TOWNE SERVICES, INC.
                         DIRECTOR STOCK OPTION AGREEMENT



         THIS DIRECTOR STOCK OPTION AGREEMENT (this "Agreement"), is entered
into as of the ____ day of _____________, _____, by and between Towne Services,
Inc., a Georgia corporation (the "Company"), and __________________ (the
"Optionee").

         WHEREAS, effective as of April 26, 2000, the Board of Directors of the
Company adopted a stock option plan known as the Amended and Restated Director
Stock Option Plan of Towne Services, Inc. (the "Plan"), and the Company's
shareholders approved the Plan on May 23, 2000, at the 2000 Annual Meeting of
Shareholders; and

         WHEREAS, the Optionee is a valued director of the Company or a
subsidiary of the Company; and

         WHEREAS, the Company considers it desirable and in its best interest
that the Optionee be provided an inducement to acquire an ownership interest in
the Company and an additional incentive to advance the interest of the Company
through the grant of an option to purchase shares of common stock of the Company
pursuant to the Plan; and

         WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to the option in accordance with the Plan.

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows.

         1. Incorporation of the Plan. This option is granted pursuant to the
provisions of the Plan and the terms and definitions of the Plan are
incorporated into this Agreement by reference and made a part of this Agreement.
A copy of the Plan has been delivered to, and receipt is acknowledged by, the
Optionee.

         2. Grant of Option. Subject to the terms, restrictions, limitations,
and conditions stated in this Agreement, the Company grants to the Optionee the
right and option (the "Option") to purchase all or any part of the number of
shares of the Company's Common Stock, no par value (the "Stock"), set forth on
Schedule A attached to this Agreement. The Option shall be exercisable in the
amounts and at the time specified on Schedule A. The Option expires and shall
not be exercisable on and after the date specified on Schedule A, or on any
earlier date as determined by this Agreement. This Option is not intended to be
an Incentive Stock Option, as defined in the Internal Revenue Code.

         3. Purchase Price. The price per share to be paid by the Optionee for
the shares subject to this Option (the "Exercise Price") is specified on
Schedule A.

         4. Exercise Terms. The Optionee must exercise the Option for at least
the lesser of 100 shares or the number of shares of stock which may be purchased
by the Optionee under the terms of this Agreement as to which the Option remains
unexercised. If this Option is not exercised with respect to all or any part of
the shares subject to this Option prior to its expiration, the shares with
respect to which this Option was not exercised shall no longer be subject to
this Option.

         5. Restrictions on Transferability. No Option shall be transferable by
an Optionee other than by will or the laws of descent and distribution or
pursuant to a Qualified Domestic Relations Order




<PAGE>

(as defined in the Internal Revenue Code of 1986, as amended (the "Code") or in
the Employee Retirement Income Security Act of 1974, as amended (the "Act"), or
the rules and regulations promulgated under the Code or the Act). During the
lifetime of an Optionee, Options shall be exercisable only by such Optionee (or
by such Optionee's guardian or legal representative, should one be appointed).

         6. Notice of Exercise of Option. This Option may be exercised by the
Optionee, or by the Optionee's administrators, executors or personal
representatives, by a written notice (in substantially the form of the Notice of
Exercise attached hereto as Schedule B) signed by the Optionee, or by the
administrators, executors or personal representatives, and delivered or mailed
to the Company as specified in Section 11 of this Agreement to the attention of
the President or any other officer the Company may designate. These notices
shall (a) specify the number of shares of Stock which the Optionee or the
Optionee's administrators, executors or personal representatives, as the case
may be, then elects to purchase hereunder, (b) contain such information as may
be reasonably required by the Company, and (c) be accompanied by (i) a certified
or cashier's check, money order or personal check (if approved by the Board)
payable to the Company in payment of the total Exercise Price applicable to the
shares as provided herein, (ii) shares of Stock owned by the Optionee and duly
endorsed or accompanied by stock transfer powers having a Fair Market Value (as
determined by the Board of Directors) equal to the total Exercise Price
applicable to the shares purchased hereunder, (iii) a written election by
Optionee to receive the full number of Shares purchasable under the Option then
being exercised less that number of shares that have a value being equal to the
Exercise Price, or (iv) any combination of (i), (ii) or (iii) above. Upon
receipt of the exercise notice and accompanying payment, and subject to the
terms hereof, the Company agrees to issue to the Optionee or the Optionee's
administrators, executors or personal representatives, as the case may be, stock
certificates for the number of shares specified in the notice registered in the
name of the person exercising this Option.

         7. Adjustment in Option. The number of Shares subject to this Option,
the Exercise Price and other matters are subject to adjustment during the term
of this Option in accordance with Section 11 of the Plan.

         8. Termination of Directorship. The unexercised portion of an Option
shall automatically and without notice terminate and be forfeited upon the
earliest to occur of the following:

                  (a) if the Optionee's position as a director of the Company
terminates, other than by reason of such Optionee's death or disability, 180
days after the date that the Optionee's position as a director of the Company
terminates;

                  (b) one year after the death of the Optionee;

                  (c) one year after the date on which the Optionee's position
as director of the Company is terminated by reason of a mental or physical
disability determined by a medical doctor satisfactory to the Company; or

                  (d) five years after the date of grant of such Option.

         9. Date of Grant. This Option was granted by the Board of Directors of
the Company on the date set forth in Schedule A (the "Date of Grant").

         10. Compliance with Regulatory Matters. The Optionee acknowledges that
the issuance of capital stock of the Company is subject to limitations imposed
by federal and state law and the Optionee hereby agrees that the Company shall
not be obligated to issue any shares of Stock upon exercise of this



                                       2
<PAGE>

Option that would cause the Company to violate any law or any rule, regulation,
order or consent decree of any regulatory authority (including without
limitation the Securities and Exchange Commission) having jurisdiction over the
affairs of the Company. The Optionee agrees that he or she will provide the
Company with any information as is reasonably requested by the Company or its
counsel to determine whether the issuance of Stock complies with the provisions
described by this Section.

         11. Miscellaneous.


                  (a)  This Agreement  shall be binding upon the parties hereto
and their representatives, successors and assigns.

                  (b)  This  Agreement  is executed and  delivered  in, and
shall be governed by the laws of, the State of Georgia.

                  (c) Any requests or notices to be given hereunder shall be
deemed given, and any elections or exercises to be made or accomplished shall be
deemed made or accomplished, upon actual delivery thereof to the designated
recipient, or three days after deposit thereof in the United States mail,
registered, return receipt requested and postage prepaid, addressed, if to the
Optionee, at the address set forth below and, if to the Company, to the
executive offices of the Company.

                  (d) This Agreement may not be modified except in writing
executed by each of the parties hereto.


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<PAGE>


         IN WITNESS WHEREOF, the Board of Directors of the Company has caused
this Director Stock Option Agreement to be executed on behalf of the Company and
the Company's seal to be affixed to this Agreement and attested by the Secretary
or an Assistant Secretary of the Company, and the Optionee has executed this
Director Stock Option Agreement under seal, all as of the day and year first
above written.

                                   COMPANY:

                                   TOWNE SERVICES, INC.
Attest:


                                   By:
-----------------------------            ---------------------------------------
         Secretary
                                   Name:
         [SEAL]                           --------------------------------------

                                   Title:
                                          --------------------------------------


                                   OPTIONEE:

                                             -----------------------------------

                                   Name:      ----------------------------------

                                   Address:   ----------------------------------





<PAGE>

                                   SCHEDULE A
                                       TO
                         DIRECTOR STOCK OPTION AGREEMENT
                                     BETWEEN
                              TOWNE SERVICES, INC.
                                       AND
                            ____________________________
                            Dated ___________________





1.       Number of Shares Subject to Option: ___________ shares of the Company's
         Common Stock


2.       This Option (Check one) [ ] is [x] is not an Incentive Stock Option.


3.       Option Exercise Price:  $_______ per share.


4.       Date of Grant:


5.       Option Vesting Schedule:


                  Options are vested with respect to all shares on the date
                  hereof, but the option may not be exercised prior to the six
                  month anniversary of the date hereof.

6.       Option Exercise Period:


         Options expire and are void unless exercised on or
         before _________________.




                                      A-1
<PAGE>




                                   SCHEDULE B
                                       TO
                         DIRECTOR STOCK OPTION AGREEMENT
                                     BETWEEN
                              TOWNE SERVICES, INC.
                                       AND
                              ___________________
                           Dated ____________________

                               NOTICE OF EXERCISE


                  The undersigned hereby notifies Towne Services, Inc. (the
"Company") of this election to exercise the undersigned's stock option to
purchase shares of the Company's Common Stock, no par value (the "Common
Stock"), pursuant to the Director Stock Option Agreement (the "Agreement")
between the undersigned and the Company dated ________________. Accompanying
this Notice is (1) a certified or cashier's check, money order or personal check
(if approved by the Board) in the amount of $____________ payable to the
Company, (2) ______________ shares of the Company's Common Stock presently owned
by the undersigned and duly endorsed or accompanied by stock transfer powers,
having an aggregate Fair Market Value as of the date hereof of $____________,
and/or (3) a written election by the undersigned to receive the full number of
shares purchasable under the Agreement less that number of shares that have a
value being equal to the Exercise Price, these amounts being equal, in the
aggregate, to the purchase price per share set forth in Section 3 of the
Agreement multiplied by the number of shares being purchased hereby (in each
instance subject to appropriate adjustment pursuant to Section 7 of the
Agreement).

         IN WITNESS WHEREOF, the undersigned has set his hand and seal, this
_____ day of ___________, ____.




                                   OPTIONEE [OR OPTIONEE'S
                                   ADMINISTRATOR,
                                   EXECUTOR OR PERSONAL
                                   REPRESENTATIVE]



                                   ---------------------------------------------
                                   Name:
                                   Position (if other than Optionee):