Document:

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                           AMENDMENT NUMBER FOUR TO
                          LOAN AND SECURITY AGREEMENT

     THIS AMENDMENT NUMBER FOUR TO LOAN AND SECURITY AGREEMENT, dated as of May
9, 2000 (this "Amendment"), amends that certain Loan and Security Agreement,
dated as of April 3, 1997 (as amended from time to time, the "Loan Agreement"),
by and between TRANSCEND SERVICES, INC., A Delaware corporation ("Borrower"), on
the one hand, and COAST BUSINESS CREDIT, a division of Southern Pacific Bank, a
California corporation ("Coast"), on the other hand.  All initially capitalized
terms used in this Amendment shall have the meanings ascribed thereto in the
Loan Agreement unless specifically defined herein.

                                R E C I T A L S

     WHEREAS, Borrower and Coast wish to amend the Loan Agreement pursuant to
the terms and provisions set forth in this Amendment; and

     NOW, THEREFORE, the parties hereto agree as follows:

                               A M E N D M E N T

     Section 1.  AMENDMENT TO THE FIRST PARAGRAPH OF SECTION 1 OF THE SCHEDULE
                 -------------------------------------------------------------
CONCERNING THE "MAXIMUM DOLLAR AMOUNT".  The first paragraph of Section 1 of the
--------------------------------------
Schedule to the Loan Agreement concerning the "Maximum Dollar Amount" is hereby
amended by deleting such first paragraph in its entirety and replacing it with
the following:

     "Loans in a total amount at any time outstanding not to exceed Three
     Million Dollars ($3,000,000) (the "Maximum Dollar Amount") consisting of
     Outsourcing Contract Loans (as hereinafter defined), Transcription Services
     Receivable Loans (as hereinafter defined), Transcription Services Contract
     Loans (as hereinafter defined) and Capital Expenditure Loans (as
     hereinafter defined)."

     Section 2.  AMENDMENT TO THE SECOND PARAGRAPH OF SECTION 2 OF THE SCHEDULE
                 --------------------------------------------------------------
TO THE LOAN AGREEMENT CONCERNING THE "MINIMUM MONTHLY INTEREST". The second
---------------------------------------------------------------
paragraph of Section 2 of the Schedule to the Loan Agreement concerning the
"Minimum Monthly Interest" is hereby amended by deleting such second paragraph
in its entirety and replacing it with the following:

     "An amount per month equal to fifty percent (50%) of the product of the
     Maximum Dollar Amount times the Prime Rate plus the Applicable Margin in
     effect for the month of determination of the Minimum Monthly Interest."

     Section 3.  AMENDMENT TO SECTION 3 OF THE SCHEDULE TO THE LOAN AGREEMENT
                 ------------------------------------------------------------
CONCERNING THE "FACILITY FEE".  Section 3 of the Schedule to the Loan Agreement
-----------------------------
concerning the "Facility Fee" is hereby amended by deleting the existing
Facility Fee provision and replacing it with the following:

     "Facility Fee:  Two Thousand Five Hundred Dollars ($2,500) per calendar
                     quarter, payable in advance of the first Business Day of
                     each calendar quarter."

     Section 4.  CONDITION PRECEDENT.  The effectiveness of this Amendment is
                 -------------------
expressly conditioned upon the receipt by Coast of a fully executed copy of this
Amendment.

     Section 5.  ENTIRE AGREEMENT.  The Loan Agreement, as amended hereby,
                 ----------------
embodies the entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the subject
matter hereof. Borrower represents, warrants and agrees that in entering into
the Loan Agreement and consenting to this Amendment, it has not relied on any
representation, promise, understanding or agreement, oral or

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written, of, by or with, Coast or any of its agents, employees, or counsel,
except the representations, promises, understandings and agreements specifically
contained in or referred to in the Loan Agreement, as amended hereby.

    Section 6.   CONFLICTING TERMS.  In the event of a conflict between the
                 -----------------
terms and provisions of this Amendment and the terms and provisions of the Loan
Agreement, the terms of this Amendment shall govern. In all other respects, the
Loan Agreement, as amended and supplemented hereby, shall remain in full force
and effect.

    Section 7.   MISCELLANEOUS.  This Amendment shall be governed by and
                 -------------
construed in accordance with the laws of the State of California. This Amendment
may be executed in any number of counterparts, all of which taken together shall
constitute one agreement, and any party hereto may execute this Amendment by
signing such counterpart.

        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
date first above written.

                                            BORROWER:

                                            TRANSCEND SERVICES, INC.,
                                            a Delaware corporation

                                            By  /s/ Larry G. Gerdes
                                                -------------------
                                                    President
                                            By  /s/ Doug Shamon
                                                ---------------
                                                    Secretary
                                            COAST:

                                            COAST BUSINESS CREDIT,
                                            a division of Southern Pacific Bank

                                            By  /s/ Phoebe Holden
                                                -----------------
                                            Title  Account Executive, AVP
                                            -----------------------------
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                             CONSENT OF GUARANTOR

          The undersigned, as guarantor of the Obligations (as defined in that
certain Loan and Security Agreement, dated as of April 3, 1997, (as amended,
together with all supplements, addenda, exhibits and schedules thereto, the
"Agreement"), entered into by and between Coast Business Credit, a division of
Southern Pacific Bank, a California corporation ("Coast"), and Transcend
Services, Inc., a Delaware corporation ("Borrowers"), under its Continuing
Guaranty, dated as of April 3, 1997, entered into by the undersigned (the
"Guaranty"), hereby acknowledges notice of the foregoing Amendment Number Four
to Loan and Security Agreement, dated as of May 9, 2000 (the "Amendment"),
between Coast and Borrower, consents to the terms contained therein, and agrees
that its Continuing Guaranty shall remain in full force and effect.

Dated as of May 9, 2000                      SULLIVAN HEALTH MANAGEMENT
                                             SERVICES, INC.,
                                             a Georgia corporation

                                             By  /s/ Doug Shamon
                                                 ---------------

                                             Title  CFO
                                                    ---<PAGE>

                                PROMISSORY NOTE

$800,000                                                         August 14, 2000

     FOR VALUE RECEIVED, the undersigned TRANSCEND SERVICES, INC., a Delaware
corporation ("Maker"), promises to pay on or before the Due Date (as hereinafter
defined) to the order of WALTER S. HUFF, JR. ("Holder") at such place or manner
as the Holder may from time to time designate in writing, in lawful money of the
United States of America, the principal sum of EIGHT HUNDRED THOUSAND AND NO/100
DOLLARS ($800,000) together with interest from and after the date hereof on the
principal balance, at the rate of ten and seventy-five hundredths percent
(10.75%) simple interest per annum calculated on a 365 day year.

     The entire outstanding principal balance with all accrued but unpaid
interest thereon shall be due and payable upon the first to occur of (i) ninety
(90) days from the date hereof, or (ii) the closing of that certain Asset
Purchase Agreement by and between the Company and Provider HealthNet Services,
Inc. (the "Due Date").

     This Note and all payments due hereunder shall be subordinate to any
commercial debt owed by Maker to a third party where the lack of such
subordination would cause a default by Maker under the terms and conditions of
the agreement providing for such commercial debt.

     Maker may prepay this Note in whole or in part at any time, and from time-
to-time without penalty or premium.  Payments under this Note shall be applied,
first, to Costs of Collection as defined herein, and then to interest due
hereunder if any, and then to principal.

     This Note is with full recourse to Maker.

     In the event that all sums owing hereunder by the Company are not paid to
Holder within five (5) days after the Due Date, interest thereon shall accrue on
the outstanding principal balance and interest beginning on the date of such
default at the maximum legal rate of the State of Georgia and together with
Costs of Collection (said Costs of Collection to be added to the principal due
hereunder, with interest due thereon).  Holder may proceed to collect such
obligations forthwith and may also immediately exercise all other remedies
hereunder and at law which may be available to Holder.

     In no contingency or event whatsoever, whether by reason of advancement of
the proceeds hereof or otherwise, shall the amount paid or agreed to be paid to
Holder for the use, forbearance or detention of money due hereunder exceed the
highest lawful rate permissible under any law which a court of competent
jurisdiction may deem applicable hereto; and, in the event any such payment is
inadvertently paid by Maker or inadvertently received by Holder, such excess sum
shall be, at Maker's option, returned to Maker forthwith or credited as a
payment of principal or Costs of Collection, but shall not be applied to the
payment of interest.  It is the intent hereof that Maker not pay or contract to
pay, and that Holder not receive or contract to receive, directly or indirectly
in any manner whatsoever, interest in excess of that which may be paid by Maker
under applicable law.

     No delay or omission by Holder in exercising any right shall operate as a
waiver of such right or any other right at any other time.  Holder shall not be
deemed to waive any right unless such waiver is in
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a writing signed by Holder. A waiver in writing on one occasion shall not be
construed as a waiver of any right at any other time. Maker expressly waives any
defense of estoppel related to any delay or omission by Holder in exercising any
right or any waiver by Holder of any right.

     MAKER, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS AND ALL OTHER PERSONS
LIABLE FOR THE PAYMENT OF THIS NOTE, WAIVES PRESENTMENT FOR PAYMENT, DEMAND,
PROTEST, AND NOTICE OF NONPAYMENT, NOTICE OF DISHONOR, AND ANY OTHER NOTICES TO
WHICH MAKER MAY OTHERWISE BE ENTITLED, AND CONSENTS TO ANY AND ALL RENEWALS,
EXTENSIONS, OR MODIFICATIONS THAT MIGHT BE MADE BY HOLDER AS TO THE TIME OF
PAYMENT OF THIS NOTE FROM TIME TO TIME.

     This Note shall be governed by the laws of the State of Georgia.  In the
event of legal action related to this Note, including without limitation any
legal action related to the making or enforcement hereof or to the collection of
any sum hereunder, the forum for such legal action shall be the state courts of
the State of Georgia, and the prevailing party shall recover from the non-
prevailing party all costs associated therewith, including its reasonable
attorneys' fees (the "Costs of Collection"). The parties specifically waive
trial by jury.

     The word "Holder" as used herein shall include Holder's transferees,
successors, heirs, personal representatives and assigns, and all rights of
Holder hereunder shall inure to the benefit of such transferees, successors,
heirs, personal representatives and assigns.  All obligations of Maker shall
bind Maker's transferees, successors and assigns.

     Time is of the essence with respect to Maker's obligations hereunder.

     SIGNED, SEALED, AND DELIVERED by the undersigned as of the day and year
first written above.

                                    MAKER:

                                    TRANSCEND SERVICES, INC.

                                    By:  /s/ Larry G. Gerdes
                                         --------------------------
                                         Larry G. Gerdes,
                                         Chief Executive Officer

Attest:

By:   /s/ Douglas A. Shamon
     ---------------------------
     Douglas A.  Shamon,
     Executive Vice President
     Chief Financial Officer
     Secretary

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