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As filed with the Securities and Exchange Commission on December 14, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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TOWNE SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C>
Georgia 62-1618121
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
3295 River Exchange Drive, Suite 350
Norcross, Georgia 30092
(Address of Principal Executive Offices)
The Towne Services, Inc. 1998 Stock Option Plan
Towne Services, Inc. 1996 Stock Option Plan
Stock Option Agreement with Henry M. Baroco
Stock Option Agreement with Donny R. Jackson
Stock Option Agreement with Glenn W. Sturm
Director Options (non guaranty options)
(Full Title of the Plans)
Drew W. Edwards
Chief Executive Officer
Towne Services, Inc.
3295 River Exchange Drive, Suite 350
Norcross, Georgia 30092
(770) 734-2680
(Name, address, and telephone number of agent for service)
--------------------------------
Copies Requested to:
Susan L. Spencer, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
999 Peachtree Street, N.E., Suite 1400
Atlanta, Georgia 30309
(404) 817-6000
(404) 817-6050 (Fax)
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=================================================================================================================
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE AGGREGATE OFFERING REGISTRATION FEE
PER SHARE PRICE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 1,895,000 $7.94 (1) $15,046,300 (1) $ 4,183
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Common Stock, no par value 25,000 $6.50 (2) $162,500 (2) $ 46
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Common Stock, no par value 80,000 $7.00 (2) $560,000 (2) $ 156
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Common Stock, no par value 33,400 $0.30 (2) $10,020 (2) $ 3
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Common Stock, no par value 550,000 $0.50 (2) $275,000 (2) $ 77
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Common Stock, no par value 20,000 $0.60 (2) $12,000 (2) $ 4
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Common Stock, no par value 310,000 $1.00 (2) $310,000 (2) $ 87
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Common Stock, no par value 170,000 $1.25 (2) $212,500 (2) $ 59
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Common Stock, no par value 545,000 $7.20 (2) $3,924,000 (2) $ 1,091
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Common Stock, no par value 755,000 $0.30 (2) $226,500 (2) $ 63
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Common Stock, no par value 1,000 $1.25 (2) $1,250 (2) $ 1
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Common Stock, no par value 100,000 $1.00 (2) $100,000 (2) $ 28
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Common Stock, no par value 300,000 $0.50 (2) $150,000 (2) $ 42
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Common Stock, no par value 97,500 $1.00 (2) $97,500 (2) $ 27
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Common Stock, no par value 230,000 $1.25 (2) $287,500 (2) $ 80
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Common Stock, no par value 50,000 $7.20 (2) $360,000 (2) $ 100
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Common Stock, no par value 50,000 $8.00 (2) $400,000 (2) $ 111
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Common Stock, no par value 35,000 $6.50 (2) $227,500 (2) $ 63
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Total 5,246,900 ----- $22,362,570 $ 6,221
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457 (c) and (h) on the basis of the average of the high
and low prices of the Common Stock on December 9, 1998, as reported by the
National Association of Securities Dealer's automated quotation system.
(2) In accordance with Rule 457(h), the registration fee is based upon the
price at which the options may be exercised.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed below are hereby incorporated by reference into
this registration statement ("Registration Statement"), and all documents
subsequently filed by Towne Services pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
shall be deemed to be incorporated by reference in this Registration Statement
and to be a part hereof from the date of filing of such documents:
(a) Towne Services' Prospectus filed on July 30, 1998 with the
Securities and Exchange Commission (the "Commission") pursuant
to Rule 424(b) (the "424(b) Prospectus," which is included
within Towne Services' Registration Statement on Form S-1
(File No. 333-53341)) promulgated by the Commission under the
Securities Act of 1933, as amended (the "Securities Act"); and
(b) the description of the Common Stock contained in the section
titled "Description of Capital Stock" on pages 49-53 of the
424(b) Prospectus, which description is also incorporated by
reference into Towne Services' Registration Statement on Form
8-A under the Exchange Act.
(c) the Quarterly Reports of Towne Services on Form 10-Q for the
quarters ended June 30, 1998 and September 30, 1998 filed with
the Commission pursuant to Section 13(a) of the Exchange Act.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The legality of the issuance of the securities being registered hereby
has been passed upon by the law firm of Nelson Mullins Riley & Scarborough,
L.L.P., counsel for Towne Services. As of December 1, 1998, Glenn W. Sturm, a
partner of this firm, owns 360,923 shares of Common Stock and serves as a
director of Towne Services. In addition, as of December 1, 1998, other members
of this firm beneficially owned an aggregate of 106,800 shares of Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation of Towne Services eliminate, subject to
certain limited exceptions, the personal liability of a director to Towne
Services or its shareholders for monetary damage for any breach of duty as a
director. There is no elimination of liability for (i) a breach of duty
involving appropriation of a business opportunity of Towne Services; (ii) an act
or omission which involves intentional misconduct or a knowing violation of law;
(iii) any transaction from which the director derives an improper personal
benefit; or (iv) as to any payments of a dividend or any other
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type of distribution that is illegal under Section 14-2-832 of the Georgia
Business Corporation Code (the "GBCC"). In addition, if at any time the GBCC is
amended to authorize further elimination or limitation of the personal liability
of a director, then the liability of each director shall be eliminated or
limited to the fullest extent permitted by such provisions, as so amended,
without further action by the shareholders, unless the provisions of the GBCC
require such action. The provision does not limit the right of Towne Services or
its shareholders to seek injunctive or other equitable relief not involving
payments in the nature of monetary damages.
Towne Services' bylaws contain certain provisions which provide
indemnification to its directors that is broader than the protection expressly
mandated in Sections 14-2-852 and 14-2-857 of the GBCC. To the extent that a
director or officer of Towne Services has been successful, on the merits or
otherwise, in the defense of any action or proceeding brought by reason of the
fact that he or she was a director or officer of Towne Services, Sections
14-2-852 and 14-2-857 of the GBCC would require Towne Services to indemnify such
persons against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith. The GBCC expressly allows Towne Services to
provide for greater indemnification rights to its officers and directors,
subject to shareholder approval.
The indemnification provisions in the bylaws require Towne Services to
indemnify and hold harmless any director who was or is a party or is threatened
to be made a party, to any threatened, pending or completed action, suit or
proceeding whether civil, criminal, administrative or investigative (including
any action or suit by or in the right of Towne Services) because he or she is or
was a director of Towne Services, against expenses (including, but not limited
to, attorney's fees and disbursements, court costs and expert witness fees), and
against judgments, fines, penalties, and amounts paid in settlement incurred by
him or her in connection with the action, suit or proceeding. Indemnification
would be disallowed under any circumstances where indemnification may not be
authorized by action of the board of directors, the shareholders or otherwise.
The board of directors of Towne Services also has the authority to extend to
officers, employees and agents the same indemnification rights held by
directors, subject to all the accompanying conditions and obligations.
Indemnified persons would also be entitled to have Towne Services advance
expenses prior to the final disposition of the proceeding. If it is ultimately
determined that they are not entitled to indemnification, however, such amounts
would be repaid. Insofar as indemnification for liability arising under the
Securities Act may be permitted to officers and directors of Towne Services
pursuant to the foregoing provisions, Towne Services has been told that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
Towne Services has entered into separate indemnification agreements
with each of its directors and executive officers, whereby it has agreed, among
other things, to provide for indemnification and advancement of expenses in a
manner and subject to terms and conditions similar to those set forth in the
bylaws. These agreements also provide that Towne Services shall purchase and
maintain liability insurance for the benefit of its directors and executive
officers. These agreements may not be abrogated by action of the shareholders.
There is no pending litigation or proceeding involving a director, officer,
employee or other agent of Towne Services as to which indemnification is being
sought, nor is Towne Services aware of any pending or threatened litigation that
may result in claims for indemnification by any director, officer, employee or
other agent.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
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ITEM 8. EXHIBITS.
The following exhibits are filed with this Registration Statement:
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Exhibit
Number Description of Exhibit
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4.1 - Towne Services, Inc. 1996 Stock Option Plan (incorporated by
reference to Exhibit 10.1 of the Company's Registration
Statement on Form S-1 (File No. 333-53341) as declared
effective by the Securities and Exchange Commission on July
30, 1998 (the "Form S-1 Registration Statement"))
4.2 - The Towne Services, Inc. 1998 Stock Option Plan (incorporated
by reference to Exhibit 10.2 of the Form S-1 Registration
Statement)
4.3 - Form of non-qualified stock option agreement (incorporated by
reference to Exhibit 10.3 of the Form S-1 Registration
Statement)
5.1 - Legal opinion of Nelson Mullins Riley & Scarborough, L.L.P.
23.1 - Consent of Arthur Andersen LLP
23.2 - Consent of Nelson Mullins Riley & Scarborough, L.L.P.
(contained in their opinion filed as Exhibit 5.1)
24 - Power of Attorney (contained on the signature pages of this
Registration Statement)
</TABLE>
ITEM 9. UNDERTAKINGS.
Towne Services, Inc. hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in aggregate, represent a fundamental change in the information
set forth in this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not
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exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that the undertakings set forth in paragraph (i)
and (ii) above do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission pursuant to
Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
Towne Services hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of its Annual Report pursuant to
Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in
the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Towne
Services pursuant to the foregoing provisions, or otherwise, Towne Services has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Towne Services of expenses incurred or
paid by a director, officer or controlling person of Towne Services in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Towne Services will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on this 11th day of
December, 1998.
TOWNE SERVICES, INC.
By: /s/ Drew W. Edwards
-------------------------------------
Drew W. Edwards
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers
and directors of Towne Services, Inc. (the "Company"), a Georgia corporation,
for himself and not for one another, does hereby constitute and appoint Drew W.
Edwards and Bruce F. Lowthers, Jr., and each of them, a true and lawful attorney
in his name, place and stead, in any and all capacities, to sign his name to any
and all amendments, including post-effective amendments, to this Registration
Statement, and to cause the same (together with all Exhibits thereto) to be
filed with the Securities and Exchange Commission, granting unto said attorneys
and each of them full power and authority to do and perform any act and thing
necessary and proper to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present, and each of the
undersigned for himself hereby ratifies and confirms all that said attorneys or
any one of them shall lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
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<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ Drew W. Edwards Chairman of the Board of Directors and December 11, 1998
- ------------------------------------------- Chief Executive Officer (Principal
Drew W. Edwards Executive Officer)
/s/ Henry M. Baroco President, Chief Operating Officer and December 11, 1998
- ------------------------------------------- Director
Henry M. Baroco
/s/ Bruce F. Lowthers, Jr. Chief Financial Officer (Principal December 11, 1998
- ------------------------------------------- Financial and Accounting Officer)
Bruce F. Lowthers, Jr.
/s/ G.Lynn Boggs Director December 11, 1998
- -------------------------------------------
G. Lynn Boggs
Director
- -------------------------------------------
Frank W. Brown
/s/ John W. Collins Director December 11, 1998
- -------------------------------------------
John W. Collins
</TABLE>
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<TABLE>
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<S> <C> <C>
/s/ J. Stanley Mackin Director December 11, 1998
- -------------------------------------------
J. Stanley Mackin
/s/ Joe M. Rodgers Director December 11, 1998
- -------------------------------------------
Joe M. Rodgers
/s/ John D. Schneider, Jr. Director December 11, 1998
- -------------------------------------------
John D. Schneider, Jr.
/s/ J. Daniel Speight, Jr. Director December 11, 1998
- -------------------------------------------
J. Daniel Speight, Jr.
/s/ Glenn W. Sturm Director December 11, 1998
- -------------------------------------------
Glenn W. Sturm
/s/ J. Stephen Turner Director December 11, 1998
- -------------------------------------------
J. Stephen Turner
/s/ Bahram Yusefzadeh Director December 11, 1998
- -------------------------------------------
Bahram Yusefzadeh
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
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<S> <C> <C>
4.1 - Towne Services, Inc. 1996 Stock Option Plan (incorporated by
reference to Exhibit 10.1 of the Company's Registration
Statement on Form S-1 (File No. 333-53341) as declared
effective by the Securities and Exchange Commission on July
30, 1998 (the "Form S-1 Registration Statement"))
4.2 - The Towne Services, Inc. 1998 Stock Option Plan
(incorporated by reference to Exhibit 10.2 of the Form S-1
Registration Statement)
4.3 - Form of Non-qualified stock option agreement (incorporated
by reference to Exhibit 10.3 of the Form S-1 Registration
Statement)
5.1 - Legal opinion of Nelson Mullins Riley & Scarborough, L.L.P.
23.1 - Consent of Arthur Andersen LLP
23.2 - Consent of Nelson Mullins Riley & Scarborough, L.L.P.
(contained in their opinion filed as Exhibit 5.1)
24 - Power of Attorney (contained on the signature pages of this
Registration Statement)
</TABLE>
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[NELSON MULLINS RILEY & SCARBOROUGH, L.L.P. LETTERHEAD]
December 11, 1998
Towne Services, Inc.
3295 River Exchange Drive, Suite 350
Norcross, Georgia 30092
Gentlemen:
We have acted as counsel to Towne Services, Inc. (the "Company") in
connection with the filing of a Registration Statement on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, covering the
offering of up to 5,246,900 shares (the "Shares") of the Company's Common Stock,
no par value, that may be issued pursuant to the Towne Services Inc. 1996 Stock
Option Plan, the Towne Services, Inc. 1998 Stock Option Plan, Stock Option
Agreement with Henry M. Baroco, Stock Option Agreement with Donny R. Jackson,
Stock Option Agreement with Glenn W. Sturm and certain Director Options (non
guaranty options) (collectively, the "Plans"). In connection therewith, we have
examined such corporate records, certificates of public officials and other
documents and records as we have considered necessary or proper for the purpose
of this opinion.
This opinion is limited by and is in accordance with, the January 1,
1992, edition of the Interpretive Standards applicable to Legal Opinions to
Third Parties in Corporate Transactions adopted by the Legal Opinion Committee
of the Corporate and Banking Law Section of the State Bar of Georgia.
Based on the foregoing, and having regard to legal considerations which
we deem relevant, we are of the opinion that the Shares covered by the
Registration Statement, which may be issued pursuant to the Plans, will, when
issued in accordance with the Plans, be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus contained in the Registration Statement.
Very truly yours,
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
By: /s/ Jon H. Klapper
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated May 21, 1998
included in Towne Services, Inc.'s Registration Statement on Form S-1 (File No.
333-53341) and to all references to our Firm included in this registration
statement.
/s/ Arthur Anderson LLP
Atlanta, Georgia
December 8, 1998
