<PAGE>
                                                                    EXHIBIT 10.5


                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered
into as of this 5th day of November, 2004, by and between Spheris Operations
Inc. (the "Company") and Anthony D. James (the "Employee").

                                   WITNESSETH:

          WHEREAS, the Company and Employee are parties to an employment
agreement dated July 30, 2002, as amended July 28, 2004, (the "Prior Agreement")
pursuant to which Employee serves as Chief Financial Officer of the Company; and

          WHEREAS, pursuant to the terms of the Securities Purchase Agreement,
on the Closing Date the Company will become an indirect wholly-owned subsidiary
of Spheris Holding III, Inc.; and

          WHEREAS, the Company desires to enter into an amended and restated
employment agreement embodying the terms of Employee's employment following the
Closing (this "Agreement") and Employee desires to enter into this Agreement and
to continue his employment with the Company following the Closing, subject to
the terms and provisions of this Agreement.

          NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and Employee agree as follows:

          Section 1. DEFINITIONS.

          (a) "Accrued Obligations" shall mean (i) all accrued but unpaid Base
Salary through the date of termination of Employee's employment, (ii) any unpaid
or unreimbursed expenses incurred in accordance with Section 7 below, and (iii)
any benefits provided under the Company's employee benefit plans upon a
termination of employment, in accordance with the terms therein.

          (b) "Annual Bonus" shall have the meaning set forth in Section 4(b).

          (c) "Base Salary" shall mean the salary provided for in Section 4(a)
below or any increased salary granted to Employee pursuant to Section 4(a).

          (d) "Board" shall mean the Board of Directors of the Company.

          (e) "Cause" shall mean (i) a continuing failure, neglect or refusal by
Employee to perform in any material respect his duties or responsibilities; (ii)
embezzlement, theft, larceny, material fraud or other acts of dishonesty; (iii)
Employee's conviction of, admission to, or entry of pleas of no contest to any
felony or any other crime which has, or may have within the Company's reasonable
discretion, a material adverse effect on Employee's ability to carry out his
duties under this Agreement or upon the reputation of the Company; (iv)
consistent drunkenness by Employee or his illegal use of narcotics which is, or
could

<PAGE>

reasonably be expected to become, materially injurious to the reputation or
business of the Company or its affiliates or which impairs, or could reasonably
be expected to impair, the performance of Employee's duties hereunder; or (v)
Employee's material breach of this Agreement or the Noncompetition Agreement.

          (f) "Change in Control" shall mean any transactions or series of
related transactions pursuant to which any person(s) or entity(ies) (other than
the shareholders of the Designated Person and their respective affiliates
immediately following the Closing Date), in the aggregate, directly or
indirectly, acquires beneficially or of record, (i) Voting Equity of a
Designated Person (whether by merger, consolidation, reorganization,
combination, sale or transfer of equity, stockholder or voting agreement, proxy,
power of attorney or otherwise); provided, however, that if immediately
following such transaction or series of transactions, the shareholders of the
Designated Person and their respective affiliates immediately following the
Closing Date, hold, in the aggregate, equity securities holding voting power in
excess of any other single holder (together with any affiliates of such single
holder), such transaction or series of transactions shall not constitute a
Change in Control hereunder; or (ii) all or substantially all of a Designated
Person's assets.

          (g) "Closing" shall have the meaning set forth in the Securities
Purchase Agreement.

          (h) "Closing Date" shall have the meaning set forth in the Securities
Purchase Agreement.

          (i) "Designated Person" shall mean Spheris Inc., Spheris Holding II,
Inc., Spheris Holding III, Inc. or the Company.

          (j) "Disability" shall mean any physical or mental disability or
infirmity that prevents the performance of Employee's duties hereunder for a
period of (i) ninety (90) consecutive days or (ii) one hundred twenty (120)
non-consecutive days during any twelve (12) month period. Any question as to the
existence, extent or potentiality of Employee's Disability upon which Employee
and the Company cannot agree shall be determined by a qualified, independent
physician selected by the Company and approved by Employee (which approval shall
not be unreasonably withheld). The determination of any such physician shall be
final and conclusive for all purposes of this Agreement.

          (k) "Good Reason" shall mean any of the following, without Employee's
express written consent: (i) a reduction in Employee's Base Salary or an adverse
modification to his rights with respect to his Annual Bonus under this
Agreement; (ii) a substantial and material diminution in Employee's title,
duties, responsibilities, reporting relationship or positions, (iii) the
relocation of Employee's principal place of employment (as provided in Section
3(c) hereof) more than fifty (50) miles from its current location; (iv) a
material breach by the Company of this Agreement or the Noncompetition
Agreement; or (v) following any Change in Control, the failure by the Company to
continue in effect any material compensation plan in which Employee is
participating immediately prior thereto to the material detriment to the
Employee, including benefits pursuant to bonus or similar plans, without
substituting plans providing Employee with substantially similar or greater
benefits or value, or the taking of any action by the Company for


                                       -2-

<PAGE>

the purpose of materially adversely affecting Employee's participation in or
materially reducing Employee's benefits under any such plans or depriving
Employee of any material fringe benefit enjoyed by Employee immediately prior
thereto.

          (l) "Noncompetition Agreement" shall mean that certain Confidential
Information, Non-Competition and Invention Assignment Agreement, dated March 19,
2002, entered into by Employee in connection with the Prior Agreement, as
amended in accordance with its terms from time to time.

          (m) "Non-Renewal Notice" shall have the meaning set forth in Section 2
hereof.

          (n) "Pro Rata Bonus" shall mean an amount equal to the product of (i)
(x) the Annual Bonus paid or payable to Employee with respect to the fiscal year
ending December 31, 2004, if such termination occurs prior to January 1, 2005,
or (y) the sum of the Annual Bonuses paid or payable to Employee with respect to
the two fiscal years immediately preceding his termination of Employment,
divided by two, if such termination occurs on or following January 1, 2005; and
(ii) a fraction, (x) the numerator of which shall be the number of months
Employee worked in the fiscal year Employee's employment is terminated or this
Agreement expires by counting from the first day of the fiscal year during which
Employee's employment is terminated or this Agreement expires and ending on the
last day of the month in which Employee's employment is terminated or this
Agreement expires and (y) the denominator of which shall be twelve; provided,
however, that for purposes of this definition, the amount of Employees Annual
Bonus paid or payable with respect to the fiscal year ending December 31, 2004
shall mean the lesser of (A) the sum of the Annual Bonus paid or payable to
Employee with respect to such fiscal year plus the amount of any transaction
bonus paid or payable to Employee with respect to the transactions contemplated
by the Securities Purchase Agreement and (B) the amount of Employee's Base
Salary as of December 31, 2004.

          (o) "Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement, dated October 12, 2004, by and among Spheris Holdings LLC
and Spheris Holding Inc.

          (p) "Severance Term" shall mean the period specified in Section
8(d)(ii) below.

          (q) "Term of Employment" shall mean the period specified in Section 2
below.

          (r) "Voting Equity" shall mean the equity securities of a Designated
Person possessing the voting power to elect the Designated Person's governing
body.

          Section 2. ACCEPTANCE AND TERM OF EMPLOYMENT.

          The Company agrees to employ Employee and Employee agrees to serve the
Company on the terms and conditions set forth herein. Unless sooner terminated
as provided in Section 8 hereof, the Term of Employment shall commence on the
Closing Date and shall continue during the period ending on the second
anniversary of the Closing Date. Subject to


                                       -3-

<PAGE>

Section 8 hereof, the Term of Employment shall be extended automatically without
further action by either party by one additional year first on the second
anniversary of the Closing Date, and on each succeeding anniversary thereafter,
unless, not later than ninety (90) days prior to the end of the Term of
Employment (including any prior extension thereof), either the Company or
Employee shall have notified the other in writing of its intention not to renew
this Agreement (a "Non-Renewal Notice"). Once the Company or Employee has
delivered a Non-Renewal Notice to the other, Employee's employment hereunder
shall terminate on the close of the business on the last day of the Term of
Employment.

          Section 3. POSITION, DUTIES AND RESPONSIBILITIES; PLACE OF
PERFORMANCE.

          (a) During the Term of Employment, Employee shall be employed and
serve as the Chief Financial Officer of the Company (together with such other
position or positions consistent with Employee's title as the Chief Executive
Officer and/or Board shall specify from time to time) and shall have such duties
typically associated with such title. Employee shall report to the Chief
Executive Officer. Employee also agrees to serve as an officer and/or director
of any subsidiary of the Company without additional compensation.

          (b) Employee shall devote his full business time, attention, skill and
reasonable best efforts to the performance of his duties under this Agreement
and shall not engage in any other business or occupation during the Term of
Employment without the written permission of the Board, including, without
limitation, any activity that (x) conflicts with the interests of the Company,
(y) interferes with the proper and efficient performance of his duties for the
Company, or (z) interferes with the exercise of his judgment in the Company's
best interests. Notwithstanding the foregoing, nothing herein shall preclude
Employee from (i) serving, with the prior written consent of the Board (which
consent shall not be withheld unreasonably), as a member of the board of
directors or advisory boards (or their equivalents in the case of a
non-corporate entity) of non-competing businesses and charitable organizations,
(ii) engaging in charitable activities and community affairs, and (iii) managing
his personal investments and affairs; provided, however, that the activities set
out in clauses (i), (ii) and (iii) shall be limited by Employee so as not to
materially interfere, individually or in the aggregate, with the performance of
his duties and responsibilities hereunder.

          (c) Employee's principal place of employment shall be in Franklin,
Tennessee, although Employee understands and agrees that he may be required to
travel from time to time for business reasons.

          Section 4. COMPENSATION. During the Term of Employment, Employee shall
be entitled to the following compensation:

          (a) Base Salary. Employee shall be paid an annualized Base Salary,
payable in accordance with the regular payroll practices of the Company, of not
less than $190,000, with increases, if any, as may be approved in writing by the
Board.

          (b) Annual Bonus. Employee shall be eligible for an annual
discretionary incentive bonus award determined by the Board in respect of each
fiscal year during the Term of Employment (the "Annual Bonus"). The target
Annual Bonus for each such year shall be 50%


                                       -4-

<PAGE>

of Employee's annual Base Salary for such year, although the actual Annual Bonus
amount may be less than or greater than the target Annual Bonus depending upon
the degree of attainment of individual and Company performance criteria
established by the Board for such year. Employee shall receive the Annual Bonus
in respect of any year at the same time as bonuses are paid to other executive
officers of the Company, but in no event later than ninety (90) days after the
end of the fiscal year for which the bonus is payable.

          Section 5. EMPLOYEE BENEFITS.

          During the Term of Employment, Employee shall be entitled to
participate in health, insurance, retirement and other benefits provided to
other senior executives of the Company. Employee shall also be entitled to the
same number of holidays, vacation, sick days (or the same amount of paid time
off, as applicable) and other benefits as are generally allowed to senior
executives of the Company in accordance with the Company policy in effect from
time to time.

          Section 6. KEY-MAN INSURANCE.

          At any time during the Term of Employment, the Company shall have the
right to insure the life of Employee for the sole benefit of the Company, in
such amounts, and with such terms, as it may determine. All premiums payable
thereon shall be the obligation of the Company. Employee shall have no interest
in any such policy, but agrees to cooperate with the Company in taking out such
insurance by submitting to physical examinations, supplying all information
required by the insurance company, and executing all necessary documents,
provided that no financial obligation is imposed on Employee by any such
documents.

          Section 7. REIMBURSEMENT OF BUSINESS EXPENSES.

          Employee is authorized to incur reasonable business expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all business expenses incurred in
connection with carrying out the business of the Company, subject to
documentation in accordance with the Company's policy, as in effect from time to
time. Expenses covered by this provision include but are not limited to
professional dues, subscriptions, fees and other reasonable expense associated
with the Executive's CPA license and continuing education requirements, and
other reasonable fees and expenses of which Executive participates in the
Company's best interests.

          Section 8. TERMINATION OF EMPLOYMENT.

          (a) General. The Term of Employment shall terminate earlier than as
provided in Section 2 hereof upon the earliest to occur of (i) Employee's death,
(ii) a termination by reason of a Disability, (iii) a termination by the Company
with or without Cause, or (iv) a termination by Employee with or without Good
Reason. Upon any termination of Employee's employment for any reason, except as
may otherwise be requested by the Company, Employee shall resign from any and
all directorships, committee memberships or any other positions Employee holds
with the Company or any of its affiliates.


                                       -5-

<PAGE>

          (b) Termination due to Death or Disability. Employee's employment
shall terminate automatically upon his death. The Company may terminate
Employee's employment immediately upon the occurrence of a Disability, such
termination to be effective upon Employee's receipt of written notice of such
termination. In the event Employee's employment is terminated due to his death
or Disability, Employee or his estate or his beneficiaries, as the case may be,
shall be entitled to:

               (i) The Accrued Obligations;

               (ii) Any unpaid Annual Bonus in respect to any completed fiscal
     year which has ended prior to the date of such termination, which amount
     shall be paid at such time Annual Bonus amounts are paid to other senior
     executives; and

               (iii) An amount equal to the Pro Rata Bonus, which amount shall
     be paid in a lump-sum as soon as practicable following the date of such
     termination.

Following such termination of Employee's employment by the reason of death or
Disability, except as set forth in this Section 8(b), Employee shall have no
further rights to any compensation or any other benefits under this Agreement.

          (c) Termination by the Company for Cause.

               (i) A termination for Cause shall not take effect unless the
     provisions of this subsection (i) are complied with. Employee shall be
     given not less than two (2) weeks written notice by the Board of the
     intention to terminate him for Cause, such notice to state in detail the
     particular act or acts or failure or failures to act that constitute the
     grounds on which the proposed termination for Cause is based and to be
     delivered within six (6) months of the occurrence of such act, acts,
     failures or failures to act. Employee shall have two (2) weeks after the
     date that such written notice has been given to Employee in which to cure
     such conduct, to the extent such cure is possible. If he fails to cure such
     conduct, the termination shall be effective on the date immediately
     following the expiration of the two (2) weeks notice period. During any
     cure period provided hereunder, the Board may, in its sole and absolute
     discretion, prohibit Employee from entering the premises of the Company or
     otherwise performing his duties hereunder.

               (ii) In the event the Company terminates Employee's employment
     for Cause, he shall be entitled only to the Accrued Obligations. Following
     such termination of Employee's employment for Cause, except as set forth in
     this Section 8(c)(ii), Employee shall have no further rights to any
     compensation or any other benefits under this Agreement.

          (d) Termination by the Company without Cause. The Company may
terminate Employee's employment without Cause, effective upon Employee's receipt
of written notice of such termination. In the event Employee's employment is
terminated by the Company without Cause (other than due to death or Disability),
Employee shall be entitled to:

               (i) The Accrued Obligations;


                                       -6-

<PAGE>

               (ii) Continuation of Base Salary for a period of twelve (12)
     months following the date of such termination (the "Severance Term"),
     payable in accordance with the Company's payroll practices;

               (iii) Any unpaid Annual Bonus in respect to any completed fiscal
     year which has ended prior to the date of such termination, which amount
     shall be paid at such time Annual Bonus amounts are paid to other senior
     executives;

               (iv) An amount equal to the Pro Rata Bonus, which amount shall be
     paid in substantially equal installments during the Severance Term at the
     same time as payments are made with respect to Base Salary pursuant to
     subsection (ii) above; and

               (v) Payment of COBRA premiums for Employee and his dependents in
     excess of the cost of such health insurance coverage for active employees
     of the Company until the earlier of (A) expiration of the Severance Term,
     or (B) the date that Employee commences employment with any person or
     entity and, thus, is eligible for health insurance benefits.

Notwithstanding the foregoing, the payments and benefits described in
subsections (ii), (iii), (iv) or (v) above shall immediately terminate, and the
Company shall have no further obligations to Employee with respect thereto, in
the event that Employee breaches any provision of the Noncompetition Agreement.

          Following such termination of Employee's employment by the Company
without Cause, except as set forth in this Section 8(d), Employee shall have no
further rights to any compensation or any other benefits under this Agreement.

          (e) Termination by Employee with Good Reason. Employee may terminate
his employment with Good Reason by providing the Company thirty (30) days'
written notice setting forth in reasonable specificity the event that
constitutes Good Reason, within six (6) months of the occurrence of such event.
During such thirty (30) day notice period, the Company shall have a cure right
(if curable), and if not cured within such period, Employee's termination will
be effective upon the expiration of such cure period, and the Employee shall be
entitled to the same payments and benefits as provided in Section 8(d) above for
a termination without Cause. Following such termination of Employee's employment
by Employee with Good Reason, except as set forth in this Section 8(e), Employee
shall have no further rights to any compensation or any other benefits under
this Agreement.

          (f) Termination by Employee without Good Reason. Employee may
terminate his employment without Good Reason by providing the Company thirty
(30) days' written notice of such termination. In the event of a termination of
employment by Employee under this Section 8(f), Employee shall be entitled only
to (i) the Accrued Obligations, and (ii) any unpaid Annual Bonus in respect of
any completed fiscal year which has ended prior to the date of such termination,
which amount shall be paid at such time Annual Bonus amounts are paid to other
senior executives. In the event of termination of Employee's employment under
this subsection (f), the Company may, in its sole and absolute discretion,
prohibit Employee from entering the premises of the Company for all or any
portion of the notice period (which in no


                                       -7-

<PAGE>

event shall be treated as a termination without Cause or an event of Good
Reason), provided that the Company shall continue to pay to Employee his then
current Base Salary and continue benefits provided pursuant to Section 5 for the
duration of the notice period. Following such termination of Employee's
employment by Employee without Good Reason, except as set forth in this Section
8(f), Employee shall have no further rights to any compensation or any other
benefits under this Agreement.

          (g) Notwithstanding anything herein to the contrary, (i) in no event
shall delivery of a Non-Renewal Notice by the Company in and of itself
constitute a termination without Cause or an event pursuant to which Employee
may terminate employment with Good Reason; and (ii) in no event shall delivery
of a Non-Renewal Notice by Employee constitute an event pursuant to which the
Company may terminate Employee's employment for Cause. Upon such expiration of
the Term of Employment, Employee shall be entitled to the

               (i) The Accrued Obligations; and

               (ii) Any unpaid Annual Bonus in respect of any completed fiscal
     year which has ended prior to the date of such termination, which amount
     shall be paid at such time Annual Bonus amounts are paid to other senior
     executives.

Notwithstanding the foregoing, in the event that the expiration of the Term of
Employment is as a result of the Company's delivery of a Non-Renewal Notice, in
lieu of the payments and benefits described in subsections (i) and (ii) above,
the Employee shall be entitled to the same payments and benefits as provided in
Section 8(d) above for a termination without Cause. Following such termination
of Employee's employment upon expiration of the Term of Employment, except as
set forth in this Section 8(g), Employee shall have no further rights to any
compensation or any other benefits under this Agreement.

          (h) Release. Notwithstanding any provision herein to the contrary, the
Company may require that, prior to payment of any amount or provision of any
benefit pursuant to Section 8(d)(ii), (iii) or (iv) above (including by reason
of a termination of employment as a result of the Company's delivery of a
Non-Renewal Notice pursuant to Section 8(g) above), Employee shall have executed
a customary general release in favor of the Company and its affiliates and
related parties in such form as is reasonably required by the Company, and any
waiting periods contained in such release shall have expired.

          (i) 280G Issues. The parties hereto agree to reasonably cooperate with
each other to minimize any taxes that may be imposed under Sections 280G and/or
4999 of the Internal Revenue Code. To the extent applicable, the Company and/or
its appropriate affiliate shall take appropriate action to obtain approval by
the shareholders of the Company and/or its appropriate affiliate of the payments
hereunder that would be subject to such taxes in a manner that satisfies Section
280G(b)(5)(B) of the Internal Revenue Code and Treas. Reg. Section 1.280G, Q/A
7.

          Section 9. NONCOMPETITION AGREEMENT.

          The Noncompetition Agreement shall remain in full force and effect in
accordance with its terms, and Employee represents and warrants to the Company
that he will


                                       -8-

<PAGE>

continue to comply with the obligations provided thereunder. Employee
acknowledges that the provisions of the Noncompetition Agreement shall survive
any termination of his employment hereunder.

          Section 10. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE.

          Employee represents that:

          (a) Employee is entering into this Agreement voluntarily and that his
employment hereunder and compliance with the terms and conditions hereof will
not conflict with or result in the breach by him of any agreement to which he is
a party or by which he may be bound;

          (b) he has not violated, and in connection with his employment with
the Company will not violate, any non-solicitation or other similar covenant or
agreement by which he is or may be bound; and

          (c) in connection with his employment with the Company he will not use
any confidential or proprietary information he may have obtained in connection
with employment with any prior employer.

          Section 11. TAXES.

          The Company may withhold from any payments made under this Agreement
all applicable taxes, including but not limited to income, employment and social
insurance taxes, as shall be required by law.

          Section 12. SET OFF; MITIGATION.

          The Company's obligation to pay Employee the amounts provided and to
make the arrangements provided hereunder shall be subject to set-off,
counterclaim or recoupment of amounts ascertainable to a sum certain owed by
Employee to the Company or its affiliates. Employee shall not be required to
mitigate the amount of any payment provided for pursuant to this Agreement by
seeking other employment or otherwise and the amount of any payment provided for
pursuant to this Agreement shall not be reduced by any compensation earned as a
result of Employee's other employment or otherwise.

          Section 13. DISPUTE RESOLUTION.

          Any controversy arising out of or relating to this Agreement or the
breach hereof (other than claims arising under the Noncompetition Agreement)
shall be settled by binding arbitration in accordance with the Employment
Dispute Resolution Rules of the American Arbitration Association and judgment
upon the award rendered may be entered in any court having jurisdiction thereof.
The arbitrator shall be selected by mutual agreement of the Company and
Employee, or if the Company and Employee are unable to agree on an arbitrator,
the arbitrator shall be appointed by the American Arbitration Association. The
costs of any such arbitration proceedings, including all reasonable legal fees,
disbursements, and other costs paid or incurred by the prevailing party arising
out of or resulting from such proceedings, shall be


                                       -9-

<PAGE>

reimbursed by the non-prevailing party. Any award made by such arbitrator shall
be final, binding and conclusive on the parties for all purposes, and judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.

          Section 14. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES.

          (a) The Company. This Agreement shall inure to the benefit of and be
enforceable by, and may be assigned by the Company to, any purchaser of all or
substantially all of the Company's business or assets, any successor to the
Company or any assignee thereof (whether direct or indirect, by purchase,
merger, consolidation or otherwise). The Company will require any such
purchaser, successor or assignee to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such purchase, succession or assignment had taken
place.

          (b) Employee. Employee's rights and obligations under this Agreement
shall not be transferable by Employee by assignment or otherwise, without the
prior written consent of the Company; provided, however, that if Employee shall
die, all amounts then payable to Employee hereunder shall be paid in accordance
with the terms of this Agreement to Employee's devisee, legatee or other
designee or, if there be no such designee, to Employee's estate.

          (c) No Third-Party Beneficiaries. Except as set forth in subsection
(b) above, nothing expressed or referred to in this Agreement will be construed
to give any person other than Company and Employee any legal or equitable right,
remedy or claim under or with respect to this Agreement or any provision of this
Agreement.

          Section 15. WAIVER AND AMENDMENTS.

          Any waiver, alteration, amendment or modification of any of the terms
of this Agreement shall be valid only if made in writing and signed by the
parties hereto; provided, however, that any such waiver, alteration, amendment
or modification is consented to on the Company's behalf by the Board. No waiver
by either of the parties hereto of their rights hereunder shall be deemed to
constitute a waiver with respect to any subsequent occurrences or transactions
hereunder unless such waiver specifically states that it is to be construed as a
continuing waiver.

          Section 16. SEVERABILITY AND GOVERNING LAW.

          If any covenants or such other provisions of this Agreement are found
to be invalid or unenforceable by a final determination of a court of competent
jurisdiction: (a) the remaining terms and provisions hereof shall be unimpaired,
and (b) the invalid or unenforceable term or provision hereof shall be deemed
replaced by a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision hereof. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE (WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW PRINCIPLES THEREOF) APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.


                                      -10-

<PAGE>

          Section 17. NOTICES.

          (a) Every notice or other communication relating to this Agreement
shall be in writing, and shall be mailed to or delivered to the party for whom
it is intended at such address as may from time to time be designated by it in a
notice mailed or delivered to the other party as herein provided, provided that,
unless and until some other address be so designated, all notices or
communications by Employee to the Company shall be mailed or delivered to the
Company at its principal executive office, and all notices or communications by
the Company to Employee may be given to Employee personally or may be mailed to
Employee at Employee's last known address, as reflected in the Company's
records.

          (b) Any notice so addressed shall be deemed to be given: (i) if
delivered by hand, on the date of such delivery; (ii) if mailed by courier or by
overnight mail, on the first business day following the date of such mailing;
and (iii) if mailed by registered or certified mail, on the third business day
after the date of such mailing.

          Section 18. SECTION HEADINGS.

          The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof, affect the meaning or interpretation of this Agreement or of any term
or provision hereof.

          Section 19. ENTIRE AGREEMENT.

          This Agreement, together with the Noncompetition Agreement,
constitutes the entire understanding and agreement of the parties hereto
regarding the employment of Employee including, without limitation, the Prior
Agreement. This Agreement supersedes all prior negotiations, discussions,
correspondence, communications, understandings and agreements between the
parties relating to the subject matter of this Agreement, including, without
limitation, the Prior Agreement.

          Section 20. SURVIVAL OF OPERATIVE SECTIONS.

          Upon any termination of Employee's employment, the provisions of
Section 8 through Section 21 of this Agreement shall survive to the extent
necessary to give effect to the provisions thereof.

          Section 21. COUNTERPARTS.

          This Agreement may be executed in two 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. The execution of this Agreement may be
by actual or facsimile signature.

                                      * * *

                  [Signatures to appear on the following page.]


                                      -11-

<PAGE>

          IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.

                                        SPHERIS OPERATIONS INC.


                                        By: /s/ Steven E. Simpson
                                            ------------------------------------
                                        Title: President and CEO
                                               ---------------------------------

                                        /s/ Anthony D. James
                                        ----------------------------------------
                                        Anthony D. James


                                      -12-