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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
----
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule
14a-12
Towne Services, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11(set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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(Towne Services Logo)
TOWNE SERVICES, INC.
3950 JOHNS CREEK COURT, SUITE 100
SUWANEE, GEORGIA 30024
(678) 475-5200
November 30, 2000
Dear Shareholder:
We cordially invite you to attend a special meeting to be held on
Wednesday, December 20, 2000 at 9:00 a.m. local time at the Hilton Garden Inn,
11695 Medlock Bridge Road, Duluth, Georgia 30097.
At the special meeting, you will be asked to consider and vote on the
adoption and approval of a proposal to amend our amended and restated articles
of incorporation. The amendment provides for a one-for-five reverse stock split
of the issued and outstanding shares of our common stock. The purpose of the
reverse stock split is to attempt to comply with the Nasdaq National Market's
$1.00 minimum bid price requirement for continued listing on the Nasdaq National
Market. Complete details of the business to be conducted at the special meeting
are provided in the attached Notice of Special Meeting of Shareholders and Proxy
Statement.
Our board of directors has determined that the proposal to be considered at
the special meeting is in the best interests of our shareholders. For the
reasons discussed in this proxy statement, our board of directors recommends a
vote "FOR" the proposal.
Please review the enclosed materials carefully. Whether or not you plan to
attend the meeting, please promptly return your proxy card in the enclosed
postage prepaid envelope. If you attend the meeting, you may vote in person if
you wish, even though you have previously returned your proxy.
Your vote is very important, and we appreciate your cooperation in
considering and acting on the matter presented. We look forward to seeing you at
the meeting.
Sincerely,
/s/ G. Lynn Boggs
G. Lynn Boggs
Chairman of the Board and
Chief Executive Officer
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TOWNE SERVICES, INC.
3950 JOHNS CREEK COURT, SUITE 100
SUWANEE, GEORGIA 30024
(678) 475-5200
-------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 20, 2000
-------------------------
To the Shareholders:
A special meeting of the shareholders of Towne Services, Inc. will be held
on Wednesday, December 20, 2000, at the Hilton Garden Inn, 11695 Medlock Bridge
Road, Duluth, Georgia 30097 at 9:00 a.m. local time, for the following purposes:
1. to consider and vote on the adoption and approval of an amendment
to our amended and restated articles of incorporation, which provides for a
one-for-five reverse stock split of the issued and outstanding shares of
our common stock; and
2. to transact any other business properly coming before the special
meeting or any adjournment thereof.
We are not aware of any matters, other than those described above, that are
to come before the meeting. If any other matters arise, however, your signed
proxy card gives authority to G. Lynn Boggs and Henry M. Baroco to vote on those
matters at their discretion. If you decide to attend the special meeting, you
may revoke your proxy at any time before it is voted. Shareholders owning shares
of our common stock at the close of business on November 22, 2000 are entitled
to attend and vote at the special meeting.
By Order of the Board of Directors,
/s/ G. Lynn Boggs
G. Lynn Boggs
Chairman of the Board and
Chief Executive Officer
Suwanee, Georgia
November 30, 2000
IT IS IMPORTANT THAT YOUR SHARES BE VOTED AT THE MEETING. PLEASE COMPLETE, SIGN,
DATE AND RETURN TO US THE ENCLOSED PROXY CARD.
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TOWNE SERVICES, INC.
3950 JOHNS CREEK COURT, SUITE 100
SUWANEE, GEORGIA 30024
(678) 475-5200
-------------------------
PROXY STATEMENT
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 20, 2000
-------------------------
Our board of directors is soliciting your proxy for the special meeting of
shareholders to be held at 9:00 a.m. local time on Wednesday, December 20, 2000,
at the Hilton Garden Inn, 11695 Medlock Bridge Road, Duluth, Georgia 30097.
Voting materials, including this proxy statement and the proxy card, are first
being mailed to the shareholders on or about November 30, 2000.
VOTING AND RELATED MATTERS
Q: WHAT AM I VOTING ON?
A: You are being asked to vote on the approval of an amendment to our amended
and restated articles of incorporation to effect a one-for-five reverse
stock split of our common stock and any other business properly coming
before the meeting. The amendment is further described below and the actual
amendment is contained in Appendix A.
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on November 22, 2000, the record
date, are entitled to vote.
Q: HOW MANY SHARES CAN BE VOTED?
A: As of the record date, approximately 27,435,919 shares of common stock were
issued, outstanding and entitled to vote at the special meeting. Each
shareholder of common stock is entitled to one vote for each share held.
Q: HOW DO I VOTE?
A: Complete, sign and mail us your proxy card. If you return your signed proxy
card but do not indicate how you wish to vote, your shares will be voted
FOR the proposal. You may, of course, attend the meeting in person and
vote. Even if you plan to attend the meeting, we ask that you sign and
return a proxy card.
Q: WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY?
A: You may revoke your proxy and change your vote at any time before the
meeting. You may do this by signing and sending a written notice of
revocation or another proxy with a later date than the one you want to
revoke, or by voting in person at the meeting.
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Q: WHO WILL COUNT THE VOTES?
A: The chairman of the board of directors will select the inspectors of the
election for our special meeting. The inspectors will ascertain the number
of shares outstanding and the voting power of the shares, determine the
shares represented at the meeting, determine the validity of proxies and
ballots, count all votes and determine the results of the voting. The
inspectors will deliver a written report after the meeting.
Q: WHAT CONSTITUTES A QUORUM?
A: There must be a quorum for the meeting to be held. A quorum is a majority
of the outstanding shares. To be counted towards the quorum, shareholders
may be present at the meeting or represented by proxy. If you submit a
properly executed proxy card, even if you abstain from voting, then you
will be considered part of the quorum. Broker non-votes, or proxies
submitted by brokers as holders of record on behalf of their customers that
do not indicate how to vote on the proposal, are also considered part of
the quorum. However, Broker non-votes and abstentions are not counted in
the tally of votes FOR or AGAINST the proposal and will have the same
effect as votes AGAINST the proposal. A WITHHELD vote is the same as an
abstention.
Q: WHAT HAPPENS IF THE SPECIAL MEETING IS POSTPONED OR ADJOURNED?
A: If the special meeting is postponed or adjourned for any reason, including
to permit the further solicitation of proxies, at any subsequent
reconvening of the meeting all proxies will be voted in the same manner as
they would have been voted at the original special meeting. However, as
described above, you may revoke your proxy and change your vote at any time
before the reconvened meeting.
Q: HOW MANY VOTES ARE REQUIRED TO APPROVE THE PROPOSAL?
A: The proposal to amend our amended and restated articles of incorporation
will be deemed approved by the shareholders if a majority of the votes
entitled to be cast on the amendment vote FOR the proposal.
Q: WHO IS PAYING FOR THIS PROXY SOLICITATION?
A: We are paying the cost of soliciting proxies. In addition to mailing these
materials, our officers, directors and employees will solicit proxies,
either personally or via telephone or facsimile. They will not be paid
specifically for this solicitation activity.
We will also reimburse brokerage houses and other custodians, nominees and
fiduciaries who are record holders for their reasonable expenses in
forwarding these materials to the beneficial owners of those shares.
Furthermore, we may engage a firm to help solicit proxies in which event
related fees will approximate $7,500 (plus expenses). The extent to which
we and our proxy solicitation firm must solicit proxies depends entirely
upon how soon proxy cards are returned. Please send in your proxy cards
immediately.
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PROPOSAL
AMENDMENT TO OUR AMENDED AND RESTATED
ARTICLES OF INCORPORATION TO EFFECT A ONE-FOR-FIVE
REVERSE STOCK SPLIT OF OUR ISSUED
AND OUTSTANDING COMMON STOCK
INTRODUCTION
Our board of directors has approved the proposal to amend our amended and
restated articles of incorporation to effect a one-for-five reverse stock split
of our common stock. We are now submitting the proposal to you, the
shareholders, for approval. The proposed reverse stock split will take effect,
if at all, after it is approved by you and after we file Articles of Amendment
with the Secretary of State of the State of Georgia.
We expect that, if the proposal is approved by you, the Articles of
Amendment will be filed promptly. However, our board of directors may elect not
to file, or to delay the filing of, the Articles of Amendment if they determine
that filing the Articles of Amendment would not be in the best interest of our
shareholders. Factors leading to such a determination could include any possible
effect on our Nasdaq listing or future securities offerings.
PURPOSE OF REVERSE SPLIT
Our common stock has been listed, and has traded, on the Nasdaq National
Market since July 30, 1998. For continued listing on the Nasdaq National Market,
it is necessary that, among other things, our shares of common stock maintain a
minimum bid price of at least $1.00 per share. Over the past several months, the
bid price of our shares of common stock has fallen below $1.00 per share. On
October 10, 2000, we received a letter from Nasdaq that our minimum bid price
was not in compliance with the minimum bid price requirement for stock listed on
Nasdaq. We were notified that if we do not comply with the $1.00 per share
requirement on or before January 8, 2001, our stock will be delisted at the
opening of business on January 9, 2001. We believe, but cannot assure, that the
proposed reverse stock split will enable the common stock to trade above the
minimum bid price established by the Nasdaq Continued Listing Requirements. We
believe we will be in compliance with the Nasdaq Continued Listing Requirements
if our common stock trades at or above the minimum bid price of $1.00 per share
for at least ten consecutive trading days prior to January 8, 2001.
If our stock is delisted from Nasdaq, trading of our stock, if any, would
have to be conducted in the non-Nasdaq over-the-counter market (also known as
the pink sheet market). In such an event, an investor could find it more
difficult to dispose of, or to obtain accurate quotations as to the market value
of our stock. In addition, if our common stock were to become delisted from
trading on Nasdaq and the trading price were to remain below $5.00 per share,
trading in our common stock may also be subject to the requirements of certain
rules promulgated under the Securities Exchange Act of 1934, which require
additional disclosure by broker-dealers in connection with any trades involving
a stock defined as a "penny stock" (generally, any non-Nasdaq equity security
that has a market price of less than $5.00 per share, subject to certain
exceptions). The additional burdens imposed upon broker-dealers by these
requirements could discourage broker-dealers from facilitating trades in our
common stock, which could severely limit the market liquidity of the stock and
the ability of investors to trade our common stock. We
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believe that, if the reverse stock split is approved, there is a greater
likelihood that the minimum bid price of the common stock will be maintained at
a level over $1.00 per share.
Even though a reverse stock split, by itself, does not impact a company's
assets or prospects, because we cannot predict the market's reaction, a reverse
stock split could result in a decrease in our aggregate market capitalization.
Our board of directors, however, believes that this risk is offset by the
prospect that the reverse stock split will improve the likelihood that we will
be able to maintain Nasdaq National Market listing and may, by increasing the
per share bid price, make an investment in our common stock more attractive for
certain investors. There can be no assurance, however, that approval of the
reverse stock split will succeed in raising the bid price of our common stock
above $1.00 per share, or that a bid price of $1.00, if achieved, would be
maintained, or that even if the Nasdaq's minimum bid price requirements were
satisfied, our common stock would not be delisted by the Nasdaq for other
reasons.
Our common stock is currently registered under Section 12(g) of the
Exchange Act, and as a result, we are subject to the periodic reporting and
other requirements of the Exchange Act. The reverse stock split will not affect
the registration of our common stock under the Exchange Act and we have no
present intention of terminating its registration under the Exchange Act in
order to become a "private" company.
The reverse stock split will not affect the number of authorized shares.
Accordingly, the reverse stock split will have the effect of creating additional
authorized and unreserved shares of our common stock. We have no current plans
to issue these shares, however, these shares may be used by us for general
corporate purposes.
The increase in the authorized but unissued shares of common stock also may
have the effect of discouraging an attempt by another person or entity, through
acquisition of a substantial number of shares of common stock, to acquire
control of us with a view to effecting a merger, sale of assets or similar
transaction, since the issuance of new shares could be used to dilute the stock
ownership of such person or entity. The authorized but unissued common stock
could be issued to a holder who would then have sufficient voting power to
assure that any business combination or any amendment to our amended and
restated articles of incorporation would not receive the shareholder vote
required for approval. Our board of directors has no current plans to issue any
shares of common stock for any of these purposes and does not intend to issue
any stock except on terms or for reasons which they deem to be in our best
interests.
The reverse stock split may result in some shareholders owning "odd-lots"
of less than 100 shares of common stock. Brokerage commissions and other
transaction costs in odd-lots are generally somewhat higher than the costs of
transactions in "round-lots" of even multiples of 100 shares.
As a result of the reverse stock split, the approximately 27,435,919 shares
of common stock outstanding on November 22, 2000 will become approximately
5,487,184 shares of common stock, and any other shares issued prior to the
effectiveness of this proposal will be similarly adjusted. In addition, if the
proposed amendment becomes effective, each option and warrant to purchase common
stock and any other convertible security, outstanding on the effective date will
be adjusted so that the number of shares of common stock issuable upon their
exercise shall be divided by five (and corresponding adjustments
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will be made to the number of shares vested under each outstanding option) and
the exercise price of each option and warrant shall be multiplied by five.
For the above reasons, we believe that the reverse stock split is in our
best interests and in the best interests of our shareholders. There can be no
guarantee, however, that the market price of our common stock after the reverse
stock split will be equal to the market price before the reverse stock split
multiplied by the split number, or that the market price following the reverse
stock split will either exceed or remain in excess of the current market price.
EXCHANGE OF STOCK CERTIFICATES
If you approve the proposed reverse stock split, we will instruct our
transfer agent to begin implementing the exchange of certificates representing
outstanding common stock. As soon as practicable after the effectiveness of the
proposed amendment, holders of our common stock will be notified and requested
to surrender their certificates representing shares of common stock to the
transfer agent in exchange for certificates representing post-reverse split
common stock. Beginning on the date the proposed amendment becomes effective,
each certificate representing shares of our common stock will be deemed for all
corporate purposes to evidence ownership of as many shares of post-reverse split
common stock after applying the split factor and otherwise making adjustments
for fractional shares described below.
You will not be required to pay a transfer or other fee in connection with
the exchange of your certificates. You should not submit certificates until
requested to do so.
FRACTIONAL SHARES
No fractional shares of common stock will be issued as a result of the
reverse stock split. In lieu of receiving fractional shares, you will be
entitled to receive from us a cash payment in U.S. dollars equal to such
fraction multiplied by five times the average of the closing bid and asked price
per share of the common stock as quoted on Nasdaq for the five trading days
immediately preceding the date the amendment becomes effective.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT
The following is a summary of the material federal income tax consequences
of the reverse stock split to you.
The reverse stock split will not be taxable to you, except for any cash
received in lieu of a fractional share of post-reverse split common stock.
Consequently, the holding period of shares of post-reverse split common stock
(including any fractional share interest) will include your holding period for
the shares of common stock exchanged, provided that the shares of common stock
are held as a capital asset at the effective time. In addition, your aggregate
basis of the shares of post-reverse split common stock (including any fractional
share interest) will be the same as your aggregate basis of the shares of common
stock exchanged.
Cash that you receive in lieu of a fractional share will be treated as if
the fractional share had been issued to you and then redeemed by us for the
cash. Accordingly, if you receive cash you will recognize taxable gain or loss
equal to any difference between the amount of cash received and your basis in
the fractional share. That basis will be an
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allocable portion of the aggregate basis of the post-reverse split common stock
described above.
YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES OF
THE REVERSE SPLIT IN LIGHT OF YOUR PARTICULAR CIRCUMSTANCES, INCLUDING THE
APPLICATION OF ANY STATE, LOCAL OR FOREIGN TAX LAW.
NO DISSENTER'S RIGHTS
Under Georgia law, you are not entitled to dissenter's rights of appraisal
with respect to the reverse stock split since our common stock is currently
listed on a national exchange.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of November 22, 2000,
regarding beneficial ownership of our common stock by (1) each person who is
known to us to own beneficially more than five percent of our common stock; (2)
each director; (3) each currently employed executive officer; and (4) all of our
current directors and executive officers as a group. The information on
beneficial ownership in the table is based on information from the people listed
below regarding their ownership of common stock. Unless otherwise indicated,
each person has sole voting power and sole investment power with respect to the
shares shown as beneficially owned by them.
OWNERSHIP OF COMMON STOCK
<TABLE>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF COMMON
BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING
------------------------------------------- --------- ----
<S> <C> <C>
G. Lynn Boggs(1)........................... 1,548,593 5.6
Henry M. Baroco(2)......................... 2,011,133 7.0
Frank W. Brown(3).......................... 333,635 1.2
John W. Collins(4)......................... 525,693 1.9
Richardson M. Roberts(5)................... 70,570 *
Joe M. Rodgers(6).......................... 274,718 1.0
John D. Schneider, Jr.(7).................. 67,500 *
J. Daniel Speight, Jr.(8).................. 289,770 1.1
Glenn W. Sturm(9).......................... 357,974 1.3
J. Stephen Turner(10)...................... 560,570 2.0
Randall S. Vosler(11)...................... 130,000 *
Bahram Yusefzadeh(12)...................... 115,570 *
SAFECO Corporation(13)..................... 1,850,000 6.7
All directors and executive officers as a
group(14) (12 persons)................... 6,285,726 21.3
</TABLE>
-------------------------
* Less than one percent.
(1) Includes currently exercisable options to purchase 82,593 shares of common
stock. Mr. Boggs' business address is 3950 Johns Creek Court, Suite 100,
Suwanee, Georgia 30024.
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(2) Includes currently exercisable options to purchase 1,455,923 shares of
common stock. Mr. Baroco's business address is 3950 Johns Creek Court,
Suite 100, Suwanee, Georgia 30024.
(3) Includes (a) 150,000 shares of common stock held by Brown, Burke Capital
Partners, Inc., of which Mr. Brown is a principal, (b) 25,047 shares of
common stock held by Capital Appreciation Partners, L.P. of which Mr. Brown
is the managing member of the general partner, (c) 24,263 shares that Mr.
Brown owns jointly with his wife and (d) options to purchase 3,070 shares
of common stock. Mr. Brown disclaims beneficial ownership of the shares
held by each of Brown, Burke Capital Partners and Capital Appreciation
Partners, L.P. except to the extent of his pecuniary interest in the
shares.
(4) Includes 50,000 shares of common stock held by The InterCept Group, Inc.,
of which Mr. Collins is Chief Executive Officer, Chairman of the Board and
a significant shareholder, and currently exercisable options to purchase
143,993 shares of common stock held by Mr. Collins. Mr. Collins disclaims
beneficial ownership of the shares held by The InterCept Group, Inc.
(5) Includes currently exercisable options to purchase 30,570 shares of common
stock.
(6) Includes (a) currently exercisable options to purchase 53,070 shares of
common stock, (b) 200,000 shares of common stock held by Rodgers Capital
Group, L.P., of which Mr. Rodgers is a partner, and (c) warrants to
purchase 21,648 shares of common stock. Mr. Rodgers disclaims beneficial
ownership of the shares held by Rodgers Capital Group except to the extent
of his pecuniary interest in the shares.
(7) Includes currently exercisable options to purchase 37,500 shares of common
stock.
(8) Includes 231,700 shares of common stock held by FLAG Financial Corporation,
of which Mr. Speight is Chief Executive Officer, President and a director,
and currently exercisable options to purchase 58,070 shares of common
stock. Mr. Speight disclaims beneficial ownership of the shares held by
FLAG Financial Corporation except to the extent of his pecuniary interest
in the shares.
(9) Includes currently exercisable options to purchase 3,070 shares of common
stock.
(10) Includes currently exercisable options to purchase 55,570 shares of common
stock.
(11) Includes currently exercisable options to purchase 130,000 shares of common
stock.
(12) Includes (a) 50,000 shares owned by the Yusefzadeh Family Limited
Partnership, of which Mr. Yusefzadeh is the general partner, (b) 38,400
shares owned by Mr. Yusefzadeh's children, and (c) currently exercisable
options to purchase 13,070 shares of common stock. Mr. Yusefzadeh disclaims
beneficial ownership of the shares held his children and the Yusefzadeh
Family Partnership, except to the extent of his pecuniary interest in the
shares.
(13) As reported by SAFECO Corporation in a Statement on Schedule 13G filed with
the SEC as of February 10, 2000 as supplemented in a Statement on Form 13F
with the SEC as of September 30, 2000. In its Statement on Schedule 13G,
SAFECO Corporation (a) reported that it is a parent holding company in
accordance with Rule 13d-1(b)(ii)(G) to a subsidiary, SAFECO Asset
Management Company, which serves as an investment advisor to several
registered investment companies and (b) disclaimed beneficial ownership of
certain of the shares. SAFECO Asset
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Management Company also filed a joint Statement on Schedule 13G with one of
the investment companies, SAFECO Common Stock Trust, to which it provides
investment advisor services. The aggregate holdings of all these entities
are reflected in SAFECO Corporation's filing. SAFECO Corporation's address
is SAFECO Plaza, Seattle, WA 98185.
(14) Includes (a) 706,747 shares held by entities affiliated with our executive
officers and directors, (b) 38,400 shares held by family members of our
executive officers and directors, (c) 24,263 shares held jointly by our
directors and their spouses, (d) warrants to purchase 21,648 shares of
common stock, and (e) currently exercisable options to purchase 2,066,499
shares of common stock. Our executive officers and directors disclaim
beneficial ownership as to an aggregate of 706,747 of these shares.
SUBMISSION OF SHAREHOLDER PROPOSALS
If you want us to consider including a proposal in our 2001 proxy
statement, you must deliver your proposal to our Secretary at our executive
offices located at 3950 Johns Creek Court, Suite 100, Suwanee, Georgia 30024, no
later than December 21, 2000.
OTHER MATTERS
As of the date of this proxy statement, we do not know of any other matters
that will be presented for action at the special meeting. If, however, any other
matters not currently known are properly brought before the special meeting, the
persons named on the proxy card will vote the proxy on those matters in their
discretion as determined by a majority of the board of directors.
By Order of the Board of Directors,
/s/ G. Lynn Boggs
G. Lynn Boggs
Chairman of the Board and
Chief Executive Officer
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APPENDIX A
AMENDMENT
TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
TOWNE SERVICES, INC.
1. Article II of the Corporation's Amended and Restated Articles of
Incorporation shall be amended by the addition of the following provision:
Simultaneously with the effective date of this amendment (the
"Effective Date"), each five shares of the Corporation's Common Stock,
issued and outstanding immediately prior to the Effective Date (the "Old
Common Stock") shall, automatically and without any action on the part of
the holder thereof, be reclassified as and changed, pursuant to a reverse
stock split (the "Reverse Stock Split"), into one share of the
Corporation's outstanding Common Stock (the "New Common Stock"), subject to
the treatment of fractional share interests as described below. Each holder
of a certificate or certificates which immediately prior to the Effective
Date represented outstanding shares of Old Common Stock (the "Old
Certificates," whether one or more) shall be entitled to receive upon
surrender of such Old Certificates to the Corporation's transfer agent for
cancellation, a certificate or certificates (the "New Certificates,"
whether one or more) representing the number of whole shares of the New
Common Stock into and for which the shares of the Old Common Stock formerly
represented by such Old Certificates so surrendered, are reclassified under
the terms hereof. From and after the Effective Date, Old Certificates shall
thereupon be deemed for all corporate purposes to evidence ownership of New
Common Stock in the appropriately reduced whole number of shares. No
certificates or scrip representing fractional share interests in New Common
Stock will be issued, and no such fractional share interest will entitle
the holder thereof to vote, or to any rights of a shareholder of the
Corporation. In lieu of any fraction of a share of New Common Stock to
which the holder would otherwise be entitled, the holder will receive a
cash payment in U.S. dollars equal to such fraction multiplied by five
times the average of the closing bid and asked price per share of Common
Stock as quoted on Nasdaq for the five trading days immediately preceding
the Effective Date. If more than one Old Certificate shall be surrendered
at one time for the account of the same shareholder, the number of full
shares of New Common Stock for which New Certificates shall be issued shall
be computed on the basis of the aggregate number of shares represented by
the Old Certificates so surrendered. In the event that the Corporation's
transfer agent determines that a holder of Old Certificates has not
surrendered all his certificates for exchange, the transfer agent shall
carry forward any fractional share until all certificates of that holder
have been presented for exchange such that payment for fractional shares to
any one person shall not exceed the value of one share. If any New
Certificate is to be issued in a name other than that in which it was
issued, the Old Certificates so surrendered shall be properly endorsed and
otherwise in proper form for transfer, and the stock transfer tax stamps to
the Old Certificates so surrendered shall be properly endorsed and
otherwise in proper form for transfer, and the person or persons requesting
such exchange shall affix any requisite stock transfer tax stamps to the
Old Certificates surrendered, or provide funds for their purchase, or
establish to the satisfaction of the transfer agent
<PAGE> 13
that such taxes are not payable. From and after the Effective Date, the
amount of capital shall be represented by the shares of the New Common
Stock into which and for which the shares of the Old Common Stock are
reclassified, until thereafter reduced or increased in accordance with
applicable law. All references elsewhere in the Amended and Restated
Articles of Incorporation to the "Common Stock" shall, after the Effective
Date, refer to the "New Common Stock".
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REVOCABLE PROXY
FOR SPECIAL MEETING OF SHAREHOLDERS OF TOWNE SERVICES, INC. TO BE HELD ON
DECEMBER 20, 2000
The undersigned hereby constitutes and appoints G. Lynn Boggs and Henry M.
Baroco and each or either of them as true and lawful agents and proxies of the
undersigned with full power of substitution in each, to represent and vote, as
indicated below, all of the shares of common stock of Towne Services, Inc.
("Towne Services") that the undersigned would be entitled to vote at the Special
Meeting of Shareholders of Towne Services to be held on Wednesday, December 20,
2000 at the Hilton Garden Inn, 11695 Medlock Bridge Road, Duluth, Georgia 30097
at 9:00 a.m. local time, and at any adjournment thereof, upon the matters
described in the accompanying Notice of Special Meeting of Shareholders and
Proxy Statement for the Special Meeting of Shareholders, receipt of which is
acknowledged, and upon any other business that may properly come before the
meeting or any adjournment. Said proxies are directed to vote on the matters
described in the Notice of Special Meeting of Shareholders and Proxy Statement
for the Special Meeting of Shareholders as follows, and otherwise in their
discretion upon such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors recommends a vote FOR the proposal. This proxy, when
properly executed, will be voted in the manner directed herein by the
undersigned shareholder. This proxy is revocable and will be voted as directed,
but if no instructions are specified, this proxy will be voted FOR the proposal
listed.
PROPOSAL
1. To adopt and approve an amendment to Towne Services' Amended and Restated
Articles of Incorporation to effect a one-for-five reverse stock split of
all of the issued and outstanding shares of common stock of Towne Services.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. IN THEIR DISCRETION, G. Lynn Boggs and Henry M. Baroco may act upon such
other business as may properly come before the meeting or any adjournment
thereof.
(Continued and to be dated and signed on reverse side)
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If any other business is presented at the Special Meeting, including whether
or not to adjourn the meeting, this proxy will be voted by those named in this
proxy in their best judgment. At the present time, the Board of Directors knows
of no other business to be presented at the Special Meeting.
Please sign exactly as your name appears on your stock certificate. When
signing as attorney, executor, administrator, trustee or guardian, please give
your full title. If shares are held jointly, each holder may sign but only one
signature is required. If a corporation, please sign in full corporate name by
authorized officer. If a partnership, please sign in full partnership name by
authorized person.
Dated: , 2000
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SIGNATURE OF SHAREHOLDER
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SIGNATURE OF SHAREHOLDER
PLEASE COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
