the contrary contained herein, this option is not exercisable
during any period of time in which MedQuist deems that the exercisability of this option, the offer
to sell the shares options hereunder, or the sale hereof, may violate a federal, state, local or
securities exchange rule, regulation or law, or may cause MedQuist to be legally obligated to issue
or sell more shares than MedQuist is legally entitled to issue or sell.
At the time of issuance of securities pursuant to this Plan, MedQuist may require such
restrictions, legends or other provisions as it deems necessary to comply with any federal or state
securities law.
In the event this option is in any way inconsistent with the legal requirements of the Code or
the regulations thereunder for an “incentive stock option,” this option shall be deemed
automatically amended as of the date hereof to conform to such legal requirements, if such
conformity may be achieved by amendment. The attached Grant Detail Report specifies which of your
options are intended to be incentive stock options (if any) and which are intended to be
non-qualified stock options (if any).
This option shall be subject to the terms of the Plan as in effect on the date this option is
granted, which terms are hereby incorporated herein by reference and made a part thereof. In the
event of any conflict between the terms of this option and the terms of the Plan, the terms of the
Plan shall govern.
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This option constitutes the entire understanding between MedQuist and you with
respect to the subject matter hereof and no amendment, modification or waiver of this
option, in whole or in part, shall be binding upon MedQuist unless in writing and
signed by a member or designee of the Compensation Committee of MedQuist.
Your exercise will not be completed until you have paid or made suitable arrangements to pay,
(i) all federal, state and local income tax withholding required to be withheld by the Company in
connection with the option exercise and (ii) the employee’s portion of other federal, state and
local payroll and other taxes due in connection with the option exercise.
This grant is in partial consideration of your prior execution, delivery and performance of a
Confidentiality and Non-Solicitation Agreement or similar agreement between you and MedQuist or any
of its direct or indirect subsidiaries containing confidentiality, non-solicitation or other
restrictive covenants (a “Noncompetition Agreement”). If you have not previously executed a
Noncompetition Agreement with the Company, you hereby agree to the confidentiality and
noninterference provisions set forth on Attachment A, which shall then be considered the
Noncompetition Agreement for purposes of interpreting this Agreement. If you breach the terms of
your Noncompetition Agreement, all of the options granted hereunder or granted to you previously
shall expire immediately and the grant(s) shall be deemed void. In the event of such a breach, if
you have exercised any such options within 12 months prior to or any time after the breach, you
shall be obligated to refund to MedQuist immediately an amount equal to the fair value of the
Common Stock on the date of such exercise (less the exercise price paid by you) plus subsequent
increase in value of MedQuist stock. The foregoing is separate from and in addition to any other
legal or equitable remedies to which the Company may be entitled as a result of such a breach. If
a court determines that all or a portion of your Noncompetition Agreement is not enforceable, then
this Stock Option Agreement shall be void.
Validity, interpretation, construction, performance and enforcement of this Agreement shall be
governed by the laws of the State of New Jersey, without regard to its conflict of law principles.
The parties fully agree that the exclusive venue of any action arising out of this Agreement and
any Non-Competition Agreement shall be in the Superior Court of Burlington County, New Jersey, any
other court of the State of New Jersey having jurisdiction and value over an action arising out of
this agreement, or the United States District Court for the District of New Jersey.
Please sign the copy of this option and return it to MedQuist’s Secretary, thereby indicating
your understanding of and agreement with its terms and conditions.
| MEDQUIST INC. |
||||
| (SEAL) | By: | |||
| Name: | ||||
| Title: | ||||
| (On Behalf of the Compensation Committee) | ||||
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I hereby acknowledge receipt of a copy of the foregoing stock option and, having read it
hereby signify my understanding of, and my agreement with, its terms and conditions.
| (Date) | ||
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ATTACHMENT A TO STOCK OPTION AGREEMENT
Confidentiality And Noninterference
Confidentiality And Noninterference
a. You covenant and agree that, in consideration of the grant to you of this stock
option, you will not, during your employment with the Company or at any tine for two (2) years
thereafter (except trade secrets shall be further protected so long as they remain trade secrets),
directly or indirectly, disclose, communicate or divulge to any individual or entity, or use for
the benefit of any individual or entity, any knowledge or information with respect to the conduct
or details of the Company’s business which you, acting reasonably, believe or should believe to be
of a confidential nature and the disclosure of which not to be in the Company’s interest. You
agree that all work performed by you for the Company is the sole property of the Company and the
Company is the sole owner of all the results and proceeds of your services for the Company.
Information of a confidential nature shall specifically include, without limitation, client lists,
pricing information, software, trade secrets, business methods and know how, employee, and
contractor lists and contact information, and information about costs, markets, sales, product and
technical and business processes.
b. In consideration of the grant to you of this stock option, you will not, during
your employment and for a period of two (2) years thereafter, directly or indirectly, whether as an
employee, owner, partner, consultant, agent, director, officer, shareholder or in any other
capacity, engage in or be employed by any prohibited business in your territory. For purposes of
the foregoing, a prohibited business means the medical transcription processing services and
dictation business and your territory means the geographic territory in which you had business
dealings while employed by the Company. If you are a Georgia resident, the foregoing shall only
apply to the extent you perform duties and activities similar to those you performed for the
company within 100 miles of Atlanta, Georgia.
c. You covenant and agree that, in consideration of the grant to you of this stock
option, you will not, for a period of two years after your employment with the Company ceases for
any reason whatsoever (whether voluntary or not), except with the express prior written consent of
the Company, directly or indirectly, whether as employee, owner, partner, consultant, agent,
director, officer, shareholder or in any other capacity, for your own account or for the benefit of
any individual or entity, (i) solicit any customer of the Company with whom you had dealing while
employed by the Company for business which would result in such customer terminating their
relationship with the Company, or (ii) hire or engage, or solicit or induce any individual or
entity which is an employee or contractor of the Company with whom you had dealings while employed
by the Company to leave the Company or to otherwise terminate their relationship with the Company.
d. The parties agree that any breach by you of any of the covenants or agreements
contained in this Attachment A will result in irreparable injury to the Company for which money
damages could not adequately compensate the Company and therefore, in the event of any such breach,
the Company shall be entitled (in addition to any other rights and remedies which it may have at
law or in equity) to have an injunction issued by any competent court enjoining and restraining you
and/or any other individual or entity involved therein from continuing such
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breach. The existence of any claim or cause of action which you may have against the Company or
any other individual or entity shall not constitute a defense or bar to the enforcement of such
covenants. If the Company is obliged to resort to the courts for the enforcement of any of the
covenants or agreement contained in this Attachment A or if such covenant. or agreements are
otherwise the subject of litigation between the parties, and the Company prevails in such
enforcement or litigation, then the term of such covenants and agreements shall be extended for a
period of time equal to the period of such breach, which extension shall commence on the later of
(a) the date on which the original (unextended) term of such covenants and agreements is scheduled
to terminate or (b) the date of the final court order (without further right of appeal) enforcing
such covenant or agreement.
e. If any portion of the Covenants or agreements contained in this Attachment A,
or the application hereof, is construed to be invalid or unenforceable, the other portions of such
covenant(s) or agreement(s), or the application thereof shall not be affected and shall be given
full force and effect without regard to the invalid or enforceable portions to the fullest extant
possible. If any covenant or agreement in this Attachment A is held unenforceable because of the
area covered, the duration thereof, or the scope thereof, then the court making such determination
shall have the power to reduce the area and/or duration and/or limit the scope thereof, and the
covenant or agreement shall then be enforceable in its reduced form.
f. For purposes of this Attachment A, the term “the Company” shall include the
Company, any successor to the Company and all present and future direct and indirect subsidiaries
and affiliates of the Company.
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