Document:

Exhibit 10.13

AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

OPTIO SOFTWARE, INC.

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
  Page

  
	
  1

  	
  ACCOUNTING AND OTHER TERMS

  	
   

  	
  5

  
	
  2

  	
  LOAN AND TERMS OF PAYMENT

  	
   

  	
  5

  
	
   

  	
  2.1

  	
  Promise to Pay

  	
   

  	
  5

  
	
   

  	
  2.2

  	
  Overadvances

  	
   

  	
  6

  
	
   

  	
  2.3

  	
  Interest Rate, Payments

  	
   

  	
  6

  
	
   

  	
  2.4

  	
  Fees

  	
   

  	
  6

  
	
  3

  	
  CONDITIONS OF LOANS

  	
   

  	
  7

  
	
   

  	
  3.1

  	
  Conditions Precedent to Initial Credit Extension

  	
   

  	
  7

  
	
   

  	
  3.2

  	
  Conditions Precedent to all Credit Extensions

  	
   

  	
  7

  
	
  4

  	
  CREATION OF SECURITY INTEREST

  	
   

  	
  7

  
	
   

  	
  4.1

  	
  Grant of Security Interest

  	
   

  	
  7

  
	
  5

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  7

  
	
   

  	
  5.1

  	
  Due Organization and Authorization

  	
   

  	
  7

  
	
   

  	
  5.2

  	
  Collateral

  	
   

  	
  8

  
	
   

  	
  5.3

  	
  Litigation

  	
   

  	
  8

  
	
   

  	
  5.4

  	
  No Material Adverse Change in Financial Statements

  	
   

  	
  8

  
	
   

  	
  5.5

  	
  Solvency

  	
   

  	
  8

  
	
   

  	
  5.6

  	
  Regulatory Compliance

  	
   

  	
  8

  
	
   

  	
  5.7

  	
  Subsidiaries

  	
   

  	
  9

  
	
   

  	
  5.8

  	
  Deposit Accounts.

  	
   

  	
  9

  
	
   

  	
  5.9

  	
  Tax Returns and Payments; Pension Contributions.

  	
   

  	
  9

  
	
   

  	
  5.10

  	
  Use of Proceeds

  	
   

  	
  9

  
	
   

  	
  5.11

  	
  Full Disclosure

  	
   

  	
  9

  
	
  6

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  10

  
	
   

  	
  6.1

  	
  Government Compliance

  	
   

  	
  10

  
	
   

  	
  6.2

  	
  Financial Statements, Reports, Certificates

  	
   

  	
  10

  
	
   

  	
  6.3

  	
  Inventory; Returns

  	
   

  	
  10

  
	
   

  	
  6.4

  	
  Taxes

  	
   

  	
  10

  
	
   

  	
  6.5

  	
  Insurance

  	
   

  	
  11

  
	
   

  	
  6.6

  	
  Primary Accounts

  	
   

  	
  11

  
	
   

  	
  6.7

  	
  Financial Covenants

  	
   

  	
  11

  
	
   

  	
  6.8

  	
  Litigation Cooperation

  	
   

  	
  11

  
	
   

  	
  6.9

  	
  Further Assurances

  	
   

  	
  12

  
	
  7

  	
  NEGATIVE COVENANTS

  	
   

  	
  12

  
	
   

  	
  7.1

  	
  Dispositions

  	
   

  	
  12

  
	
   

  	
  7.2

  	
  Changes in Business, Ownership, Management or
  Business Locations

  	
   

  	
  12

  
	
   

  	
  7.3

  	
  Mergers or Acquisitions

  	
   

  	
  12

  
	
   

  	
  7.4

  	
  Indebtedness

  	
   

  	
  12

  

 2
 

 

	
  

  	
  7.5

  	
  Encumbrance

  	
   

  	
  12

  
	
   

  	
  7.6

  	
  Distributions; Investments

  	
   

  	
  12

  
	
   

  	
  7.7

  	
  Transactions with Affiliates

  	
   

  	
  13

  
	
   

  	
  7.8

  	
  Subordinated Debt

  	
   

  	
  13

  
	
   

  	
  7.9

  	
  Compliance

  	
   

  	
  13

  
	
  8

  	
  EVENTS OF DEFAULT

  	
   

  	
  13

  
	
   

  	
  8.1

  	
  Payment Default

  	
   

  	
  13

  
	
   

  	
  8.2

  	
  Covenant Default

  	
   

  	
  13

  
	
   

  	
  8.3

  	
  Material Adverse Change

  	
   

  	
  13

  
	
   

  	
  8.4

  	
  Attachment

  	
   

  	
  13

  
	
   

  	
  8.5

  	
  Insolvency

  	
   

  	
  14

  
	
   

  	
  8.6

  	
  Other Agreements

  	
   

  	
  14

  
	
   

  	
  8.7

  	
  Judgments

  	
   

  	
  14

  
	
   

  	
  8.8

  	
  Misrepresentations

  	
   

  	
  14

  
	
   

  	
  8.9

  	
  Guaranty

  	
   

  	
  14

  
	
  9

  	
  BANK’S RIGHTS AND REMEDIES

  	
   

  	
  14

  
	
   

  	
  9.1

  	
  Rights and Remedies

  	
   

  	
  14

  
	
   

  	
  9.2

  	
  Power of Attorney

  	
   

  	
  15

  
	
   

  	
  9.3

  	
  Accounts Collection

  	
   

  	
  15

  
	
   

  	
  9.4

  	
  Bank Expenses

  	
   

  	
  15

  
	
   

  	
  9.5

  	
  Application of Payments and Proceeds

  	
   

  	
  15

  
	
   

  	
  9.6

  	
  Bank’s Liability for Collateral

  	
   

  	
  16

  
	
   

  	
  9.7

  	
  Remedies Cumulative

  	
   

  	
  16

  
	
   

  	
  9.8

  	
  Demand Waiver

  	
   

  	
  16

  
	
  10

  	
  NOTICES

  	
   

  	
  16

  
	
  11

  	
  CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER

  	
   

  	
  17

  
	
  12

  	
  GENERAL PROVISIONS

  	
   

  	
  17

  
	
   

  	
  12.1

  	
  Successors and Assigns

  	
   

  	
  17

  
	
   

  	
  12.2

  	
  Indemnification

  	
   

  	
  17

  
	
   

  	
  12.3

  	
  Time of Essence

  	
   

  	
  17

  
	
   

  	
  12.4

  	
  Severability of Provision

  	
   

  	
  17

  
	
   

  	
  12.5

  	
  Amendments in Writing, Integration

  	
   

  	
  17

  
	
   

  	
  12.6

  	
  Counterparts

  	
   

  	
  17

  
	
   

  	
  12.7

  	
  Survival

  	
   

  	
  18

  
	
   

  	
  12.8

  	
  Confidentiality

  	
   

  	
  18

  
	
   

  	
  12.9

  	
  Attorneys’ Fees, Costs and Expenses

  	
   

  	
  18

  
	
  13

  	
  DEFINITIONS

  	
   

  	
  18

  
	
   

  	
  13.1

  	
  Definitions

  	
   

  	
  18

  

 

 3

This AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT dated as of April 20,
2007, between SILICON VALLEY BANK (“Bank”), a California corporation whose
address is 3353 Peachtree Rd., Suite M-10, Atlanta, GA  30326 and OPTIO SOFTWARE, INC. (“Borrower”),
a Georgia corporation whose address is 3015 Windward Plaza, Fairways II,
Alpharetta, GA  30005, provides the terms
on which Bank will lend to Borrower and Borrower will repay Bank. This Loan
Agreement amends and restates that certain Loan and Security Agreement between
the parties, dated April 25, 2002 in its entirety. The parties agree as
follows:

1                                                        ACCOUNTING
AND OTHER TERMS

Accounting terms not
defined in this Agreement will be construed following GAAP. Calculations and
determinations must be made following GAAP. The term “financial statements”
includes the notes and schedules. The terms “including” and “includes” always
mean “including (or includes) without limitation,” in this or any Loan
Document. Capitalized terms not otherwise defined in this Agreement shall have
the meanings set forth in Section 13. All other terms contained in this
Agreement, unless otherwise indicated, shall have the meaning provided by the
Code to the extent such terms are defined therein.

2                                                        LOAN
AND TERMS OF PAYMENT

2.1                                              Promise
to Pay.

Borrower hereby
unconditionally promises to pay Bank the outstanding principal amount of all
Credit Extensions and accrued and unpaid interest thereon as and when due in
accordance with this Agreement.

2.1.1                                    Revolving
Advances.

(a)   Bank will make Advances not exceeding (i) the lesser of (A) the
Committed Revolving Line or (B) the Borrowing Base minus (ii) any
amounts used for Cash Management Services. Amounts borrowed under this Section may
be repaid and reborrowed during the term of this Agreement.

(b)   To obtain an Advance, Borrower must notify Bank by facsimile or
telephone by 3:00 p.m. Eastern time on the Business Day the Advance is to
be made. Borrower must promptly confirm the notification by delivering to Bank
the Payment/Advance Form attached as Exhibit B (the “Payment/Advance
Form”). Bank will credit Advances to Borrower’s deposit account. Bank may make
Advances under this Agreement based on instructions from a Responsible Officer
or his or her designee or without instructions if the Advances are necessary to
meet Obligations which have become due. For purposes of this Section 2.1.1(b),
Bank may rely on any telephone notice given by a person whom Bank reasonably
believes is a Responsible Officer or designee. Borrower will indemnify Bank for
any loss Bank suffers due to such reliance.

(c)   The Committed Revolving Line terminates on the Revolving Maturity
Date, when all Advances are immediately payable.

(d)   Bank’s obligation to lend the undisbursed portion of the
Obligations will terminate if, in Bank’s sole but reasonable discretion, there
has been a material adverse change in the general affairs, management, results
of operation, condition (financial or otherwise) or the prospect of repayment
of the Obligations, or there has been any material adverse deviation by
Borrower from the most recent business plan of Borrower presented to and
accepted by Bank prior to the execution of this Agreement.

2.1.2                                    Cash
Management Services Sublimit.

Borrower may use up to
Fifty Thousand Dollars ($50,000) of the Revolving Line for Bank’s cash
management services which may include merchant services, direct deposit of
payroll, business credit card, and check cashing services identified in Bank’s
various cash management services agreements (collectively, the “Cash Management
Services”). Any amounts used by Borrower for Cash Management Services will be
treated as Advances under the Revolving Line, will accrue interest at the
interest rate applicable to Advances, and will reduce the amount otherwise
available for Credit Extensions thereunder.

 4
 

2.2                                              Overadvances.

If Borrower’s Obligations
under Section 2.1.1 and 2.1.2 exceed the lesser of either (i)  the
Committed Revolving Line or (ii) the Borrowing Base, Borrower shall
immediately, upon
determining that there is an overage, but no later than upon delivery of the
Borrowing Base Certificate in accordance with Section 6.2(b), pay
Bank the excess.

2.3                                              Interest
Rate, Payments.

(a)   Interest Rate. So long as Borrower’s Quick Ratio exceeds
2.00:1.00, Advances shall accrue interest on the outstanding principal balance
at a floating per annum rate equal to the Prime Rate. From and after any month
where Borrower’s Quick Ratio is less than 2.00:1.00 and continuing until such
time as Borrower’s Quick Ratio exceeds 2.00:1.00, Advances shall accrue
interest on the outstanding principal balance at a floating per annum rate
equal of 0.75 percentage points above the Prime Rate. After an Event of
Default, Obligations accrue interest at 5 percent above the rate effective
immediately before the Event of Default. The interest rate increases or
decreases when the Prime Rate changes. Interest is computed on a 360 day year
for the actual number of days elapsed.

(b)   Payments. Interest due on the Committed Revolving Line is payable
on the first Business Day of each month. Bank may debit any of Borrower’s
deposit accounts including Account Number 3300293105 for principal and interest payments owing or any
amounts Borrower owes Bank. Bank will promptly notify Borrower when it debits
Borrower’s accounts. These debits are not a set-off. Payments received after
2:00 p.m. Eastern time are considered received at the opening of business
on the next Business Day. When a payment is due on a day that is not a Business
Day, the payment is due the next Business Day and additional interest accrues.

(c)   Agreements Regarding Interest and Other Charges.  Borrower and the Bank agree that the only
charges imposed or to be imposed by Bank upon Borrower for the use of money in
connection with the Obligations is and will be the interest required to be paid
under the provisions of this Agreement as well as the related provisions of the
Loan Documents. The amount of interest due and payable under this Agreement or
the Loan Documents will not exceed the maximum rate of interest allowed by
applicable law and, if any payment is made by Borrower or received by Bank in
excess of such payment, such sum shall be credited as a payment of principal. It
is the express intent that Borrower not pay and the Bank not receive, directly
or indirectly or in any manner, interest in excess of that which may be
lawfully paid under applicable law. All interest and other charges, fees or
other amounts deemed to be interest which are paid or agreed to be paid to Bank
under this Agreement or the Loan Documents shall, to the maximum extent
permitted by applicable law, be amortized, allocated and spread on a pro-rata basis throughout the entire actual term of the
Obligations. Any and all fees payable under this Agreement are not intended,
and will not be deemed to be interest or a charge for use of money, but rather
will constitute an “other charge” within the meaning of O.C.G.A. §7-4-2(a)(1).

2.4                                              Fees.

Borrower
will pay:

(a)   Facility Fee. A fully earned, non-refundable facility fee of
$15,000 for the Committed Revolving Line; and

(b)   Bank Expenses. All Bank Expenses (including reasonable attorneys’
fees and reasonable expenses) incurred through and after the date of this
Agreement, are payable when due.

 5
 

3                                                        CONDITIONS
OF LOANS

3.1                                              Conditions
Precedent to Initial Credit Extension.

Bank’s obligation to make
the initial Credit Extension is subject to the condition precedent that it
receive the agreements, documents and fees required hereunder, as well as
verification of its first priority interest in the Collateral.

3.2                                              Conditions
Precedent to all Credit Extensions.

Bank’s
obligations to make each Credit Extension, including the initial Credit
Extension, is subject to the following:

(a)   timely receipt of any Payment/Advance Form;

(b)   the representations and warranties in Section 5, to the
knowledge of Borrower, must be materially true on the date of the
Payment/Advance Form and on the effective date of each Credit Extension
and no Event of Default may have occurred and be continuing, or result from the
Credit Extension. Each Credit Extension is Borrower’s representation and
warranty on that date that the representations and warranties of Section 5
remain true; and

(c)   in Bank’s sole discretion, there has not been a Material Adverse
Change.

4                                                        CREATION
OF SECURITY INTEREST

4.1                                              Grant
of Security Interest.

Borrower grants Bank a
continuing security interest in all presently existing and later acquired
Collateral to secure all Obligations and performance of each of Borrower’s
duties under the Loan Documents. Except for Permitted Liens, any security
interest will be a first priority security interest in the Collateral. Bank may
place a “hold” on any deposit account pledged as Collateral; provided, however,
that such “hold” shall be limited to the outstanding amount of Obligations, and
any balances in such deposit accounts in excess of such Obligations shall not
be held by Bank and shall be available for Borrower’s use. If this Agreement is
terminated, Bank’s lien and security interest in the Collateral will continue
until Borrower fully satisfies its Obligations.

5                                                        REPRESENTATIONS
AND WARRANTIES

Borrower
represents and warrants as follows:

5.1                                              Due
Organization and Authorization.

Borrower and each
Subsidiary is duly existing and in good standing in its state of formation and
qualified and licensed to do business in, and in good standing in, any state in
which the conduct of its business or its ownership of property requires that it
be qualified, except where the failure to do so could not reasonably be
expected to cause a Material Adverse Change. In connection with this Agreement,
Borrower has delivered to Bank a completed certificate signed by Borrower,
entitled “Perfection Certificate”. Borrower represents and warrants to Bank
that (a) Borrower’s exact legal name is that indicated on the Perfection
Certificate and on the signature page hereof; (b) Borrower is an
organization of the type and is organized in the jurisdiction set forth in the
Perfection Certificate; (c) the Perfection Certificate accurately sets
forth Borrower’s organizational identification number or accurately states that
Borrower has none; (d) the Perfection Certificate accurately sets forth
Borrower’s place of business, or, if more than one, its chief executive office
as well as Borrower’s mailing address (if different than its chief executive
office); (e) Borrower (and each of its predecessors) has not, in the past
five (5) years, changed its jurisdiction of formation, organizational
structure or type, or any organizational number assigned by its jurisdiction;
and (f) all other information set forth on the Perfection Certificate
pertaining to Borrower and each of its Subsidiaries is accurate and complete (it being understood and agreed that Borrower
may 

 6
 

from time to time update certain information in the
Perfection Certificate after the Effective Date to the extent permitted by one
or more specific provisions in this Agreement).

The execution, delivery
and performance of the Loan Documents have been duly authorized, and do not
conflict with Borrower’s formation documents, nor constitute an event of
default under any material agreement by which Borrower is bound, except where
such default could not reasonably be expected to cause a Material Adverse
Change. Borrower is not in default under any agreement to which or by which it
is bound in which the default could reasonably be expected to cause a Material
Adverse Change.

5.2                                              Collateral.

Borrower has good title to
the Collateral, free of Liens except Permitted Liens. The Accounts are bona
fide, existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. To the knowledge of Borrower’s
Responsible Officers, Borrower has no notice of any actual or imminent
Insolvency Proceeding of any account debtor whose accounts are an Eligible
Account in any Borrowing Base Certificate. All material Inventory is in all
material respects of good and marketable quality, free from material defects.

The Collateral is not in
the possession of any third party bailee (such as a warehouse) except as
otherwise provided in the Perfection Certificate. None of the components of the
Collateral shall be maintained at locations other than as provided in the
Perfection Certificate or as Borrower has given Bank notice pursuant to Section 7.2.
In the event that Borrower, after the date hereof, intends to store or
otherwise deliver any portion of the Collateral to a bailee, then Borrower will
first receive the written consent of Bank and such bailee must execute and
deliver a bailee agreement in form and substance satisfactory to Bank in its
sole discretion.

5.3                                              Litigation.

There are no actions or
proceedings pending or, to the knowledge of Borrower’s Responsible Officers,
threatened by or against Borrower or any Subsidiary in which a likely adverse
decision could reasonably be expected to cause a Material Adverse Change.

5.4                                              No
Material Adverse Change in Financial Statements.

All consolidated financial
statements for Borrower, and any Subsidiary, delivered to Bank fairly present
in all material respects as of the dates of such financial statements, Borrower’s
consolidated financial condition and Borrower’s consolidated results of
operations. There has not been any material deterioration in Borrower’s
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.

5.5                                              Solvency.

The fair salable value of
Borrower’s assets (including goodwill minus disposition costs) exceeds the fair
value of its liabilities; the Borrower is not left with unreasonably small
capital after the transactions in this Agreement; and Borrower is able to pay
its debts (including trade debts) as they mature.

5.6                                              Regulatory
Compliance.

Borrower is not an “investment
company” or a company “controlled” by an “investment company” under the
Investment Company Act. Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations T and U
of the Federal Reserve Board of Governors). Borrower has complied in all
material respects with the Federal Fair Labor Standards Act. Borrower has not
violated any laws, ordinances or rules, the violation of which could reasonably
be expected to cause a Material Adverse Change. None of Borrower’s or any
Subsidiary’s properties or assets has been used by Borrower or any Subsidiary
or, to the best of Borrower’s knowledge, by previous Persons, in disposing, 

 7
 

producing,
storing, treating, or transporting any hazardous substance other than legally. Borrower
and each Subsidiary has timely filed all required tax returns and paid, or made
adequate provision to pay, all material taxes, except those being contested in
good faith with adequate reserves under GAAP. Borrower and each Subsidiary has
obtained all consents, approvals and authorizations of, made all declarations
or filings with, and given all notices to, all government authorities that are
necessary to continue its business as currently conducted, except where the
failure to do so could not reasonably be expected to cause a Material Adverse
Change.

5.7                                              Subsidiaries.

Borrower does not own any
stock, partnership interest or other equity securities except for Permitted
Investments.

5.8                                              Deposit
Accounts.

Borrower will maintain all
of its deposit accounts, operating accounts, and excess investment balances at
or through Bank. Borrower shall have the right to maintain a deposit account
with financial institutions other than Bank for the purpose of making small
incidental deposits with any such financial institutions, so long as such
financial institutions enter into Bank’s standard form of Deposit Account
Control Agreement, as required for Bank to perfect its security interest in
those accounts.

5.9                                              Tax
Returns and Payments; Pension Contributions.

Borrower has timely filed
all required tax returns and reports, and Borrower has timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by
Borrower; other than certain delinquent states sales and income taxes for which
Borrower has maintained adequate reserves and which Borrower is in the process
of remedying. Borrower may defer payment of any contested taxes, provided that
Borrower (a) in good faith contests its obligation to pay the taxes by
appropriate proceedings promptly and diligently instituted and conducted, (b) notifies
Bank in writing of the commencement of, and any material development in, the
proceedings, (c) posts bonds or takes any other steps required to prevent
the governmental authority levying such contested taxes from obtaining a Lien
upon any of the Collateral that is other than a “Permitted Lien”. Borrower is
unaware of any claims or adjustments proposed for any of Borrower’s prior tax
years which could result in additional taxes becoming due and payable by Borrower.
Borrower has paid all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with their terms, and
Borrower has not withdrawn from participation in, and has not permitted partial
or complete termination of, or permitted the occurrence of any other event with
respect to, any such plan which could reasonably be expected to result in any
liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency.

5.10                                       Use
of Proceeds.

Borrower shall use the
proceeds of the Credit Extensions solely as working capital, and to fund its
general business requirements and not for personal, family, household or
agricultural purposes.

5.11                                       Full
Disclosure.

No written representation, warranty or other statement
of Borrower in any certificate or written statement given to Bank (taken
together with all such written certificates and written statements to Bank)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in the certificates or
statements not misleading. It being recognized 
by Bank that the projections and forecasts provided by Borrower in good
faith and based upon reasonable assumptions are not viewed as facts and that
actual results during the period or periods covered by such projections and
forecasts may differ from the projected and forecasted results.

 8

6                                                        AFFIRMATIVE
COVENANTS

Borrower
will do all of the following for so long as Bank has an obligation to lend, or
there are outstanding Obligations:

6.1                                              Government
Compliance.

Borrower will maintain its
and all Subsidiaries’ legal existence and good standing in its jurisdiction of
formation and maintain qualification in each jurisdiction in which the failure
to so qualify would reasonably be expected to cause a material adverse effect
on Borrower’s business or operations. Borrower will comply, and have each Subsidiary
comply, with all laws, ordinances and regulations to which it is subject,
noncompliance with which could reasonably be expected to have a material
adverse effect on Borrower’s business or operations or would reasonably be
expected to cause a Material Adverse Change.

6.2                                              Financial
Statements, Reports, Certificates.

(a)   Borrower
will deliver to Bank:  (i) As soon
as available, but no later than 30 days after the last day of each month, a
company prepared consolidated balance sheet and income statement covering
Borrower’s consolidated operations during the period certified by a Responsible
Officer and in a form reasonably acceptable to Bank and a Compliance
Certificate signed by a Responsible Officer in the form of Exhibit D; (ii) as soon as
available, but no later than 45 days after the last day of each of Borrower’s
fiscal quarters, Borrower’s 10-Q for that quarter and, (iii) as soon
as available, but no later than 90 days after the last day of Borrower’s fiscal
year, audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm reasonably
acceptable to Bank, including any nationally recognized accounting firm, which
firms are hereby deemed reasonably acceptable to Bank, along with Borrower’s 10-K
for that year; (iv) a prompt report of any legal actions pending or
threatened against Borrower or any Subsidiary that could reasonably be expected
to result in damages or costs to Borrower or any Subsidiary of $100,000 or
more; (v) budgets, sales projections, operating plans or other financial
information Bank reasonably requests; and (vi) prompt notice of any
material change in the composition of the Intellectual Property or knowledge of
an event that materially adversely affects the value of the Intellectual
Property.

(b)   Within 30
days after the last day of each month, Borrower will deliver to Bank a
Borrowing Base Certificate signed by a Responsible Officer in the form of Exhibit C, with aged listings of
accounts receivable.

(c)   All reports
on Form 10-K and 10-Q and all financial statements delivered
to Bank pursuant to Section 6.2(a) above shall be accompanied by a
Compliance Certificate.

(d)   Allow Bank, with 5 Business Days’ prior notice (unless an Event of
Default has occurred and is continuing, in which case Bank shall not be
required to give any prior notice), to audit that portion of Borrower’s
Collateral related to Accounts at Borrower’s expense. Such audits will be
conducted no more often than once per year, unless an Event of Default has
occurred and is continuing.

6.3                                              Inventory;
Returns.

Borrower will keep all
material Inventory in good and marketable condition, free from material defects.
Returns and allowances between Borrower and its account debtors will follow
Borrower’s customary practices as they exist at execution of this Agreement. Borrower
must promptly notify Bank of all returns, recoveries, disputes and claims,
that  involve more than $50,000.

 9
 

6.4                                              Taxes.

Borrower will make, and
cause each Subsidiary to make, timely payment of all material federal, state,
and local taxes or assessments (other than taxes and assessments which Borrower
is contesting in good faith, with adequate reserves maintained in accordance
with GAAP) and will deliver to Bank, on demand, appropriate certificates
attesting to the payment.

6.5                                              Insurance.

Borrower will keep its
business and the Collateral insured for risks and in amounts standard for
Borrower’s industry, and as Bank may reasonably request. Insurance policies
will be in a form, with companies, and in amounts that are satisfactory to Bank
in Bank’s reasonable discretion. All property policies will have a lender’s
loss payable endorsement showing Bank as an additional loss payee and, other
than for Errors and Omissions policies, waive subrogation against Bank and all
liability policies will show the Bank as an additional insured and provide that
the insurer must give Bank at least 20 days notice before canceling or
declining to renew its policy. At Bank’s request, Borrower will deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy will, at Bank’s option, be payable to Bank on account
of the Obligations.

6.6                                              Primary
Accounts.

Borrower will maintain its
primary banking relationship with Bank, which relationship shall include
Borrower maintaining account balances in any accounts at or through Bank
representing 100% of all account balances of Borrower at any financial
institution.

6.7                                              Financial
Covenants.

Borrower will
maintain as of the last day of each month:

(i)    Quick Ratio. A monthly ratio of Quick Assets to Current
Liabilities minus Deferred Revenue of at least 2.00 to 1.00.

(ii)   EBITDA. EBITDA,
as of the last day of each month, of no less than:

	
  Asof the last day of:

  	
   

  	
   

  	
   

  	
  Minimum EBITDA:

  	
   

  
	
  March -
  April  2007

  	
   

  	
   

  	
  ($2,000,000

  	
  )

  	
   

  
	
  May 2007

  	
   

  	
   

  	
  ($1,500,000

  	
  )

  	
   

  
	
  June -
  July 2007

  	
   

  	
   

  	
  ($1,000,000

  	
  )

  	
   

  
	
  August 2007
  - January 2008

  	
   

  	
   

  	
  ($250,000

  	
  )

  	
   

  
	
  February 2008 and
  thereafter

  	
   

  	
   

  	
  ($750,000

  	
  )

  	
   

  

6.8                                              Litigation
Cooperation.

From the date hereof and
continuing through the termination of this Agreement, make available to Bank,
without expense to Bank, Borrower and its officers, employees and agents and
Borrower’s books and records, to the extent that Bank may deem them reasonably
necessary to prosecute or defend any third-party suit or proceeding instituted
by or against Bank with respect to any Collateral or relating to Borrower.

6.9                                              Further
Assurances.

Borrower will execute any
further instruments and take further action as Bank reasonably requests to
perfect or continue Bank’s security interest in the Collateral or to effect the
purposes of this Agreement.

 10
 

7                                                        NEGATIVE
COVENANTS

Borrower will not do any
of the following without Bank’s prior written consent, which will not be
unreasonably withheld, for so long as Bank has an obligation to lend or there
are any outstanding Obligations:

7.1                                              Dispositions.

Convey, sell, lease,
transfer or otherwise dispose of (collectively “Transfer”), or permit any of its
Subsidiaries to Transfer, all or any part of its business or any material real
or personal property, including all of Borrower’s Intellectual Property, except  for Transfers (i) of
Inventory in the ordinary course of business; (ii) of non-exclusive licenses
and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business; (iii) of worn-out
or obsolete Equipment; or (iv) Transfers, which, in the aggregate, do not
exceed $75,000 in any fiscal year.

7.2                                              Changes
in Business, Ownership, Management or Business Locations.

Engage in or permit any of
its Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower or reasonably related thereto or have a material change
in its (i) management or (ii) ownership of greater than 25% (other
than by the sale of Borrower’s equity securities in a public or private
offering so long as Borrower identifies any private investors prior to the
closing of the investment, or other than as set forth in Section 7.3,
below). Borrower will not, without at least 30 days prior written notice,
relocate its chief executive office.

7.3                                              Mergers
or Acquisitions.

Merge or consolidate, or
permit any of its Subsidiaries to merge or consolidate, with any other Person,
or acquire, or permit any of its Subsidiaries to acquire, all or substantially
all of the capital stock or property of another Person, except where (i) no
Event of Default has occurred and is continuing or would result from such
action during the term of this Agreement and (ii) such transaction would
not result in a decrease of more than 25% of Tangible Net Worth. A Subsidiary
may merge or consolidate into another Subsidiary or into Borrower.

7.4                                              Indebtedness.

Create, incur, assume, or
be liable for any Indebtedness, or permit any Subsidiary to do so, other than
Permitted Indebtedness.

7.5                                              Encumbrance.

Create, incur, or allow
any Lien on any of its property, or assign or convey any right to receive
income, including the sale of any Accounts, or permit any of its Subsidiaries
to do so, except for Permitted Liens, or permit any Collateral not to be
subject to the first priority security interest granted here, subject to
Permitted Liens.

7.6                                              Distributions;
Investments.

Except as permitted
pursuant to Section 7.3, directly or indirectly acquire or own any Person,
or make any Investment in any Person, other than Permitted Investments, or
permit any of its Subsidiaries to do so. Pay any cash dividends or make any
distribution or redeem, retire or purchase any of Borrower’s capital stock.

 11
 

7.7                                              Transactions
with Affiliates.

Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower except for transactions that are in the ordinary course of Borrower’s
business, upon fair and reasonable terms that are no less favorable to Borrower
than would be obtained in an arm’s length transaction with a non­affiliated
Person.

7.8                                              Subordinated
Debt.

Make or permit any payment
on any Subordinated Debt, except under the terms of the Subordinated Debt, or
amend any provision in any document relating to the Subordinated Debt without
Bank’s prior written consent.

7.9                                              Compliance.

Become an “investment
company” or a company controlled by an “investment company,” under the
Investment Company Act of 1940 or undertake as one of its important activities
extending credit to purchase or carry margin stock, or use the proceeds of any
Credit Extension for that purpose; fail to meet the minimum funding
requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as
defined in ERISA, to occur; fail to comply with the Federal Fair Labor
Standards Act or violate any other law or regulation, if the violation could
reasonably be expected to have a material adverse effect on Borrower’s business
or operations or would reasonably be expected to cause a Material Adverse
Change, or permit any of its Subsidiaries to do so.

8                                                        EVENTS
OF DEFAULT

Any
one of the following is an Event of Default:

8.1                                              Payment
Default.

If Borrower fails to pay
any of the Obligations within 5 days after their due date. During the
additional period the failure to cure the default is not an Event of Default
(but no Credit Extension will be made during the cure period);

8.2                                              Covenant
Default.

If
Borrower does not perform any obligation in Section 6 or violates any
covenant in Section 7, or if Borrower does not perform or observe any
other material term, condition or covenant in this Agreement, any Loan
Documents, or in any agreement between Borrower and Bank and as to any default
under a term, condition or covenant that can be cured, has not cured the
default within 10 days after it occurs, or if the default cannot be cured
within10 days or cannot be cured after Borrower’s attempts within 10 day
period, and the default may be cured within a reasonable time, then Borrower
has an additional period (of not more than 30 days) to attempt to cure the
default. During the additional time, the failure to cure the default is not an
Event of Default (but no Credit Extensions will be made during the cure
period);

8.3                                              Material
Adverse Change.

If
there (i) occurs a material adverse change in the business, operations, or
condition (financial or otherwise) of the Borrower, or (ii) is a material
impairment of the prospect of repayment of any portion of the Obligations or (iii) is
a material impairment of the value or priority of Bank’s security interests in
the Collateral.

 12
 

8.4                                              Attachment.

If any material portion of
Borrower’s assets is attached, seized, levied on, or comes into possession of a
trustee or receiver and the attachment, seizure or levy is not removed in 10
days, or if Borrower is enjoined, restrained, or prevented by court order from
conducting a material part of its business or if a judgment or other claim
becomes a Lien on a material portion of Borrower’s assets, or if a notice of
lien, levy, or assessment is filed against any of Borrower’s assets by any
government agency and not paid within 10 days after Borrower receives notice. These
are not Events of Default if stayed or if a bond is posted pending contest by
Borrower (but no Credit Extensions will be made during the cure period);

8.5                                              Insolvency.

If Borrower becomes
insolvent or if Borrower begins an Insolvency Proceeding or an Insolvency
Proceeding is begun against Borrower and not dismissed or stayed within 30 days
(but no Credit Extensions will be made before any Insolvency Proceeding is
dismissed);

8.6                                              Other
Agreements.

If there is a default in
any agreement between Borrower and a third party that gives the third party the
right to accelerate any Indebtedness exceeding $100,000 or that could cause a
Material Adverse Change;

8.7                                              Judgments.

If a money judgment(s) in
the aggregate of at least $100,000 is rendered against Borrower and is
unsatisfied and unstayed for 10 days (but no Credit Extensions will be made
before the judgment is stayed or satisfied);

8.8                                              Misrepresentations.

If Borrower or any Person
acting for Borrower makes any material misrepresentation or material
misstatement now or later in any warranty or representation in this Agreement
or in any writing delivered to Bank or to induce Bank to enter this Agreement
or any Loan Document; or

8.9                                              Guaranty.

Any guaranty of any
Obligations ceases for any reason to be in full force or any Guarantor does not
perform any obligation under any guaranty of the Obligations, or any material
misrepresentation or material misstatement exists now or later in any warranty
or representation in any guaranty of the Obligations or in any certificate
delivered to Bank in connection with the guaranty, or any circumstance
described in Sections 8.4, 8.5 or 8.7 occurs to any Guarantor.

9                                                        BANK’S
RIGHTS AND REMEDIES

9.1                                              Rights
and Remedies.

When an Event of
Default occurs and continues Bank may, without notice or demand, do any or all
of the following during any such period:

(a)    Declare
all Obligations immediately due and payable (but if an Event of Default
described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Bank);

(b)   Stop
advancing money or extending credit for Borrower’s benefit under this Agreement
or under any other agreement between Borrower and Bank;

(c)    Settle or
adjust disputes and claims directly with account debtors for amounts, on terms
and in any order that Bank considers reasonably advisable;

 13
 

(d)   Make any
payments and do any acts it considers necessary or reasonable to protect its
security interest in the Collateral. Borrower will assemble the Collateral if
Bank requires and make it available as Bank designates. Bank may enter premises
where the Collateral is located, take and maintain possession of any part of
the Collateral, and pay, purchase, contest, or compromise any Lien which
appears to be prior or superior to its security interest and pay all expenses
incurred. Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank’s rights or remedies;

(e)    Apply to
the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any
amount held by Bank owing to or for the credit or the account of Borrower;

(f)    Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell the Collateral. Bank is granted a non-exclusive,
royalty-free license or other right to use, without charge, Borrower’s labels,
Patents, Copyrights, Mask Works, rights of use of any name, trade secrets,
trade names, Trademarks, service marks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section, Borrower’s rights under all licenses
and all franchise agreements (to the extent allowable under such licenses and
agreements) inure to Bank’s benefit; and

(g)    Dispose of the Collateral according to the Code.

9.2                                              Power
of Attorney.

Effective only when an
Event of Default occurs and continues, Borrower irrevocably appoints Bank as
its lawful attorney to:  (i) endorse
Borrower’s name on any checks or other forms of payment or security; (ii) sign
Borrower’s name on any invoice or bill of lading for any Account or drafts
against account debtors, (iii) make, settle, and adjust all claims under
Borrower’s insurance policies; (iv) settle and adjust disputes and claims
about the Accounts directly with account debtors, for amounts and on terms Bank
determines reasonable; and (v) transfer the Collateral into the name of
Bank or a third party as the Code permits. Bank may exercise the power of
attorney to sign Borrower’s name on any documents necessary to perfect or
continue the perfection of any security interest regardless of whether an Event
of Default has occurred. Bank’s appointment as Borrower’s attorney in fact, and
all of Bank’s rights and powers, coupled with an interest, are irrevocable
until all Obligations have been fully repaid and performed and Bank’s
obligation to provide Credit Extensions terminates.

9.3                                              Accounts
Collection.

When an Event of Default
occurs and continues, Bank may notify any Person owing Borrower money of Bank’s
security interest in the funds and verify the amount of the Account. Borrower
must collect all payments in trust for Bank and, if requested by Bank,
immediately deliver the payments to Bank in the form received from the account
debtor, with proper endorsements for deposit.

9.4                                              Bank
Expenses.

If
Borrower fails to pay any amount or furnish any required proof of payment to
third persons, Bank may make all or part of the payment or obtain insurance
policies required in Section 6.5, and take any action under the policies
Bank deems prudent. Any amounts paid by Bank are Bank Expenses and immediately
due and payable, bearing interest at the then applicable rate and secured by
the Collateral. No payments by Bank are deemed an agreement to make similar
payments in the future or Bank’s waiver of any Event of Default.

 14
 

9.5                                              Application
of Payments and Proceeds.

Borrower shall have no
right to specify the order or the accounts to which Bank shall allocate or
apply any payments required to be made by Borrower to Bank or otherwise
received by Bank under this Agreement when any such allocation or application
is not specified elsewhere in this Agreement. If an Event of Default has
occurred and is continuing, Bank may apply any funds in its possession, whether
from Borrower account balances, payments, proceeds realized as the result of
any collection of Accounts or other disposition of the Collateral, or
otherwise, to the Obligations in such order as Bank shall determine in its sole
discretion. Any surplus shall be paid to Borrower or other Persons legally
entitled thereto; Borrower shall remain liable to Bank for any deficiency. If
Bank, in its good faith business judgment, directly or indirectly enters into a
deferred payment or other credit transaction with any purchaser at any sale of
Collateral, Bank shall have the option, exercisable at any time, of either
reducing the Obligations by the principal amount of the purchase price or
deferring the reduction of the Obligations until the actual receipt by Bank of
cash therefor.

9.6                                              Bank’s
Liability for Collateral.

If Bank complies with
reasonable banking practices and the Code, it is not liable for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, or other person. Subject to the foregoing,
Borrower bears all risk of loss, damage or destruction of the Collateral.

9.7                                              Remedies
Cumulative.

Bank’s rights and remedies
under this Agreement, the Loan Documents, and all other agreements are
cumulative. Bank has all rights and remedies provided under the Code, by law,
or in equity. Bank’s exercise of one right or remedy is not an election, and
Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay
is not a waiver, election, or acquiescence. No waiver is effective unless
signed by Bank and then is only effective for the specific instance and purpose
for which it was given.

9.8                                              Demand
Waiver.

Borrower waives demand,
notice of default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees held
by Bank on which Borrower is liable.

10                                  NOTICES

All
notices or demands by any party about this Agreement or any other related
agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth below:

	
  If to Borrower:

  	
   

  	
  Optio Software, Inc.

  
	
   

  	
   

  	
  3015 Windward
  Plaza

  
	
   

  	
   

  	
  Fairways II

  
	
   

  	
   

  	
  Alpharetta,
  Georgia 30005

  
	
   

  	
   

  	
  Attention:

  	
  Caroline Bembry

  
	
   

  	
   

  	
  Fax No.:

  	
  770-576-3525

  

 15
 

 

	
  with Copy to: 

  	
   

  	
  Lord, Bissell & Brook

  
	
   

  	
   

  	
  The Proscenium,
  Suite 1900

  
	
   

  	
   

  	
  1170 Peachtree Street,
  NE

  
	
   

  	
   

  	
  Atlanta, Georgia  30309

  
	
   

  	
   

  	
  Attention:   Neil Dicksont, Esq.

  
	
   

  	
   

  	
  Fax No.:      404-870-4617

  
	
  If to Bank: 

  	
   

  	
  Silicon Valley
  Bank

  
	
   

  	
   

  	
  3353 Peachtree
  Road, Suite M-10

  
	
   

  	
   

  	
  Atlanta,
  Georgia  30326

  
	
   

  	
   

  	
  Attention:   Nathan
  Ottinger

  
	
   

  	
   

  	
  Fax No.:      404-467-4467

  

 

A party may change its notice address by giving the other
party written notice.

 16

11                                                 CHOICE
OF LAW , VENUE AND JURY TRIAL WAIVER

Georgia law governs the Loan Documents without regard
to principles of conflicts of law. Borrower and Bank each submit to the
exclusive jurisdiction of the State and Federal courts in Fulton County,
Georgia.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS.
THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

12                                                 GENERAL
PROVISIONS

12.1                                       Successors
and Assigns.

This
Agreement binds and is for the benefit of the successors and permitted assigns
of each party. Borrower may not assign this Agreement or any rights or
obligations under it without Bank’s prior written consent which may be granted
or withheld in Bank’s discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank’s obligations, rights and benefits
under this Agreement and the other Loan Documents.

12.2                                       Indemnification.

Except
for losses caused by Bank’s gross negligence or willful misconduct, Borrower
will indemnify, defend and hold harmless Bank and its officers, employees, and
agents against:  (a) all
obligations, demands, claims, and liabilities asserted by any other party in
connection with the transactions contemplated by the Loan Documents; and (b) all
losses or Bank Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower (including reasonable
attorneys fees and expenses).

12.3                                       Time
of Essence.

Time
is of the essence for the performance of all obligations in this Agreement.

12.4                                       Severability
of Provision.

Each
provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.

12.5                                       Amendments
in Writing, Integration.

All
amendments to this Agreement must be in writing and signed by Borrower and Bank.
This Agreement represents the entire agreement about this subject matter, and
supersedes prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement
and the Loan Documents.

12.6                                       Counterparts.

This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, are an original, and
all taken together, constitute one Agreement.

 17
 

12.7                                       Survival.

All
covenants, representations and warranties made in this Agreement continue in
full force while  any Obligations remain
outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank
will survive until all statutes of limitations for actions that may be brought
against Bank have run.

12.8                                       Confidentiality.

In
handling any confidential information, Bank will exercise the same degree of
care that it exercises for its own proprietary information, but disclosure of
information may be made (i) to Bank’s subsidiaries or affiliates in
connection with their business with Borrower, (ii) to prospective
transferees or purchasers of any interest in the loans (provided, however, Bank
shall use commercially reasonable efforts in obtaining such prospective
transferee or purchasers agreement of the terms of this provision), (iii) as
required by law, regulation, subpoena, or other order, (iv) as required in
connection with Bank’s examination or audit and (v) as Bank considers
appropriate exercising remedies under this Agreement. Confidential information
does not include information that either: (a) is in the public domain or
in Bank’s possession when disclosed to Bank, or becomes part of the public
domain after disclosure to Bank; or (b) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.

12.9                                       Attorneys’
Fees, Costs and Expenses.

In any action or
proceeding between Borrower and Bank arising out of the Loan Documents, the
prevailing party will be entitled to recover its reasonable attorneys’ fees and
other reasonable costs and expenses incurred, in addition to any other relief
to which it may be entitled.

13                                                 DEFINITIONS

13.1                                       Definitions.

In this Agreement:

“Accounts” are
all existing and later arising accounts, contract rights, and other obligations
owed Borrower in connection with its sale or lease of goods (including
licensing software and other technology) or provision of services,  all credit insurance, guaranties, other security and  all merchandise returned or reclaimed by
Borrower and Borrower’s Books relating to any of the foregoing.

“Advance” or “Advances” is a loan advance (or advances) under the
Committed Revolving Line.

“Affiliate” of a
Person is a Person that owns or controls directly or indirectly the Person, any
Person that controls or is controlled by or is under common control with the
Person, and each of that Person’s senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person’s
managers and members.

“Bank Expenses”
are all audit fees and expenses and reasonable costs and expenses (including
reasonable attorneys’ fees and expenses) for preparing, negotiating,
administering, defending and enforcing the Loan Documents (including appeals or
Insolvency Proceedings).

“Borrower’s Books”
are all Borrower’s books and records including ledgers, records regarding
Borrower’s assets or liabilities, the Collateral, business operations or
financial condition and all computer programs or discs or any equipment
containing the information.

“Borrowing Base”
is 80% of Eligible Accounts as determined by Bank from Borrower’s most recent
Borrowing Base Certificate; provided, however, that, in either instance, Bank may  lower the percentage of the Borrowing Base
after performing an audit of Borrower’s Collateral that is not satisfactory to
the Bank.

 18
 

“Business Day”
is any day that is not a Saturday, Sunday or a day on which the Bank is closed.

“Cash Management Services”
is defined in Section 2.1.2.

“Closing Date”
is the date of this Agreement.

“Code” is the
Georgia Uniform Commercial Code, as applicable.

“Collateral” is
the property described on Exhibit A.

“Committed Revolving Line”
is an Advance, or Advances, of up to $4,000,000.

“Contingent Obligation”
is, for any Person, any direct or indirect liability, contingent or not, of
that Person for (i) any indebtedness, lease, dividend, letter of credit or
other obligation of another such as an obligation directly or indirectly
guaranteed, endorsed, co-made, discounted or sold with recourse by that
Person, or for which that Person is directly or indirectly liable; (ii) any
obligations for undrawn letters of credit for the account of that Person; and (iii) all
obligations from any interest rate, currency or commodity swap agreement,
interest rate cap or collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices;  but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The
amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

“Copyrights” are
all copyright rights, applications or registrations and like protections in
each work or authorship or derivative work, whether published or not (whether
or not it is a trade secret) now or later existing, created, acquired or held.

“Credit Extension”
is each Advance, or any other extension of credit by Bank for Borrower’s
benefit.

“Current Assets”
are amounts that under GAAP should be included on that date as current assets
on Borrower’s consolidated balance sheet.

“Current Liabilities”
are the aggregate amount of Borrower’s Total Liabilities which mature within
one (1) year.

“Deferred Revenue”
is all amounts received in advance of performance under contracts and not yet
recognized as revenue.

“EBITDA” is
earnings before interest expense, taxes, depreciation and amortization expense,
calculated in accordance with GAAP, for the previous three months, on a rolling
basis.

“Eligible Accounts” are Accounts in the ordinary course of
Borrower’s business that meet all Borrower’s representations and warranties in Section 5;
but Bank may change eligibility
standards by giving Borrower thirty (30) days prior written notice. Unless Bank
agrees otherwise in writing, Eligible Accounts will not include:

(a)    Accounts
that the account debtor has not paid within 90 days of invoice date;

(b)   Accounts
for an account debtor, 50% or more of whose Accounts have not been paid within
90 days of invoice date;

(c)    Credit
balances over 90 days from invoice date;

(d)   Accounts
for an account debtor, including Affiliates, whose total obligations to
Borrower exceed 25% of all Accounts, for the amounts that exceed that
percentage, unless the Bank approves in writing;

 19
 

(e)    Accounts
for which the account debtor does not have its principal place of business in
the United States (other than Eligible Foreign Accounts);

(f)    Accounts
owing from an Account Debtor which is a federal, state or local government
entity or any department, agency, or instrumentality thereof; except for
Accounts of the United States if Borrower has assigned its payment rights to
Bank and the assignment has been acknowledged under the Federal Assignment of
Claims Act of 1940, as amended;

(g)    Accounts
for which Borrower owes the account debtor, but only up to the amount owed
(sometimes called “contra” accounts, accounts payable, customer deposits or
credit accounts);

(h)   Accounts
for demonstration or promotional equipment, or in which goods are consigned,
sales guaranteed, sale or return, sale on approval, bill and hold, or other
terms if account debtor’s payment may be conditional;

(i)    Accounts
for which the account debtor is Borrower’s Affiliate, officer, employee, or
agent;

(j)     Accounts
in which the account debtor disputes liability or makes any claim and Bank
believes there may be a basis for dispute (but only up to the disputed or
claimed amount), or if the Account Debtor is subject to an Insolvency
Proceeding, or becomes insolvent, or goes out of business;

(k)   Accounts
for which Bank reasonably determines  collection  to
be doubtful.

“Eligible Foreign
Accounts”  are Accounts for
which the account debtor does not have its principal place of business in the
United States but are: (i) covered by credit insurance  reasonably satisfactory to Bank, less any
deductible; or (ii) supported by letter(s) of credit reasonably
acceptable to Bank; or (iii) that Bank approves in writing.

“ERISA” is the
Employment Retirement Income Security Act of 1974, and its regulations.

“GAAP” is
generally accepted accounting principles.

“Guarantor” is
any present or future guarantor of the Obligations.

“Indebtedness”
is (a) indebtedness for borrowed money or the deferred price of property
or services, such as reimbursement and other obligations for surety bonds and
letters of credit, (b) obligations evidenced by notes, bonds, debentures
or similar instruments, (c) capital lease obligations, which in the
aggregate, exceed $1,000,000 and (d) Contingent Obligations.

“Insolvency Proceeding”
are proceedings by or against any Person under the United States Bankruptcy
Code, or any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.

“Intangible Assets”  are intangible
items such as unamortized debt discount and expense, Intellectual Property and
research and development expenses, not including prepaid expenses.

“Intellectual Property” is:

(a)    Copyrights,
Trademarks, Patents, and Mask Works including amendments, renewals, extensions,
and all licenses or other rights to use and all license fees and royalties from
the use;

(b)   Any trade
secrets and any intellectual property rights in computer software and computer
software products now or later existing, created, acquired or held;

(c)    All design
rights which may be available to Borrower now or later created, acquired or
held;

 20
 

(d)   Any claims
for damages (past, present or future) for infringement of any of the rights
above, with the right, but not the obligation, to sue and collect damages for
use or infringement of the intellectual property rights above;

All proceeds and products of the foregoing, including
all insurance, indemnity or warranty payments.

“Inventory” is
present and future inventory in which Borrower has any interest, including
merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products intended for sale or lease or to be
furnished under a contract of service, of every kind and description now or
later owned by or in the custody or possession, actual or constructive, of
Borrower, including inventory temporarily out of its custody or possession or
in transit and including returns on any accounts or other proceeds (including
insurance proceeds) from the sale or disposition of any of the foregoing and
any documents of title.

“Investment” is
any beneficial ownership of (including stock, partnership interest or other
securities) any Person, or any loan, advance or capital contribution to any
Person.

“Lien” is a
mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.

“Loan Documents”
are, collectively, this Agreement, any note, or notes or guaranties executed by
Borrower or Guarantor, and any other present or future agreement between
Borrower and/or for the benefit of Bank in connection with this Agreement, all
as amended, extended or restated.

“Mask Works” are
all mask works or similar rights available for the protection of semiconductor
chips, now owned or later acquired.

“Material Adverse Change”
is described in Section 8.3.

“Obligations”
are debts, principal, interest, Bank Expenses and other amounts Borrower owes
Bank now or later, including cash management services, letters of credit and
foreign exchange contracts, if any and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower
assigned to Bank.

“Patents” are
patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions and continuations-in-part
of the same.

“Perfection Certificate”
is defined in Section 5.1.

“Permitted Indebtedness” is:

(a)    Borrower’s
indebtedness to Bank under this Agreement or any other Loan Document;

(b)   Indebtedness
existing on the Closing Date and shown on the Perfection Certificate;

(c)    Subordinated
Debt, except that Borrower shall not incur any additional indebtedness from
Bankers/Softech/Mid-States after the Closing Date;

(d)   Indebtedness
to trade creditors incurred in the ordinary course of business;

(e)    Indebtedness
secured by Permitted Liens;

(f)    Indebtedness
incurred by Subsidiaries, not to exceed $150,000 in the aggregate at any time,
and any guaranty of the same by Borrower; and

“Permitted Investments” are:

(a)    Investments
shown on the Perfection Certificate and existing on the Closing Date; and

(b)   (i) 
marketable direct obligations issued or unconditionally guaranteed by the
United States or its agency or any State maturing within 1 year from its
acquisition, (ii) commercial paper maturing 

 21
 

no more than 1 year after
its creation and having the highest rating from either Standard & Poor’s
Corporation or Moody’s Investors Service, Inc., and (iii) Bank’s certificates
of deposit issued maturing no more than 1 year after issue.

“Permitted Liens” are:

(a)    Liens
existing on the Closing Date and shown on the Perfection Certificate or arising
under this Agreement or other Loan Documents;

(b)   Liens for
taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its Books, if they have no
priority over any of Bank’s security interests;

(c)    Purchase
money Liens (i) on Equipment acquired or held by Borrower or its
Subsidiaries incurred for financing the acquisition of the Equipment, or (ii) existing
on equipment when acquired, if the Lien is
confined to the property and improvements and the proceeds of the equipment;

(d)   Licenses or
sublicenses granted in the ordinary course of Borrower’s business and any
interest or title of a licensor or under any license or sublicense, if the licenses and sublicenses permit granting Bank a
security interest;

(e)    Leases or
subleases granted in the ordinary course of Borrower’s business, including in
connection with Borrower’s leased premises or leased property;

(f)    Liens
incurred in the extension, renewal or refinancing of the indebtedness secured
by Liens described in (a) through (c), but any
extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness
may not increase.

“Person” is any
individual, sole proprietorship, partnership, limited liability company, joint
venture, company association, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint stock
company, estate, entity or government agency.

“Prime Rate” is
Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.

“Quick Assets”
is, on any date, the Borrower’s consolidated, unrestricted cash, cash
equivalents, net billed accounts receivable and investments with maturities of
fewer than 12 months determined according to GAAP.

“Responsible  Officer” is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.

“Revolving Maturity Date”
is April 19, 2008.

“Subordinated Debt”
is debt incurred by Borrower subordinated to Borrower’s indebtedness owed to
Bank and which is reflected in a written agreement in a manner and form
acceptable to Bank and approved by Bank in writing.

“Subsidiary” is
for any Person, or any other business entity of which more than 50% of the
voting stock or other equity interests is owned or controlled, directly or
indirectly, by the Person or one or more Affiliates of the Person.

“Total  Liabilities” is on any day, obligations that should, under
GAAP, be classified as liabilities on Borrower’s consolidated balance sheet,
including all Indebtedness, and current portion Subordinated Debt allowed to be
paid, but excluding all other Subordinated Debt.

 22
 

“Trademarks” are
trademark and servicemark rights, registered or not, applications to register
and registrations and like protections, and the entire goodwill of the business
of Assignor connected with the trademarks.

	
  BORROWER:

  	
   

  	
   

  	
   

  
	
  OPTIO SOFTWARE, INC.

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Caroline Bembry

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
   

  	
   

  
	
  BANK:

  	
   

  	
   

  	
   

  
	
  SILICON VALLEY BANK

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas Armstrong

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  
						

 

 23

EXHIBIT A

The Collateral consists of all of Borrower’s right,
title and interest in and to the following:

All goods and equipment now owned or hereafter
acquired, including, without limitation, all machinery, fixtures, vehicles
(including motor vehicles and trailers), and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions, and improvements to any of the foregoing, wherever
located;

All inventory, now owned or hereafter acquired,
including, without limitation, all merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products including
such inventory as is temporarily out of Borrower’s custody or possession or in
transit and including any returns upon any accounts or other proceeds,
including insurance proceeds, resulting from the sale or disposition of any of
the foregoing and any documents of title representing any of the above;

All contract rights and general intangibles now owned
or hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase
orders, customer lists, route lists, infringements, claims, computer programs,
computer discs, computer tapes, literature, reports, catalogs, design rights,
income tax refunds, payments of insurance and rights to payment of any kind;

All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by Borrower, whether or not earned by performance,
and any and all credit insurance, guaranties, and other security therefor, as
well as all merchandise returned to or reclaimed by Borrower;

All documents, cash, deposit accounts, securities,
securities entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower’s Books relating to the foregoing;

All Borrower’s Books relating to the foregoing and any
and all claims, rights and interests in any of the above and all substitutions
for, additions and accessions to and proceeds thereof.

Notwithstanding the foregoing, the Collateral shall
not be deemed to include any copyrights, copyright applications, copyright
registration and like protection in each work of authorship and derivative work
thereof, whether published or unpublished, now owned or hereafter acquired; any
patents, patent applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same, trademarks, servicemarks and applications
therefor, whether registered or not, and the goodwill of the business of
Borrower connected with and symbolized by such trademarks, any trade secret
rights, including any rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; or any claims for damage by way of any past, present and
future infringement of any of the foregoing (collectively, the “Intellectual
Property”) except that the Collateral shall include the proceeds of all the
Intellectual Property that are accounts, (i.e. accounts receivable) of
Borrower, or general intangibles consisting of rights to payment, if a judicial
authority (including a U.S. Bankruptcy Court) holds that a security interest in
the underlying Intellectual Property is necessary to have a security interest
in such accounts and general intangibles of Borrower that are proceeds of the Intellectual
Property, then the Collateral shall automatically, and effective as of the
Closing Date, include the Intellectual Property to the extent necessary to
permit perfection of Bank’s security interest in such accounts and general
intangibles of Borrower that are proceeds of the Intellectual Property.

EXHIBIT B

LOAN PAYMENT/ADVANCE REQUEST
FORM

DEADLINE
FOR SAME DAY PROCESSING IS 3:00 E.S.T.

	
  Fax To:

  	
   

  	
  Date:

  	
   

  	
   

  	
   

  

 

	
  o

  	
   

  	
  Loan Payment:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Optio
  Software, Inc. (Borrower)

  
	
   

  	
   

  	
  From Account #

  	
   

  	
   

  	
   

  	
  To Account #

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Deposit Account
  #)

  	
   

  	
   

  	
   

  	
  (Loan Account #)

  	
   

  	
   

  
	
   

  	
   

  	
  Principal $

  	
   

  	
  and/or Interest $

  	
   

  	
   

  
	
   

  	
   

  	
  All Borrower’s
  representation and warranties in the Loan and Security Agreement, to the
  knowledge of Borrower, are true, correct and complete in all material
  respects to on the date of the telephone transfer request for and advance,
  but those representations and warranties expressly referring to another date
  shall be true, correct and complete in all material respects as of the date:

  
	
   

  	
   

  	
  Authorized Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
																			

 

	
  o

  	
   

  	
  LOAN ADVANCE:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Complete Outgoing
  Wire Request section below if all or a portion of the funds from
  this loan advance are for an outgoing wire.

  
	
   

  	
   

  	
  From Account #

  	
   

  	
   

  	
   

  	
  To Account #

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Loan Account #)

  	
   

  	
   

  	
   

  	
  (Deposit Account #)

  	
   

  	
   

  
	
   

  	
   

  	
  Amount of Advance $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  All Borrower’s
  representation and warranties in the Loan and Security Agreement, to the
  knowledge of Borrower,  are true,
  correct and complete in all material respects to on the date of the telephone
  transfer request for and advance, but those representations and warranties
  expressly referring to another date shall be true, correct and complete in
  all material respects as of the date:

  
	
   

  	
   

  	
  Authorized Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
																

 

	
  o

  	
   

  	
  OUTGOING WIRE REQUEST

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Complete only if all or a
  portion of funds from the loan advance
  above are to be wired.

  
	
   

  	
   

  	
  Deadline for same day processing
  is 3:00pm, E.S.T.

  
	
   

  	
   

  	
  Beneficiary Name:

  	
   

  	
   

  	
  Amount of Wire: $

  	
   

  	
   

  
	
   

  	
   

  	
  Beneficiary Bank:

  	
   

  	
   

  	
  Account Number:

  	
   

  	
   

  
	
   

  	
   

  	
  City and Sate:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Beneficiary Bank Transit
  (ABA) #:

  	
   

  	
   

  	
  Beneficiary Bank Code
  (Swift, Sort, Chip, etc.):

  	
   

  
	
   

  	
   

  	
  (For International
  Wire Only)

  
	
   

  	
   

  	
  Intermediary Bank:

  	
   

  	
   

  	
  Transit (ABA) #:

  	
   

  	
   

  
	
   

  	
   

  	
  For Further Credit to:

  	
   

  	
   

  
	
   

  	
   

  	
  Special Instruction:

  	
   

  	
   

  
	
   

  	
   

  	
  By signing below, I (we)
  acknowledge and agree that my (our) funds transfer request shall be processed
  in accordance with and subject to the terms and conditions set forth in the
  agreements(s) covering funds transfer service(s), which
  agreements(s) were previously received and executed by me (us).

  
	
   

  	
   

  	
  Authorized Signature:

  	
   

  	
   

  	
  2nd Signature (If
  Required):

  	
   

  
	
   

  	
   

  	
  Print Name/Title:

  	
   

  	
   

  	
  Print Name/Title:

  	
   

  
	
   

  	
   

  	
  Telephone #

  	
   

  	
   

  	
  Telephone #

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
																													

 

EXHIBIT C

BORROWING BASE CERTIFICATE

	
  Borrower:

  	
   

  	
  Optio
  Software, Inc.

  	
   

  	
   

  	
   

  	
  Bank:

  	
   

  	
  Silicon Valley Bank

  
	
  Commitment Amount:   $4,000,000

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  ACCOUNTS
  RECEIVABLE

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Accounts
  Receivable Book Value as of
                      

  	
   

  	
  $

  	
   

  	
   

  
	
  2.

  	
   

  	
  Additions (please
  explain on reverse)

  	
   

  	
  $

  	
   

  	
   

  
	
  3.

  	
   

  	
  TOTAL ACCOUNTS
  RECEIVABLE

  	
   

  	
  $

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Amounts over 90
  days due

  	
   

  	
  $

  	
   

  	
   

  
	
  5.

  	
   

  	
  Balance of 50%
  over 90 day accounts

  	
   

  	
  $

  	
   

  	
   

  
	
  6.

  	
   

  	
  Credit balances
  over 90 days

  	
   

  	
  $

  	
   

  	
   

  
	
  7.

  	
   

  	
  Concentration
  Limits*

  	
   

  	
  $

  	
   

  	
   

  
	
  8.

  	
   

  	
  Foreign Accounts

  	
   

  	
  $

  	
   

  	
   

  
	
  9.

  	
   

  	
  Governmental
  Accounts

  	
   

  	
  $

  	
   

  	
   

  
	
  10.

  	
   

  	
  Contra Accounts

  	
   

  	
  $

  	
   

  	
   

  
	
  11.

  	
   

  	
  Promotion or Demo
  Accounts

  	
   

  	
  $

  	
   

  	
   

  
	
  12.

  	
   

  	
  Intercompany/Employee
  Accounts

  	
   

  	
  $

  	
   

  	
   

  
	
  13.

  	
   

  	
  Other (please
  explain on reverse)

  	
   

  	
  $

  	
   

  	
   

  
	
  14.

  	
   

  	
  TOTAL ACCOUNTS
  RECEIVABLE DEDUCTIONS

  	
   

  	
  $

  	
   

  	
   

  
	
  15.

  	
   

  	
  Eligible Accounts
  (#3 minus #14)

  	
   

  	
  $

  	
   

  	
   

  
	
  16.

  	
   

  	
  LOAN VALUE OF
  ACCOUNTS (80% of #15)

  	
   

  	
  $

  	
   

  	
   

  
	
  BALANCES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Maximum Loan
  Amount

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  18.

  	
   

  	
  Total Funds Available
  [Lesser of #17 or #16]

  	
   

  	
  $

  	
   

  	
   

  
	
  19.

  	
   

  	
  Present balance
  owing on Line of Credit

  	
   

  	
  $

  	
   

  	
   

  
	
  20.

  	
   

  	
  Amounts owing for
  Cash Management Services

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  RESERVE POSITION (#18
  minus #19 minus #20)

  	
   

  	
  $

  	
   

  	
   

  

 

The undersigned represents and warrants that this
is true, complete and correct in all material respects, and that the
information in this Borrowing Base Certificate complies with the
representations and warranties in the Loan and Security Agreement between the
undersigned and Silicon Valley Bank.

	
  COMMENTS:

  	
   

  	
   

  
	
   

  	
   

  	
  BANK USE ONLY

  
	
  Optio Software, Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Rec’d By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Auth. Signer

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Auth. Signer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
										

 

 2

EXHIBIT
D

COMPLIANCE CERTIFICATE

	
  TO:

  	
   

  	
  SILICON VALLEY BANK

  
	
  FROM:

  	
   

  	
  OPTIO SOFTWARE, INC.

  

 

The undersigned authorized officer of Optio Software, Inc.
(“Borrower”) certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower
is in complete compliance for the period ending                    
with all required covenants except as noted below and (ii) all
representations and warranties in the Agreement, to the knowledge of Borrower,
are true and correct in all material respects on this date. Attached are the
required documents supporting the certification. The Officer certifies that
these are prepared in accordance with Generally Accepted Accounting Principles
(GAAP) consistently applied from one period to the next except as explained in
an accompanying letter or footnotes. The Officer acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.

Please indicate
compliance status by circling Yes/No under “Complies” column.

	
  Reporting Covenant

  	
   

  	
   

  	
   

  	
  Required

  	
   

  	
   

  	
   

  	
  Complies

  
	
  Monthly Fins + Compliance Certificate

  	
   

  	
  Monthly within 30
  days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  10-Q + CC

  	
   

  	
  FQE within 45 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Annual (Audited)
  + 10-K + CC

  	
   

  	
  FYE within 90 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  A/R Agings

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  A/R Audit

  	
   

  	
  Annual

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Borrowing Base
  Certificate

  	
   

  	
  Monthly within 30 days

  	
   

  	
  Yes

  	
   

  	
  No

  

 

	
  Financial Covenant

  	
   

  	
   

  	
   

  	
  Required

  	
   

  	
   

  	
   

  	
  Actual

  	
   

  	
   

  	
   

  	
  Complies

  
	
  Maintain:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly Minimum Quick Ratio

  	
   

  	
  2.00:1.00

  	
   

  	
            :1.00

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  Minimum EBITDA

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  March - April  2007

  	
   

  	
  ($2,000,000)

  	
   

  	
  $                    

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  May 2007

  	
   

  	
  ($1,500,000)

  	
   

  	
  $                    

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  June - July 2007

  	
   

  	
  ($1,000,000)

  	
   

  	
  $                    

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  August 2007 - January 2008

  	
   

  	
  ($250,000)

  	
   

  	
  $                    

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  February 2008
  and thereafter

  	
   

  	
  ($750,000)

  	
   

  	
  $                    

  	
   

  	
  Yes

  	
   

  	
  No

  

 

Have there been updates to Borrower’s intellectual
property, if appropriate?          Yes /
No

	
  Comments Regarding Exceptions:  See Attached.

  	
   

  	
  BANK
  USE ONLY

  	
   

  
	
  Sincerely,

  	
   

  	
  Received by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  
	
  Optio Software, Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Compliance Status:

  	
   

  	
  Yes   No

  	
   

  
	
  DATEExhibit 4.1

FIRST SUPPLEMENTAL
INDENTURE

FIRST SUPPLEMENTAL INDENTURE (this “First
Supplemental Indenture”), dated as of April 30, 2007, by and between
Mission Energy Holding Company, a Delaware corporation (“MEHC” or the “Issuer”)
and Wilmington Trust Company, as Trustee (the “Trustee”) to the
Indenture (as defined below).

W I T N E S S E T H:

WHEREAS, the Issuer and the Trustee have heretofore
executed and delivered the Indenture, dated as of July 2, 2001 (as amended and
supplemented, the “Indenture”), pursuant to which MEHC has $
799,957,000.00 million aggregate principal amount of 13.50% Senior Secured
Notes due 2008 (the “Notes”) outstanding;

WHEREAS, Section 902 of the Indenture provides that
the Issuer and the Trustee may, with certain exceptions, amend the Indenture
and the Notes with the consent of the Holders (as defined in the Indenture) of
at least a majority in aggregate principal amount of the Notes then outstanding
(the “Proposed Amendments Requisite Consents”);

WHEREAS, Section 1303 of the Indenture provides that
the security interests in the Collateral (as defined in the Indenture) created
by the Security Documents (as defined in the Indenture) may be released without
impairing the Lien (as defined in the Indenture) described in Section 1301 of
the Indenture in contravention of the provisions of the Indenture if such
Collateral and Lien are released pursuant to the terms of the Indenture, and
Section 902 provides that the Collateral (as defined in the Indenture) and Lien
may be released with the consent of the Holders of at least a majority in
aggregate principal amount of the Notes then outstanding (together with the
Proposed Amendments Requisite Consents, the “Requisite Consents”);

WHEREAS, as of the Acceptance Time, Section 4.11 of
the EME Stock Pledge Agreement (as amended as of the date hereof) will provide
that the security interests in the Collateral may be released upon the
occurrence of the Requisite Consents Event (as defined therein);

WHEREAS, MEHC has distributed an Offer to Purchase and
Consent Solicitation Statement, dated April 17, 2007 (the “Solicitation
Statement”), to the Holders of the Notes in connection with a proposed
release of the security interests in the Collateral as described in the
Solicitation Statement (the “Proposed Release”) and certain proposed
amendments to the Indenture as described in the Solicitation Statement (the “Proposed
Amendments”);

WHEREAS, the Holders of at least a majority in
aggregate principal amount of the Notes then outstanding have duly consented to
the Proposed Release and the Proposed Amendments;

  
  
 

WHEREAS, the Board of Directors of MEHC has determined
that it is in the best interests of MEHC to authorize and approve the Proposed
Release and the Proposed Amendments; and

WHEREAS, the execution and delivery of this First
Supplemental Indenture has been duly authorized by all necessary corporate
action on the part of the Issuer and all conditions and requirements necessary
to make this instrument a valid and binding agreement have been duly performed and
complied with.

NOW THEREFORE, in consideration of the foregoing and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Issuer and the Trustee mutually covenant and agree,
for the equal and ratable benefit of the Holders of the Notes, as follows:

ARTICLE I—AMENDMENTS

Section 1.1.   Amendments to the Definitions in the
Indenture and the Notes.

(a)           Upon
the effective date of this First Supplemental Indenture (i) any definitions,
and any definitions used exclusively within such definitions, in the Indenture
shall be deemed deleted when all references in the Indenture to such
definitions would be eliminated as a result of the amendments described herein,
(ii) cross-references to provisions in the Indenture that have been deleted as
a result of the Proposed Release and the Proposed Amendments shall be deemed
deleted, and (iii) certain other changes to the Indenture of a technical or
conforming nature shall be deemed made to the extent necessary to reflect the
deletion of the provisions described herein.

(b)           Any
definitions used exclusively in the provisions of the Notes that are hereby
deleted, and any definitions used exclusively within such definitions, are
hereby deleted in their entirety from the Notes, and all references in the
Notes to paragraphs, Sections, Articles or other terms or provisions of the
Indenture that have been otherwise deleted pursuant to this First Supplemental
Indenture are hereby deleted in their entirety or revised to conform herewith,
as the case may be.

Section 1.2.   Amendments
to Article 5—Remedies.  The following
Section of the Indenture, and any corresponding provisions in the Notes, is
hereby deleted in its entirety and replaced with “Intentionally Omitted.”:

	
  Existing Section Number

  	
   

  	
   

  	
   

  	
  Caption

  	
   

  	
   

  
	
  Section 515.

  	
   

  	
  Waiver of Stay or Extension Laws

  

 

 2
 

Section 1.3.   Amendments
to Article 10—Covenants.  The
following Sections of the Indenture, and any corresponding provisions in the
Notes, are hereby deleted in their entirety and replaced with “Intentionally
Omitted.”:

	
  Existing Section Number

  	
   

  	
   

  	
   

  	
  Caption

  	
   

  	
   

  
	
  Section 1005.

  	
   

  	
  Maintenance of
  Properties

  
	
  Section 1006.

  	
   

  	
  Payment of Taxes and
  Other Claims

  
	
  Section 1007.

  	
   

  	
  Maintenance of
  Insurance

  
	
  Section 1008.

  	
   

  	
  Limitation on
  Incurrence of Indebtedness

  
	
  Section 1009.

  	
   

  	
  Limitation on
  Restricted Payments

  
	
  Section 1010.

  	
   

  	
  Limitations Concerning
  Distributions By Subsidiaries, etc

  
	
  Section 1011.

  	
   

  	
  Limitation on Liens

  
	
  Section 1012.

  	
   

  	
  Limitation on Sale and
  Leaseback Transactions

  
	
  Section 1013.

  	
   

  	
  Limitation on
  Transactions with Affiliates

  
	
  Section 1014.

  	
   

  	
  Limitation on Issuances
  and Sales of Capital Stock of Restricted Subsidiaries

  
	
  Section 1015.

  	
   

  	
  Independent Director

  
	
  Section 1016.

  	
   

  	
  Change of Control

  
	
  Section 1017.

  	
   

  	
  Asset Sales

  
	
  Section 1018.

  	
   

  	
  Provision of Financial
  Information

  
	
  Section 1019.

  	
   

  	
  Separateness

  
	
  Section 1020.

  	
   

  	
  Provisions with Respect
  to Contact Energy

  
	
  Section 1022.

  	
   

  	
  Statement by Officers as to Default; Compliance
  Certificates

  

 

Section 1.4.   Amendments
to Article 8—Merger, Consolidation, Etc. Section 801 of the Indenture is
hereby amended in its entirety to read as follows:

The Company shall not directly or indirectly: (i)
consolidate or merge with or into another Person; or (ii) sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
and its Subsidiaries’ properties or assets, taken as a whole, in one or more
related transactions, to another Person; unless: (1) either: (a) the Company is
the surviving corporation; or (b) the Person formed by or surviving any such
consolidation or merger, if other than the Company, or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation, limited liability company or limited partnership
organized or existing under the laws of the United States, any state thereof or
the District of Columbia; and (2) the Person formed by or surviving any such
consolidation or merger, if other than the Company, or the Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all of the Company’s obligations under the Securities, this
Indenture, the Registration Rights Agreement, the Interest Pledge Agreement and
the EME Stock Pledge Agreement, as applicable, pursuant to agreements in form
reasonably satisfactory to the Trustee.

This Section 8.01 does
not apply to a sale, assignment, transfer, lease, conveyance or other
disposition of assets between or among the Company and any of its Restricted
Subsidiaries; provided, however, that, in the case of such a sale, assignment,
transfer, lease, conveyance or other disposition to a Restricted Subsidiary,
such Restricted Subsidiary shall assume the obligations of the Company under Section
6.07 hereof pursuant to agreements in form reasonably satisfactory to the
Trustee.

 3
 

Section 1.5.   Amendments to Article 12—Defeasance and Covenant
Defeasance. Section 1204 of the Indenture is hereby amended by deleting
paragraphs (2), (3), (5) and (6) in their entirety.

Section 1.6.   Amendments to Article 5—Remedies. Section 501 of the
Indenture is hereby amended in its entirety to read as follows:

“Event of Default”,
wherever used herein, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(1)           default for 30 days
in the payment when due of interest on, or Liquidated Damages, if any, with
respect to, any Security;

(2)           default in payment
when due of the principal of, or premium, if any, on the Securities;

(3)           failure by the
Company to comply with Section 801;

(4)           failure by the
Company for 60 days after written notice thereof has been given to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least 25%
of the aggregate principal amount of the Securities Outstanding to comply with
any of the other covenants or agreements in this Indenture;

(5)           with
respect to  the Company, the entry by a
court having jurisdiction in the premises of (A) a decree or order for relief
in respect of any entity or group of entities, as applicable, described above
in an involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (B) a decree or
order adjudging any entity or any group of entities, as applicable, described
above a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of any entity or group of entities, as applicable, described above under any
applicable Federal or State law, or appointing a

 4
 

custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of any entity or any group of entities,
as applicable, described above or of any substantial part of the property of
any entity or any group of entities, as applicable, described above, or
ordering the winding up or liquidation of the affairs of any entity or any
entity or group of entities, as applicable, described above, and the
continuance of any such decree or order for relief or any such order or decree
or order unstayed and in effect for a period of 90 consecutive days; or

(6)           with
respect to the Company (i) the commencement of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent by any of the entities or group of entities, as
applicable, described above, or (ii) the consent by any of the entities or
group of entities, as applicable, described above to the entry of a decree or
order for relief in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding against
any of them or (iii) the filing of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the
consent to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of any of the entities or group of entities,
as applicable, described above or of any substantial part of the property of
the Company, or (iv) the making by any of the entities or group of entities, as
applicable, described above of an assignment for the benefit of creditors, or
the admission in writing of inability to pay its or their debts generally as
they become due, or (v) the taking of corporate action by any of the entities
or group of entities, as applicable, described above in furtherance of any such
action.

In the case of any Event of Default occurring by
reason of any willful action or inaction taken or not taken by or on behalf of
the Company with the intention of avoiding payment of the premium that it would
have to have paid if it then had elected to redeem the Securities pursuant to
Section 1101, an equivalent premium will also become and be immediately due and
payable to the extent permitted by law upon the acceleration of the Securities.

Section 1.7.   Amendments
to Article 13—Collateral and Security Documents. Sections 1302, 1303, 1304,
1305, 1306, 1307 and 1308 of the Indenture are deleted in their entirety, and
Section 1301 is hereby amended in its entirety to read as follows:

 5
 

Notwithstanding anything to the contrary contained in
this Indenture, (a) the Holders hereby consent to the release of the security
interests created by the Security Documents on the Collateral, and (b) the
Trustee and Joint Collateral Agent are each hereby authorized to execute and
deliver any documents necessary to effect the release referred to in clause (a)
above.

ARTICLE II—MISCELLANEOUS

Section 2.1.   Execution
of Supplemental Indenture. This First Supplemental Indenture is executed
and shall be constructed as an indenture supplement to the Indenture and, as
provided in the Indenture, this First Supplemental Indenture forms a part
thereof.

Section 2.2.   Indenture Remains in Full Force and Effect.
Except as supplemented by this First Supplemental Indenture, all provisions in
the Indenture and the Notes shall remain in full force and effect.

Section 2.3.   Effect and Operation of Supplemental Indenture.  This First Supplemental Indenture shall be
effective and binding immediately upon its execution by MEHC and the Trustee
(so long as the Requisite Consents have been received) but, notwithstanding
anything in the Indenture or this First Supplemental Indenture to the contrary,
the amendments to the Indenture set forth in Section 1.1 through Section 1.7 of
this First Supplemental Indenture shall not become operative unless and until
the Notes tendered in connection with the Solicitation Statement are accepted for
purchase by MEHC on the Early Payment Date (as defined in the Solicitation
Statement) (or the Final Payment Date (as defined in the Solicitation
Statement) if MEHC forgoes the Early Payment Date) (the time at which the
tendered Notes are so accepted for purchase, the “Acceptance Time”) and the
Indenture will remain in effect in its current form until such amendments
become operative.  If the offer and
consent solicitation set forth in the Solicitation Statement is terminated,
withdrawn or otherwise not completed, this First Supplemental Indenture will
have no force or effect, and the amendments to the Indenture set forth in
Section 1.1 through Section 1.7 of this First Supplemental Indenture will not
become operative.

Section 2.4.   References to Supplemental Indenture. Any and
all notices, requests, certificates and other instruments executed and
delivered after the execution and delivery of this First Supplemental Indenture
may refer to the Indenture without making specific reference to this First
Supplemental Indenture, but nevertheless all such references shall include this
First Supplemental Indenture unless the context requires otherwise.

Section 2.5.   Conflict with Trust Indenture Act. The Issuer
will comply with the provisions of the Trust Indenture Act of 1939, as amended
(the “TIA”). If any provision of this First Supplemental Indenture limits,
qualifies or conflicts with any provision of the TIA that is required under the
TIA to be part of and govern any provision of this First Supplemental
Indenture, the provision of the TIA shall control.  If any

 6
 

provision of this First Supplemental Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the provision of the TIA shall be deemed to apply to the Indenture as
so modified or to be excluded by this First Supplemental Indenture, as the case
may be.

Section 2.6.   Severability. If any court of competent
jurisdiction shall determine that any provision in this First Supplemental
Indenture shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

Section 2.7.   Terms Defined in the Indenture. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Indenture.

Section 2.8.   Headings. The Article and Section headings of
this First Supplemental Indenture have been inserted for convenience of
reference only, are not to be considered a part of this First Supplemental
Indenture and shall in no way modify or restrict any of the terms or provisions
hereof.

Section 2.9.   Benefits of First Supplemental Indenture.  Nothing in this First Supplemental Indenture
or the Notes, express or implied, shall give to any Person, other than the
parties hereto and thereto and their successors hereunder and thereunder and
the Holders of the Notes any benefit of any legal or equitable right, remedy or
claim under the Indenture, this First Supplemental Indenture or the Notes.

Section 2.10.   Successors. All agreements of MEHC in this
First Supplemental Indenture shall bind its respective successors.  All agreements of the Trustee in this First
Supplemental Indenture shall bind its successors.

Section 2.11.   Concerning the Trustee. The recitals contained
herein and in the Notes, except with respect to the Trustee’s certificates of
authentication, shall be taken as the statements of the Issuer, and the Trustee
assumes no responsibility for the correctness of the same.  The Trustee makes no representations as to
the validity or sufficiency of this First Supplemental Indenture or of the
Notes.

Section 2.12.   Certain Duties and Responsibilities of the Trustee.  In entering into this First Supplemental
Indenture, the Trustee shall be entitled to the benefit of every provision of
the Indenture and the Notes relating to the conduct or affecting the liability
or affording protection to the Trustee, whether or not elsewhere herein so
provided.

Section 2.13.   Counterparts. 
This First Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.

 7
 

Section 2.14.   GOVERNING LAW. THIS FIRST SUPPLEMENTAL
INDENTURE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CHOICE OF LAW RULES (OTHER THAN SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).

Section 2.15.   Confirmation. Each of the Issuer and the
Trustee hereby confirms and reaffirms the Indenture in every particular except
as amended and supplemented by this First Supplemental Indenture.

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

	
   

  	
   

  	
  MISSION ENERGY HOLDING
  COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mark Clarke

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Mark
  Clarke

  
	
   

  	
   

  	
   

  	
   

  	
  Title:
  Controller

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WILMINGTON TRUST
  COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Mary St. Amand

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Mary St.
  Amand

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Vice
  President

  

 

 8

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