Exhibit 10.31
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SEPARATION AGREEMENT
This Separation Agreement is made this 2nd day of April, 2003, by and
between MedQuist Inc. (hereinafter the "COMPANY") and ▇▇▇▇▇ ▇. ▇▇▇▇▇
(hereinafter "▇▇▇▇▇"), currently Chairman, President and Chief Executive Officer
of the COMPANY.
WHEREAS, ▇▇▇▇▇ has announced his resignation as Chairman, President and
Chief Executive Officer of the Company; and
WHEREAS, the Parties desire to set forth the terms and conditions
relating to ▇▇▇▇▇'▇ separation of employment with the Company
NOW THEREFORE, the Parties, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1.▇▇▇▇▇ has announced his resignation as Chairman, President and Chief
Executive Officer of the COMPANY and his employment as Chairman, President and
Chief Executive Officer of the COMPANY shall end at the close of business on
July 6, 2003 (the "Resignation Date"). Thereafter, he shall continue as an
employee and advisor of the Company until his Termination Date as more fully
described in Section 3.
2. The EMPLOYMENT AGREEMENT entered into as of the 22nd day of May,
2000, by and between the COMPANY and ▇▇▇▇▇ (the "EMPLOYMENT AGREEMENT") shall
continue in full force and effect through the Resignation Date. In accordance
with the EMPLOYMENT AGREEMENT, the COMPANY shall pay ▇▇▇▇▇ his 2002 bonus in the
amount of one hundred eighty-two thousand dollars ($182,000.00) immediately
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following ▇▇▇▇▇'▇ execution of this Separation Agreement. Pursuant to the
EMPLOYMENT AGREEMENT, the COMPANY shall continue to pay ▇▇▇▇▇ his base annual
salary of four hundred ninety-two thousand nine hundred sixty dollars
($492,960.00) at such times as is consistent with the COMPANY's pay periods for
other executives of the COMPANY through the Resignation Date. Until the
Resignation Date, ▇▇▇▇▇ agrees to continue to serve as a member of the Board of
Directors of COMPANY and to perform such duties of Chairman, President and Chief
Executive Officer as are consistent with that position and may reasonably be
assigned from time to time by the Board of Directors of the COMPANY, through the
Resignation Date. The parties hereby waive any right to written notice of
non-renewal pursuant to Section 3 of the EMPLOYMENT AGREEMENT.
3. After the Resignation Date, ▇▇▇▇▇ shall continue to be employed by
the COMPANY as special advisor to the Chairman, the new Chief Executive Officer,
the Executive Committee and the Board of Directors of the COMPANY ("Special
Advisor") through April 1, 2004. On the next regular pay date after the
Resignation Date, ▇▇▇▇▇ shall be paid a non-refundable lump sum payment of one
hundred and seventy-nine thousand seven hundred and twenty five dollars
($179,725), less applicable withholding and deductions, for his services as
Special Advisor. Notwithstanding the lump sum payment, ▇▇▇▇▇ shall be treated by
the COMPANY as an employee through the Termination Date as defined in this
paragraph 3. The COMPANY agrees that ▇▇▇▇▇'▇ announcement of resignation and the
execution of this Separation Agreement does not constitute a "notice of an
intention to terminate the employment relationship" under the vesting provisions
of the Stock Option Agreements between ▇▇▇▇▇ and the COMPANY ("Stock Option
Agreements"), and that ▇▇▇▇▇ shall retain the right to exercise all options
vested as of the Termination Date (as defined below in this paragraph 3) in
accordance with the terms of the Stock Option Agreements so long as he is
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considered an employee. Either party may terminate ▇▇▇▇▇'▇ employment as Special
Advisor at any time by providing written notice to the other party, provided
that regardless of the duration of the period during which ▇▇▇▇▇ serves as
Special Advisor, the COMPANY shall provide ▇▇▇▇▇ (unless his employment as
Special Advisor is terminated for "Cause" as described below) through April 1,
2004 with all of the benefits set forth in paragraph 4 below. The COMPANY may
terminate ▇▇▇▇▇'▇ employment as Special Advisor for "Cause" as defined in
Section 8.b. of the EMPLOYMENT AGREEMENT provided that (i) any conduct by ▇▇▇▇▇
before the date he executes this Separation Agreement may not constitute the
basis for the COMPANY to terminate ▇▇▇▇▇'▇ employment as Special Advisor for
"Cause," and (ii) prior to terminating ▇▇▇▇▇'▇ employment as Special Advisor for
cause, the COMPANY shall abide by the notice and opportunity to cure provisions
contained in Section 12(a) of the EMPLOYMENT AGREEMENT. In addition, ▇▇▇▇▇'▇
employment as Special Advisor shall terminate immediately upon his death,
resignation or in the event of physical or mental incapacity or disability for a
period of ninety days or more. ▇▇▇▇▇'▇ last date of employment, April 1, 2004,
unless extended through December 31, 2004 pursuant to paragraph 5, or if his
employment is earlier terminated for "Cause" or by his death, resignation, or
mental incapacity or disability for a period of ninety days or more is referred
to hereafter as the "Termination Date."
4. Through the Termination Date, (i) ▇▇▇▇▇ shall be eligible to
continue to participate in the COMPANY's medical, dental and life insurance,
401(k) and deferred compensation plans as in effect from time to time; (ii) the
COMPANY shall continue to provide ▇▇▇▇▇ with a car allowance or use of an
automobile, including all reasonable expenses of operation as set forth in
Section 6.e. of the EMPLOYMENT AGREEMENT until the Resignation Date and shall
pay ▇▇▇▇▇ a car allowance of one thousand dollars ($1000.00) per month
thereafter until the Termination Date; (iii) the COMPANY shall reimburse ▇▇▇▇▇
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in full for all reasonable and necessary business and travel expenses incurred
in accordance with and pursuant to the provisions of Section 7 of the EMPLOYMENT
AGREEMENT; and (iv) the COMPANY shall continue to provide ▇▇▇▇▇ with secretarial
support in the ordinary course of business, allow ▇▇▇▇▇ to continue to use its
e-mail and voicemail systems for business purposes, and ▇▇▇▇▇ shall be allowed
to retain his laptop indefinitely. After the Termination Date, ▇▇▇▇▇ shall not
be eligible for any further benefits from the COMPANY except that nothing in
this Separation Agreement is in derogation of ▇▇▇▇▇'▇ rights with respect to his
401(k) and deferred compensation benefits and ▇▇▇▇▇ can elect continued medical
and dental coverage at his expense for up to eighteen (18) additional months by
completing the applicable COBRA forms when sent to him.
5. The Board of Directors may elect to continue ▇▇▇▇▇'▇ employment as
Special Advisor through December 31, 2004, by providing notice no later than
January 1, 2004, to ▇▇▇▇▇, in which event ▇▇▇▇▇ shall be paid a non-refundable
lump sum payment of one hundred and eighty-four thousand eight hundred and sixty
dollars ($184,860), less applicable deductions and withholding, on the next
regular pay date after April 1, 2004 and ▇▇▇▇▇ shall continue to be an employee
of the COMPANY and shall receive the benefits set forth in paragraph 4 through
the Termination Date.
6. In light of ▇▇▇▇▇'▇ current positions as Chairman, President and
Chief Executive Officer and his future appointment as Special Advisor of the
COMPANY, the COMPANY shall indemnify ▇▇▇▇▇ in accordance with and subject to the
terms of Article X of the COMPANY's by laws.
7. ▇▇▇▇▇ agrees and acknowledges that the provision of section 9 of the
EMPLOYMENT AGREEMENT, Restrictive Covenants and Confidentiality; Injunctive
Relief and section 10, Survival, shall apply in full force and effect for one
(1) year from April 1, 2004, and the COMPANY agrees and acknowledges that such
restrictions supersede any provisions on confidentiality, non-interference or
non-compete set forth in any attachment to the Stock Option Agreements or any
other Non-Competition Agreements between ▇▇▇▇▇ and the COMPANY.
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8. ▇▇▇▇▇ agrees that a breach of his obligations set forth in
paragraphs 7 of this Separation Agreement will result in irreparable injury to
the COMPANY and that the COMPANY's remedies at law will be inadequate and the
COMPANY shall be entitled to preliminary and permanent injunctive relief, other
equitable relief and any other remedy or relief ordered by a court of competent
jurisdiction.
9. ▇▇▇▇▇ agrees that except as set forth in paragraphs 2, 3, 4 and 5 of
this Separation Agreement, ▇▇▇▇▇ is not entitled to any other compensation or
benefits from the COMPANY.
10. The parties acknowledge that the sums and benefits set forth in
paragraphs 3, 4 and 5 above represent amounts in addition to anything of value
to which ▇▇▇▇▇ is otherwise entitled and are provided in consideration for the
execution of this Separation Agreement.
11. ▇▇▇▇▇ and the COMPANY affirm that this Separation Agreement and the
EMPLOYMENT AGREEMENT set forth the entire agreement between the parties with
respect to the subject matter contained herein and supersede all prior or
contemporaneous agreements or understandings between the parties with respect to
the subject matter contained herein. Further, there are no representations,
arrangements or understandings, either oral or written, between the parties,
which are not fully expressed herein. Finally, no alteration or other
modification of this Separation Agreement shall be effective unless made in
writing and signed by both parties.
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12. This Separation Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
13. Any notice authorized or required to be given or made by or
pursuant to this Separation Agreement shall be made in writing and either
personally delivered or mailed by overnight express mail addressed as follows:
If to ▇▇▇▇▇: ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
▇▇▇▇ ▇▇▇▇▇ LLP
Centre Square West
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the COMPANY: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Managing Director
▇▇▇▇▇▇▇▇▇ Partners, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: MedQuist Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Legal Officer
Either party may change the address to which such notices are to be addressed by
giving the other party notice in the manner indicated above.
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14. The parties acknowledge that they have carefully reviewed this
Separation Agreement with the assistance of counsel, that they have entered into
this Separation Agreement voluntarily and knowingly and without reliance on any
promises not expressly contained herein, that they have been afforded an
adequate time to review carefully the terms of this Separation Agreement, and
that this Separation Agreement shall not be deemed void or voidable by claims of
duress, deception, mistake or fact or otherwise. Nor shall the principle of
construction whereby all ambiguities are to be construed against the drafter be
employed in the interpretation of this Separation Agreement. This Separation
Agreement should not be construed for or against any party.
15. This Separation Agreement shall be governed by and all questions
relating to its validity, interpretation, enforcement and performance shall be
construed in accordance with the laws of the State of New Jersey. The COMPANY
and ▇▇▇▇▇ agree to arbitrate any claims or disputes pertaining to this
Separation Agreement or to any matter arising therefrom by the American
Arbitration Association in the State of New Jersey. The exclusive choice of
forum set forth in this paragraph 13 shall not be deemed to preclude the
enforcement of any judgment obtained in such forum or the taking of any action
under this Separation Agreement to enforce such judgment in any appropriate
jurisdiction.
16. ▇▇▇▇▇ affirms that he has carefully read the foregoing Separation
Agreement, that he fully understands the meaning and intent of this document and
that he intends to be bound by the promises contained in this Separation
Agreement for the aforesaid consideration.
IN WITNESS WHEREOF, ▇▇▇▇▇ and the authorized representative of
the COMPANY have executed this Separation Agreement on the dates indicated
below:
By: ▇▇▇▇▇ ▇ ▇▇▇▇▇ Dated: April 2, 2003
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▇▇▇▇▇ ▇ ▇▇▇▇▇
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Dated: April 2, 2003
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Compensation
Committee Chainman
MedQuist Inc.
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