<PAGE>
 
                                                                  EXHIBIT 10.14.

                          LOAN AND SECURITY AGREEMENT
                                  LOAN #1692

THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made as of the date set forth
below between:

     Secured Party:           DVI Financial Services, Inc.; and

     Debtor:                  Transcend Services, Inc.

1.   Certain Definition: The following terms shall have the following respective
     meanings:

     (a)  Advances. Advances of funds to the Debtor pursuant to Section 2 hereof
          --------
          and Schedules which may be executed between Secured Party and Debtor
          from time to time.

     (b)  Collateral: "Collateral" shall have the meaning set forth in Section
          ----------                                                          
          2.2 hereof.

     (c)  Event of Default: Those events set forth in Section 9 hereof.
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     (d)  Monthly Loan Repayment.  The amount set forth in any Schedule executed
          ----------------------                                                
          in connection with any Advance under this Agreement.

     (e)  Schedule(s): Any and all or each (as the context shall require) of the
          ------------                                                          
          Loan and Collateral Schedules of the Debtor, to be executed by the
          parties under this Agreement.

     (f)  Secured Obligations.  The payment of the principal and interest as set
          -------------------                                                   
          forth in each and all of the Schedules, and the payment of all
          additional amounts and other sums at any time due and owing under the
          Schedules for this Agreement, and the performance and observance of
          all covenants and conditions contained herein and therein.

     (g)  Supplier: The entity from whom the Debtor purchased the collateral
          ---------                                                         
          including manufacturers, dealers, sellers and vendors.

2.   Purpose of Financing and Description of Loans; Grant of Security Interest;
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     Collateral
     ----------

     (a)  Secured Party agrees, subject to the terms and conditions of this
          Agreement, to make Advances to the Debtor in an aggregate amount to be
          determined by Secured Party in its sole and absolute discretion.
<PAGE>
 
     (b)  Debtor agrees that the proceeds of any Advance will be used solely to
          acquire the Collateral as described in the Schedule executed in
          connection with said advance.

     (c)  The amount of any Advances to Debtor shall be set forth on the
          Schedule executed in connection with said Advance.

     (d)  The term of repayment of any Advance made under this Agreement (the
          "Term") shall commence on the date set forth in the Schedule executed
          in connection with said Advance and shall continue for the period set
          forth in said Schedule, and for all extensions and renewal of such
          period.

     (e)  Debtor shall pay to Secured Party the Monthly Loan Repayment for each
          Advance in amounts and on the dates set forth in the Schedule executed
          in connection with said Advance, whether or not Secured Party has
          rendered an invoice to Debtor. Debtor agrees to pay the Monthly Loan
          Repayment to Secured Party at the office of the Secured Party set
          forth below, or to such entity and/or at such other place as Secured
          Party may from time to time designate by notice to Debtor. Any other
          amounts required to be paid to Secured Party under this Agreement are
          due upon Debtor's receipt of Secured Party's invoice and will be
          payable as directed in the invoice. Payments under this Agreement may
          be applied to the Debtor's then accrued Secured Obligations in such
          order as Secured Party may choose.

     (f)  The Advances shall not be subject to prepayment or redemption in whole
          or in part prior to the expiration of the Term set forth in the
          Schedule executed in connection with said Advance.

2.1  Grant of Security Interest. In consideration of the Advances to be made by
     ---------------------------                                               
     Secured Party to Debtor under this Agreement, and to secure the payment and
     performance of the Secured Obligations, Debtor hereby grants and assigns to
     Secured Party, its successors and assigns, a security interest in the
     Collateral described in section 2.2 below.

2.2  Collateral.  To the extent covered in any Schedules executed pursuant to
     -----------                                                             
     this Agreement, Collateral includes:

     (a)  all personal property consisting of "equipment" and "proceeds" as
          defined in the Pennsylvania Commercial Code and all furniture,
          fixtures, machinery or other property, and

     (b)  accounts receivable, contract rights, instruments, documents, chattel
          paper and all other forms of obligations owing to Debtor arising out
          of the rendition of services by Debtor in connection with the medical
          equipment financed under this Agreement, whether or not earned by
          performance, and any and all credit insurance, guaranties, and other
          security therefor, as well as any books and records relating to the
          foregoing, whether now owned or hereafter acquired, and all
          substitutions, renewals or replacements of and alternations, additions
          or
<PAGE>
 
          improvements, if any, to such Collateral, together with, in each and
          every case, all proceeds thereof. Each item of Collateral shall secure
          not only the specific Advances made by Secured Party to Debtor as set
          forth in any Schedule, but also all other present and future
          indebtedness or obligations of Debtor to Secured Party of every kind
          and nature whatsoever. Debtor warrants and agrees that the Collateral
          will be used primarily for business or commercial purposes and that
          regardless of the manner of affixation, the Collateral shall remain
          personal property and shall not become part of the real estate. Debtor
          agrees to keep the Collateral at the locations set forth in the
          Schedule(s) covering said Collateral and will not make any change in
          the location of the Collateral within such state, and will not remove
          the Collateral from such state without the prior written consent of
          Secured Party.

3.   Time is of the Essence; Late Charges.  Time is of the essence in this
     -------------------------------------                                
     Agreement and if any Monthly Loan Repayment is not paid within the ten (10)
     days after the due date thereof, Secured Party shall have the right to add
     and collect, and Debtor agrees to pay:

     (a)  A late charge on and in addition to, such Monthly Loan Repayment equal
          to five percent (5%) of such Monthly Loan Repayment or a lesser amount
          if established by any State or Federal statute applicable thereto; and

     (b)  Interest on such Monthly Loan Repayment from thirty (30) days after
          the due date until paid at the rate of eighteen (18%) per annum.

4.   No Warranties.  This Agreement is solely a financing agreement.  Debtor
     -------------                                                          
     acknowledges that: The Collateral has or will have been selected and
     acquired solely by Debtor for Debtor's purposes; Secured Party is not the
     manufacturer, dealer, vendor or supplier of the collateral; the collateral
     is of a size, design, capacity, description and manufacture selected by
     Debtor; Debtor is satisfied that the collateral is suitable and fit for its
     purposes;; and SECURED PARTY HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR
                    ------------------------------------------------------------
     REPRESENTATION WHATSOEVER, EITHER EXPRESS OF IMPLIED, AS TO THE FITNESS,
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     CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE COLLATERAL, ITS
     ----------------------------------------------------------------------
     FITNESS FOR ANY PARTICULAR PURPOSE, THE VALUE OF THE COLLATERAL, THE
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     QUALITY OR CAPACITY OF THE MATERIALS IN THE COLLATERAL OR WORKMANSHIP IN
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     THE COLLATERAL, NOR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER.
     --------------------------------------------------------------------

4.1  No Agency.  Debtor acknowledges and agrees that none of the manufacturer,
     ----------                                                               
     vendor, dealer or supplier, nor any salesman, representative, or other
     agent of the manufacturer, dealer, vendor or supplier, is an agent of
     Secured Party. No salesman, representative or agent of the manufacturer,
     dealer vendor or supplier is authorized to waive or alter any term or
     condition of this Agreement, and no representation as to the Collateral or
     any other matter by any manufacturer, dealer, vendor or supplier shall in
     any way affect Debtor's duty to pay the Monthly Loan Repayment and perform
     his other obligations as
<PAGE>
 
     set forth in this Agreement.

5.   Acceptance.  Execution by Debtor and Secured Party of the Schedule covering
     ----------                                                                 
     the collateral will conclusively establish that such Collateral has been
     included under and will be subject to all of the terms and conditions of
     this Agreement.  If Debtor has not furnished Secured Party with an executed
     Schedule by the earlier of fourteen (14) days after receipt thereof or
     expiration of the commitment set forth in any applicable Equipment
     Financing Commitment, Secured Party may terminate its obligation to make
     any Advances with respect to any applicable Collateral.

6.   Insurance and Risk of Loss. All risk of loss of, damage to, or destruction
     ---------------------------                                               
     of the Collateral shall at all times be borne by Debtor. Debtor will
     procure forthwith and maintain property and general liability insurance
     with extended or combined additional coverage on the collateral for the
     full insurance value thereof for the life of this Agreement any Schedule(s)
     plus such other insurance as Secured Party may specify, and promptly
     deliver each policy to Secured Party with a standard long form endorsement
     attached showing Secured Party or assigns as additional insured and loss
     payees. Each insurer shall agree by endorsement upon such policy issued by
     it or by independent instrument furnished to Secured Party and Debtor that
     it will give Secured Party and Debtor thirty (30) days written notice
     before the policy in question shall be material altered or canceled.
     Secured Party's acceptance of policies in lesser amounts or risks shall not
     be a waiver of Debtor's foregoing obligation.

7.   Debtor's Representations and Warranties.  Debtor represents and warrants to
     ----------------------------------------                                   
     Secured Party as follows:

     (a)  Debtor is duly organized and existing under the laws of the State of
          its formation without limit s to the duration of its existence, and is
          authorized and in good standing to do business in said State; Debtor
          has corporate powers and adequate authority, rights and franchises to
          own its own property and to carry on its business as now conducted;
          and is duly qualified and in good standing in each state in which the
          character of the properties owned by it therein or the conduct of its
          business makes such qualifications necessary; and Debtor has the
          corporate power and adequate authority to make and carry out this
          Agreement.

     (b)  The execution, delivery and performance of this Agreement are duly
          authorized and do not, to the best of the Debtor's knowledge, require
          the consent or approval of any government body or other regulatory
          authority, ; are not in the contravention of or in conflict with any
          law, regulation or any term or provision of its articles of formation
          or bylaws, and this Agreement is a valid and binding obligation of
          Debtor legal enforceable in accordance with it terms.

     (c)  The execution, delivery and performance of this Agreement will not
          contravene or conflict with any agreement, indenture or undertaking to
          which Debtor is a party or by which it or any of its property may be
          bound by or affected, and will not
<PAGE>
 
          cause any lien, charge or other encumbrance to be created or imposed
          upon any such property by reason thereof.

     (d)  There is no material litigation or other proceeding pending or
          threatened against or affecting Debtor, and it is not in default with
          respect to any order, writ, injunction, decree or demand of any court
          or other governmental or regulatory authority. The balance sheets of
          Debtor and the related profit and loss statements and other financial
          data as submitted in writing by Debtor to Secured Party in connection
          with this Agreement, are true and correct, and said balance sheets and
          profit and loss statements truly represent the financial condition of
          Debtor as of the dates thereof.

     (e)  Debtor has good and valid title to the Collateral which is free from
          and will be kept free from all liens, claims, security interest and
          encumbrancers except for the security interest granted hereby.

     (f)  No financing statement covering the Collateral or any proceeds thereof
          is on file in favor of anyone other than Secured Party, but if such
          other financing statement is on file, it will be terminated or
          subordinated.

     (g)  All necessary action, including the filing of UCC-1 Financing
          Statements, has or will be made to give Secured Party a first priority
          security interest in the Collateral. Debtor agrees to permit Secured
          Party to pre-file any UCC-1` Financing statement pursuant to
          California Commercial Code #9402.

8.   Debtor's Agreements.  Debtor agrees:
     --------------------                

     (a)  To defend at Debtor's own cost and expense any action, proceeding or
          claim affecting the Collateral.

     (b)  To pay reasonable attorney's fees and other expenses incurred by
          Secured Patty in enforcing its rights in the event of Debtor's default
          under this Agreement.

     (c)  To pay promptly all taxes, assessments, license fees and other public
          or private charges when levied or assessed against the Collateral or
          this Agreement and this obligation shall survive the termination of
          this Agreement.

     (d)  That if a certificate of title is required or permitted by law, Debtor
          shall obtain such certificate with respect to the Collateral, showing
          the security interests of Secured Patty thereon and in any event do
          everything necessary or expedient to preserve or perfect the security
          interest of Secured Party.

     (e)  That Debtor will not misuse, fail to keep in good repair, secrete, or
          without the prior written consent of Secured Party, and
          notwithstanding Secured Party's claim to proceeds, sell, rent, lend,
          encumber or transfer any of the Collateral. The
<PAGE>
 
          Collateral shall be maintained in accordance with the manufacturer's
          specifications and shall at all times be eligible for the
          manufacturer's maintenance program.

     (f)  That Secured Party may enter upon Debtor's premises or wherever the
          collateral may be located at any reasonable time to inspect the
          Collateral and Debtor's books and records pertaining to the
          Collateral, and Debtor shall assist Secured Party in making such
          inspection.

     (g)  That the security interest granted by Debtor to Secured Party shall
          continue effective irrespective of the payment of the Secured
          Obligations, so long as there are any obligations of any kind,
          including obligations under guarantees or assignments, owed by Debtor
          to Secured Party.

     (h)  To make and identify the Collateral with all information and in such
          manner as Secured Party may request from time to time and replace
          promptly any such marking or identifications which are removed,
          defaced or destroyed.

     (i)  To indemnify and hold Secured Party harmless from and against all
          claims, losses, liabilities (including negligence, tort and strict
          liability), damages, judgements, suits and all legal proceedings, and
          any and all costs and expenses in connection therewith (including
          attorney's fees) arising out of or in any manner connected with the
          manufacture, purchase, financing, ownership, delivery, rejection,
          nondelivery, possession, use, transportation, storage, operation,
          maintenance, repair, return or other disposition of the collateral or
          with this Agreements, including, without limitation, claims for injury
          to, or death of, persons and for damage to property, and give Secured
          Party prompt notice of such claims or liability.

     (j)  That Debtor will not part with possession of or control or suffer or
          allow to pass out its possession or control items of Collateral or
          change the location of the collateral or any part thereof from the
          address shown in the appropriate Schedule without the prior written
          consent of Secured Party.

     (k)  That Debtor shall not ASSIGN OR IN ANY WAY DISPOSE OR ALL OR ANY PART
                               -----------------------------------------------
          OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT OR SELL, LEASE,
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          TRANSFER, PLEDGE OR HYPOTHECATE ANY PART OF THE COLLATERAL, DEBTOR'S
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          INTEREST IN THIS AGREEMENT AND THE COLLATERAL IS NOT ASSIGNABLE AND
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          WILL NOT BE ASSIGNED OR TRANSFERRED BY OPERATION OF LAW, CONSENT TO
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          ANY OF THE FOREGOING PROHIBITED ACTS APPLIES ONLY IN THE GIVEN
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          INSTANCE AND IS NOT CONSENT TO SUBSEQUENT LIKE ACT BY DEBTOR OR
          ---------------------------------------------------------------
          ANOTHER ENTITY.
          ------- 
          
9.   Events of Default.  Any of the following events or conditions shall
     ------------------                                                 
     constitute and Event
<PAGE>
 
     of Default hereunder:

     (a)  Debtor's failure to pay any Monthly Loan Repayment or any installment
          of the principal or interest due under any Schedule when and after the
          same shall become due and payable, whether at the due date thereof, or
          ant the date fixed for prepayment or by acceleration or otherwise;

     (b)  Debtor failure to observe or perform any covenant or agreement to be
          observed or performed by Debtor under this Agreement, any schedule or
          any other instrument or agreement delivered by Debtor to Secured Party
          in connection with this or any other transaction;

     (c)  Any representation or warranty made by Debtor herein or in any report,
          certificate, financial or other statement furnished in connection with
          this Agreement shall prove to be false or misleading in any material
          respect; or

     (d)  Debtor is (i) adjudicated insolvent or a bankrupt, or ceases, becomes
          unable, or admits in writing its inability, to pay its debts as they
          mature, or makes a general assignment for the benefit of, or enters
          into any composition or arrangement with, creditors; (ii) applies for
          or consents to the appointment of a receiver, trustee or liquidator of
          it or of a substantial part of its property, or authorizes such
          application or consent, or proceedings seeking such appointment shall
          be instituted against it without such authorization, consent or
          application and continues undismissed for a period of 60 calendar
          days; (iii) authorizes or files a voluntary petition in bankruptcy or
          applies for or consents to the application of any bankruptcy,
          reorganization in bankruptcy, arrangement, readjustments or debts,
          insolvency, dissolution, moratorium or other similar laws of any
          jurisdiction, or authorize such application or consent, or
          proceedings to such end shall be instituted against it without such
          authorization, application or consent and such proceeding instituted
          against it shall continue undismissed for a period of 60 calendar
          days; or

     (e)  Secured Party, in good faith, believes the prospect of payment or
          performance is impaired or in good faith believes the Collateral is
          insecure;

     (f)  Any agreement made by a guarantor, surety or endorser for Debtor's
          default in any obligation or liability to secured Party or any
          guaranty obtained in connection with this transaction is terminated or
          breached.

10.  Secured Party's Remedies.  Debtor agrees that when an Event of Default has
     ------------------------                                                  
     occurred and is continuing, Secured Party shall have the rights, options,
     duties and remedies of a Secured Party and Debtor shall have the rights and
     duties of a Debtor under the Uniform Commerical Code in effect in each
     jurisdiction where the Collateral or any part thereof is located and,
     without limiting the foregoing, Secured Party may exercise one or more or
     all, and in any order, of the remedies hereinafter set forth:
<PAGE>
 
     (a)  By notice in wiring to Debtor, declare the entire unpaid principal
          balance due under any, each and all Schedule(s) to be immediately due
          and payable; and thereupon all such unpaid balance(s), together with
          all accrued and unpaid interest thereon, shall be immediately due and
          payable;

     (b)  Personally, or by agents or attorneys, take immediate possession of
          the Collateral or any portion thereof and for the purpose pursue the
          same wherever it may be found and enter any of the premises of Debtor
          with or without notice, demand, process of law or legal procedure, and
          search for, take possession of, remove, keep and store the same, or
          use, operate, or lease the same until sold and otherwise exercise any
          and all of the rights and poers of Debtor in respect thereof;

     (c)  Either with or without taking possession and without instituting any
          legal proceedings whatsoever (having first given notice of such sale
          by mail to debtor once at least 10 calendar days prior to the date of
          such sale, and any other notice of such sale which may be required by
          law, if said notice is sufficient, sell and dispose of the collateral
          or any part thereof at public auction(s) to the highest bidder, or at
          a private sale(s) in one lot as an entirely or in several lots, and
          either for cash or for credit and on such terms as Secured Party may
          determine, and at any place (whether or not it is the location of the
          Collateral or any part thereof, designated in the notice above
          referred to. Any such sale or sales may be adjourned from time to time
          by announcement of the time and place appointed for such sale or
          sales, or fur such adjourned sales or sales without further notice,
          and Secured Party may bid and become the purchaser at any such sale;

     (d)  Secured Party may proceed to protect and enforce this Agreement and 
          any Schedule(s) by suit or suits or proceedings in equity, at law or
          in bankruptcy, and whether for the specific performance of any
          covenant or agreement herein contained, or execution or aid of any
          power herein granted, or for foreclosure hereunder, or for the
          appointment of a receiver or receivers for the Collateral, or any
          party thereof, or for the enforcement of any proper, legal or
          equitable remedy available under appliable law.

     (e)  Secured Party may require Debtor to assemble the Collateral and return
          it to Secured Party at a place to be designated by Secured Party which
          is reasonably convenient to both parties.

     (f)  Debtor agrees to pay the Secured Party all expense or retaking,
          holding, preparing for sale, or selling the Collateral in addition to
          attorneys' fees as set forth above.

11.  Acceleration Clause.  In case of any sale of the Collateral, or any part
     -------------------                                                     
     thereof, pursuant to any judgment or decree of any court or otherwise in
     connection with the enforcement of any of the terms of this Agreement, the
     outstanding principal due under any schedule, if not previously due, the
     interest accrued thereon and all other sums required to be paid by Debtor
     pursuant to this Agreement shall at once become nd be immediately due and
<PAGE>
 
     payable.

12.  Exercise of Rights.  No delay or omission of Secured Party in the exercise
     -------------------                                                       
     of any right or power arising from any default shall act as a waiver of or
     impair any such right or power or prevent its exercise during the
     continuance of such default.  No waiver by Secured Party of any such
     default, whether such waiver be full or partial, shall extend to or be
     taken to affect any subsequent default, nor shall it impair the rights
     resulting therefrom except as may be otherwise provided therein.  The
     giving, taking or enforcement of any other or additional security,
     collateral, or guaranteed for the payment of the Secured Obligations shall
     not operate to prejudice, waive, or affect the security of this Agreement
     or any rights, powers, or remedies hereunder, and Secured Party shall not
     be required to look first to enforce or exhaust such other additional
     security, collateral, or guarantees. All rights, remedies and options of
     Secured Party hereunder, or by law shall be cumulative.

13.  Assignment by Secured Party.  SECURED PARTY MAY ASSIGN OR TRANSFER THIS
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     AGREEMENT OR SECURED PARTY'S INTEREST IN THE COLLATERAL WITHOUT NOTICE TO
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     DEBTOR.  Any assignee of Secured Party shall have all of the rights but non
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     of the obligations, of Secured Party under this Agreement, and Debtor
     agrees that it will not asset against any assignee of Secured Party any
     defense, counterclaim or offset that Debtor may have against Secured Party.

14.  Non-Terminable Agreement; Obligations Unconditional.  This Agreement cannot
     ---------------------------------------------------                        
     be canceled or terminated except as expressly provided herein. Debtor
     hereby agrees that Debtor's obligation to pay all secured Obligations shall
     be absolute and unconditional and Debtor will not be entitled to any
     abatement of Monthly Loan Repayments or other payments due under this
     Agreement or any reduction thereof under circumstances or for any reason
     whatsoever. Debtor hereby waives any and all existing and future claims, as
     offsets, against any Monthly Loan repayments and other payments due under
     this Agreement as and when due regardless of any offset or claim which may
     be asserted by Debtor or on its behalf. The obligations and liabilities of
     Debtor hereunder will survive the termination of this Agreement.

15.  Additional Documents.   In connection with and in order to provide
     ---------------------                                             
     effective evidence of the security interest in the Collateral granted
     Secured Party under this Agreement, Debtor will execute and deliver to
     Secured Party such financing statements and similar documents as Secured
     Party requests. Debtor authorizes Secured Party where permitted by law to
     make filings of such financing statements without Debtor's signature.
     Debtor further agrees to furnish Secured Party.

     (a)  On a timely basis, Debtor's future financial statements including
          Debtor's most recent annual report, balance sheet and income
          statement, prepared in accordance with generally accepted accounting
          principles, which reports, Debtor warrants, shall fully and fairly
          represent the true financial condition of Debtor;
<PAGE>
 
     (b)  Any other financial information normally provided by Debtor to the
          public; and

     (c)  Such other financial data or information relative to this Agreement
          and the collateral, including, without limitation, copies of
          Suppliers' proposals and purchase orders and agreements, listings of
          serial numbers or other identification data and confirmations of such
          information, as Secured Party may from time to time reasonably
          request. Debtor will procure and/or execute, have executed, have
          acknowledge, and/or deliver to Secured Party, record and file such
          other documents and notices as Secured Party deems necessary or
          desirable to protect its interest in and rights under this Agreement
          and Collateral. Debtor will pay for all filings, searches, title
          reports, legal and other fees incurred by Secured Party in connection
          with any documents to be provide by Debtor pursuant to this Agreement
          and any other similar documents Secured Party may procure.

16.  Miscellaneous.
     --------------

     (a)  Successors and Assigns. Whenever any of the parties hereto is referred
          ----------------------    
          to, such reference shall be deemed to include the successors and
          assigns of such parties, and all the covenants, promises, and
          agreement sin this Agreement contained by or on behalf of Debtor or
          Secured Party shall bind and inure to the benefit of the respective
          successors and assigns of each party whether so expresses or not.

     (b)  Partial Invalidity.  The enforceability or invalidity of any
          ------------------                                          
          provision(s) of this Agreement shall not render any other provision(s)
          herein contained unenforceable or invalid.

     (c)  Communication.  All communication provide for herein shall be in
          -------------                                                   
          writing and shall be deemed to have been give (unless otherwise
          required by the specific provisions in respect of any matter) (i) when
          addressed and delivered personally or (ii) three (3) calendar days
          following deposit in the United States mail, registered or certified,
          postage prepaid, and addressed to the address set forth beneath the
          respective parties' signature lines below, or as to Debtor of Secured
          Party at such other address as they may designate by notice duly given
          in accordance with this Section to the other party.

     (d)  Counterpart: Governing Law.  This Agreement may be executed,
          --------------------------                                  
          acknowledge, and delivered in any number of counterparts, each of such
          counterparts constituting an original but all together only one
          Agreement., This Agreement and any Schedule shall be construed and
          enforced in accordance with and governed by the laws of the
          Commonwealth of Pennsylvania. Debtor agrees to submit to the
          jurisdiction of the Sate and/or Federal Courts in Pennsylvania.

     (e)  Entire Agreement.  This Agreement constitutes the entire understanding
          ----------------                                                      
          or agreement between Secured Party and Debtor and there is not
          understanding or agreement, oral or written, which is not set forth
          herein. This Agreement may not
<PAGE>
 
          be amended except by a writing signed by Secured Party and Debtor and
          shall be binding upon and inure to the benefit of the parties thereto,
          their permitted successors and assigns.

DATED:  April 9, 1998

DEBTOR:                                      SECURED PARTY:

TRANSCEND SERVICES, INC.                     DVI FINANCIAL SERVICES, INC.
   
By:   /s/ Doug Shamon                        By:
 
Its:  Executive Vice President/CFO           Its:
 
Address:    3353 Peachtree Road              Address:  500 Hyde Park
            Suite 1000                                 Doylestown, PA 18901
            Atlanta, GA 30326


No security interest in an Equipment Schedule may be created through the
transfer or possession of any counterpart of the original Equipment Schedule
other than that Equipment Schedule marked "Secured Party's Original" and a
certified copy of the Master Agreement.