Transcend Services (TRCR)

MISCELLANEOUS

Section 13.1 Survival of Representations and Warranties. All of the representations and warranties made herein shall survive the execution and delivery of this Agreement until the eighteen (18) month anniversary of the Closing Date; provided that: (a) each of the Specified Representations shall survive until the five (5) year anniversary of the Closing Date. Any representation or warranty in respect of which indemnity may be sought under Article IX hereof, and the indemnity with respect thereto, shall survive the time at which it would otherwise terminate pursuant to this Section 13.1 if written notice of the inaccuracy or breach thereof giving rise to such right or potential right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time, and in any such case such representation or warranty shall survive until any claim for indemnity related to such inaccuracy or breach is resolved. The representations and warranties contained in this Agreement or in any certificate or other writing delivered in connection with this Agreement shall in no event be affected by any investigation, inquiry or examination made for or on behalf of any party, or the knowledge of any party’s officers, directors, employees, representatives, consultants, agents, or advisors or the acceptance by any party of any certificate or opinion hereunder.

Section 13.2 Treatment of Indemnity Payment. It is the intention of the parties to treat any indemnity payment made under this Agreement as an adjustment to the purchase price for all federal, state, local and foreign Tax purposes, and the parties agree to file their Tax Returns accordingly.

Section 13.3 Interpretation. Any statute, regulation, or other law defined or referred to herein (or in any agreement or instrument that is referred to herein) means such statute, regulation or other law as, from time to time, may be amended, modified or supplemented, including (in the case of statutes) by succession of comparable successor statutes. References to a person also refer to its predecessors and permitted successors and assigns.

- 51 -

Section 13.4 Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery:

if to the Seller, to:

2910 Edgewater Drive

Edgewater, Maryland 21037

Attention: Dorothy Fitzgerald

with a copy (which shall not constitute notice) to:

Baxter, Baker, Sidle, Conn & Jones, P.A.

120 E. Baltimore Street, Suite 2100

Baltimore, MD 21202

Telecopy: (410) 230-3800

Attention: Daryl J. Sidle, Esq.

if to the Purchaser:

Transcend Services, Inc.

One Glenlake Parkway

Suite 1325

Atlanta, Georgia 30328

Fax: (678) 808-0601

Attention: Mr. Lance Cornell, CFO

with a copy to:

Womble Carlyle Sandridge & Rice, PLLC

271 17^th Street, NW

Suite 2400

Atlanta, GA 30363

Fax: (404) 962-7574

Attention: John F. Sandy Smith, Esq.

All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial courier service; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied. Any party may by notice given in accordance with this Section 13.4 designate another address or Person for receipt of notices hereunder.

- 52 -

Section 13.5 Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. Subject to applicable securities laws and the terms and conditions thereof, the Purchaser may assign any of its rights under this Agreement or the other Transaction Documents to any of its Affiliates. The Seller may not assign any of its rights under this Agreement without the written consent of the Purchaser. Except as provided in Article IX, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

Section 13.6 Amendment and Waiver.

(a) No failure or delay on the part of the Seller or the Purchaser in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Seller or the Purchaser at law, in equity or otherwise.

(b) Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Seller or the Purchaser from the terms of any provision of this Agreement, shall be effective (i) only if it is made or given in writing and signed by the Seller and the Purchaser and (ii) only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Seller in any case shall entitle the Seller to any other or further notice or demand in similar or other circumstances.

Section 13.7 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

Section 13.8 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

Section 13.9 Governing Law; Consent To Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. The parties hereto irrevocably submit to the exclusive jurisdiction of any state or federal court sitting in the County of Fulton, in the State of Georgia over any suit, action or proceeding arising out of or relating to this Agreement, the other Transaction Documents, the Purchased Shares or the affairs of the Company. To the fullest extent they may effectively do so under applicable law, the parties hereto irrevocably waive and agree not to assert, by way of motion, as a defense or otherwise, any claim that they are not subject to the jurisdiction of any such court, any objection that they may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

- 53 -

Section 13.10 Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.

Section 13.11 Rules of Construction. Unless the context otherwise requires, references to sections or subsections refer to sections or subsections of this Agreement.

Section 13.12 Entire Agreement. This Agreement, together with the exhibits and schedules hereto, and the other Transaction Documents are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement, together with the exhibits and schedules hereto, and the other Transaction Documents supersede all prior agreements and understandings between the parties with respect to such subject matter.

Section 13.13 Further Assurances. Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or making any filings with, any Governmental Authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.

11. Miscellaneous.

11.1. Brokers’ Commission. Pursuant to an Engagement Letter, dated November 22, 2008, Seller engaged Everingham & Kerr, Inc. to act as its broker in connection with this transaction, and Seller shall be responsible for payment of a brokerage fee to Everingham & Kerr, Inc at Closing in accordance with the terms of such Engagement Letter. In addition, pursuant to a Letter of Understanding dated July 23, 2008, Purchaser is also responsible to pay Everingham & Kerr a fee in connection with this transaction at the Closing. Each party shall be responsible to pay only it’s contractually agreed upon fee pursuant to the foregoing Engagement Letter and Letter of Understanding, respectively, and each Party agrees to indemnify the other against all Losses arising out of claims for fees or commissions of brokers employed or alleged to have been employed by such Party.

11.2. Amendment and Modification. The Parties hereto may amend, modify and supplement this Agreement in such manner as may be agreed upon by them in writing.

11.3. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors, assigns, heirs and legal representatives. This Agreement may not be assigned by Purchaser except to another corporation controlled by or under common control with Purchaser. In any such event, Purchaser shall remain directly liable for all undertakings and obligations hereunder. This Agreement may not be assigned by Seller and the Member.

11.4. Entire Agreement. This Agreement and the exhibits and schedules attached hereto contain the entire agreement of the Parties hereto with respect to the purchase of the Purchased Assets and the other transactions contemplated herein, and supersede all prior understandings and agreements of the Parties with respect to the subject matter hereof. Any reference herein to this Agreement shall be deemed to include the schedules and exhibits attached hereto.

11.5. Headings. The descriptive headings in this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

11.6. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together will constitute one and the same instrument.

11.7. Notices. All notices and communications required or permitted hereunder shall be in writing and may be given by depositing the same in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified, return receipt requested (to be deemed received after three (3) Business Days after transmittal (whether accepted or refused) and personal delivery upon delivery) or overnight commercial transmittal service (to be deemed received after one (1) Business Day of transmittal) or by facsimile or hand delivery of the same in person to an officer or agent of such party (to be deemed received immediately upon delivery), as follows:

Transcend Services, Inc.

One Glenlake Parkway, Suite 1325

Atlanta, Georgia 30328

Facsimile: (678) 808-0601

Attention: Mr. Lance Cornell, CFO

with a copy to:

Morris, Manning & Martin, L.L.P.

1600 Atlanta Financial Center

3343 Peachtree Road, N.E.

Atlanta, Georgia 30326

Attn.: John F. “Sandy” Smith, Esq.

          Bernard H. Coleman, Jr., Esq.

Facsimile: (404) 365-9532

Robert H. Harvey

628 Green Valley Road

Suite 300

Greensboro, NC 27408

Facsimile: 336-274-9502

With a copy to:

Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P.

230 North Elm Street, Suite 2000

Greensboro, North Carolina 27401

Attn: J. Lee Lloyd and John M. Cross, Jr.

Facsimile: (336) 232-9120 and (336) 232-9196

or to such other address as any party hereto shall specify pursuant to this Section from time to time.

11.8. No Third Party Beneficiaries. No Person not a party to this Agreement shall have rights under this Agreement as a third party beneficiary or otherwise.

11.9. Exercise of Rights and Remedies. Except as otherwise provided herein, no delay of or omission in the exercise of any right, power or remedy accruing to any party as a result of any breach or default by any other party under this Agreement shall impair any such right, power or remedy, nor shall it be construed as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default occurring before or after that waiver.

11.10. Time. Time is of the essence with respect to this Agreement.

11.11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and to be performed herein. No provision of this Agreement or any related document shall be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured or drafted such provision.

11.12. Certain Definitions. The Parties agree that: (a) “pending” means that notice of the act or omission or fact or circumstance with respect to which such term is used has been received by the Person with respect to which such term is used; (b) “threatened” means any act that would cause one reasonably to believe that the act, omission, fact or circumstance with respect to which such word is used is likely to occur; and (c) the word “include”, “includes”, and “including” when used in this Agreement shall be deemed to be followed by the words “without limitation”, unless otherwise specified. A reference to any party to this Agreement or any other agreement or document shall include such party’s predecessors, successors and permitted assigns. Reference to any Law means such Law as amended, modified, codified, replaced or reenacted, and all rules and regulations promulgated thereunder. All accounting terms used and not defined herein shall have the respective meanings given to them under GAAP.

11.13. Number and Gender of Words. Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender shall include each other gender where appropriate.

11.14. Invalid Provisions. If any provision of this Agreement that is not essential to accomplishing its purposes is held to be illegal, invalid, or unenforceable under present or future laws, such provisions shall be fully severable as if such invalid or unenforceable provisions had never comprised a part of the Agreement; and the remaining provisions of the Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be automatically as a part of this Agreement, a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

11.15. No Rule of Construction. All of the Parties hereto have been represented by counsel in the negotiations and preparation of this Agreement; therefore, this Agreement will be deemed to be drafted by each of the Parties hereto, and no rule of construction will be invoked respecting the authorship of this Agreement.

MISCELLANEOUS

If to McGrogan to:

Susan McGrogan

10109 Cortez Boulevard

Brooksville, FL 34613

Facsimile: 352-596-3326

4

If to the Company to:

Transcend Services, Inc.

945 East Paces Ferry Road, Suite 1475

Atlanta, Georgia 30326

Facsimile: (404) 364-8009

Attention: Chief Executive Officer

With a copy in like manner (which shall not constitute notice) to:

Smith, Gambrell & Russell, LLP

1230 Peachtree Street, N.E.

Suite 3100, Promenade II

Atlanta, Georgia 30309-3592

Facsimile: (404) 685-6923

Attention: Richard G. Greenstein, Esq.

Each party may change its address for the giving of notices and communications to it, and/or copies thereof, by written notice to the other party in conformity with the foregoing.

[Signatures appear on the following page]

5

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

6

EXHIBIT A

FORM OF WRITTEN NOTICE

The undersigned, Susan McGrogan (“McGrogan”), hereby expresses McGrogan’s intent to exercise an option (the “Option”) to purchase shares of the Common Stock, par value $0.05 per share, of Transcend Services, Inc. (the “Company”) granted to McGrogan by the Company pursuant to that certain Option Agreement to Purchase Stock dated as of                          by and between McGrogan and the Company, subject to the terms and conditions contained therein (the “Option Agreement”).

McGrogan hereby (i) tenders to the Company the sum of One Hundred Thousand Dollars ($100,000) reduced for fractional shares in immediately available funds (ii) further agrees that the outstanding principal balance of that certain Promissory Note in favor of McGrogan dated January 31, 2005 in the original principal amount of $3,500,000 shall be reduced by an amount equal to One Hundred Thousand Dollars ($100,000) on the Effective Date of Exercise in payment for the exercise of this Option, and (iii) that for purposes of principal payments due under the terms of the Promissory Note, the aforesaid $100,000 shall be deducted from the principal amount which would otherwise be due on the Promissory Note on the next payment date under Section 1.2 of the Promissory Note.

Capitalized terms used in this document not otherwise defined shall have the meaning ascribed to them in the Option Agreement.

7