Document:

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                                                                    Exhibit 10.2

                           DIRECTOR STOCK OPTION PLAN

                         OF MACK-CALI REALTY CORPORATION

SECTION 1. PURPOSE.

         The 1994 Director Stock Option Plan was established by Cali Realty
Corporation ("Cali") in 1994 as the "1994 Director Stock Option Plan of Cali
Realty Corporation" and was subsequently amended and restated in 1996 as the
"Director Stock Option Plan of Cali Realty Corporation" (the "Director Stock
Option Plan"). The Director Stock Option Plan is being amended and restated in
its entirety and renamed the "Director Stock Option Plan of Mack-Cali Realty
Corporation (the "Plan") in order to reflect the change of Cali's name to
Mack-Cali Realty Corporation in December 1997 in connection with the acquisition
of certain office properties from The Mack Company and Patriot American Office
Group, to incorporate previously authorized amendments to the Plan and to
clarify certain procedures and definitions under the Plan.

         The purpose of the Plan is to promote the growth and profitability of
Mack-Cali Realty Corporation (the "Corporation") by providing directors and
Advisory Board members of the Corporation, or its Subsidiaries if so designated,
with an incentive to achieve corporate objectives, to attract and retain
directors and Advisory Board members of outstanding competence and to provide
such individuals with an equity interest in the Corporation. The Plan, as
amended and restated effective as of December 1, 1998, and as set forth herein,
is intended to be construed as an employee benefit plan that satisfies the
requirements for exemption from the restrictions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, pursuant to the applicable rules
promulgated thereunder.

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         SECTION 2. DEFINITIONS.

         The following definitions are applicable to the Plan:

         2.1      ADMINISTRATIVE COMMITTEE.

         "Administrative Committee" means the committee appointed pursuant to
Section 3 hereof or, if no such committee is appointed, the Board.

         2.2      ADVISORY BOARD.

         "Advisory Board" shall mean the Advisory Board of the Corporation which
was established in December 1997.

         2.3      BENEFICIARY.

         "Beneficiary" means the beneficiary or beneficiaries designated by a
Participant in accordance with Section 7.8 hereof to receive the amount, if any,
payable under the Plan upon the death of such Participant.

         2.4      BOARD.
         "Board" means the Board of Directors of the Corporation.

         2.5      CAUSE.

         "Cause" means termination for fraud or willful misconduct as determined
by the Administrative Committee or the Board.

         2.6      CODE.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         2.7      COMMON STOCK.

         "Common Stock" means the shares of common stock, $.01 par value per
share, of the Corporation.

         2.8      CORPORATION.

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         "Corporation" means Mack-Cali Realty Corporation.

         2.9      DIRECTOR'S OPTION.

         "Director's Option" means a Non-qualified Stock Option granted pursuant
to Section 6.2 hereof.

         2.10     DISABILITY.

         "Disability" means a mental or physical condition rendering a
Participant unable to perform his or her regular duties as determined by the
Administrative Committee or the Board.

         2.11     DISCRETIONARY OPTION.

         "Discretionary Option" means a Non-qualified Stock Option granted
pursuant to Section 6.3 hereof.

         2.12     ELIGIBLE ADVISORY BOARD MEMBERS.

         "Eligible Advisory Board Members" means non-employee members of the
Advisory Board.

         2.13     ELIGIBLE DIRECTORS.

         "Eligible Directors" means a non-employee members of the Board. In
addition, Eligible Director shall include any non-employee members of the Board
of Directors of a Subsidiary of the Company, if and only if, and only to the
extent, such Board of Directors is designated by the Board as eligible to
participate in the Plan.

         2.14     EXCHANGE ACT.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to a particular section of, or rule under the Exchange Act include
references to successor provisions.

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         2.15     FAIR MARKET VALUE.

         "Fair Market Value" means the closing price as quoted on the New York
Stock Exchange at the end of the last business day preceding the Grant Date or
other date of determination as reported in the New York Edition of the WALL
STREET JOURNAL.

         2.16     INCENTIVE STOCK OPTION.

         "Incentive Stock Option" means an option to purchase Common Stock that
satisfies the requirements of Section 422 of the Code.

         2.17     IMMEDIATE FAMILY.

         "Immediate Family" means, with respect to a particular Participant, the
Participant's spouse, children and grandchildren.

         2.18     MATURE SHARES.

         "Mature Shares" means Shares for which the holder thereof has good
title, free and clear of all liens and encumbrances, and which such holder
either (i) has held for at least six (6) months or (ii) has purchased from the
open market.

         2.19     NON-QUALIFIED STOCK OPTION.

         "Non-qualified Stock Option" means an option to purchase Common Stock
that does not qualify as an Incentive Stock Option.

         2.20     OPTION.

         "Option" means a Director's Option or Discretionary Option granted
under the Plan.

         2.21     OPTION AGREEMENT.

         "Option Agreement" means the written agreement by which an Option shall
be evidenced.

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         2.22     OPTION PRICE.

         "Option Price" means the purchase price per Share of an Option.

         2.23     OPTION TERM.

         "Option Term" means the period beginning on the Grant Date of an Option
and ending on the expiration date of such Option, as specified in the Option
Agreement for such Option and as may, in the discretion of the Administrative
Committee, and consistent with the provisions of the Plan, be extended from time
to time.

         2.24     PARTICIPANT.

         "Participant" means an Eligible Director or Eligible Advisory Board
Member who has been granted an Award or a Permitted Transferee.

         2.25     PERMITTED TRANSFEREE.

         "Permitted Transferee" means a person to whom an Option may be
transferred or assigned in accordance with Section 7.8 hereof.

         2.26     PLAN.

         "Plan" means the Director Stock Option Plan of Mack-Cali Realty
Corporation as amended and restated herein, and as may be amended from time to
time.

         2.27     RETIREMENT.

         "Retirement" means separation from service as a director or member of
the Advisory Board on or after age 65 or at such other time as the Board may
designate.

         2.28     RULE 16B-3.

         "Rule 16b-3" means Rule 16b-3 of the SEC under the Exchange Act, as
amended from time to time, together with any successor rule.

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         2.29     SEC.

         "SEC" means the Securities and Exchange Commission.

         2.30     SHARE.

         "Share" means a share of Common Stock.

         2.31     SUBSIDIARY.

         "Subsidiary" means a corporation or other entity with respect which the
Corporation (i) owns, directly or indirectly, fifty percent (50%) or more of the
then outstanding common stock in any corporation or (ii) has a fifty percent
(50%) or more ownership interest in any other entity.

SECTION 3.  ADMINISTRATION.

         The Plan shall be administered by a committee (the "Administrative
Committee), which shall consist of two or more directors of the Corporation, all
of whom qualify as "Non-Employee Directors" as defined in Rule 16b-3 of the
Exchange Act. The number of members of the Administrative Committee shall from
time to time be increased or decreased, and shall be subject to such conditions,
in each case as the Board deems appropriate to permit transactions in Shares
pursuant to the Plan to satisfy such conditions of Rule 16b-3 as then in effect.
In the event that the Compensation Committee of the Board (the "Compensation
Committee) meets the requirements set forth in this Section 3 hereof, such
Compensation Committee shall be the Administrative Committee hereunder unless
otherwise determined by the Board.

         A majority of the members of the Administrative Committee shall
constitute a quorum. The Administrative Committee may act at a meeting,
including a telephonic meeting, by action of a majority of the members present,
or without a meeting by unanimous

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written consent.

         Subject to the express provisions of the Plan, the Committee shall have
full and final authority and discretion as follows:

                  (i)      select the Eligible Directors and Eligible Advisory
                           Board Members entitled to receive Discretionary
                           Options pursuant to Section 6.3 hereof;

                  (ii)     grant Discretionary Options to those Participants it
                           selects in such amounts as it shall determine,
                           subject to the terms and conditions of the Plan;

                  (iii)    determine the number of Shares to be covered by each
                           Discretionary Option granted under the Plan and the
                           time or times when and the manner in which such
                           Discretionary Option shall be exercisable;

                  (iv)     to amend or cancel, with the consent of the
                           Participant, any outstanding Option(s) and to grant
                           new Option(s) in substitution therefor;

                  (v)      to accelerate the exercisability (including
                           exercisability within a period of less than one year
                           after the Grant Date) of, and to accelerate or waive
                           any or all of the terms and conditions applicable to,
                           any Option or any group of Options for any reason and
                           at any time, including in connection with a
                           termination of service (other than for Cause);

                  (vi)     subject to the provisions of the Plan, to extend the
                           time during which any Option or group of Options may
                           be exercised;

                  (vii)    to interpret the Plan and make all determinations
                           necessary or advisable for the administration of the
                           Plan including the establishment, amendment or
                           revocation from time to time of guidelines or
                           regulations for the administration of the Plan, to
                           cause appropriate records to be established, and to
                           make all determinations and take all other actions
                           considered necessary or advisable for the
                           administration of the Plan; and

                  (viii)   to take any other action with respect to any matters
                           relating to the Plan for which it is responsible.

         All decisions, actions or interpretations of the Administrative
Committee on all matters relating to the Plan or any Option Agreement shall be
final, binding and conclusive upon all parties. No member of the Administrative
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option.

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SECTION 4. PARTICIPATION.

         4.1      DIRECTOR'S OPTIONS.

         All Eligible Directors shall automatically be eligible to receive
Director's Options under the Plan .

         4.2      DISCRETIONARY OPTIONS.

         The Administrative Committee, may, in its discretion grant
Discretionary Options to any Eligible Director or Eligible Advisory Board
Member, whether or not he or she has previously received an Option. No such
Eligible Directors or Eligible Advisory Board Members shall at any time have the
right to receive a Discretionary Option unless selected by the Administrative
Committee pursuant to the Plan. No Participant, having been granted an Option,
shall have the right to an additional Option in the future unless such Option is
granted by the Administrative Committee.

SECTION 5. MAXIMUM NUMBER OF SHARES AVAILABLE FOR OPTIONS.

         Subject to adjustment in accordance with Section 7.2 hereof, the
maximum number of Shares for which grants under the Plan shall be available is
400,000. In the event any Options granted under the Plan shall be forfeited,
terminate or expire, the number of Shares no longer subject to such Option, to
the extent of such forfeiture, termination or expiration, shall thereafter again
be available for grant under the Plan. The Common Stock distributed under the
Plan may be authorized and unissued shares, shares held in the treasury of the
Corporation, or shares purchased on the open market by the Corporation (at such
time or times and in such manner as it may determine). The Corporation shall be
under no obligation to acquire Common Stock for distribution to Participants
before payment in Common Stock

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is due and distributable.

SECTION 6.  GRANTS OF OPTIONS.

         6.1      GENERAL CONDITIONS TO GRANTS.

         The Grant Date of a Director's Option shall be the date on which the
Eligible Director is initially elected or appointed to the Board and the Grant
Date of a Discretionary Option shall be the date on which the Administrative
Committee grants the Option or such later date as specified in advance by the
Administrative Committee. All Options shall be evidenced by an Option Agreement
and any terms and conditions of an Option not set forth in the Plan shall be set
forth in the Option Agreement related to that Option. All Options granted under
this Plan shall be Non-qualified Stock Options.

         6.2      GRANT OF DIRECTORS' OPTIONS.

         Each Eligible Director shall be granted, upon his or her initial
election or appointment to the Board, a Non-qualified Stock Option to purchase
5,000 Shares (a "Director's Option"). The grant of a Director's Option shall not
be subject to the discretion of the Administrative Committee.

         6.3      GRANT OF DISCRETIONARY OPTIONS.

         Subject to the limitations of the Plan, the Administrative Committee
may, in its discretion, grant an Eligible Director or Eligible Advisory Board
Member a Non-qualified Stock Option to purchase such amount of Shares as shall
be determined by the Administrative Committee in its sole discretion (a
"Discretionary Option"). A Discretionary Option granted under this Section 6.3
may be in addition to the Director's Option granted to an Eligible Director
pursuant to Section 6.2 hereof.

         6.4      TERMS AND CONDITIONS OF OPTIONS.

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         Except as otherwise provided in a Participant's Option Agreement, each
Option granted under the Plan shall be subject to the following express terms
and conditions and to such other terms and conditions consistent therewith as
the Administrative Committee may deem appropriate.

         (a) OPTION TERM. The Option Term for each Option granted under the Plan
shall be ten (10) years and each Option shall automatically expire on the tenth
(10th) anniversary of the Grant Date.

         (b) OPTION PRICE. The Option Price of each Share as to which an Option
may be exercised shall be the Fair Market Value of the Share of the Grant Date.

         (c) EXERCISE OF OPTION. Except as otherwise provided under the Plan, no
part of any Option may be exercised until the Participant shall have remained a
member of the Board or Advisory Board, as the case may be, for the periods set
forth below:

                  (i)      DIRECTOR'S OPTIONS. One year from the Grant Date.

                  (ii)     DISCRETIONARY OPTIONS. The period, if any, determined
                           by the Administrative Committee in its sole
                           discretion.

         (d) PAYMENT OF PURCHASE PRICE UPON EXERCISE. Each Option shall provide
that the Option Price of the Shares as to which an Option shall be exercised
shall be paid to the Corporation at the time of exercise either (i) in cash,
certified check or wire transfer, or (ii) in such other consideration as the
Administrative Committee deems appropriate including, but not limited to, loans
from the Corporation or a third party, (iii) subject to approval of the
Administrative Committee, in Mature Shares having a total fair market value, as
determined by the Administrative

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Committee, equal to the Option Price for such Shares, or a combination of cash
and Mature Shares having a total fair market value, as so determined, equal to
the Option Price for such Shares, (iv) subject to the approval of the
Administrative Committee, in its sole discretion, by delivering a properly
executed exercise notice in a form approved by the Administrative Committee,
together with an irrevocable notice of exercise and irrevocable instructions to
a broker to promptly deliver to the Corporation the amount of applicable sale or
loan proceeds sufficient to pay the purchase price for such Shares, together
with the amount of federal, state and local withholding taxes payable by
Participant by reason of such exercise or (v) any combination of the foregoing.

         (e) EXERCISE IN THE EVENT OF DEATH, DISABILITY, RETIREMENT OR OTHER
TERMINATION OF SERVICE. Subject to Subsection 6.4(f) hereof, the following
provisions shall apply upon termination of a Participant's status as a member of
the Board or Advisory Board:

                  (i)      UPON TERMINATION DUE TO DEATH, DISABILITY OR
                           RETIREMENT. If Participant's status as a member of
                           the Board or the Advisory Board shall terminate
                           because of his or her death, Disability or
                           Retirement, the Participant, Beneficiary or legal
                           representative shall have the right to exercise all
                           Options regardless of whether such Options are
                           vested, at any time and from time to time, but not
                           later than (x) one year following the date of death
                           or Disability, (ii) one year following the date of
                           Retirement, or (iii) the expiration date specified in
                           Section 6.4(a) hereof, whichever is earlier.

                  (ii)     UPON TERMINATION FOR ANY REASON OTHER THAN DUE TO
                           DEATH, DISABILITY, RETIREMENT OR FOR CAUSE. If a
                           Participant' s status as a member of the Board or
                           Advisory Board shall terminate for any reason other
                           than due to the Participant's death, Disability,
                           Retirement or termination for Cause, such Participant
                           shall have the right to exercise his or her Options,
                           to the extent that such Participant shall have been
                           entitled to do so on the date of such termination, at
                           any time and from time to time, but not later than
                           (i) on the expiration date specified in Section
                           6.4(a) hereof or (ii) three (3) months after the date
                           of such termination of service, whichever date is
                           earlier and the portion of any Option granted
                           hereunder that is not vested and exercisable as of
                           the date of such termination of service shall
                           automatically expire and be forfeited as of the date
                           of such termination of service.

                  (iii)    UPON TERMINATION FOR CAUSE. If a Participant's status
                           as a member of the Board or Advisory Board shall
                           terminate for Cause, all Options regardless of
                           whether such Options are vested or not shall be
                           forfeited and canceled on the date of such
                           termination.

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         (f) TRANSFER OF SERVICE FROM BOARD TO ADVISORY BOARD OR VICE VERSA. For
purposes of determining the exercise period and vesting of Options granted
hereunder, (i) a Participant who resigns as a member of the Board in order to
become a member of the Advisory Board shall be deemed during his or her period
of service as a member of the Advisory Board to be a continuing member of the
Board and (ii) a Participant who resigns as a member of the Advisory Board in
order to become a member of the Board shall be deemed during his or her period
of service as a member of the Board to be a continuing member of the Advisory
Board.

         (g) TRANSFERABILITY OF OPTIONS. Subject to Section 7.8 hereof, no
Options granted under the Plan shall be transferable other than by will or by
the laws of descent and distribution. During the lifetime of the Participant, an
Option shall be exercisable only by such Participant.

         (h) PARTICIPANTS TO HAVE NO RIGHTS AS STOCKHOLDERS. No Participant
shall have any rights as a stockholder with respect to any Common Stock subject
to his or her Option prior to the date of issuance to him or her of such Common
Stock.

         (i) INVESTMENT REPRESENTATION. Each Option Agreement for an Option
shall provide that, upon demand by the Administrative Committee for such a
representation, the Participant (or any person acting under Subsection 6.4(e)
hereof) shall deliver to the Administrative Committee, at the time of any
exercise of an Option or portion thereof, a written representation that the
Shares to be acquired upon such exercise are to be acquired for investment and
not for resale or with a view to the distribution thereof. Upon such demand,
delivery of such representation prior to the delivery of any Common Stock issued
upon exercise of an Option and prior to the expiration of the Option Term shall
be a condition

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precedent to the right of the Participant or such other person to purchase any
Common Stock. In the event certificates for Common Stock are delivered under the
Plan with respect to which such an investment representation has been obtained,
the Administrative Committee may cause a legend or legends to be placed on such
certificates to make appropriate reference to such representations and to
restrict transfer in the absence of compliance with applicable federal or state
securities laws.

         (j) OTHER OPTION PROVISIONS. The Administrative Committee may require a
Participant to agree, as a condition to receiving an Option under the Plan, that
part or all of any Options previously granted to such Participant under the Plan
be terminated.

         SECTION 6.5       EXERCISE OF OPTIONS.

         An Option shall be exercised by the delivery to the Corporation during
the Option Term of (x) written notice of intent to purchase a specific number of
Shares subject to the Option and (y) payment in full of the Option Price of such
specific number of Shares.

SECTION 7. GENERAL PROVISIONS.

         7.1      GENERAL CREDITOR STATUS.

         Participants shall have no right, title, or interest whatsoever in or
to any investments which the Corporation may make to aid it in meeting its
obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Corporation and any
Participant, Beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Corporation
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Corporation. All payments to be made hereunder shall be
paid from the general funds of the Corporation

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and no special or separate fund shall be established and no segregation of
assets shall be made to assure payment of such amounts except as expressly set
forth in the Plan; PROVIDED, HOWEVER, that in its sole discretion, the
Administrative Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Stock; PROVIDED, FURTHER, HOWEVER, that, unless the Administrative Committee
otherwise determines with the consent of the affected Participant, the existence
of such trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan.

         7.2      CERTAIN ADJUSTMENTS TO SHARES.

         In the event of any change in the Common Stock by reason of any stock
dividend, recapitalization, reorganization, spin-off, split-off, merger,
consolidation, stock split, reverse stock split, combination or exchange of
shares, or any rights offering to purchase Common Stock at a price substantially
below fair market value, or of any similar change affecting the Common Stock of
or by the Corporation, the number and kind of Shares available for Options under
the Plan and the Option Price per Share thereof shall be appropriately adjusted
consistent with such change in such manner as the Administrative Committee may
deem equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, the Participants hereunder. The Administrative
Committee shall give notice to each Participant of any adjustment made pursuant
to this Section and, upon notice, such adjustment shall be effective and binding
for all purposes of the Plan.

         7.3      SUCCESSOR CORPORATION.

         The obligations of the Corporation under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to

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substantially all of the assets and business of the Corporation. The Corporation
agrees that it will make appropriate provision for the preservation of
Participants' rights under the Plan in any agreement or plan which it may enter
into or adopt to effect any such merger, consolidation, reorganization or
transfer of assets.

         7.4      NO CLAIM OR RIGHT UNDER THE PLAN.

         Neither the Plan nor any action taken thereunder shall be construed as
giving any director or Advisory Board member any right to a continuation of
membership on the Board or the Advisory Board, as applicable.

         7.5      OPTIONS NOT TREATED AS COMPENSATION UNDER BENEFIT.

         No Option shall be considered as compensation under any employee
benefit plan of the Corporation, except as specifically provided in any such
plan or as otherwise determined by the Board.

         7.6      LISTING AND QUALIFICATION OF COMMON STOCK.

         The Corporation, in its discretion, may postpone the issuance or
delivery of Common Stock upon any exercise of an Option until completion of such
stock exchange listing or other qualification of such shares under any state or
federal law, rule or regulation as the Corporation may consider appropriate, and
may make such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the Shares in
compliance with applicable laws, rules and regulations.

         7.7      WITHHOLDING TAXES.

         The Corporation may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of all federal, state and
local taxes required by law to be withheld with respect to Options granted
pursuant to the Plan including, but not

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limited to (i) accepting a remittance from the Participant in cash, or in the
Administrative Committee's discretion in Mature Shares, (ii) deducting the
amount required to be withheld from any other amount then or thereafter payable
by the Corporation to a Participant, Beneficiary or legal representative or from
any Shares due to the Participant under the Plan, (iii) requiring a Participant,
Beneficiary or legal representative to pay to the Corporation the amount
required to be withheld as a condition of releasing Common Stock or (iv) any
combination of the foregoing. In addition, subject to such rules and regulations
as the Administrative Committee shall from time to time establish, Participants
shall be permitted to satisfy federal, state and local taxes, if any, imposed
upon the payment of Options in Common Stock at a rate up to such Participant's
maximum marginal tax rate with respect to each such tax by (i) irrevocably
electing to have the Corporation deduct from the number of Shares otherwise
deliverable in payment of an Option such number of Shares as shall have a value
equal to the amount of tax to be withheld, (ii) delivering to the Corporation
such portion of the Common Stock delivered in payment of the Option as shall
have a value equal to the amount of tax to be withheld, or (iii) delivering to
the Corporation such number of Mature Shares or combination of Mature Shares and
cash as shall have a value equal to the amount of tax to be withheld.

         7.8      NON-TRANSFERABILITY/DESIGNATION AND CHANGE OF BENEFICIARY.

         (a) An Option granted hereunder shall not be assignable or transferable
other than by will or by the laws of descent and distribution and may be
exercised during the Participant's lifetime only by the Participant or his or
her guardian or legal representative, except that a Participant may, if
permitted by the Administrative Committee, in its discretion, transfer an
Option, or portion thereof, to one or more members of the Participant's

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Immediate Family.

         (b) Each Participant shall file with the Administrative Committee a
written designation of one or more persons as the Beneficiary who shall be
entitled to receive the amount, if any, payable under the Plan upon his or her
death. A Participant may, from time to time, revoke or change his or her
Beneficiary by filing a new designation with the Administrative Committee. The
last such designation received by the Administrative Committee shall be
controlling; PROVIDED, HOWEVER, that no designation, or change or revocation
thereof, shall be effective unless received by the Administrative Committee
prior to the Participants' death, and in no event shall it be effective as of a
date prior to such receipt.

         7.9      PAYMENTS TO PERSONS OTHER THAN A PARTICIPANT.

         If the Administrative Committee shall find that any person to whom any
amount is payable under the Plan is unable to care for his or her affairs
because of illness or accident, or is a minor, or has died, then any payment due
to such person or his or her estate (unless a prior claim therefor has been made
by a duly appointed legal representative), may, if the Administrative Committee
so direct the Corporation, be paid to his or her spouse, a child, a relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Administrative Committee to be a proper recipient on behalf of
such person otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Administrative Committee and the Corporation
thereof.

         7.10     NO LIABILITY OF ADMINISTRATIVE COMMITTEE MEMBERS.

         No member of the Administrative Committee shall be personally liable by
reason of any contract or other instrument executed by such member or on his or
her behalf in his or her capacity as a member of the Administrative Committee
nor for any mistake of judgment

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made in good faith, and the Corporation shall indemnify and hold harmless each
employee, officer or director of the Corporation to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the Board
of Directors) arising out of any act or omission to act in connection with the
Plan unless arising out of such person's own fraud or bad faith. The
indemnification provided for in this Section 7.10 shall be in addition to any
rights of indemnification such Administration Committee member has as a director
of officer pursuant to law, under the Certificate of Incorporation or By-Laws of
the Corporation.

         7.11     AMENDMENT OR TERMINATION.

         Except as to matters that in the opinion of the Corporation's legal
counsel require stockholder approval, any provision of the Plan may be modified
as to a Participant by an individual agreement approved by the Administrative
Committee. The Board may, with prospective or retroactive effect, amend, suspend
or terminate the Plan or any portion thereof at any time; PROVIDED, HOWEVER,
that (i) no amendment that would materially increase the cost of the Plan to the
Corporation may be made by the Board without the approval of the stockholders of
the Corporation and (ii) no amendment, suspension or termination of the Plan
shall deprive any Participant of any rights to Options previously made under the
Plan without his or her written consent. Subject to earlier termination pursuant
to the provisions of this Section, and unless the stockholders of the
Corporation shall have approved an extension of the Plan beyond such date, no
further Options shall be made under the Plan after the tenth (10th) anniversary
of the original effective date of the Plan specified in Section 7.15 hereof.

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         7.12     UNFUNDED PLAN.

         The Plan is intended to constitute an unfunded deferred compensation
arrangement.

         7.13     GOVERNING LAW.

         The Plan shall be governed by and construed in accordance with the laws
of the State of Maryland, without reference to the principles of conflicts of
law thereof.

         7.14     NON-UNIFORM DETERMINATIONS.

         The Administrative Committee's determinations under the Plan need not
be uniform and may be made by the Administrative Committee selectively among
persons who receive, or are eligible to receive Discretionary Options, whether
or not such persons are similarly situated. Without limiting the generality of
the foregoing, the Administrative Committee shall be entitled, to enter into
non-uniform and selective Option Agreements as to (a) the identity of the
Participant, (b) the terms and provisions of Options, and (c) the treatment of
termination of service.

         7.15 EFFECTIVE DATE. The 1994 Director Stock Option Plan was originally
effective as of August 31, 1994 and was subsequently amended and restated in its
entirety effective December 1, 1998.

         7.16     NO ILLEGAL TRANSACTIONS.

         The Plan and all Options granted pursuant to it are subject to all
applicable laws and regulations. Notwithstanding any provision of the Plan or
any Option, Participants shall not be entitled to exercise or receive benefits
under, any Option, and the Corporation shall not be obligated to deliver any
Shares or deliver any benefits to a Participant, if such exercise or delivery
would constitute a violation by the Participant or the Corporation of any
applicable law or regulation.

                                       19
<PAGE>

         7.17     SEVERABILITY.

         If any part of the Plan is declared by any court of governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
invalidate any other part of the Plan. Any Section or part of a Section so
declared to be unlawful or invalid shall, if possible, be construed in manner
which will give effect to the terms of such Section to the fullest extent
possible while remaining lawful and valid.

                                       20<PAGE>
                                                                   EXHIBIT 10.15

                           LOAN AND SECURITY AGREEMENT

                  THIS LOAN AND SECURITY AGREEMENT is entered into as of March
29, 2001, by and between OPTIO SOFTWARE, INC., a Georgia corporation
("Borrower"), and BRANCH BANKING AND TRUST COMPANY, a North Carolina banking
corporation ("Bank").

                              STATEMENT OF PURPOSE

                  Borrower has requested Bank, and Bank has agreed, subject to
the terms of this Agreement, to extend a Revolving Credit Loan to Borrower in an
initial maximum aggregate principal amount outstanding not to exceed FIVE
MILLION AND NO/100 DOLLARS ($5,000,000.00). Bank may, in its sole discretion,
without any obligation or requirement to do so, extend additional credit to
Borrower in excess of the initial maximum aggregate principal amount described
above, which additional credit shall be subject to the terms and conditions of
this Agreement and secured by the Loan Documents. In consideration of the
promises, representations and warranties contained in this Agreement, Borrower
and Bank enter into the following Agreement on the terms and conditions set out
below.

                                    AGREEMENT

SECTION I.  DEFINITIONS.

                  When used in this Agreement, the following terms shall have
the following meanings (defined terms shall have the same meaning when used in
either the singular or plural):

                  "ACCOUNTS," "CHATTEL PAPER," "CONTRACT RIGHTS," "DOCUMENTS,"
"EQUIPMENT," "GENERAL INTANGIBLES," "Goods," "INSTRUMENTS," "INVENTORY," and
"INVESTMENT PROPERTY" shall have the same respective meanings as are given to
those terms in the Uniform Commercial Code of Georgia, as amended.

                  "AFFILIATE" means a Person (other than a Subsidiary): (i)
which, directly or indirectly, through one or more intermediaries controls, or
is controlled by, or is under common control with, Borrower; (ii) which
beneficially owns or holds five percent (5%) or more of any class of the voting
stock of Borrower; or (iii) five percent (5%) or more of the voting stock (or in
the case of a Person which is not a corporation, five percent (5%) or more of
the equity interests) of which is beneficially owned or held by Borrower or a
Subsidiary. The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.

                  "AGREEMENT" means this Loan and Security Agreement, as it may
be amended or supplemented from time to time.

<PAGE>

                  "AVAILABILITY" means, from time to time, the lesser of the (i)
Commitment, or (ii) Borrowing Base, reduced by the (A) aggregate principal
amount of the Revolving Credit Loan outstanding, and (B) Letter of Credit
Reserve.

                  "BORROWING BASE" means, based on the most recent Collateral
Report which as of the date of determination has been received by Bank, the
aggregate of 70% of the net amount of Eligible Receivables. Bank, in its
reasonable commercial discretion, may, from time to time apply a greater or
lesser percentage to Eligible Receivables in determining the Borrowing Base.

                  "BUSINESS DAY" shall mean each day when Bank is open for
business.

                  "CAPITAL LEASE" shall mean, as applied to any Person, any
lease of any property (whether real, personal or mixed) that would, in
accordance with GAAP, be required to be classified and accounted for as a
capital lease on a balance sheet of the lessee.

                  "CAPITAL LEASE OBLIGATION" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that would,
in accordance with GAAP, appear on a balance sheet as a liability of such lessee
in respect of such Capital Lease.

                  "CLOSING" shall have the meaning assigned to it in Paragraph
3.01.

                  "COLLATERAL" shall mean all of the property described in
Paragraph 4.02 and any other property, of every kind and nature, which is the
subject of any other agreement securing any part or all of the Obligations or
Other Obligations.

                  "COLLATERAL REPORT" means a report on Bank's standard form, or
in such other form as Bank may require, prepared by Borrower in accordance with
Bank's instructions, certified by the Chief Financial Officer or other
authorized officer of Borrower, regarding the Receivables of Borrower and other
Collateral, if applicable.

                  "COLLECTIONS" shall have the meaning assigned to it in
Paragraph 2.04(A).

                  "COMMITMENT" shall have the meaning assigned to it in
Paragraph 2.01(A).

                  "DEBT SERVICE REQUIREMENTS" shall mean, for any period, the
sum of (a) Interest Expense, (b) such portions of Long-Term Indebtedness which
are or were due and payable during such period, and (c) such portions of the
obligations under Capital Leases which are or were due and payable during such
period.

                  "DEFAULT RATE" shall mean the Prime Rate plus 5.00% per annum.

                  "EBIDTA" for any period shall mean, without duplication, (i)
Net Income; PLUS (ii) for such period any Interest Expense deducted in the
determination of Net Income; PLUS (iii) any income and franchise taxes actually
paid in cash or accrued by a Borrower and its Subsidiaries and deducted in the
determination of Net Income; PLUS (iv) amortization and depreciation and other
non-cash charges deducted in determining Net Income for such period;

                                       2
<PAGE>

MINUS (v) the sum for such period of interest income, extraordinary gains, gains
from sales of assets (other than sales of inventory in the ordinary course of
business) and unrealized losses from changes in currency; PLUS (vi) non-cash
stock dividends.

                  "ELIGIBLE RECEIVABLES" means those Receivables of Borrower,
each of which meets the following requirements: (i) such Receivable arose in the
ordinary course of Borrower's business, (ii) the right to payment has been fully
earned by completed performance and, if Inventory is involved, such Inventory
has been shipped by Borrower (or if not shipped by Borrower, are held by
Borrower under a "bill and hold" arrangement approved in writing by Bank in its
sole discretion), (iii) the Receivable includes only that portion which is not
subject to any offset, defense, counterclaim, credit, allowance or adjustment
and is not represented by a deposit, (iv) Borrower's title to such Receivable is
absolute and is subject to no prior assignment, claim, lien or security
interest, (v) the full amount reflected on Borrower's books and on any invoice
or statement delivered to Bank related to such Receivable is owing to Borrower
and no partial payment has been made on such Account, (vi) such Receivable is
due and payable not more than thirty (30) days from invoice date and no more
than sixty (60) days (or such other period as Bank may by written notice to
Borrower approve) have elapsed from invoice date; (vii) such Receivable did not
arise out of a contract or purchase order containing provisions prohibiting
assignment thereof or the creation of a security interest therein, and Borrower
has received no note, trade acceptance, draft or other instrument with respect
to such Receivable or in payment of such Account, (viii) Borrower has received
no notice of the death of the account debtor or of the dissolution, termination
of existence, insolvency, bankruptcy, appointment of a receiver for any part of
the property of, or assignment for the benefit of creditors made by, the account
debtor, (ix) such Receivable is not payable by any Subsidiary or Affiliate of
Borrower, (x) such Receivable is not payable by any foreign Person (provided
that Persons present in possessions of the United States of America shall not be
considered foreign Persons), unless such Receivable is payable in the full
amount of the face value of such Receivable in United States dollars and is
supported by an irrevocable letter of credit in form and substance acceptable to
Bank and issued by a bank satisfactory to Bank (and, if requested by Bank, such
letter of credit or the proceeds thereof, as Bank shall require, have been
assigned to Bank); (xi) such Receivable is not payable by the United States of
America or any political subdivision or agency thereof, unless Bank and Borrower
have complied with the Assignment of Claims Act with respect to such Receivable;
(xii) such receivable is not payable by any State or any agency thereof, unless
Borrower has met any requirements deemed necessary by the Bank to perfect its
security interest in such receivable; (xiii) the account debtor for such
Receivable is not located in the State of New Jersey unless Borrower has filed a
Notice of Business Activities Report with the New Jersey Division of Taxation
for the then current year; (xiv) such Receivable is not, at the reasonable
commercial discretion of Bank, deemed doubtful for collection for whatever
reason. Additionally, in the event that an account debtor of Borrower shall have
fifty percent (50%) or more of his accounts with Borrower ninety (90) days or
more from invoice date, then all Receivables from such account debtor shall be
deemed ineligible.

                  "ERISA" shall have the meaning assigned to it in Paragraph
5.01(I).

                  "EVENT OF DEFAULT" shall have the meaning assigned to it in
Paragraph 7.01.

                                       3
<PAGE>

                  "FIXED ASSETS" means any asset that would, in accordance with
GAAP, be required to be classified and accounted for as a capital asset.

                  "GAAP" means generally accepted accounting principles in the
United States consistently applied.

                  "INDEBTEDNESS" means, as to Borrower, all items of
indebtedness, obligation or liability for borrowed money, including without
limitation all sums evidenced by the Revolving Credit Promissory Note or
incurred pursuant to this Agreement, for the deferred purchase price of Fixed
Assets or services, or otherwise, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, including, but without
limitation: (i) all indebtedness guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the ordinary course
of business) or discounted with recourse; (ii) all indebtedness in effect
guaranteed, directly or indirectly, through agreements, contingent or otherwise,
to: (A) purchase such indebtedness; (B) purchase, sell or lease (as lessee or
lessor) property, products, materials or supplies or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such indebtedness or to assure the owner of the indebtedness against loss; or
(C) supply funds to or in any other manner invest in the debtor; (iii) all
indebtedness secured by (or for which the holder of such indebtedness has a
right, contingent or otherwise, to be secured by) any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance upon property
owned or acquired subject thereto, whether or not the liabilities secured
thereby have been assumed; (iv) Capital Lease Obligations; (v) current
liabilities in respect of unfunded vested benefits under plans covered by ERISA
and the regulations issued thereunder; or (vi) obligations under acceptance
facilities.

                  "INTEREST EXPENSE" shall mean, for any period, the total
interest expense of Borrower (including interest expense attributable to Capital
Leases), determined in accordance with GAAP.

                  "LAWS" means all ordinances, statutes, rules, regulations,
orders, injunctions, writs or decrees of any government or political subdivision
or agency thereof, or any court or similar entity established by any authority
thereof, including, without limitation, the Environmental Protection Act, the
Occupational Safety and Health Act, the Resource Conservation and Recovery Act,
the Hazardous and Solid Waste Amendments of 1984, the Comprehensive
Environmental, Response, Compensation and Liability Act of 1980, and the
Superfund Reauthorization and Amendments Act of 1986, the Toxic Substances
Control Act, the Clean Water Act, the Safe Drinking Water Act, the Clean Air
Act, the Securities and Exchange Act of 1934, all as amended from time to time,
and all rules and regulations issued under any of such laws.

                  "LETTER OF CREDIT OBLIGATIONS" means all obligations of
Borrower and any Affiliate or Subsidiary of Borrower to repay Bank all amounts
subject to advance, or advanced, by Bank in connection with any letter(s) of
credit or similar arrangement(s), whether heretofore, now or hereafter issued on
behalf of Borrower or any of its Affiliates or Subsidiaries.

                                       4
<PAGE>

                  "LETTER OF CREDIT RESERVE" shall have the meaning assigned to
it in Paragraph 2.01(A).

                  "LOAN" means the Revolving Credit Loan, including principal,
accrued interest, late fees, and reimbursable expenses.

                  "LOAN DOCUMENTS" means this Agreement, the Revolving Credit
Promissory Note, and any other document evidencing, securing or otherwise
relating to the Obligations, or required to be delivered by Borrower under this
Agreement, as any such documents may be extended, modified, renewed or
substituted.

                  "LOCK BOX ACCOUNT" shall have the meaning assigned to it in
Paragraph 2.04(A).

                  "LONG-TERM INDEBTEDNESS" shall mean all outstanding
Indebtedness of Borrower that, by its terms or by the terms of any instrument or
agreement relating thereto, matures more than one year from, or is renewable or
extendible at the option of Borrower to a date more than one year from
(including an option of Borrower under a revolving credit or similar arrangement
obligating the lender to extend credit over a period of one year or more), the
date of creation thereof, and includes current maturities of any such
Indebtedness.

                  "NET INCOME" shall mean, for any period, the net income (or
loss) of Borrower for such period, determined in accordance with GAAP.

                  "OBLIGATIONS" means (i) the obligation of Borrower to pay the
principal of and interest on the Loan in accordance with the terms of the
Revolving Credit Promissory Note and this Agreement and to satisfy all of its
other liabilities to Bank under this Agreement, whether now existing or
hereafter incurred, including any extensions, modifications, renewals or
substitutions; (ii) the obligation of Borrower to repay to Bank all amounts
advanced by Bank under this Agreement on behalf of Borrower, including, but
without limitation, advances for principal or interest, payments to prior
secured parties, mortgagees or lienors, or for taxes, levies, insurance, rent,
repairs to or maintenance or storage of any of the Collateral; and (iii) the
obligation of Borrower to reimburse Bank, on demand, for all of Bank's
reasonable expenses and costs, including the reasonable fees and expenses of its
counsel, in connection with the preparation, entering into, administration,
amendment, modification or enforcement of this Agreement and the documents
required under this Agreement, including, without limitation, any proceeding
brought or threatened to enforce payment of any of the obligations referred to
in clauses (i) and (ii) above.

                  "OTHER OBLIGATIONS" means all obligations, liabilities,
Indebtedness, duties and responsibilities of Borrower to Bank, any affiliate or
subsidiary, bank or no n-bank, direct or indirect, of BB&T Corporation, other
than the Obligations, under any and all agreements, instruments and other
documents, whether now existing or hereafter incurred, including any extensions,
modifications, renewals or substitutions thereof.

                  "PERMITTED LIENS" means (i) liens for taxes, assessments or
similar charges, incurred in the ordinary course of business that are not yet
due and payable or that are being

                                       5
<PAGE>

contested in good faith and with due diligence by appropriate proceedings; (ii)
pledges or deposits made in the ordinary course of business to secure payment of
workers' compensation, or to participate in any fund in connection with workers'
compensation, unemployment insurance, old-age pensions or other social security
programs; (iii) liens of mechanics, materialmen, warehousemen, carriers or other
like liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable; (iv) good faith pledges or deposits made in
the ordinary course of business to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, not in
excess of twenty percent (20%) of the aggregate amount due thereunder, or to
secure statutory obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business; (v) encumbrances
consisting of zoning restrictions, easements or other restrictions on the use of
real property, none of which impairs the use of such property by Borrower in the
operation of its business, and none of which is violated by existing or proposed
restrictions on land use; (vi) liens in favor of Bank and other liens permitted
under Section 6.02 hereof; (vii) other existing liens set forth or described on
EXHIBIT "A", and any renewals and extensions thereof; (viii) purchase money
security interests granted to secure the purchase price of assets which receives
the prior written approval of Bank; and (ix) the following, if the validity or
amount is being contested in good faith by appropriate and lawful proceedings,
so long as levy and execution have been stayed and continue to be stayed and
they do not, in the aggregate, materially detract from the value of the property
of Borrower, or materially impair their use in the operation of its business:
(A) claims or liens for taxes, assessments or charges due and payable and
subject to interest or penalty; (B) claims, liens and encumbrances upon, and
defects of title to, real or personal property, including any attachment of
personal or real property or other legal process prior to adjudication of a
dispute on the merits; (C) claims or liens of mechanics, materialmen,
warehousemen, carriers or other like liens; and (D) adverse judgments on appeal.

                  "PERSON" means any individual, corporation, partnership,
association, joint-stock company, trust, limited liability company or
partnership, unincorporated organization, joint venture, court or government or
political subdivision or agency.

                  "PRIME RATE" shall have the meaning assigned to it in
Paragraph 2.05.

                  "RATE" shall have the meaning assigned to it in Paragraph
2.05.

                  "RECEIVABLES" means all obligations of every kind at any time
owing to Borrower (whether now existing or hereafter arising, and whether
classified under the Uniform Commercial Code as Accounts, Instruments, Contract
Rights, Chattel Paper, General Intangibles or otherwise), all proceeds thereof,
all security therefor and all of rights of Borrower to goods or other property
sold or leased which may be represented by such property.

                  "RECORDS" means correspondence, memoranda, tapes, discs,
papers, books and other documents, or transcribed information of any type,
whether expressed in ordinary or machine language.

                  "REVOLVING CREDIT LOAN" shall have the meaning assigned to it
in Paragraph 2.01.

                                       6
<PAGE>

                  "REVOLVING CREDIT PROMISSORY NOTE" shall have the meaning
assigned to it in Paragraph 2.02.

                  "STOCKHOLDER DEBT" shall mean that certain indebtedness of
Borrower due to MA Muscato Family Limited Partnership I, Muscato Family Limited
Partnership I and Brian Newton, the former principal shareholders of Borrower's
subsidiary, Muscato Corporation, in the principal amount of $8,000,000.00 and
payable in the year 2030.

                  "SUBSIDIARY" of a Person means any corporation of which fifty
percent (50%) or more of the outstanding voting securities shall, at the time of
determination, be owned directly or indirectly, through one or more
intermediaries, by such Person.

                  "TANGIBLE NET WORTH" means, at any date, the shareholders'
equity determined in accordance with GAAP, less (i) all accounts receivable due
from shareholders, directors, officers, Affiliates or Subsidiaries, and (ii) the
value of all intangible assets, plus all Indebtedness which is fully and
expressly subordinated in writing to Bank and Bank's right to receive payment in
full of all the Obligations and Other Obligations, on terms and conditions
acceptable to Bank.

SECTION II. THE LOAN.

                  2.01   THE REVOLVING CREDIT LOAN.

                         Subject to the terms of this Agreement, Bank has agreed
to make available to Borrower for Borrower's use from time to time during the
term of this Agreement, upon the written or oral request of Borrower, a line of
credit ("Revolving Credit Loan") at any time equal to the lesser of (a)
$5,000,000.00 ("Commitment") or (b) the Borrowing Base; provided, however, Bank
shall retain as a non-disbursed reserve from the Revolving Credit Loan an amount
equal to the Letter of Credit Obligations (the "Letter of Credit Reserve"). Bank
agrees to make advances under the Revolving Credit Loan automatically, without
any request by Borrower, upon the presentment of items drawn against the
Borrower's checking account, provided that there is sufficient Availability to
cover such advances. Borrower shall submit a completed Collateral Report to Bank
at least once per week so long as any Obligations are outstanding. It is further
provided that Borrower releases the Bank from any liability or obligation for
and agrees to indemnify and hold the Bank harmless from and against any loss,
cost, damage or expense (including the Bank's reasonable attorneys' fees)
incurred or suffered as a result of the payment by the Bank of any item drawn
against the Borrower's checking account that is subsequently determined to have
been improperly paid for any reason, except for the gross negligence, willful
misconduct or bad faith of the Bank. Bank also reserves the right, in its sole
discretion, upon three (3) Business Days prior written notice, to discontinue
automatic payment of items presented to the Bank, and to require written or oral
advance requests to be made by the Borrower.

                  2.02 THE REVOLVING CREDIT PROMISSORY NOTE. The Loan shall be
evidenced by a promissory note, payable to the order of Bank in the amount of
Bank's Commitment (the "Revolving Credit Promissory Note"), the terms of which
are incorporated by reference.

                                       7
<PAGE>

                2.03   PAYMENT OF PRINCIPAL ON THE REVOLVING CREDIT PROMISSORY
NOTE.

                           (A) Unless sooner payable by reason of an Event of
Default and acceleration under Paragraphs 7.01 and 7.02, the principal balance
outstanding under the Revolving Credit Promissory Note and the remaining
Obligations shall be payable on the termination of this Agreement as described
in Paragraph 8.01; provided, however, that Borrower may borrow, pay, reborrow
and repay the Loan from time to time; provided, further, however, that the
aggregate outstanding principal amount of the Loan shall at no time exceed the
lesser of the Commitment or the Borrowing Base, less the amount of the Letter of
Credit Reserve. In addition, that portion of the Obligations consisting of the
principal amount of the Loan shall be payable to the extent of any Collections
with respect to the Receivables, which Collections may be applied as described
in Paragraph 2.04 on the date such Collections are received.

                           (B) In the event that the aggregate principal amount
of the Loan outstanding shall at any time exceed the lesser of the Commitment or
the Borrowing Base, less the amount of the Letter of Credit Reserve, Borrower
shall immediately upon demand repay so much of the Loan as is necessary in order
that the aggregate principal amount of the Loan outstanding shall not exceed the
lesser of the Commitment or the Borrowing Base, less the amount of the Letter of
Credit Reserve.

                  2.04  PAYMENT AND COLLECTIONS.

                           (A) Upon execution hereof, Borrower (or any of its
Affiliates, Subsidiaries, agents or those Persons acting for or in concert with
Borrower) shall (i) establish and maintain at Borrower's expense an account (the
"Lock Box Account") with Bank in Borrower's name and to which all monies,
checks, notes, drafts or any other form of payment relating to and/or proceeds
of the Receivables (the "Collections") shall be deposited for application on
account of the Obligations and the Other Obligations as provided in this
Paragraph 2.04; and (ii) direct each of its account debtors in writing to remit
all payments with respect to Receivables for deposit in the Lock Box Account in
such form as Bank may approve; in each case no later than the first Business Day
following receipt of Bank's election under this Paragraph. Neither Borrower nor
any Affiliate or Subsidiary shall be permitted to withdraw any amounts from the
Lock Box Account or change the procedures under Bank's Lock Box Account
agreement. Neither Borrower nor any Affiliate or Subsidiary shall change any
directive to its account debtors as described in clause (ii) above without the
prior written consent of Bank, and in the event any such instructions to account
debtors are changed without Bank's consent, such actions shall constitute an
Event of Default under this Agreement, would cause irreparable damage to Bank
for which there would be no adequate remedy at law, and agrees and consents to
specific performance of the terms and provisions of this Agreement, including
Section 2.04. All Collections to the Lock Box Account shall be swept from the
Lock Box Account with such frequency as Bank may desire, but not less than once
each Business Day of collected funds. Borrower agrees that all Collections shall
be the sole and exclusive property of Bank, to the extent of the outstanding
Obligations and Other Obligations, immediately upon the receipt of such items in
the Lock Box Account by Bank or by Borrower if received by Borrower (in which
event Borrower shall hold all such items in trust for Bank prior to delivery to
Bank) or otherwise; provided, however, that no such item received by Bank shall
constitute payment to Bank unless

                                       8
<PAGE>

such item is actually collected by Bank. Notwithstanding anything to the
contrary in this Agreement, all Collections shall, solely for purposes of
determining the occurrence of an Event of Default, be deemed received upon
actual receipt by Bank, unless such item is subsequently dishonored for any
reason whatsoever.

                           (B) Borrower appoints any person that Bank may from
time to time designate as Borrower's attorney-in-fact with full power and
authority, at any time hereafter, to (i) endorse Borrower's name on any checks,
notes, acceptances, money orders, drafts or other forms of payment or security
that may come into Bank's possession; (ii) sign Borrower's name on any invoice
or bill of lading relating to any Collateral, on drafts against customers, on
schedules and assignments of Receivables, on notices of assignment, financing
statements and other public records, on verifications of accounts and on notices
to customers; (iii) sign Borrower's name to the proofs of claim against any
account debtor on behalf of Borrower; (iv) notify the post office authorities to
change the address for delivery of Borrower's mail to an address designated by
Bank; (v) receive, open and dispose of all mail addressed to Borrower; (vi) send
requests for verification of Accounts to customers or account debtors and (vii)
do all things necessary to carry out this Agreement. Neither Bank nor the
attorney will be liable for any acts or omissions or for any error of judgment
or mistake of fact or law in connection with the activities described in or
contemplated by the first sentence of this Paragraph 2.04(B), except for such
acts or omissions which constitute gross negligence, willful misconduct or bad
faith. This power, being coupled with an interest, is irrevocable so long as any
Receivables assigned to Bank or in which Bank has a security interest remain
unpaid or until the Obligations and Other Obligations have been fully satisfied.

                           (C) Borrower irrevocably waives the right to direct
the application of any and all payments at any time or times hereafter which may
be received by Bank from or for the benefit of Borrower, and Borrower hereby
irrevocably agrees that Bank shall have the continuing exclusive right to apply
and reapply any and all such payments received at any time or times hereafter in
such manner as Bank may deem advisable, notwithstanding any entry by Bank upon
any of its books and records.

                           (D) To the extent that Borrower makes a payment(s) to
Bank or Bank enforces its security interests and liens or exercises its right of
set-off, and such payment(s) or the proceeds of such enforcement or set-off are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable claim, then to the
extent of such recovery, the liability originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment had not
been made or such enforcement or set-off had not occurred and shall be
Obligations secured by the Collateral.

                  2.05  INTEREST RATE AND FEES.

                           (A) Interest on the Loan shall be paid as follows:

                                    (1) Interest shall accrue on the principal
balance of the Loan, from time to time outstanding, and will be payable at the
Prime Rate plus one-half percent

                                       9
<PAGE>

(00.50%) per annum (hereinafter referred to as the "Rate"). Changes in the Prime
Rate shall be effective on the date of such change. "Prime Rate" shall mean that
interest rate per annum so denominated and set by Bank from time to time as an
interest rate basis for borrowings. The Prime Rate is one of several interest
rate bases used by Bank, and Bank lends at rates above and below the Prime Rate.
On the date hereof, the Prime Rate is 8.0% and, therefore, the rate of interest
in effect hereunder with respect to the Revolving Credit Loan on the date
hereof, expressed in simple interest terms, is 8.5%.

                                    (2) Interest shall be calculated on the
basis of a three hundred sixty (360) day year, shall be charged for the actual
number of days the Loan is outstanding, and shall be payable by Borrower on the
first day of each month, commencing the first day of the calendar month
immediately following the date of this Agreement or, if such day is not a
Business Day, on the next succeeding Business Day. Such payments of interest may
be effected by Bank's debits on the dates such interest is due on Borrower's
account with Bank, or, if insufficient funds are in such account, by advances
under the Loan to Borrower on the date such interest is due, subject to the
provisions hereof and so long as there is Availability. Bank is authorized by
Borrower to effect such payment of interest (and any other amounts due under
this Agreement to Bank from Borrower or any Subsidiary or Affiliate) by such
debits or such advances as the case may be. In the event there are insufficient
funds in such account and there is no Availability, Borrower shall be required
to pay such interest to Bank when due.

                                    (3) Upon and after the occurrence of an
Event of Default, and during the continuance of such Event of Default, the
Obligations shall bear interest at the Default Rate.

                           (B) If, at any time, the Rate shall be deemed by any
competent court of law, governmental agency or tribunal to exceed the maximum
rate of interest permitted by any applicable Laws, then, for such time as the
Rate would be deemed excessive, its application shall be suspended and there
shall be charged instead the maximum rate of interest permissible under such
Laws and any amounts collected in excess of the permissible amount shall be
deemed a prepayment of principal on the Obligations as determined by Bank.

                           (C) Subject to the provisions of Section 8.02 hereof,
on the execution of this Agreement, Borrower shall pay to Bank a commitment fee
of TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) less any deposit paid to Bank upon
execution of the Commitment Letter dated March 1, 2001. Borrower shall pay an
examination fee not to exceed SEVEN HUNDRED FIFTY DOLLARS ($750.00), plus
reasonable travel expenses, to be reimbursed as incurred by Bank for audits of
the books and records of Borrower as authorized under this Agreement, and a
monthly administrative fee in the amount of TWO HUNDRED DOLLARS ($200.00), to be
paid to Bank for the administration of the Loan on the first Business Day of
each month during the term of this Agreement; provided, however, except in the
event of default, Borrower's obligation to reimburse Bank for audits, as herein
provided, shall be no more frequently than quarterly. Bank is authorized by
Borrower to effect any such payments by debiting Borrower's account with Bank on
the date such amounts are due, or otherwise as described in Paragraph
2.05(A)(2).

                                       10
<PAGE>

                  2.06 PAYMENT TO BANK. All sums payable to Bank under this
Agreement shall be paid in United States dollars in immediately available funds
to Bank at its principal office in Atlanta, Georgia. Bank may, at its sole
discretion, effect payment of all such sums by debiting Borrower's account with
Bank or as otherwise described in Paragraph 2.05(A)(2). Bank shall send Borrower
monthly statements of all amounts due under this Agreement, which statements
shall be considered correct and conclusively binding on Borrower absent manifest
error unless Borrower notifies Bank to the contrary within thirty (30) days of
the receipt by Borrower of any statement which it deems to be incorrect.

SECTION III.  CONDITIONS PRECEDENT.

                  The obligation of Bank to make the Loan under this Agreement
is subject to the following conditions precedent:

                  3.01 DOCUMENTS REQUIRED FOR THE CLOSING. Borrower shall have
delivered to Bank on or prior to the effective date of this Agreement
("Closing"), the Revolving Credit Promissory Note, and shall have delivered to
Bank on or prior to the date of Closing or concurrently with the Closing, the
following:

                           (A) Duly executed UCC-1 financing statements;

                           (B) A certified (as of the date of Closing) copy of
resolutions of Borrower's board of directors or other governing body or
authority authorizing the execution, delivery and performance of this Agreement,
the Revolving Credit Promissory Note, and the other Loan Documents;

                           (C) A certificate (as of the date of Closing) of
Borrower's Secretary or other official having similar responsibilities as to the
incumbency and signatures of the officers of Borrower signing this Agreement,
the Revolving Credit Promissory Note, the Loan Documents and each other document
to be delivered pursuant hereto;

                           (D) A certificate (as of the date of Closing) signed
by the President, Vice President, Chief Financial Officer or other official
having similar authority of Borrower and to the effect that: (i) the
representations and warranties set forth in Paragraph 5.01 are true as of the
date of the Closing; and (ii) no Event of Default under this Agreement, and no
event which, with the giving of notice or passage of time or both, would become
an Event of Default, has occurred as of such date;

                           (E) A Collateral Report dated no more than one week
prior to Closing;

                           (F) An opinion from legal counsel for Borrower as to
the status of Borrower, the enforceability of the Loan Documents, and such other
matters as Bank shall require;

                           (G) Bank's standard form lock box, cash management or
account sweep agreements, duly executed by Borrower;

                                       11
<PAGE>

                           (H) Such other documents or agreements as Bank or its
counsel may reasonably require to evidence or secure the Loan including, without
limitation, any guaranty agreement, security agreement, deed of trust,
subordination agreement or such other documents required to cross-default and
cross-collateralize the Obligations and the Other Obligations.

                  3.02  CERTAIN EVENTS. At the time of Closing or any borrowing
hereunder, Borrower shall be deemed to certify to Bank that:

                           (A) No Event of Default shall have occurred and be
continuing, and no event shall have occurred and be continuing that, with the
giving of notice or passage of time or both, would be an Event of Default;

                           (B) No material adverse change shall have occurred in
the financial or operating condition or prospects (other than general macro
economic conditions) of Borrower since the date of this Agreement;

                           (C) All the Loan Documents shall have remained in
full force and effect; and

                           (D) The representations and warranties contained
herein shall be true and correct in all material respects as of such date.

SECTION IV. COLLATERAL SECURITY.

                  4.01 COMPOSITION OF THE COLLATERAL. The Collateral shall stand
as one general, continuing collateral security for all Obligations and may be
retained by Bank until all Obligations and Other Obligations have been satisfied
in full.

                  4.02 RIGHTS IN PROPERTY HELD BY BORROWER. As security for the
prompt satisfaction of all Obligations and Other Obligations, Borrower assigns
to Bank all of its right, title and interest in and to, and grants to Bank a
first lien upon and security interest in, all of the following, wherever
located, whether now owned or hereafter acquired, together with all
replacements, attachments, accessions, alterations, accessories, products and
proceeds (including, without limitation, insurance proceeds) thereof: (i)
Accounts; (ii) Inventory (including goods intended for sale, use or lease by
Borrower or to be furnished by Borrower under contracts of service, all raw
materials, work-in-process, finished goods, Inventory that may be rejected,
returned, reclaimed, repossessed or stopped in transit, and materials and
supplies); (iii) Goods, (iv) Equipment; (v) Chattel Paper; (vi) General
Intangibles (including without limitation tax refund claims, equipment
manufacturer's warranties, and equipment leases); (vii) Instruments; (viii)
Documents; (ix) Contract Rights, (x) rights as seller of Inventory; (xi)
Receivables; (xii) all leasehold improvements and fixtures; (xiii) vehicles;
(xiv) patents, trademarks, service marks and other intangible rights; (xv) all
Records pertaining to any Collateral; and (xvi) Deposit Accounts; (xvii)
Investment Property, and (xviii) to the extent not otherwise specified above,
the assets, properties and rights described on the attached EXHIBIT "B".

                                       12
<PAGE>

                  4.03  PRIORITY OF LIENS. The liens on all Collateral shall be
first and prior liens except for Permitted Liens.

                  4.04  FINANCING STATEMENTS.

                           (A) Borrower will: (i) join with Bank in executing
such financing statements (including amendments and continuation statements) in
form satisfactory to Bank; (ii) pay or reimburse Bank for all costs and taxes of
filing or recording in such public offices as Bank may designate; and (iii) take
such other steps as Bank may reasonably direct, including the noting of Bank's
lien on the Collateral and on any certificates of title, all to perfect Bank's
interest in the Collateral.

                           (B) In addition to the foregoing, and not in
limitation:

                                    (1) A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office; and

                                    (2) To the extent lawful, Borrower appoints
Bank as its attorney-in-fact (without requiring Bank to act as such) to execute
any financing statement in the name of Borrower, and to perform all other acts
that Bank deems appropriate to perfect and continue its security interest in,
and to protect and preserve, the Collateral, including leasing warehouses to
Bank or its designee, transferring Collateral thereto or to public warehouses,
placing and maintaining signs, appointing custodians and maintaining such
Records with respect to the Collateral as Bank may reasonably request. If any
Collateral is in the possession or control of any other party, Borrower shall
notify all such parties of Bank's security interest therein, and instruct all
such parties to hold all such Collateral for Bank's account and subject to
Bank's instructions.

                  4.05 CROSS COLLATERALIZATION. The Collateral shall constitute
security for all the Obligations and Other Obligations, without apportionment or
designation as to any particular Obligation or Other Obligation, and all of such
Obligations or Other Obligations, howsoever and whensoever incurred, shall be
secured by all of the Collateral, howsoever and whensoever acquired, and Bank
shall have the right, in its sole discretion, to determine the order in which
Bank's rights in or remedies against the Collateral are to be exercised and
which portions of the Collateral are to be proceeded against and the order of
application of proceeds of the Collateral as against any particular Obligation
or Other Obligation. Bank shall have no obligation to marshal any of the
Collateral or apply the same in any fashion. In addition to the Collateral, all
liens, security interests and collateral with respect to any Other Obligations
shall constitute cross-collateral for all Obligations without apportionment or
designation as to any particular Obligation, and all Obligations, howsoever and
whensoever incurred, shall be secured by all such other collateral, howsoever
and whensoever acquired, and Bank shall have the right, in its sole discretion,
to determine the order in which Bank's rights in or remedies against such other
collateral are to be exercised and which portions of the other collateral are to
be proceeded against and the order of application of proceeds of the other
collateral against particular

                                       13
<PAGE>

Obligations. Bank shall have no obligation to marshal any of such other
collateral or apply the same in any fashion.

                  4.06 LOCATION OF COLLATERAL. The Collateral shall be kept only
at the locations described on EXHIBIT "C" and shall not be removed except for
the sale of Inventory in the regular course of Borrower's business. Borrower
shall provide Bank with written notice ten (10) days prior to any change in the
location of any of the places where any part of the Collateral is kept or the
establishment of any new, or the discontinuance of any existing, places of
business or places where Collateral is kept.

                  4.07 PROCESSING OF INVENTORY. Upon default, Borrower
authorizes Bank to pay and charge to Borrower any amounts Bank deems necessary
for any processing or finishing of Inventory in order to obtain a release of
such Inventory from any processor, mechanic, artisan or finisher. Upon default,
Borrower agrees to pay Bank all of Bank's expenses of processing, finishing,
selling and storing, handling, licensing, insuring and shipping the Inventory
and any and all of the other costs and expenses which Bank may incur in
protecting or enforcing Bank's security interest in the Inventory or the
proceeds or products thereof. All sums payable by Borrower under this Paragraph
shall be due on demand, deemed a part of the Obligations and secured by the
Collateral, including the Inventory.

                  4.08 EXCULPATION OF BANK. Bank shall not be liable or
responsible for and Borrower releases Bank from any and all causes of action or
claims which Borrower may now or hereafter have for any loss or damage to
Borrower claimed to be caused by or arising from: (a) the safekeeping of
Collateral; (b) any damage to any Collateral occurring or arising in any manner
or fashion from any cause; (c) any diminution in the value of Collateral; or (d)
any act or default of any carrier, warehouseman, bailee or forwarding agency,
except those claims arising as a result of the gross negligence or willful
misconduct of Bank. All risk of loss, damage or destruction of Collateral shall
be borne by Borrower.

SECTION V. REPRESENTATIONS AND WARRANTIES.

                  5.01  ORIGINAL. To induce Bank to enter into this Agreement,
Borrower represents and warrants to Bank as follows:

                           (A) Borrower is a corporation duly organized, validly
existing and in good standing under the Laws of the state of its incorporation
or organization; it has the lawful power to own its properties and to engage in
the business it conducts, and is duly qualified and in good standing as a
foreign corporation in the jurisdictions where the nature of its business or the
location of property owned by it makes such qualification necessary and where
the failure to so qualify would have a material adverse effect (in Bank's
reasonable commercial discretion) upon the Borrower; the states in which
Borrower is qualified to do business are set forth on EXHIBIT "D"; the addresses
of all places of business of Borrower and the addresses at which any of the
Collateral is or shall be located are as set forth in EXHIBIT "C"; and Borrower
maintains its books and records relating to its Accounts, Receivables, Contract
Rights, Instruments, Investment Property, and General Intangibles at its offices
at 3015 Windward Plaza, Fairways II, Alpharetta, Georgia 30005.

                                       14
<PAGE>

                           (B) Borrower is not in default with respect to any of
its existing Indebtedness.

                           (C) The execution of this Agreement, the Revolving
Credit Promissory Note and the other Loan Documents, and the performance of the
transactions contemplated hereunder and thereunder will not (or, with the
passage of time, the giving of notice, or both): (i) violate the charter or
bylaw provisions of Borrower, or, to the best of Borrower's knowledge, violate
any Laws or result in a default under any contract, agreement or instrument to
which Borrower is a party or by which Borrower or its property is bound; or (ii)
result in the creation or imposition of any security interest in, or lien or
encumbrance upon, any of the assets of Borrower, except in favor of Bank, and
except where such violation, conflict, breach, default, termination or lien
would not have a material adverse effect (in Bank's reasonable commercial
discretion) upon the Borrower.

                           (D) Borrower has the power and authority to enter
into and perform its obligations under this Agreement, the Revolving Credit
Promissory Note and the other Loan Documents, and has taken all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement, the Revolving Credit Promissory Note and the Loan Documents.

                           (E) This Agreement and the Loan Documents are, and
the Revolving Credit Promissory Note and all other Loan Documents when executed
and delivered will be, valid, binding and enforceable in accordance with their
respective terms subject to enforcement of bankruptcy, insolvency,
reorganization, fraudulent conveyance or other Laws limiting the enforcement of
creditors' rights generally and to moratorium laws from time to time in effect
and to limitations on equitable remedies.

                           (F) Except as otherwise permitted in this Agreement
(in connection with Permitted Liens or otherwise), Borrower has filed all
federal, state and local tax returns and other tax-related reports, unless
contested in good faith by appropriate proceedings, it is required by Laws to
file prior to the date of this Agreement and which are material to the conduct
of its business; has paid or caused to be paid all taxes, assessments and other
governmental charges that are due and payable prior to the date of this
Agreement, and has made adequate provision for the payment of such taxes,
assessments or other charges accruing but not yet payable; Borrower has no
knowledge of any deficiency or additional assessment in connection with any
taxes, assessments or charges not provided for on its books.

                           (G) All financial statements delivered to Bank have
been prepared in accordance with GAAP. Such financial statements contain no
material misstatement or omission and fairly present the financial condition,
assets and liabilities of Borrower and its Subsidiaries on a consolidated basis
as of the respective dates thereof and the results of operations of Borrower and
its Subsidiaries on a consolidated basis as of the respective dates thereof and
for the respective periods then ended. Since the date of the most recent
financial statement for Borrower provided to Bank, there has been no material
adverse change in assets, liabilities, financial condition or prospects of
Borrower or any Subsidiary or in the results of operations of Borrower or any
Subsidiary, and neither Borrower nor any of its Subsidiaries has incurred any

                                       15
<PAGE>

obligation or liability that materially and adversely affect its financial
condition, business operations or properties, or has entered into any material
contract not contemplated by this Agreement and not in the ordinary course of
business consistent with past practice.

                           (H) Each consent, approval or authorization of, or
filing, registration or qualification with, any Person required to be obtained
or effected by Borrower in connection with the execution and delivery of this
Agreement, the Revolving Credit Promissory Note and the other Loan Documents or
the undertaking or performance of any Obligation has been duly obtained or
effected.

                           (I) All Defined  Benefit Pension Plans, if any, as
defined in the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), of Borrower meet, as of the date of this Agreement, the minimum
funding standards of Section 302 of ERISA, and with respect to all Employee
Benefit Plans, as defined in ERISA, of Borrower, no Reportable Event or
Prohibited Transaction, as defined in ERISA, has occurred.

                           (J) Borrower has no Subsidiaries except as shown on
attached EXHIBIT "E".

                           (K) All Inventory (i) is and shall be of good and
merchantable quality, free from any and all defects and not obsolete except as
noted in Borrower's periodic Inventory reports provided to Bank; (ii) is and
shall be subject to internal controls and management procedures (including, but
not limited to, a physical inventory) conducted by Borrower and satisfactory to
Bank; and (iii) meets and shall meet all standards imposed by any governmental
authority having jurisdiction over such Inventory, its use and/or sale. No
Inventory (a) has been or shall be consigned without Bank's prior written
consent; and (b) is or shall ever be stored with a bailee, warehouseman or
similar party without Bank's prior written consent and in such event Borrower
will, concurrently with delivery to such party, cause any such party to issue
and deliver to Bank, in form acceptable to Bank, warehouse receipts in Bank's
name evidencing the storage of such Inventory.

                           (L) There are no material actions, suits,
investigations or proceedings pending or, to the knowledge of Borrower,
threatened against or affecting Borrower before any court or administrative
officer or agency. Borrower is not in violation of or in default under any
applicable Law, order, decree, writ or injunction, to which a default or failure
to comply could have a material adverse effect (in Bank's reasonable commercial
discretion), upon the Borrower.

                           (M) Borrower has good, indefeasible and merchantable
title in fee simple (or its equivalent under applicable law) to, and ownership
of, the assets reflected in its most recent financial statement delivered to
Bank, and all of its other assets, free and clear of all liens, claims, security
interests and encumbrances, except for the Permitted Liens and as shown on
EXHIBIT "A".

                           (N) No dangerous, hazardous or toxic substances,
pollutants, contaminants, chemicals, wastes or materials, within the meaning of
any applicable Laws (collectively "Hazardous Substances") are unlawfully stored
or located upon any premises

                                       16
<PAGE>

owned, leased, controlled or used by Borrower or any of its Subsidiaries, and no
part of any such premises, including the groundwater located thereon and
thereunder, is presently contaminated by any such Hazardous Substance. All
activities and operations of Borrower and its Subsidiaries meet in all material
respects the requirements of all applicable environmental Laws. Borrower has
never sent a Hazardous Substance to a site which, pursuant to any Law, (i) has
been placed on the "National Priorities List" or "CERCLIS List" of hazardous
wastes (or any similar state list) or (ii) is subject to a claim, an
administrative order or other request to take removal or remedial action or to
pay for the cost of cleaning up such a site. Borrower has timely filed all
reports required to be filed, has acquired all necessary certificates, approvals
and permits and has generated and maintained all required data, documentation
and records under applicable environmental Laws.

                           (O) No representation or warranty by Borrower
contained in this Agreement, the Loan Documents or in any other certificate or
document furnished by Borrower pursuant to this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to make
such representation or warranty not misleading in light of the circumstances
under which it was made.

                           (P) Borrower and each of its subsidiaries have duly
complied in all material respects with, and the Collateral and their business
operations and leaseholds are in compliance in all material respects with, the
Laws, and there have been no material citations, notices or orders of
noncompliance issued to Borrower or any of its subsidiaries under any of such
Laws.

                  5.02  SURVIVAL.  All the representations and warranties set
forth in Paragraph 5.01 shall survive until all Obligations are satisfied in
full.

SECTION VI.  BORROWER'S COVENANTS.

                  Borrower covenants and agrees with Bank that, so long as
Borrower may borrow under the Commitment and so long as any of the Obligations
remain unsatisfied, it will comply with the following covenants:

                  6.01  AFFIRMATIVE COVENANTS.

                           (A) Borrower will use the proceeds of the Loan only
for the following purposes: to refinance existing indebtedness with First Union
National Bank, to fund capital expenditures and other general expenditures, to
provide for working capital, and no other purpose. Borrower will furnish Bank
such evidence as it may reasonably require with respect to such uses.

                           (B) Borrower will furnish Bank:

                                    (1) Within twenty (20) days after the close
of each monthly accounting period in each fiscal year: (a) income statements of
Borrower for such monthly period and (b) balance sheets of Borrower as of the
end of such monthly period, all in reasonable

                                       17
<PAGE>

detail, subject to year-end audit adjustments and certified by Borrower's
President or Chief Financial Officer to have been prepared in accordance with
GAAP except for any inconsistencies explained in such certificate.

                                    (2) Within ninety (90) days after the close
of each fiscal year financial statements (income statement, balance sheet and
statement of cash flows at a minimum) of Borrower, as of the end of such year,
in reasonable detail, including all supporting schedules and comments; such
statements to be audited by independent certified public accountants acceptable
to Bank, and certified by such accountants to have been prepared in accordance
with GAAP, except for any inconsistencies explained in such statement. Borrower
will obtain from such independent certified public accountants and deliver to
Bank, within ninety (90) days after the close of each fiscal year, their written
statement that in making the examination necessary to their certification they
have obtained no knowledge of any Event of Default by Borrower, or disclosing
all Events of Default of which they have obtained knowledge; provided, however,
that in making their examination such accountants shall not be required to go
beyond the bounds of generally accepted auditing standards for the purpose of
certifying financial statements. Bank shall have the right, from time to time,
to discuss Borrower's affairs directly with Borrower's independent certified
public accountants after notice to Borrower and opportunity of Borrower to be
present at any such discussions.

                                    (3) Contemporaneously with each monthly and
year-end financial report required by the foregoing paragraphs (1) and (2), a
certificate of the President or Chief Financial Officer of Borrower stating that
he has individually reviewed the provisions of this Agreement and that a review
of the activities of Borrower during such yearly or monthly period, as the case
may be, has been made by him or under his supervision, with a view to
determining whether Borrower has fulfilled all its obligations under this
Agreement, and that, to the best of his knowledge, Borrower has observed and
performed each undertaking contained in this Agreement and is not in default in
the observance or performance of any of the provisions of this Agreement or, if
Borrower shall be in default, specifying all such defaults and events of which
it may have knowledge.

                                    (4) By the fifteenth (15th) day of each
month, an aging of Receivables and payables in such form and content as Bank may
reasonably require, all dated as of the last day of the immediately preceding
monthly accounting period, together with a Collateral Report dated as of the
date an aging of Receivables report.

                                    (5) At least weekly during the term of this
Agreement, a Collateral Report dated no more than three business days prior to
its submission to Bank.

                          (C) Borrower will maintain, or cause to be maintained,
public liability insurance and fire and extended coverage insurance on all
assets owned by it, all in such form and amounts as are consistent with industry
practices and with such insurers as may be satisfactory to Bank in its
commercial reasonable judgment. Such policies shall contain a provision whereby
they cannot be canceled except after at least thirty (30) days' written notice
to Bank. Such policies to the extent they insure any of the Collateral shall
name the Bank as additional insured and be payable to Bank as its interest may
appear. Borrower will furnish to

                                       18
<PAGE>

Bank such evidence of insurance as Bank may require. Borrower agrees that, in
the event it fails to pay or cause to be paid the premium on any such insurance,
Bank may do so and be reimbursed by Borrower therefor on demand with interest
thereon at Bank's Rate. Borrower assigns to Bank any returned or unearned
premiums that may be due Borrower upon cancellation of any such policies for any
reason whatsoever and directs the insurers to pay Bank any amounts so due. Bank
is appointed Borrower's attorney-in-fact (without requiring Bank to act as such)
to endorse any check which may be payable to Borrower and to collect such
returned or unearned premiums or the proceeds of such insurance, and any amount
so collected may be applied by Bank toward satisfaction of any of the
Obligations or Other Obligations.

                          (D) Borrower will pay or cause to be paid when due,
all taxes, assessments and charges or levies imposed upon it or its property or
which it is required to withhold and pay over, except where contested in good
faith by appropriate proceedings with adequate reserves therefor having been set
aside on its books. Borrower shall pay or cause to be paid all such taxes,
assessments, charges or levies forthwith whenever foreclosure on any lien that
attaches appears imminent.

                          (E) Borrower will, when requested so to do, make
available for inspection during normal business hours by duly authorized
representatives of Bank any of its books and Records, and will furnish Bank any
information regarding its business affairs and financial condition within a
reasonable time after request by Bank. Borrower agrees that Bank shall have the
right to conduct all such examinations, inspections and audits of Borrower's
books and Records, business affairs and financial condition as Bank deems
necessary in its commercially reasonable judgment. Such examinations,
inspections and audits may include the verification of Accounts to customers or
account debtors of Borrower or other similar or different requirements deemed
necessary by Bank.

                          (F) Borrower will take all necessary steps to
preserve its existence and franchises and comply in all material respects with
all present and future Laws applicable to it in the operation of its business,
including the Securities and Exchange Commission, the ownership and operation of
the Collateral owned by it, and all material agreements to which it is subject.

                          (G) Borrower will collect its Accounts and Receivables
only in the ordinary course of business.

                          (H) Borrower will keep accurate and complete Records
of its Accounts, Inventory and Receivables consistent with sound business
practices.

                          (I) Borrower will pay when due (or within applicable
grace periods) all Indebtedness due third Persons, except when the amount is
being contested in good faith by appropriate proceedings and with adequate
reserves having been set aside on the books of Borrower in accordance with GAAP.

                          (J) Borrower will notify Bank promptly if it becomes
aware of the occurrence of any Event of Default or of any fact, condition or
event that with the giving of

                                       19
<PAGE>

notice or passage of time or both, could become an Event of Default, or of the
failure of Borrower to observe any of its undertakings under this Agreement.

                          (K) Borrower will notify Bank ten (10) days in advance
of any change in the location of any of its places of business or of the
establishment of any new, or the discontinuance of any existing, place of
business or of the locations at which any of the Collateral is kept.

                          (L) Borrower will: (1) fund all its Defined Benefit
Pension Plans, if any, in accordance with no less than the minimum funding
standards required under ERISA; (2) furnish Bank, promptly after the filing of
the same, with copies of all reports or other statements filed with the United
States Department of Labor or the Internal Revenue Service with respect to all
Employee Benefit Plans; and (3) promptly advise Bank of the occurrence of any
Reportable Event or Prohibited Transaction (as defined in ERISA) with respect to
any Employee Benefit Plan.

                          (M) If requested by Bank, Borrower will furnish to
Bank written reports, in addition to the other reports and certificates required
of Borrower under this Agreement, detailing the aging and collection of
Receivables, and containing such information as Bank may specify. Such reports
shall be furnished by Borrower to Bank weekly, if required by Bank.

                          (N) Borrower will maintain a Tangible Net Worth of not
less than $3,000,000.00 as of January 31, 2002.

                          (O) Borrower will maintain a ratio of total
Indebtedness to Tangible Net Worth not to exceed 9.5 to 1 as of April 30, 2001,
35.5 to 1 as of October 31, 2001, and 12.25 to 1 as of January 31, 2002. For
purposes of this Subparagraph (O), all Indebtedness which is fully and expressly
subordinated in writing to Bank and Bank's right to payment in full of all of
the Obligations and Other Obligations, on terms and conditions acceptable to
Bank, shall be deemed excluded from the term "Indebtedness."

                          (P) Borrower shall allow Bank and its agents and
representatives at all times to have access to Borrower's premises upon
reasonable notice and during normal business hours for purposes of examining and
inspecting the Collateral and all Records pertaining thereto, and otherwise to
monitor compliance with the terms of this Agreement.

                          (Q) Borrower shall maintain all of its Equipment and
facilities in good working order and condition (ordinary wear and tear
excepted), and shall not permit any Equipment to become a fixture to real estate
or an accession to any other property. Borrower shall, immediately upon Bank's
demand, deliver to Bank any and all evidences of ownership of, certificates of
title to and applications for title to any of the Equipment.

                          (R) Borrower shall maintain its primary depository
relationship with Bank.

                                       20
<PAGE>

                  6.02  NEGATIVE COVENANTS.

                           (A) Without the Bank's prior written consent
(exercisable in its reasonable commercial discretion), Borrower will not change
its name, enter into any merger, consolidation, reorganization or
recapitalization, or reclassify its capital stock or other equity interests,
except for a merger between Borrower and a domestic Subsidiary or between
domestic Subsidiaries of Borrower, so long as Borrower is the surviving or
continuing corporation in any such merger.

                           (B) Without the Bank's prior written consent
(exercisable in its reasonable commercial discretion), Borrower will not sell,
transfer, lease or otherwise dispose of all or (except in the ordinary course of
business) any part of its assets except (1) a transfer of any property to a
Subsidiary of Borrower and (2) dispositions expressly permitted by this
Agreement.

                           (C) Borrower will not mortgage, pledge, grant or
permit to exist a security interest in, lien or encumbrance of any kind upon any
of its real or personal asset, now owned or hereafter acquired, except for
Permitted Liens.

                           (D) Borrower will not, without Bank's prior written
consent, become liable, directly or indirectly, as guarantor or otherwise, for
any obligation of any other Person, except for the endorsement of commercial
paper for deposit or collection in the ordinary course of business or the giving
of indemnities in connection with the sale of Inventory or other asset
dispositions permitted hereunder.

                           (E) Borrower will not incur, create, assume or permit
to exist any Indebtedness except: (1) the Loan; (2) Indebtedness existing as of
this date, a schedule of which is attached as EXHIBIT "F"; (3) business expenses
and trade indebtedness incurred in the ordinary course of business; (4)
contingent Indebtedness permitted by Paragraph 6.02(D); (5) Indebtedness secured
by Permitted Liens; and (6) Indebtedness expressly permitted by this Agreement.

                           (F) Borrower will not declare or pay any dividends,
or make any other payment or distribution on account of its capital stock,
except in accordance with the applicable Laws, provided that Borrower shall not
be in default of this Agreement or if made, would not result in an event of
default hereunder; and, further, with the Bank's prior written consent
(exercisable in its reasonable commercial discretion), Borrower may declare and
pay stock dividends. A Subsidiary of Borrower shall be expressly authorized to
pay dividends to Borrower.

                           (G) Borrower will not redeem, purchase or retire any
of its capital stock or other equity interests except pursuant to any existing
agreement shown on the attached EXHIBIT "G," and then only with the prior
written consent of Bank exercisable in its sole and absolute discretion.

                           (H) Borrower will not acquire any stock in, or all or
substantially all of the assets of, any Person other than its Subsidiaries.

                                       21
<PAGE>

                           (I) Borrower will not furnish Bank any certificate or
other document that contains any untrue statement of a material fact or that
omits to state a material fact necessary to make it not misleading in light of
the circumstances under which it was furnished.

                           (J) Borrower will not directly, or indirectly, apply
any part of the proceeds of the Loan to the purchasing or carrying of any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System, or any regulations, interpretations or rulings
issued thereunder.

                           (K) Without Bank's prior written consent, which may
be withheld in its absolute discretion, Borrower shall not prepay the
Stockholder Debt.

                           (L) Without the Bank's prior written consent,
Borrower shall expend for Fixed Assets no more than ONE MILLION DOLLARS
($1,000,000.00) during the term of this Agreement.

                           (M) Without the Bank's prior written consent,
Borrower shall incur funded debt and Capital Lease Obligations of no more than
TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) in the aggregate during the
term of this Agreement.

                           (N) Borrower will not permit EBITDA for any
hereinafter referenced period ending on the referenced computation date to be
less than the dollar amount set forth below opposite such date:

<TABLE>
<CAPTION>
                    COMPUTATION DATE          EBITDA
                    ----------------          ------
                    <S>                       <C>
                    April 30, 2001            ($4,500,000.00)
                    July 31, 2001             ($2,000,000.00)
                    October 31, 2001           $  500,000.00
                    January 31, 2002           $1,500,000.00
</TABLE>

SECTION VII.  DEFAULT

                  7.01  EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an Event of Default under this Agreement:

                           (A) Borrower shall fail to make payment of any of the
Obligations when due or declared due.

                           (B) Borrower shall fail to observe or perform any
non-monetary obligation to be observed or performed by it under this Agreement
or under any of the Loan Documents or any other documents to which it is a party
relating to the Loan and such failure continues unremedied for a period of
fifteen (15) Business Days after the earlier to occur of (i) the date on which
such breach is known or reasonably should have become known to any officer of
the Borrower, or (ii) the date on which lender shall have notified the Borrower
of such failure.

                                       22
<PAGE>

                           (C) Borrower shall fail to make payment of any Other
Obligation when due or declared due, and such failure shall continue beyond any
applicable grace period therefor.

                           (D) Borrower shall fail to observe or perform any
non-monetary obligation to be observed or performed by it in connection with any
Other Obligation, and such failure shall continue beyond any applicable grace
period therefor and, after the expiration of any applicable grace period, such
failure continues unremedied for a period of fifteen (15) Business Days after
the earlier to occur of (i) the date on which such breach is known or reasonably
should have become known to any officer of the Borrower, or (ii) the date on
which lender shall have notified the Borrower of such failure.

                           (E) Borrower shall fail to pay any Indebtedness and
such failure shall continue beyond the later of (i) any applicable grace period
therefor or (ii) five days after written notice from Bank to Borrower, or
Borrower shall suffer to exist any other event of default under any agreement
relating to such Indebtedness.

                           (F) Any financial statement, representation, warranty
or certificate made or furnished by Borrower to Bank in connection with this
Agreement or as an inducement to Bank to enter into this Agreement, or in any
separate statement or document to be delivered under this Agreement to Bank, or
otherwise, shall be materially false, incorrect or incomplete when made, and
such failure shall continue unremedied for a period of fifteen (15) Business
Days after the earlier to occur of (i) the date on which such breach is known or
reasonably should have become known to any officer of the Borrower, or (ii) the
date on which lender shall have notified the Borrower of such failure.

                           (G) Borrower shall admit in writing its inability to
pay its debts as they mature, or shall make an assignment for the benefit of or
any of its creditors.

                           (H) Proceedings in bankruptcy or for reorganization
of Borrower, or for the readjustment of any of its debts, under the Bankruptcy
Code, as amended, or under any other Laws, whether state or federal, for the
relief of insolvent debtors, now or hereafter existing, shall be commenced by
Borrower, or shall be commenced against Borrower and shall not be discharged
within sixty (60) days of their commencement.

                           (I) A receiver, custodian or trustee shall be
appointed for Borrower or for any substantial part of its assets, or any
proceedings shall be instituted for the dissolution or the full or partial
liquidation of Borrower, and such receiver, custodian or trustee shall not be
discharged within sixty (60) days of his appointment, or such proceedings shall
not be discharged within sixty (60) days of their commencement, or Borrower
shall discontinue business or materially change the nature of its business.

                           (J) Borrower shall suffer final judgment(s) for
payment of money aggregating in excess of TWENTY-FIVE THOUSAND DOLLARS
($25,000.00) and shall not discharge all such judgment(s) within a period of
sixty (60) days unless, pending further proceedings, execution has not been
commenced or if commenced has been effectively stayed.

                                       23
<PAGE>

                           (K) A judgment creditor of Borrower shall lawfully
obtain and retain for at least five (5) days possession of any portion of the
Collateral by any lawful means, including, but without limitation, levy,
distraint, replevin, claim and delivery, or self-help.

                           (L) The cancellation, termination, expiration,
qualification or any other change in any agreement guaranteeing the obligations
of Borrower under the Revolving Credit Promissory Note or this Agreement.

                           (M) Should the Borrower assert for any reason that
this Agreement (or any provision hereof), the Revolving Credit Promissory Note
or any other Loan Document is invalid or unenforceable.

                  7.02 ACCELERATION. Bank may, immediately and without notice
upon the occurrence of an Event of Default, declare all Obligations and Other
Obligations to be, and the Obligations and Other Obligations shall become, due
and payable without further action of any kind.

                  7.03 REMEDIES. After any acceleration, as provided for in
Paragraph 7.02, all commitments and obligations of Bank shall terminate and Bank
shall have, in addition to the rights and remedies given it by this Agreement,
the Revolving Credit Promissory Note and the Loan Documents, all rights and
remedies allowed by all applicable Laws, including, but without limitation, the
Uniform Commercial Code as enacted in any jurisdiction in which any Collateral
may be located and the right to take legal action against Borrower or institute
proceedings for the collection of the Loan. Without limiting the generality of
the foregoing, Bank may immediately, without demand of performance and without
other notice (except as specifically required by this Agreement, the Loan
Documents or applicable Laws) or demand whatsoever to Borrower, all of which are
expressly waived, and without advertisement, sell at public or private sale or
otherwise realize upon, at such place as Bank may determine, or elsewhere, the
whole or, from time to time, any part of the Collateral, or any interest which
Borrower may have in the Collateral. After deducting from the proceeds of sale
or other disposition of the Collateral all expenses (including all reasonable
expenses for legal services), Bank shall apply such proceeds toward the payment
of the Obligations or Other Obligations. Any remainder of the proceeds after
satisfaction in full of the Obligations or Other Obligations shall be
distributed as required by applicable Laws. Notice of any sale or other
disposition shall be given to Borrower at least fifteen (15) days before the
time of any intended public sale or of the time after which any intended private
sale or other disposition of the Collateral is to be made, which Borrower agrees
shall be reasonable notice of such sale or other disposition. Borrower agrees to
assemble, or to cause to be assembled, at its own expense, the Collateral at
such place or places as Bank shall reasonably designate. At any such sale or
other disposition, Bank may, to the extent permissible under applicable Laws,
purchase the whole or any part of the Collateral, free from any right of
redemption on the part of Borrower which right is waived and released. Without
limiting the generality of any of the rights and remedies conferred upon Bank
under this Paragraph, Bank may, to the full extent permitted by applicable Laws:

                                       24
<PAGE>

                           (A) Enter upon the premises of Borrower, and take
immediate possession of the Collateral, either personally or by means of a
receiver appointed by a court of competent jurisdiction;

                           (B) At Bank's option, use, operate, manage and
control the Collateral in any lawful manner;

                           (C) Collect and receive all rents, income, revenue,
earnings, issues and profits;

                           (D) Maintain, repair, renovate, alter or remove the
Collateral as Bank may determine in its reasonable discretion, and discharge any
liens, security interests or other encumbrances and any taxes at any time levied
or placed on any of the Collateral;

                           (E) Notify account debtors that Receivables have been
assigned to Bank and collect them directly in Bank's name;

                           (F) Endorse Borrower's name on any check, note,
acceptance, draft or other form of payment or security payable to Borrower that
may come into the possession of Bank; sign Borrower's name on any invoice or
bill of lading relating to any Receivable and on drafts against account debtors
and on drafts against letters of credit issued for the benefit of account
debtors;

                           (G) Notify the post office authorities to change the
address for delivery of Borrower's mail to an address designated by Bank and
receive, open and dispose of all mail addressed to Borrower;

                           (H) Require that all full or partial payments of
Receivables which are made directly to Borrower or which otherwise come into
Borrower's possession be received by Borrower in trust for Bank and immediately
delivered by Borrower to Bank in the form received; and

                           (I) Make such payments and incur such costs as Bank
deems necessary to enforce the payment or performance of the Obligations, all
such costs being due on demand, deemed a part of the Obligations and secured by
the Collateral.

SECTION VIII.  TERMINATION.

                  8.01 TERM. This Agreement shall have a term of one (1) year
from the date hereof to March 29, 2002 ("Term"). The Bank may terminate this
Agreement at any time without further notice following the occurrence of an
Event of Default under Paragraph 7.01.

                  8.02. OPTION TO TERMINATE. At any time after ninety (90) days
from the Closing, and notwithstanding the provisions of Paragraph 8.01, the Bank
may, at any time, upon ninety (90) days' written notice to the other terminate
this Agreement. In the event Bank shall exercise the notice to terminate after
expiration of ninety (90) days from Closing and prior to one

                                       25
<PAGE>

hundred eighty (180) days from Closing, it shall rebate to Borrower one-half of
the Commitment Fee provided for hereinabove. In the event Bank shall exercise
the option to terminate at any time after one hundred eighty (180) days from
Closing, Bank shall retain the full Commitment Fee. Notwithstanding the
provisions of paragraph 8.01, Borrower shall have the right at any time, upon at
least ninety (90) days prior written notice to the Bank, without premium or
penalty, to terminate this Agreement.

                  8.03 EFFECT OF TERMINATION. No termination of this Agreement
shall in any way (i) affect or impair Bank's security interest in and lien on
the Collateral (or any other collateral or security) or any real estate or any
other right or privilege under this Agreement or under the Revolving Credit
Promissory Note or any other agreement related to this Agreement, (ii) relieve
Borrower from any of its duties and obligations under this Agreement or under
the Revolving Credit Promissory Note or such other agreements including, without
limitation, the Obligations or (iii) relieve any other Person primarily or
secondarily liable for the Obligations from its obligations and duties to Bank.

SECTION IX.  MISCELLANEOUS.

                  9.01 APPOINTMENT OF BANK AS ATTORNEY IN FACT. Borrower
appoints Bank its attorney-in-fact (without requiring Bank to act as such) with
power and for the purposes of taking such action as, and at the times permitted
by Paragraph 7.03 (A) through (I). This power, being coupled with an interest,
shall be irrevocable so long as any part of the Obligations is outstanding.

                  9.02 FURTHER ASSURANCE. From time to time, Borrower will
execute and deliver to Bank such additional documents and will provide such
additional information as Bank may reasonably require to carry out the terms of
this Agreement and be informed of Borrower's status and affairs.

                  9.03 NOTICES. Any notices or consents required or permitted by
this Agreement shall be in writing and shall be deemed delivered if delivered in
person or if sent by certified mail, postage prepaid, return receipt requested,
or overnight courier, as follows, unless such address is changed by written
notice given in accordance with the terms of this Agreement:

                  (A)  If to Borrower:

                       Optio Software, Inc.
                       3015 Windward Plaza, Fairways II
                       Alpharetta, GA  30005
                       Attn: Mr. Barron Hughes, Chief Financial Officer

                       With copy to:

                       Morris, Manning & Martin, LLP
                       1600 Atlanta Financial Center
                       3343 Peachtree Road, N.E.

                                       26
<PAGE>

                       Atlanta, GA  30326-1044
                       Attn:  Ward Bondurant, Esq.

                  (B)  If to Bank:

                       Branch Banking and Trust Company
                       Post Office Box 1245
                       Winston-Salem, NC  27102

                       Attn:  Mr. Kevin J. Delaney, SR Vice President

                  9.04 WAIVER AND RELEASE BY BORROWER. To the maximum extent
permitted by applicable Laws, Borrower:

                           (A) Waives (except as may otherwise be provided in
this Agreement): (1) presentment for payment, demand, protest, notice or
non-payment or dishonor and of protest with respect to the Revolving Credit
Promissory Note; and (2) notice and opportunity to be heard, after acceleration
in the manner provided in Paragraph 7.02, before exercise by Bank of the
remedies of self-help, set-off or of other summary procedures permitted by any
applicable Laws or by any agreement with Borrower and, except where required by
this Agreement or by any applicable Laws, notice of any other action taken by
Bank; and

                           (B) Releases Bank and its directors, officers,
attorneys, agents and employees from all claims for loss or damage caused by any
act or omission on the part of any of them except for gross negligence or
willful misconduct.

                  9.05 APPLICABLE LAW. The substantive laws of Georgia shall
govern the construction of this Agreement and the rights and remedies of the
parties.

                  9.06 BINDING EFFECT, ASSIGNMENT AND ENTIRE AGREEMENT. This
Agreement shall inure to the benefit of, and shall be binding upon, the
respective successors and permitted assigns of the parties. Borrower has no
right to assign any of its rights or obligations under this Agreement without
the prior written consent of Bank. This Agreement, and the documents executed
and delivered pursuant to this Agreement, constitute the entire agreement
between the parties, and may be amended only by a writing signed by each party.

                  9.07 SEVERABILITY. If any provision of this Agreement shall be
held invalid under any applicable Laws, such invalidity shall not affect any
other provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions are severable.

                  9.08 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original but all
of which together shall constitute but one and the same instrument.

                                       27
<PAGE>

                  9.09 EXPENSES. Borrower shall pay (i) all out-of-pocket
expenses of Bank, including fees and disbursements of counsel for Bank, in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the other Loan Documents, (ii) all out-of-pocket expenses of Bank,
including fees , provided, that the expenses, fees and other disbursements
pursuant to sections 9.09(i) and (ii) shall not exceed $4,000.00, and
disbursements of counsel for Bank, in connection with any waiver or consent
hereunder or any amendment hereof or any actual or alleged default hereunder,
and (iii) shall indemnify and hold Bank harmless from any loss, liability or
expense incurred by Bank upon, or attributable to, the occurrence of an Event of
Default, including fees and disbursements of counsel in connection with such
Event of Default and collection and other enforcement proceedings resulting
therefrom, including out-of-pocket expenses incurred in enforcing this Agreement
and the other Loan Documents. Borrower shall pay all transfer taxes, documentary
taxes, assessments, filing fees or other charges made by any applicable
governmental authority by reason of the execution and delivery of this Agreement
or any of the other Loan Documents. Borrower shall also pay Bank its
then-current fees and charges for any and all operational services provided to
Borrower, none of which are included within the interest charges under the Loans
or any other charges or fees specifically described in this Agreement.

                  9.10 SEAL. This Agreement is intended to take effect as an
instrument under seal.

                  9.11 INTERPRETATION. Whenever used in this Agreement, the
singular number shall include the plural, the plural the singular, and the use
of the masculine, feminine or neuter gender shall include all genders.

                  9.12 WAIVER. No waiver of any Event of Default or breach by
Borrower hereunder shall be implied from any delay or omission by Bank to take
action on account of such default, and no express waiver shall affect any Event
of Default other than specified in the waiver, and it shall be operative only
for the time and to the extent therein stated. Waivers of any covenant, term or
condition herein must be in writing and shall not be construed as a waiver of
any subsequent breach of the same covenant, term or condition or breach of any
other covenant, term or condition.

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

                              BANK:

                              BRANCH BANKING AND TRUST COMPANY

                              By: /s/ Paul E. McLaughlin
                                  ------------------------------
                              Name: Paul E. McLaughlin
                              Title: Senior V.P.

                                       28
<PAGE>

                              BORROWER:

                              OPTIO SOFTWARE, INC.
                              a Georgia corporation

                              By: /s/ Barron Hughes
                                 --------------------------------
                              Name: Barron Hughes
                              Title: CFO

ATTEST:

/s/ Barron Hughes
Secretary

[AFFIX CORPORATE SEAL]

                                       29
<PAGE>

                                INDEX OF EXHIBITS

Exhibit A    Permitted Liens

Exhibit B    Collateral Description

Exhibit C    Location of Collateral List of Places of Business of Borrower

Exhibit D    List of States Where Borrower is Qualified to Transact Business

Exhibit E    List of Subsidiaries of Borrower

Exhibit F    Existing Indebtedness

Exhibit G    Agreements

                                       30
<PAGE>

                                    EXHIBIT A

                                 PERMITTED LIENS

GEORGIA SUPERIOR COURT CLERKS' COOPERATIVE AUTHORITY

<TABLE>
<S>      <C>
1.       UCC-1 No. 007-1999-003168 in favor of IBM Credit Corporation, as
         Secured Party, covering leased computer equipment.
2.       UCC-1 No. 007-1999-013516 in favor of Fidelity Leasing, Inc., as
         Secured Party, covering four (4) Lanier copiers.
3.       UCC-1 No. 007-2000-004722 in favor of Bankers/Softech/Mid-States, a
         division of EAB Leasing Corporation, as Secured Party, covering goods,
         chattel paper, fixtures, furnishings, equipment, accounts, accounts
         receivables and general intangibles.
4.       UCC-1 No. 007-2000-004723 in favor of Bankers/Softech/Mid-States, as
         Secured Party, covering certain leased personal property.
5.       UCC-1 No. 060-2000-017334 in favor of Bankers/Softech, as Secured
         Party, covering goods, chattel paper, fixtures, furnishings, equipment,
         accounts, accounts receivables and general intangibles.
6.       UCC-1 No. 001-1996-001321 in favor of Steelcase Financial Services,
         Inc., as Secured Party, covering leased furniture and/or equipment.
7.       UCC-1 No. 007-1996-006266 in favor of Siemens Credit Corporation, as
         Secured Party, covering leased phone system.

FLORIDA SECRETARY OF STATE

8.       UCC-1 No. 200000277714 in favor of IBM Credit Corporation, as Secured
         Party, covering leased computer equipment.

</TABLE>

<PAGE>

                                    EXHIBIT B

                             COLLATERAL DESCRIPTION

None

                                       32
<PAGE>

                                    EXHIBIT C

         LOCATION OF COLLATERAL--LIST OF PLACES OF BUSINESS OF BORROWER

1.       3015 Windward Plaza
         Fairways II
         Alpharetta, Georgia 30005

2.       1166 Triton Drive, Suite 200
         Foster City, California  94404

3.       225 South Westmonte Drive
         Altamonte Springs, Florida 32714

                                       33
<PAGE>

                                    EXHIBIT D

         LIST OF STATES WHERE BORROWER IS QUALIFIED TO TRANSACT BUSINESS

Georgia (state of incorporation)
California
Florida (filed 3/28/01)

                                       34
<PAGE>

                                    EXHIBIT E

                        LIST OF SUBSIDIARIES OF BORROWER

Muscato Corporation, a Florida corporation
225 South Westmonte Drive
Altamonte Springs, Florida 32714

Optio Software, Europe, S.A.
Optio Software, UK, Pvt. Limited
Optio Software, Asia Pacific

                                       35
<PAGE>

                                    EXHIBIT F

                              EXISTING INDEBTEDNESS

1. Promissory Note dated 3/27/00 in favor of Michael A. Muscato in the principal
amount of $4,000,000, due 3/28/30 and bearing interest at 6.75% per year.

2. Promissory Note dated 3/27/00 in favor of Nicholas Muscato in the principal
amount of $2,000,000, due 3/28/30 and bearing interest at 6.75% per year.

3. Promissory Note dated 3/27/00 in favor of Brian Newton in the principal
amount of $2,000,000, due 3/28/30 and bearing interest at 6.75% per year.

4. Lease with IBM Credit Corporation as Lessor - $167,460 balance due as of
1/31/01 - 36 month lease ending on 11/30/03 - monthly payments are $5,081.

5. Lease with IBM Credit Corporation as Lessor - $185,227 balance due as of
1/31/01 - 60 month lease ending on 4/30/05 - monthly payments are $4,561.

6. Lease with Siemens as Lessor - $27,964 balance due as of 1/31/01 - 60 month
lease ending on 1/1/02 - monthly payments are $3,783.51.***

7. Note in favor of Pamela McCabe and Betty Drumheller in the principal amount
of $52,800, due upon demand and bearing interest at 12% per year.

8. Note in favor of First Capital Bank in the principal amount of $4,960,
relating to 36 month lease of vehicle with monthly payments of $475.

***This lease was terminated February 15, 2001 and was replaced by the following
lease: Lease with Siemens as Lessor - $350,472 balance due as of 2/28/01 (new
lease) - 60 month lease ending on 2/28/06 - monthly payments are $7,436.67.

                                       36
<PAGE>

                                    EXHIBIT G

                                   AGREEMENTS

None

                                       37

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