AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

Execution Copy

AGREEMENT AND PLAN OF MERGER

DATED AS OF MARCH 3, 2008

AMONG

BOTTOMLINE TECHNOLOGIES (de), INC.,

OLIVE ACQUISITION CORP.

AND

OPTIO SOFTWARE, INC.

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (“ Agreement ”) is made and entered into as of the 3rd day of March, 2008, by and among Bottomline Technologies (de), Inc., a Delaware corporation (“ Parent ”), Olive Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”), and Optio Software, Inc., a Georgia corporation (“ Company ”).

WHEREAS, each of Parent, Merger Sub and Company desires to enter in to a transaction whereby Merger Sub will merge with and into Company (the “ Merger ”), with Company being the surviving corporation, upon the terms and subject to the conditions set forth in this Agreement;

WHEREAS, in accordance with the provisions of the Georgia Business Corporation Code (the “ GBCC ”), the Boards of Directors of Parent, Merger Sub and Company have adopted this Agreement and the Merger pursuant to which Merger Sub will merge with and into Company and each outstanding share of Company common stock, no par value per share (“Company Stock”), excluding any Company Dissenting Shares (as defined below), and each outstanding Company Stock Option (as defined below), will be converted into the right to receive the Merger Consideration (as defined in Section 2.2(b)) upon the terms and subject to the conditions set forth herein;

WHEREAS, the Board of Directors of Company has directed that the Agreement be submitted for approval by Company’s shareholders; and

WHEREAS, concurrently with the execution of this Agreement, and as a condition to the willingness of Parent to enter into this Agreement, certain of the holders of Company Stock are entering into a voting agreement with Parent substantially in the form attached hereto as Exhibit A (the “ Voting Agreement ”).

NOW, THEREFORE, on the basis of the foregoing recitals and in consideration of the respective covenants, agreements, representations and warranties contained herein, the parties hereto agree as follows:

ARTICLE 1.

DEFINITIONS

Except as otherwise expressly provided for in this Agreement, or unless the context otherwise requires, as used throughout this Agreement the following terms shall have the respective meanings specified below:

“Affiliate” of, or a Person “Affiliated” with, a specific Person(s) is a Person that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person(s) specified.

“Affiliated Group” means, with respect to any entity, a group of entities required or permitted to file consolidated, combined or unitary Tax Returns (as defined herein).

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“Agreement” has the meaning set forth in the preamble of this Agreement.

“BDO” means BDO Seidman, LLP, Company’s independent public accountants.

“Benefit Arrangements” has the meaning set forth in Section 4.20(b).

“Book Entry Shares” has the meaning set forth in Section 2.5(b).

“Business Day” means any day other than a Saturday, Sunday or other day on which banks in New York are required or authorized by law to be closed.

“Certificate of Merger” or “Certificates of Merger” have the meaning set forth in Section 3.2.

“Certificates” has the meaning set forth in Section 2.5(b).

“Closing” means the consummation of the Merger provided for in Article 2 of this Agreement on the Closing Date (as defined herein) at the offices of Locke Lord Bissell & Liddell LLP, 1900 The Proscenium, 1170 Peachtree Street, NE, Atlanta, Georgia 30309, or at such other place as the parties may agree upon in writing.

“Closing Date” means the date which is no later than the second Business Day following the day on which the last of the conditions specified in Articles 9, 10 and 11 (excluding, for purposes of this definition, conditions that, by their terms, are to be satisfied on the Closing Date) have been fulfilled or waived (if permissible) or such other date as the parties may agree upon.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the preamble of this Agreement.

“Company Disclosure Letter” means that letter designated as such which has been delivered by Company to Parent concurrently with the execution and delivery of this Agreement.

“Company Dissenting Shares” has the meaning set forth in Section 2.2(c).

“Company Leases” has the meaning set forth in Section 4.9.

“Company List” means any list required to be furnished by Company to Parent herewith.

“Company Patents” has the meaning set forth in Section 4.24(b).

“Company Property” has the meaning set forth in Section 4.12(b).

“Company Registered IP” has the meaning set forth in Section 4.24(b).

“Company Registered Marks” has the meaning set forth in Section 4.24(b).

“Company SEC Documents” has the meaning set forth in Section 4.5(a).

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“Company Shareholders’ Meeting” means the meeting of Company’s shareholders referred to in Section 6.6.

“Company Source Code” has the meaning set forth in Section 4.24(g).

“Company Stock” has the meaning set forth in the second recital of this Agreement.

“Company Stock Option Plans” means all stock option plans or other equity-related plans of Company.

“Company Stock Option” means any option or right to acquire Company Stock, or stock appreciation right payable in cash issued pursuant to Company Stock Option Plans or otherwise.

“Company Supplied Information” has the meaning set forth in Section 4.23.

“Competing Transaction” has the meaning set forth in Section 6.1(l).

“Confidentiality Agreement” means that certain Confidentiality Agreement dated November 15, 2007 by and between Parent and Company.

“Continuing Employees” has the meaning set forth in Section 12.1(b).

“Copyrights” has the meaning set forth in Section 4.24(a).

“DGCL” means the General Corporation Law of the State of Delaware.

“Effective Time of the Merger” means the later of the date and time upon which a Certificate of Merger is filed with the Secretary of State of the State of Georgia or the Secretary of State of the State of Delaware, or at such time thereafter as shall be agreed to by the parties and specified in the applicable Certificate of Merger.

“Employee Plans” has the meaning set forth in Section 4.20(a).

“Encumbrance” means any option, pledge, security interest, lien, charge, encumbrance or restriction (whether on voting or disposition or otherwise), whether imposed by agreement, understanding, law or otherwise.

“Environmental Regulations” has the meaning set forth in Section 4.12(b).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliates” has the meaning set forth in Section 4.20(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Agent” means Computershare Investor Services, LLC.

“Exchange Fund” has the meaning set forth in Section 2.5(a).

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“Expenses” has the meaning set forth in Section 14.1.

“Financial Statements of Company” means the financial statements of Company consisting of (i) the balance sheets as of January 31, 2005, 2006 and 2007, the related statements of income, stockholders’ equity and cash flows for the years then ended and the related notes thereto and related opinions of BDO thereon for the years then ended and (ii) the balance sheets as of April 30, July 31 and October 31, 2007 and the related statements of income, stockholders’ equity and cash flows for the periods then ended.

“GAAP” means United States generally accepted accounting principles consistently applied during the periods involved.

“GBCC” has the meaning set forth in the second recital of this Agreement.

“Governmental Entity” means any court, tribunal or judicial or arbitral body in any jurisdiction or any United States federal, state, municipal or local or any foreign or other governmental, regulatory or administrative authority, agency or instrumentality.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“Hazardous Materials” has the meaning set forth in Section 4.12(b).

“Indemnified Liabilities” has the meaning set forth in Section 7.4(a).

“Indemnified Parties” has the meaning set forth in Section 7.4(a).

“Intellectual Property” has the meaning set forth in Section 4.24(a).

“IRS” means the Internal Revenue Service.

“Marks” has the meaning set forth in Section 4.24(a).

“Material Adverse Effect” means any circumstance, change in or effect on Company or the Surviving Corporation (1) that is, or would reasonably be expected to be, materially adverse to the condition (financial or otherwise), business, properties, assets, liabilities, or results of operations of Company or the Surviving Corporation, taken as a whole, or (2) that materially impairs or would reasonably be expected to materially impair the ability of Company to timely perform its obligations under this Agreement or to consummate the transactions contemplated hereby; provided , however , that in determining whether a Material Adverse Effect has occurred there shall be excluded the effect of: (i) any change in applicable laws, regulations, GAAP or accounting requirements applicable to Company or to the software industry generally (to the extent not having a disproportionate effect on the Company and its Subsidiaries), (ii) any general social, political, economic, environmental or natural condition, change, effect, event or occurrence including changes in prevailing interest rates, currency exchange rates or general global economic or global market conditions (to the extent not having a disproportionate effect on the Company and its Subsidiaries), (iii) any loss or threatened loss of business from any customers of the Company or its Subsidiaries caused by the announcement or the pendency of

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the transactions contemplated by this Agreement, (iv) any action or omission by Company pursuant to the terms of this Agreement including the public announcement of the transactions contemplated by this Agreement, (v) any expenses incurred in connection with this Agreement or the transactions contemplated hereby, (vi) changes in the industry and markets in which the Company operates generally (to the extent not having a disproportionate effect on Company and its Subsidiaries), (vii) any change in the Company’s stock price or trading volume, in and of itself, and (viii) the failure, in and of itself, of the Company to meet projections of earnings, revenues or financial measures (it being understood that the cause of any such failure may be deemed to constitute a Material Adverse Effect and may be taken into consideration when determining whether a Material Adverse Effect has occurred).

“Merger” has the meaning set forth in the first recital of this Agreement.

“Merger Consideration” has the meaning set forth in Section 2.2(b).

“Merger Sub” has the meaning set forth in the preamble of this Agreement.

“New Plans” has the meaning set forth in Section 12.1(b).

“Open Source Materials” has the meaning set forth in Section 4.24(i).

“Parent” has the meaning set forth in the preamble of this Agreement.

“Parent Supplied Information” has the meaning set forth in Section 5.7.

“Patents” has the meaning set forth in Section 4.24(a).

“Person” means any individual, corporation, association, partnership, limited liability company, trust, joint venture, other entity, unincorporated organization, government or governmental department or agency.

“Proxy Statement” means the Proxy Statement, together with any supplements thereto, that is used to solicit proxies for the Company Shareholders’ Meeting in connection with the Merger.

“Representatives” has the meaning set forth in Section 6.1(l).

“Scheduled Contract” has the meaning set forth in Section 4.15.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Subsidiary” of a Person means any corporation, partnership, limited liability company or other business entity of which more than 25% of the voting power is owned or controlled by such Person.

“Superior Proposal” has the meaning set forth in Section 6.1(l).

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“Surviving Corporation” means Company, following the effectiveness of the Merger.

“Tax” or “Taxes” means (i) any and all federal, state, local or foreign taxes, charges, premium taxes, fees, imposts, levies or other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property, corporation and estimated taxes, custom duties, fees, assessments and charges of any kind whatsoever; and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any taxing authority in connection with any item described in clause (i).

“Tax Returns” means all returns, declarations, reports, information returns, statements, elections, disclosures and schedules required to be filed in respect of any Taxes (including any attachments thereto or amendments thereof).

“Termination Fee” has the meaning set forth in Section 13.2(b).

“Three Day Period” has the meaning set forth in Section 6.1(l).

“Trade Secrets” has the meaning set forth in Section 4.24(a).

“Voting Agreement” has the meaning set forth in the fourth recital of this Agreement.

ARTICLE 2.

TERMS OF MERGER

2.1. Effect of Merger and Surviving Corporation . At the Effective Time of the Merger, Merger Sub will be merged with and into Company pursuant to the terms, conditions and provisions of this Agreement and in accordance with the applicable provisions of the GBCC and the DGCL, the separate corporate existence of Merger Sub shall cease and the Company shall be the Surviving Corporation in the Merger. The Merger will have the effects set forth in the GBCC and the DGCL.

2.2. Stock of Company . Subject to Section 2.6, each share of Company Stock issued and outstanding immediately prior to the Effective Time of the Merger shall, without any further action on the part of Company or the holders of such shares, be treated on the basis set forth in this Section 2.2.

(a) Cancellation of Certain Stock . At the Effective Time of the Merger, any share of Company Stock held by Company or any of its Subsidiaries as treasury stock or owned by Parent or Merger Sub shall be automatically cancelled and retired and shall cease to exist, and no consideration shall be delivered therefor.

(b) Conversion of Company Stock . At the Effective Time of the Merger, each issued and outstanding share of Company Stock (other than shares to be cancelled in accordance with Section 2.2(a) and any Company Dissenting Shares) shall be automatically cancelled and cease to be an issued and outstanding share of Company Stock and be converted into the right to receive per share consideration (the “ Merger Consideration ”) in cash in the amount of $1.85.

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(c) Company Dissenting Shares . Notwithstanding anything in this Agreement to the contrary, any shares of Company Stock that are issued and outstanding as of the Effective Time of the Merger and that are held by a shareholder of Company who has properly asserted such holder’s dissenters’ rights under Article 13 of the GBCC (the “ Company Dissenting Shares ”) shall not be converted into the right to receive the Merger Consideration unless and until such holder shall have failed to perfect, or shall have effectively withdrawn or lost, such holder’s right to payment for such shares under Article 13 of the GBCC. If any such holder shall have so failed to perfect or shall have effectively withdrawn or lost such right at or following the Effective Time of the Merger, each share of such holder’s Company Stock shall thereupon be deemed to have been converted into and to have become, as of the Effective Time of the Merger, the right to receive, without any interest thereon, the Merger Consideration. Company shall give Parent (i) prompt notice of any notice or demands for appraisal or payment for shares of Company Stock received by Company and (ii) the opportunity to participate in all negotiations and proceedings with respect to any such demands or notices. Company shall not, without the prior written consent of Parent, or as required by the GBCC, make any payment with respect to, or settle, offer to settle or otherwise negotiate, any such demands. Each holder of Company Dissenting Shares who becomes entitled under Article 13 of the GBCC to receive payment for such holder’s shares shall receive payment therefor from the Surviving Corporation (but only after the amount thereof shall have been agreed upon or finally determined pursuant to the GBCC), and such shares shall be retired and cancelled.

2.3. Company Stock Options . Each Company Stock Option outstanding as of the Effective Time of the Merger shall be treated in accordance with Section 12.2.

2.4. Effect on Merger Sub Stock . At the Effective Time of the Merger, each issued and outstanding share of capital stock of Merger Sub shall be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation.

2.5. Exchange Procedures .

(a) At the Effective Time of the Merger, Parent shall deposit with the Exchange Agent for the benefit of the holders of shares of Company Stock outstanding immediately prior to the Effective Time of the Merger, for exchange in accordance with this Section 2.5 through the Exchange Agent, cash in the amount of the aggregate Merger Consideration payable to (i) such holders of Company Stock pursuant to Section 2.2 in exchange for their shares of Company Stock and (ii) such holders of Company Stock Options, pursuant to Section 12.2 in exchange for their Company Stock Options (collectively, the “ Exchange Fund ”).

(b) Parent shall direct the Exchange Agent to mail, as soon as reasonably practicable after the Effective Time of the Merger, to each holder of record of shares of Company Stock which are represented by (x) a certificate or certificates which immediately prior to the Effective Time of the Merger represented outstanding shares of Company Stock (the “ Certificates ”) or (y) an entry to that effect in the shareholder records maintained on behalf of Company by the Company stock transfer agent (the “ Book Entry Shares ”), whose shares were

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converted into the right to receive the Merger Consideration pursuant to Section 2.2 hereof, (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates (if any) shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent and Company may reasonably specify), and (ii) instructions for use in effecting the surrender of the Certificates or authorizing transfer and cancellation of Book Entry Shares in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Exchange Agent or to such other agent or agents as may be appointed by Parent, or authorizing transfer of Book Entry Shares, together with such letter of transmittal, duly executed, the holder of such shares of Company stock shall be entitled to receive in exchange therefor the amount of the Merger Consideration which such holder has the right to receive pursuant to Section 2.2 hereof, and any Certificate so surrendered shall forthwith be cancelled. Until surrendered as contemplated by this Section 2.5, each Certificate and any Book Entry Shares shall be deemed at any time after the Effective Time of the Merger to represent only the right to receive upon such surrender the Merger Consideration to be paid in consideration therefor upon surrender of such Certificate or transfer of the Book Entry Shares, as the case may be, as contemplated by this Section 2.5. Notwithstanding anything to the contrary set forth herein, if any holder of shares of Company Stock that are not Book Entry Shares should be unable to surrender the Certificates for such shares, because they have been lost or destroyed, such holder shall, if required by Parent or Exchange Agent, deliver in lieu thereof a bond in form and substance and with surety reasonably satisfactory to Parent and shall be entitled to receive the Merger Consideration to be paid in consideration therefor in accordance with Section 2.2 hereof.

(c) If, after the Effective Time of the Merger, Certificates or Book Entry Shares are presented to Parent for any reason, they shall be cancelled and exchanged as provided in this Agreement.

(d) Any portion of the Exchange Fund which remains undistributed to the shareholders of Company following the passage of six months after the Effective Time of the Merger shall be delivered to the Surviving Corporation, upon demand, and any shareholders of Company who have not theretofore complied with this Section 2.5 shall thereafter look only to the Surviving Corporation and/or Parent for payment of their claim for the Merger Consideration payable in consideration for any Certificate or transfer of any Book Entry Shares, without interest.

(e) Except as otherwise required by law, none of Parent, Company or the Surviving Corporation shall be liable to any holder of shares of Company Stock for such cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

2.6. Adjustments . If after the date hereof and on or prior to the Effective Time of the Merger, the outstanding shares of Company Stock shall be changed into a different number of shares by reason of any reclassification, recapitalization or combination, stock split, reverse stock split, stock dividend or rights issued in respect of such stock, or any similar event shall occur, the Merger Consideration shall be adjusted accordingly to provide to the holders of Company Stock the same economic effect as contemplated by this Agreement prior to such event.

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2.7. Directors of Surviving Corporation . At the Effective Time of the Merger, the board of directors of the Surviving Corporation shall be comprised of the persons serving as directors of Merger Sub immediately prior to the Effective Time of the Merger. Such persons shall serve until the earlier of their resignation or removal or until their respective successors are duly elected and qualified.

2.8. Executive Officers of Surviving Corporation . At the Effective Time of the Merger, the executive officers of the Surviving Corporation shall be comprised of the persons serving as executive officers of Merger Sub immediately prior to the Effective Time of the Merger. Such persons shall serve until the earlier of their resignation or termination.

2.9. No Further Ownership Rights in Stock . All Merger Consideration delivered upon the surrender for exchange of shares of Company Stock in accordance with the terms hereof shall be deemed to have been delivered in full satisfaction of all rights pertaining to ownership of such shares of stock. At and after the Effective Time of the Merger, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Stock which were outstanding immediately prior to the Effective Time of the Merger, and upon delivery of the Merger Consideration upon surrender for exchange of Company Stock, each such share of Company Stock shall be cancelled.

2.10. Articles of Incorporation and Bylaws . The Articles of Incorporation of the Surviving Corporation shall be the Second Amended and Restated Articles of Incorporation of Company, which shall be filed with the Certificates of Merger and shall be in the form set forth in Exhibit B. The Bylaws of Company as in effect immediately prior to the Effective Time of the Merger shall be the Bylaws of the Surviving Corporation.

2.11. Withholding Rights. Each of Parent, the Surviving Corporation, and the Exchange Agent shall be entitled to deduct, withhold, and pay over to the applicable Governmental Entity from the consideration otherwise payable pursuant to this Agreement to any recipient of a payment hereunder such minimum amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by Parent, the Surviving Corporation or the Exchange Agent, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the applicable recipient in respect of which such deduction and withholding was made by Parent, the Surviving Corporation or the Exchange Agent, as the case may be and Parent and Surviving Corporation as to themselves covenant and shall cause as to the Exchange Agent to have such withholding paid to the applicable Governmental Entity when such amount is due.

ARTICLE 3.

THE CLOSING

3.1. Closing Date . The Closing shall take place on the Closing Date.

3.2. Certificate of Merger . Subject to the provisions of this Agreement, a certificate of merger (“ Certificate of Merger ”) shall be duly prepared, executed by the Surviving

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Corporation and thereafter delivered to the Secretary of State of the State of Georgia for filing, as provided in the GBCC, on the Closing Date, and a Certificate of Merger (and together with the Certificate of Merger to be delivered to the Secretary of State of the State of Georgia, collectively, the “ Certificates of Merger ”) shall be duly prepared, executed by the Surviving Corporation and thereafter delivered to the Secretary of State of the State of Delaware for filing, as provided in the DGCL, on the Closing Date.

3.3. Further Assurances . At the Closing, the parties hereto shall deliver, or cause to be delivered, such documents or certificates as may be necessary in the reasonable opinion of counsel for any of the parties, to effectuate the transactions contemplated by this Agreement.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF COMPANY

The following representations and warranties by Company to Parent and Merger Sub are qualified by the Company Disclosure Letter. The Company Disclosure Letter shall refer to the representation or warranty to which exceptions or matters disclosed therein relate; provided , however , that an exception or matter disclosed with respect to one representation or warranty shall also be deemed disclosed with respect to each other warranty or representation only to the extent it is clear from a reading of such disclosure that it also relates to such other representation or warranty. The inclusion of any item in such Company Disclosure Letter shall not be deemed an admission that such item is a material fact, event or circumstance or that such item has or had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

4.1. Incorporation, Standing and Power . Company has been duly organized, is validly existing and in good standing as a corporation under the laws of the State of Georgia. The Company has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted. The Company is duly qualified to do business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. Company has delivered to Parent true and correct copies of the Company’s Articles of Incorporation and Bylaws, as currently in effect.

4.2. Capitalization .

(a) As of the close of business on March 1, 2008, the authorized capital stock of Company consists of 100,000,000 shares of Company Stock, of which 22,222,280 shares are issued and outstanding, and 20,000,000 shares of preferred stock, none of which are issued or outstanding. No shares of Company Stock are held in treasury by Company. The rights and privileges of the Company Stock and the preferred stock are as set forth in the Company’s Articles of Incorporation and pursuant to applicable laws. All of the outstanding shares of Company Stock are validly issued, fully paid and nonassessable. Except for Company Stock Options covering 3,799,367 shares of Company Stock as of the date hereof, there are no

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outstanding options, warrants or other rights in or with respect to the unissued shares of capital stock of Company nor any securities convertible into such stock, and Company is not obligated to issue any additional shares of Company Stock or any additional options, warrants or other rights in or with respect to the issued or unissued shares of capital stock of Company or any other securities convertible into such stock, except for issuances under the Company Stock Options permitted by Section 6.1(a).

No issued and outstanding shares of Company Stock are subject to a substantial risk of forfeiture within the meaning of Section 83 of the Code or are otherwise subject to a repurchase or redemption right or right of first refusal in favor of Company.

Section 4.2(a) of the Company Disclosure Letter sets forth a complete and accurate list, as of the date of this Agreement, of: (i) all Company Stock Option Plans, indicating for each Company Stock Option Plan, as of March 1, 2008, the number of shares of Company Stock issued to date under such plan, the number of shares of Company Stock subject to outstanding options under such plan and the number of shares of Company Stock reserved for future issuance under such plan; and (ii) all outstanding Company Stock Options, indicating with respect to each such Company Stock Option the name of the holder thereof, the Company Stock Option Plan under which it was granted, if any, the number of shares of Company Stock subject to such Company Stock Option, the exercise price, the date of grant, and the vesting schedule, including whether (and to what extent) the vesting will be accelerated in any way by the Merger or by termination of employment or change in position following consummation of the Merger. Company has delivered to Parent complete and accurate copies of all Company Stock Option Plans and the forms of all stock option agreements evidencing Company Stock Options.

There are no options, warrants, equity securities, calls, rights, commitments or agreements of any character obligating Company or any of its Subsidiaries to grant, extend, accelerate the vesting of, otherwise modify or amend or enter into any such option, warrant, equity security, call, right, commitment or agreement. Company does not have any outstanding stock appreciation rights, phantom stock, performance based rights or similar rights or obligations. Other than the Voting Agreement, neither Company nor any of its Affiliates is a party to or is bound by any, and to the knowledge of Company, there are no agreements with respect to the voting (including voting trusts and proxies) or sale or transfer (including agreements imposing transfer restrictions) of any shares of capital stock or other equity interests of Company.

All outstanding shares of Company Stock are, and all shares of Company Stock subject to issuance as specified above, upon exercise, receipt of payment by Company and issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be, duly authorized, validly issued, fully paid and nonassessable and not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the GBCC, Company’s Articles of Incorporation or Bylaws or any agreement to which Company is a party or is otherwise bound.

There are no obligations, contingent or otherwise, of Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of Company Stock.

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No consent of the holders of Company Stock Options is required in connection with the actions contemplated by Section 12.2.

(b) No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which shareholders of Company may vote are issued and outstanding.

4.3. Subsidiaries . All of the Subsidiaries of the Company, including their jurisdiction of organization and authorized and outstanding capitalization, are listed in Section 4.3 of the Company Disclosure Letter. All such shares of Subsidiaries are validly issued, fully paid and non-assessable, and are owned directly or indirectly by the Company clear of all pledges, claims and liens. Other than Subsidiaries and securities held in its investment portfolio, neither the Company nor its Subsidiaries owns any equity interest in any Person.

Each Subsidiary of Company is an entity of the type described on Section 4.3 of the Company Disclosure Letter and is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite corporate or other power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted, and is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification necessary, except for such failures to be so organized, qualified or in good standing, individually or in the aggregate, that have not had, and would not reasonably be expected to have, a Material Adverse Effect. Company has delivered to Parent complete and accurate copies of the charter, by-laws or other organizational documents of each Subsidiary of Company.

4.4. Financial Statements . Each of the Financial Statements of Company (including, in each case, any related notes and schedules) contained or the consolidated financial statements (including, in each case, any related notes and schedules) to be contained in the Company SEC Documents at the time filed: (a) present or will present fairly, in all material respects, the financial condition of Company as of the respective dates indicated and its statements of operations and changes in stockholders’ equity and cash flows, for the respective periods then ended; and (b) have been or will be prepared in accordance with GAAP consistently applied.

4.5. Reports and Filings .

(a) Company has filed all required forms, reports, proxy statements, schedules, registration statements and other documents with the SEC since January 31, 2003 (including those that Company may file after the date hereof until the Closing, the “ Company SEC Documents ”). All of the Company SEC Documents were or will be filed on a timely basis. As of their respective dates of filing with the SEC (or, if amended, supplemented or superseded by a filing prior to the date hereof, as of the date of such filing), the Company SEC Documents, including any financial statements or schedules included or incorporated by reference therein, complied or will comply when filed in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Documents, and none of the Company SEC Documents, including any financial statements or schedules included or incorporated by

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reference therein, when filed contained or will contain when filed any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent superseded or amended by a Company SEC Document filed subsequently and prior to the date hereof. As used in this Section 4.5, the term “file” shall be broadly construed to include any manner in which a document or information is furnished, supplied or otherwise made available to the SEC.

(b) The Company has heretofore made, and hereafter will make, available to Parent a complete and correct copy of any amendments or modifications that are required to be filed with or submitted to the SEC but have not yet been filed with or submitted to the SEC to agreements, documents or other instruments that previously had been filed with or submitted to the SEC by the Company pursuant to the Exchange Act.

(c) Each Company SEC Document containing financial statements that has been filed with or submitted to the SEC since July 31, 2002, was accompanied by the certifications required to be filed or submitted by the Company’s chief executive officer and chief financial officer pursuant to the Sarbanes-Oxley Act of 2002, and at the time of filing or submission of each such certification, such certification was true and accurate in all material respects.

(d) Company is in compliance with the applicable listing and other rules and regulations of the Over-The-Counter Bulletin Board.

4.6. Authority of Company .

(a) Company has all requisite corporate power and authority to enter into this Agreement and, subject only to the requisite approval of the shareholders of Company of this Agreement and the Merger, to consummate the transactions contemplated by this Agreement. The execution and delivery by Company of this Agreement and, subject to the requisite approval of the shareholders of Company of this Agreement and the Merger, the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Company including, without limitation, the vote of the Board of Directors of Company (which vote was unanimous) approving this Agreement and the Merger.

(b) This Agreement has been duly executed by Company and is a valid and binding obligation of Company enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, liquidation, receivership, conservatorship, insolvency, fraudulent transfer, moratorium or other similar laws affecting the rights of creditors generally and by general equitable principles.

(c) Neither the execution and delivery by Company of this Agreement, the consummation of the transactions contemplated herein, nor compliance by Company with any of the provisions hereof, will: (a) conflict with or result in a breach of any provision of its Articles of Incorporation, as amended, or Bylaws, as amended, or of the charter, bylaws or other organizational documents of any Subsidiary of Company; (b) conflict with, constitute a breach of, result in a default (or give rise to any rights of termination, cancellation or acceleration, or

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any right to acquire any securities or assets) under or require a consent or waiver under or require the payment of any penalty under any of the terms, conditions or provisions of any Scheduled Contract; (c) result in the creation or imposition of any Encumbrance on any of the properties or assets of Company or any of its Subsidiaries; or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Company or any of its Subsidiaries or any of their respective properties or assets, except with respect to clauses (b), (c) and (d), for such violations, breaches, defaults or Encumbrances which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(d) No consent of, approval of, notice to or filing with any Governmental Entity having jurisdiction over any aspect of the business or assets of Company or any of its Subsidiaries is required in connection with the execution and delivery by Company of this Agreement or the consummation by Company of the Merger or the other transactions contemplated hereby or thereby, except (i) under the Exchange Act (including the filing of the Proxy Statement with the SEC); (ii) such other filings or notifications as may be required under federal or state securities law; (iii) such other consents, approvals, waivers, orders, authorizations, registrations, declarations and filings, which if not obtained or made would not, individually or in the aggregate, materially affect the ability of the Company to consummate the Merger or reasonably be expected to have a Material Adverse Effect on the Company; (iv) applicable filings, notifications, approvals or consents under the HSR Act; and (v) the filing of a Certificate of Merger with the Secretary of State of the State of Georgia and the Secretary of State of the State of Delaware and appropriate documents with relevant authorities of other states in which the Company is qualified to do business.

4.7. Insurance . Set forth in Section 4.7 of the Company Disclosure Letter is a list, as of the date hereof, of all policies of insurance carried and owned by Company or any of its Subsidiaries and which are in force on the date hereof. Each such policy is in full force and effect and is valid, outstanding and enforceable, and all premiums have been paid when due. No insurer under any such policy or bond has cancelled or indicated an intention to cancel or not to renew any such policy or bond or generally disclaimed liability thereunder. Neither Company nor any of its Subsidiaries is in default under any such policy or bond which is material to the operations of Company and its Subsidiaries and all material claims thereunder have been filed in a timely fashion.

4.8. Personal Property . Company or one of its Subsidiaries owns or leases all tangible assets necessary for the conduct of their businesses as presently conducted. Company and its Subsidiaries have good title to all the material tangible properties and assets owned or stated to be owned by Company and its Subsidiaries, free and clear of all Encumbrances except: (a) as set forth in the Company SEC Documents filed prior to the date hereof or Financial Statements of Company; (b) for Encumbrances for current taxes not yet due; (c) for Encumbrances incurred in the ordinary course of business; or (d) for Encumbrances that are not substantial in character, amount or extent and that do not materially detract from the value, or interfere with present use, of the property subject thereto or affected thereby, or otherwise materially impair the conduct of business of Company.

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4.9. Real Estate . Neither Company nor any of its Subsidiaries owns real property. Company or a Subsidiary of the Company has a valid leasehold interest in all material real property leased by the Company or a Subsidiary of the Company, free and clear of all Encumbrances, except (a) for rights of lessors, co-lessees or sublessees in such matters that are reflected in the lease; (b) for current taxes not yet due and payable; and (c) for such Encumbrances, if any, as do not materially detract from the value of or materially interfere with the present use of such property. Section 4.9 of the Company Disclosure Letter sets forth a complete and accurate list of all real property leased, subleased or licensed by Company or any of its Subsidiaries (collectively “ Company Leases ”) and the location of the premises. Neither Company nor any of its Subsidiaries nor, to Company’s knowledge, any other party to any Company Lease, is in default under any of the Company Leases, except where the existence of such defaults, individually or in the aggregate, has not had a Material Adverse Effect. Each of the Company Leases is in full force and effect and is enforceable in accordance with its terms.

4.10. Litigation . Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement, there is no suit, action, investigation or proceeding (whether judicial, arbitral, administrative or other) pending or, to the knowledge of Company, threatened, against or affecting Company or any of its Subsidiaries as to which an adverse outcome would individually, or in the aggregate, reasonably be expected to have a Material Adverse Effect, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity outstanding against Company or any of its Subsidiaries having or which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. There are no material judgments, decrees, stipulations or orders against Company or any of its Subsidiaries or enjoining their respective directors, officers or employees in respect of, or the effect of which is to prohibit, any business practice or the acquisition of any property or the conduct of business in any area.

4.11. Taxes . Subject to such exceptions as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect:

(a)(i) All Tax Returns required to be filed by or on behalf of Company or its Subsidiaries have been duly and timely filed with the appropriate taxing authorities in all jurisdictions in which such Tax Returns are required to be filed (after giving effect to any valid extensions of time in which to make such filings), and all such Tax Returns were true, complete and correct; (ii) all Taxes due and payable by or on behalf of Company or its Subsidiaries, either directly, or otherwise, have been fully and timely paid, except to the extent adequately reserved therefor in accordance with GAAP and/or applicable regulatory accounting principles or banking regulations consistently applied on the Company balance sheet, and adequate reserves or accruals for Taxes have been provided in the Company balance sheet with respect to any period through the date thereof for which Tax Returns have not yet been filed or for which Taxes are not yet due and owing; and (iii) no agreement, waiver or other document or arrangement extending or having the effect of extending the period for assessment or collection of Taxes (including, but not limited to, any applicable statute of limitation) has been executed or filed with any taxing authority by or on behalf of Company or any of its Subsidiaries.

(b) Company and its Subsidiaries have complied with all applicable laws, rules and regulations relating to the payment and withholding of Taxes and have duly and timely withheld from any salaries, wages or other compensation paid to any employee or independent contractor, and have paid over to the appropriate taxing authorities all amounts required to be so withheld and paid over for all periods under all applicable laws.

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(c) Company has furnished to Parent true and correct copies of (i) all income Tax Returns of Company relating to all taxable periods beginning after January 31, 2005; and (ii) any audit report issued within the last three years relating to any Taxes due from or with respect to Company and its Subsidiaries with respect to their income, assets or operations.

(d) No written claim has been made by a taxing authority in a jurisdiction where Company or any of its Subsidiaries does not file an income or franchise Tax Return such that Company or any of its Subsidiaries is or may be subject to taxation by that jurisdiction.

(e)(i) All deficiencies asserted or assessments made as a result of any examinations by any taxing authority of the Tax Returns of or covering or including Company or any of its Subsidiaries have been fully paid or adequately reserved therefor on the Company balance sheet and, to the Company’s knowledge, there are no other audits or investigations by any taxing authority in progress, nor has Company or any of its Subsidiaries received any written notice from any taxing authority that it intends to conduct such an audit or investigation; (ii) no requests for a ruling or a determination letter are pending with any taxing authority; and (iii) no issue has been raised in writing by any taxing authority in any current or prior examination which, by application of the same or similar principles, could reasonably be expected to result in a proposed deficiency against Company or any of its Subsidiaries for any subsequent taxable period.

(f) Neither Company nor any of its Subsidiaries is a party to any tax allocation, indemnification or sharing agreement (or similar agreement or arrangement), whether written or not written, pursuant to which it will have any obligation to make any payments after the Closing.

(g) Neither Company nor any of its Subsidiaries has been a member of an Affiliated Group (other than a group whose common parent was Company).

(h) Neither Company nor any of its Subsidiaries has requests for rulings in respect of Taxes pending between Company or its Subsidiaries and any taxing authority.

(i) There is no contract, agreement, plan or arrangement covering any Person that, individually or collectively, could give rise to the payment of any amount that would not be deductible by Company or its affiliates by reason of Section 280G of the Code.

(j) There are no Encumbrances as a result of any due and unpaid Taxes upon any of the assets of Company or its Subsidiaries.

(k) Each agreement, plan or arrangement (whether written or oral) that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) has been operated and administered in reasonable, good faith compliance with Section 409A of the Code and the guidance provided thereunder from the period beginning January 1, 2005 through the date hereof and no such agreement, plan or arrangement which was in effect prior to October 4, 2004, which Company determined to not be subject to Section 409A of the Code, has

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been materially modified after October 3, 2004. No equity-based compensation arrangement or award granted under any such agreement, plan or arrangement is considered “deferred compensation” within the meaning of Section 409A of the Code.

(l) Each Company Stock Option that was not fully vested and exercisable as of December 31, 2004 has an exercise price at least equal to the fair market value, within the meaning of Section 409A of the Code, of a share of Company Stock on a date no earlier than the date of the corporate action authorizing the grant and has a grant date identical to the date of the corporate action authorizing the grant.

4.12. Compliance with Charter Provisions and Laws and Regulations .

(a) Neither Company nor any of its Subsidiaries is in default under or in breach or violation of (i) any provision of its Articles of Incorporation, as amended, or Bylaws, as amended, or (ii) any law, ordinance, rule or regulation promulgated by any Governmental Entity, except, with respect to this clause (ii), for such violations as would not have, individually or in the aggregate, a Material Adverse Effect. To the knowledge of Company, no investigation by any Governmental Entity with respect to Company or any of its Subsidiaries is pending or threatened, other t