Exhibit 10.7



TRANSCEND SERVICES, INC.

2005 EXECUTIVE COMPENSATION PLAN



On
December 8, 2004, the Stock Option and Compensation Committee of the Board of Directors of Transcend Services, Inc. (the Company) approved a 2005 compensation plan for management, including the executive officers of the Company as
follows:



|                   |  |                                                              |  |                                                         |   |  |                                    |         |                                                                                           |   |      
|------------------ |  | ------------------------------------------------------------ |  | ------------------------------------------------------- | - |  | ---------------------------------- | ------- | ----------------------------------------------------------------------------------------- | - | -----
|Name               |  | Title                                                        |  | Potential Annual Bonus as Percentage of Annual Salary * |   |  | Annual Salary (effective 1/1/2005) |         | Quarterly Cash Bonus Potential Determined at Each Quarter-End on a Year- To-Date Basis **
|Gerdes, Larry G.   |  | Chief Executive Officer                                      |  | 50                                                      | % |  | $                                  | 235,000 |                                                                                           | $ | 0    
|Binion, Thomas C.  |  | President and Chief Operating Officer                        |  | 40                                                      | % |  | $                                  | 185,000 |                                                                                           | $ | 7,500
|Hawkins, Carl P.   |  | Chief Information Officer                                    |  | 40                                                      | % |  | $                                  | 160,000 |                                                                                           | $ | 5,000
|Bleser, Joseph G.  |  | Chief Financial Officer, Treasurer and Secretary             |  | 40                                                      | % |  | $                                  | 150,000 |                                                                                           | $ | 0    
|Bateman, Jeanne N. |  | Chief Accounting Officer, Controller and Assistant Secretary |  | 25                                                      | % |  | $                                  | 75,000  |                                                                                           | $ | 0    

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|* | Based upon the Company achieving or exceeding the annual net income in the Companys 2005 business plan approved by the Board of Directors on December 8, 2004.
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|** | Based upon the assigned Customer Service Group(s) achieving or exceeding the CEO-approved gross margin for the applicable Group(s) determined at each quarter-end on a year-to-date
basis in 2005. Quarterly bonus potential that is not earned in a given quarter cannot be earned in a subsequent quarter.
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