Document:

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                                                                   Exhibit 10.19

                                PROMISSORY NOTE
$300,000
                                                                   JULY 22, 1999

     HENRY M. BAROCO (hereinafter referred to as "Maker"), for value received,
hereby promises to pay to the order of TOWNE SERVICES, INC., a Georgia
corporation (hereinafter referred to as "Payee"), the aggregate principal sum of
three hundred thousand ($300,000) on July 31, 2002, together with interest on
the unpaid principal balance at the rate of 8.0% per annum, compounded annually.
The principal hereof and the interest thereon are payable at 3950 Johns Creek
Court, Suite 100, Suwanee, Georgia 30024, or at such other place as Payee may
from time to time designate to Maker in writing, in coin or currency of the
United States of America.

     Maker may, at any time and from time to time, prepay all or any portion of
the principal of this Note remaining unpaid, without penalty or premium.
Prepayments shall be applied first to the payment of accrued but unpaid interest
on this Note and the balance to principal.

     If any of the following events (an "Event of Default") shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise), then this Note shall thereupon be and become, forthwith due and
payable, without any further notice or demand of any kind whatsoever, all of
which are hereby expressly waived:

          (a)  If Maker defaults in the payment of principal or interest on this
     Note when and as the same shall become due and payable and such default
     continues for 20 days after Maker receives notice from Payee of such
     default; or

          (b)  If Maker makes an assignment for the benefit of creditors or
     admits in writing an inability to pay his or its debts generally as they
     become due;

          (c)  If an order, judgment or decree is entered adjudicating Maker
     bankrupt or insolvent;

          (d)  If Maker petitions or applies to any tribunal for the appointment
     of a trustee or receiver of Maker, or of any substantial part of the assets
     of Maker, or commences any proceedings relating to Maker under any
     bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
     dissolution or liquidation law of any jurisdiction, whether now or
     hereafter in effect; or

          (e)  If any such petition or application is filed, or any such
     proceedings are commenced, against Maker, and Maker by any act indicates
     its approval thereof, consent thereto, or acquiescence therein, or an order
     is entered appointing any such trustee or
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     receiver, or approving the petition in any such proceedings, and such order
     remains unstayed and in effect for more than 90 days.

     This Note is with full recourse to any assets of Maker.

     Any failure on the part of Payee at any time to require the performance by
Maker of any of the terms or provisions hereof, even if known, shall in no way
affect the right thereafter to enforce the same, nor shall any failure of Payee
to insist on strict compliance with the terms and conditions hereof be taken or
held to be a waiver of any succeeding breach or of the right of Payee to insist
on strict compliance with the terms and conditions hereof.

     Time is of the essence.

     This Note shall be governed by, and enforced and interpreted in accordance
with, the laws of the State of Georgia without regard to the principles of
conflict of laws.

     In the event this note, or any part hereof, is collected by or through an
attorney-at-law, Maker agrees to pay all costs of collection including, but not
limited to, attorneys' fees equal to 15% of the principal and interest then
due. In the event that Maker fails to make any payment when due, Payee shall
provide written notice of default to Maker, which notice shall allow Maker ten
(10) days from the date of receipt of such notice in which to cure such
default. If such default is not cured within the time allowed, the balance
hereof shall be deemed to be immediately accelerated without further notice to
Maker.

     IN WITNESS WHEREOF, Maker has executed this Note under seal as of the date
first set forth above.

                                        MAKER:

                                        /s/ Henry M. Baroco
                                        -----------------------------<PAGE>   1
                                                                   Exhibit 10.20

                                   PROMISSORY NOTE

$100,000                                                           July 22, 1999

     BRUCE F. LOWTHERS JR. (hereinafter referred to as "Maker"), for value
received, hereby promises to pay to the order of TOWNE SERVICES, INC., a
Georgia corporation (hereinafter referred to as "Payee"), the aggregate
principal sum of One hundred thousand ($100,000) on July 31, 2002, together
with interest on the unpaid principal balance at the rate of 8.0% per annum,
compounded annually. The principal hereof and the interest thereon are payable
at 3950 Johns Creek Court, Suite 100, Suwanee, Georgia 30024, or at such other
place as Payee may from time to time designate to Maker in writing, in coin or
currency of the United States of America.

     Maker may, at any time and from time to time, prepay all or any portion of
the principal of this Note remaining unpaid, without penalty or premium.
Prepayments shall be applied first to the payment of accrued but unpaid
interest on this Note and the balance to principal.

     If any of the following events (an "Event of Default") shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise), then this Note shall thereupon be and become, forthwith due and
payable, without any further notice or demand of any kind whatsoever, all of
which are hereby expressly waived:

          (a)  If Maker defaults in the payment of principal or interest on this
     Note when and as the same shall become due and payable and such default
     continues for 20 days after Maker receives notice from Payee of such
     default; or

          (b)  If Maker makes an assignment for the benefit of creditors or
     admits in writing an inability to pay his or its debts generally as they
     become due;

          (c)  If an order, judgement or decree is entered adjudicating Maker
     bankrupt or insolvent;

          (d)  If Maker petitions or applies to any tribunal for the appointment
     of a trustee or receiver of Maker, or of any substantial part of the assets
     of Maker, or commences any proceedings relating to Maker under any
     bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
     dissolution or liquidation law of any jurisdiction, whether now or
     hereafter in effect; or

          (e)  If any such petition or application is filed, or any such
proceedings are commenced, against Maker, and Maker by any act indicates its
approval thereof, consent thereto, or acquiescence therein, or an order is
entered appointing any such trustee or receiver, or approving the petition in
any such proceedings, and such order remains unstayed and in effect for more
than 90 days.

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     This Note is with full recourse to any assets of Maker.

     Any failure on the part of Payee at any time to require the performance by
Maker of any of the terms or provisions hereof, even if known, shall in no way
affect the right thereafter to enforce the same, nor shall any failure of Payee
to insist on strict compliance with the terms and conditions hereof be taken or
held to be a waiver of any succeeding breach or of the right of Payee to insist
on strict compliance with the terms and conditions hereof.

     Time is of the essence.

     This Note shall be governed by, and enforced and interpreted in accordance
with, the laws of the State of Georgia without regard to the principles of
conflict of laws.

     In the event this note, or any part hereof, is collected by or through an
attorney-at-law, Maker agrees to pay all costs of collection including, but not
limited to, attorneys' fees equal to 15% of the principal and interest then
due. In the even that Maker fails to make any payment when due, Payee shall
provide written notice of default to Maker, which notice shall allow Maker ten
(10) days from the date of receipt of such notice in which to cure such
default. If such default is not cured within the time allowed, the balance
hereof shall be deemed to be immediately accelerated without future notice to
Maker.

     IN WITNESS WHEREOF, Maker has executed this Note under seal as of the date
first set forth above.

                                        MAKER:

                                         /s/ Bruce F. Lowthers, Jr.
                                        ---------------------------------------<PAGE>   1
                                                                   EXHIBIT 10.26

                         REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of July
19, 1999, is entered into by and between Towne Services, Inc., a Georgia
corporation (the "Company"), and the shareholders of the Company named on the
signature pages hereto (collectively, the "Shareholders" and each, a
"Shareholder").

                                   RECITALS:

         WHEREAS, the Company and Imaging Institute, Inc., a Minnesota
corporation ("Imaging") have entered into an Agreement and Plan of Merger dated
as of July 16, 1999 (the "Merger Agreement"), pursuant to which, among other
things, the Company has agreed to issue to the Shareholders shares of the
Company's common stock, without par value (the "Common Stock"), pursuant to the
merger of Imaging with and into Merger Sub, a Georgia corporation and
wholly-owned subsidiary of the Company;

         WHEREAS, the Shareholders will acquire as a result of the merger a
total of 81,016 Shares of Common Stock; and

         WHEREAS, the Company and the Shareholders desire to provide for the
rights of the Shareholders with respect to the registration of the shares of
Common Stock to be received by the Shareholders pursuant to the Merger
Agreement (the "Shares");

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:

     1. Definitions. For purposes of this Agreement:

     (a) "Act" shall mean the United States Securities Act of 1933, as amended,
or any similar U.S. federal statute enacted hereafter, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time;

     (b) "Commission" shall mean the United States Securities and Exchange
Commission or any other U.S. federal agency at the time administering the Act;

     (c) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act and the declaration or ordering of effectiveness of such
registration statement by the Commission;

     (d) "Registrable Securities" shall mean shares of Common Stock issued or
issuable to the Shareholders pursuant to the Merger Agreement and any Common
Stock issued as a dividend or other distribution with respect to, or in exchange
or replacement of, the foregoing but shall not include any other shares of
Common Stock acquired by Shareholders other than the foregoing;

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     (e) "Holder" shall mean a Shareholder if the Shareholder continues to hold
at least 50% of his or her Registrable Securities as of the date of this
Agreement; provided, however, that any person who acquires any of the
Registrable Securities in a distribution or transfer pursuant to a registration
statement filed by the Company under the Act or pursuant to a sale under Rule
144, Regulation S or any other exemption from registration under the Act, shall
not be considered a Holder;

     (f) "1934 Act" shall mean the United States Securities Exchange Act of
1934, as amended, or any similar U.S. federal statute enacted hereafter, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect from time to time; and

     (g) All other capitalized terms used herein but not otherwise defined shall
have the meanings ascribed to them in the Merger Agreement.

     2. Piggyback Registration. Subject to Section 8, if at any time during the
12-month period beginning on the date hereof the Company proposes to register
any of its securities under the Act, either for its own account or for the
account of other holders of Common Stock (other than on a Form S-8, Form S-4 or
similar registration statement), in connection with the public offering of such
securities solely for cash, on a registration form that would also permit the
registration of Registrable Securities, the Company shall, with respect to any
such registration, promptly give each Holder written notice of such proposal.
Upon the written request of any Holder given within 15 days after mailing of any
such notice by the Company, the Company shall use all commercially reasonable
efforts to cause to be included in such registration under the Act all the
Registrable Securities that each such Holder has requested be registered.

     3. Obligations of the Company. Whenever required under this Agreement to
use all commercially reasonable efforts to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:

     (a) Prepare and file with the Commission a registration statement covering
such Registrable Securities and use all commercially reasonable efforts to cause
such registration statement to be declared effective by the Commission as
expeditiously as possible and to keep such registration effective until the
earlier of (i) the date when all Registrable Securities covered by the
registration statement have been sold or (ii) 60 days from the effective date of
the registration statement; provided, that before filing a registration
statement or prospectus or any amendments or supplements thereto, the Company
will furnish to each Holder of Registrable Securities covered by such
registration statement and the underwriters, if any, copies of all such
documents proposed to be filed (excluding exhibits, unless any such person shall
specifically request exhibits), which documents will be subject to the review of
such Holders and underwriters. The Company agrees that it will not file such
registration statement or any amendment thereto or any prospectus or any
supplement thereto (including any documents incorporated by reference therein)
with the Commission if the information in such registration statement or
prospectus concerning a particular selling Holder has changed and such Holder or
the underwriters, if any, shall reasonably object; provided, that the Company
may file and amend the registration statement under this clause if it removes
the Holder and

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any incorrect or outdated information from the registration statement before
such filing or amendment.

     (b) Prepare and file with the Commission such amendments and post-effective
amendments to such registration statement as may be necessary to keep such
registration statement effective during the period referred to in Section 3(a)
and to comply with the provisions of the Act with respect to the disposition of
all securities covered by such registration statement, and cause the prospectus
to be supplemented by any required prospectus supplement, and as so supplemented
to be filed with the Commission pursuant to Rule 424 under the Act.

     (c) Furnish to the selling Holders such numbers of copies of such
registration statement, each amendment thereto, the prospectus included in such
registration statement (including each preliminary prospectus), each supplement
thereto and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.

     (d) Use all commercially reasonable efforts to register and qualify the
Registrable Securities under such other securities laws of such jurisdictions as
shall be reasonably requested by any selling Holder and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
selling Holder to consummate the disposition of the Registrable Securities owned
by such Holder in such jurisdictions; provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to
transact business or to file a general consent to service of process in any such
counties, states or jurisdictions; and provided further that (anything in this
Agreement to the contrary notwithstanding with respect to the bearing of
expenses) if any jurisdiction in which the Registrable Securities shall be
qualified shall require that expenses incurred in connection with the
qualification of the Registrable Securities in that jurisdiction be borne by
selling shareholders, then such expenses shall be payable by the selling Holders
pro rata, to the extent required by such jurisdiction, including but not limited
to filing fees and expenses of counsel and other advisors and any commissions or
discounts related to the registration of Registrable Securities in such other
jurisdictions.

     (e) Promptly notify each selling Holder of such Registrable Securities at
any time when a prospectus relating thereto is required to be delivered under
the Act of the happening of any event as a result of which the prospectus
included in such registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading and, at the request of any such Holder, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading.

     (f) Provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement.

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     (g) Promptly notify the Holders of Registrable Securities of the following
events: (i) the filing of the prospectus or any prospectus supplement and the
registration statement and any amendment or post-effective amendment thereto
and, with respect to the registration statement or any post-effective amendment
thereto, the declaration of the effectiveness of such documents, (ii) any
requests by the Commission for amendments or supplements to the registration
statement or the prospectus or for additional information, (iii) the issuance or
threat of issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation of any proceedings
for that purpose and (iv) the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threat of initiation of any
proceeding for such purpose.

     (h) Make every commercially reasonable effort to prevent the entry of any
order suspending the effectiveness of the registration statement and obtain at
the earliest possible moment the withdrawal of any such order, if entered.

     (i) Cooperate with the selling Holders of Registrable Securities and the
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends, and enable such Registrable Securities to be in such lots
and registered in such names as the underwriters may request at least two
business days prior to any delivery of Registrable Securities to the
underwriters.

     (j) Provide a CUSIP number for all Registrable Securities not later than
the effective date of the registration statement.

     (k) Otherwise use all commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission.

     4. Termination of Registration. Notwithstanding any other provision in this
Agreement, at any time before or after the filing of a registration statement,
the Company may, in its sole discretion, abandon or terminate such registration
without the consent of or any liability to the Holders.

     5. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Holders shall furnish to the Company such information regarding them, the
Registrable Securities held by them, and the intended method of disposition of
such Registrable Securities as the Company shall reasonably request and as shall
be required or, in the opinion of the Company, reasonably necessary, in
connection with the action to be taken by the Company.

     6. Suspension of Disposition of Registrable Securities. Each selling Holder
of Registrable Securities agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(e) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities until such Holder's receipt of
copies of a supplemented or amended prospectus contemplated by Section 3(e)
hereof, or until it is advised in writing (the "Advice") by the Company that the
use of the prospectus may be resumed, and has received copies of any additional
or supplemental

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filings which are incorporated by reference in the prospectus, and, if so
directed by the Company, such Holder will deliver to the Company (at the expense
of the Company) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time periods mentioned in Section 3(a) hereof shall be
extended by the number of days during the period from and including the date of
the giving of such notice pursuant to Section 3(e) hereof to and including the
date when each selling Holder of Registrable Securities shall have received the
copies of the supplemented or amended prospectus contemplated by Section 3(e)
hereof or the Advice.

     7. Expenses of Registration. All expenses incurred in connection with a
registration pursuant to this Agreement (excluding underwriters' discounts and
commissions and costs and expenses and costs and expenses described in Section
3(d)), including all registration and qualification fees, printing and
accounting fees, and fees and disbursements of counsel for the Company, shall be
borne by the Company.

     8. Underwriting Requirements; Priorities.

     (a) The Company shall select the investment banker(s) and manager(s) to
administer the offering, if any. If the managing underwriters advise the Company
in writing that in their opinion the number of securities requested to be
included in such registration pursuant to this Agreement exceeds the number
which can be sold at the desired price in such offering, the Company will
include in such registration (i) first, all of the securities the Company
proposes to sell, (ii) second, the number of Registrable Securities requested to
be included, which in the opinion of such underwriters can be sold, pro rata
among the respective Holders of Registrable Securities requesting such
registration on the basis of the number of shares of Registrable Securities
owned by each such Holder and (iii) third, all other securities requested to be
included in such registration.

     (b) No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the term of such underwriting arrangements.

     9. Termination of the Company's Obligations.

     (a) The Company shall not be obligated to register or include in any
registration Registrable Securities that any Holder has requested to be
registered if the Company shall furnish such Holder with a written opinion of
counsel reasonably satisfactory to such Holder, that all Registrable Securities
that such Holder holds may be publicly offered, sold and distributed without
registration under the Act pursuant to Rule 144, Regulation S or other exemption
from registration promulgated by the Commission under the Act (whether or not
subject to applicable volume limitations thereunder).

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     (b) The Company shall not be obligated to register or include in any
registration Registrable Securities of any Holder who has had an opportunity to
sell Registrable Securities pursuant to Section 2 of this Agreement within the
preceding 120 days;

     (c) With a view to making available to the Holders the benefits of Rule 144
promulgated under the Act and any other rule or regulation of the Commission
that may at any time permit a Holder to sell securities of the Company to the
public without registration, the Company agrees to use all commercially
reasonable efforts to:

     (i) file with the Commission in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act at any time
after it is subject to such registration requirements; and

     (ii) furnish to any Holder so long as such Holder owns any of the
Registrable Securities forthwith upon request a written statement by the Company
that it has complied with the reporting requirements the 1934 Act (at any time
for which it remains subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as may be reasonably requested by any Holder
in availing any Holder of any rule or regulation of the Commission permitting
the selling of any such securities without registration.

     (d) The rights of the Holders and the obligations of the Company under this
Agreement shall expire on the first anniversary of the Closing Date.

     10. Lockup Agreement. Each Holder agrees that upon the request of the
underwriters managing any underwritten offering of the Company' securities, not
to sell, make any short sale of, pledge, grant any option for the purchase of or
otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for a period of up to 180 days following the
offering.

     11. Indemnification. In the event any Registrable Securities are included
in a registration statement under this Agreement:

     (a) To the full extent permitted by law, the Company will indemnify and
hold harmless each Holder requesting or joining in a registration, each
director, officer, partner, employee, or agent for such Holder, any underwriter
(as defined in the Act) for such Holder, and each person, if any, who controls
such Holder or underwriter within the meaning of the Act, against any losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Act and applicable state securities laws insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based on any untrue or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein in light of the
circumstances under which they were made or necessary to make the statements
therein not misleading or arise out of any violation by the Company of any rule
or regulation promulgated under the Act applicable to the

<PAGE>   7

Company and relating to action or inaction required of the Company in connection
with any such registration; and will reimburse each such person or entity for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 11(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld) nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in connection with
such registration statement, preliminary prospectus, final prospectus, or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by or on behalf of any such Holder, underwriter or controlling
person.

     (b) To the full extent permitted by law, each Holder requesting or joining
in a registration under this Agreement will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
registration statement, each person, if any, who controls the Company within the
meaning of the Act, and any underwriter for the Company (within the meaning of
the Act), each other selling Holder and each person, if any, who controls such
other selling Holder within the meaning of Section 15 of the Act against any
losses, claims, damages or liabilities, joint or several, to which the Company
or any such director, officer, controlling person or underwriter may become
subject, under the Act and applicable state securities laws, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances, in each case to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission was made in such registration
statement, preliminary or final prospectus, or amendments or supplements
thereto, in reliance upon and in conformity with written information furnished
by such Holder expressly for use in connection with such registration; and each
such Holder will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, controlling person or underwriter in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 11(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of such Holder (which consent shall not be unreasonably withheld).

     (c) In no event shall the liability of the Company or any selling Holder of
Registrable Securities hereunder be greater than the dollar amount of the
proceeds received by such Holder, or, in the case of the Company, the proceeds
received by all Holders, upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

<PAGE>   8

     (d) Promptly after receipt by an indemnified party under this Section 11 of
notice of the commencement of any action or knowledge of a claim that would, if
asserted, give rise to a claim for indemnity hereunder, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 11, notify the indemnifying party in writing of the
commencement thereof or knowledge thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties. The
failure to notify an indemnifying party promptly of the commencement of any such
action or of the knowledge of any such claim, if prejudicial to his ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 11, but the omission so to notify the
indemnifying party will not relieve him of any liability that he may have to any
indemnified party otherwise than under this Section 11.

     12. Put Right.

     (a) Holders of Registrable Shares other than Lori R. Frank and Jerry L.
Bucher shall have the right, for the seven (7) days immediately following the
first anniversary of the Closing Date (the "ANNIVERSARY DATE"), to put their
Registrable Shares to the Company if the average closing price per share of the
Parent Common Stock as reported on the Nasdaq National Market ("NASDAQ") for the
ten (10) consecutive trading days ending on the Anniversary Date (the
"ANNIVERSARY VALUE") is less than $9.50 per share of the Parent Common Stock. In
such a case, each Holder shall have the right to cause the Company to repurchase
the total number of Registrable Securities held by such Holder at a price of
$9.50 per share.

     (b) Each Holder desiring to exercise the put right in paragraph (a) shall
deliver to the Company, in accordance with Section 15, an Exercise Notice in the
form attached hereto as Exhibit A within seven (7) days following the
Anniversary Date. Such Exercise Notice shall state the number of Registrable
Securities to be repurchased by the Company from the Holder (the "REPURCHASE
SHARES"). Upon receipt of such notice, the Company will notify the transfer
agent for the Parent Common Stock that the number of Repurchase Shares shall be
removed from the aggregate holdings of such Holder in the stock records of the
Company and transferred to the treasury of the Company. The Company shall also
pay the Holder, by wire transfer or check mailed to the most current address
given by such Holder in accordance with the provisions of Section 15, an amount
equal to (i) $9.50 multiplied by (ii) the number of Repurchase Shares.

     (c) In no event shall the rights provided to Holders pursuant to this
Section 12 be exercisable if the exercise of such rights would adversely affect
any transaction being contemplated by the Company that is intended to be
accounted for as a pooling of interests at the time such rights become
exercisable; provided, however, that any exercise rights so affected by a
pooling transaction shall become exercisable in accordance with this Section 12
upon the cessation of the restrictions imposed by such pooling transaction.

<PAGE>   9

     13. Remedies. In addition to being entitled to exercise all rights provided
in this Agreement and the Merger Agreement as well as all rights granted by law,
including recovery of damages, the Company and each Holder of Registrable
Securities will be entitled to specific performance of its rights under this
Agreement.

     14. Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of Holders of at least a
majority of the outstanding Registrable Securities, voting together as a single
class.

     15. Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by personal delivery, by internationally
recognized overnight courier (with charges prepaid) or by telecopy (with
telephone confirmation) as follows:

     (a) if to a Holder of Registrable Securities, at the most current address
given by such Holder to the Company in accordance with the provisions of this
Section 15, which address initially is, with respect to the Shareholders, the
address set forth in the Merger Agreement, with a copy (which shall not
constitute notice) to the Shareholders' respective counsel as identified
therein; and

     (b) if to the Company, initially at its address set forth in the Merger
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 15, with a copy (which shall not
constitute notice) to the Company's counsel as identified in the Merger
Agreement.

     (c) All such notices and communications shall be deemed to have been duly
given or made when personally delivered, the day of guaranteed delivery by such
overnight courier service or when transmitted to the specified telecopy number
and confirmed by telephone, in each case addressed to the respective parties as
set forth above.

     16. Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     17. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

     18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE UNITED STATES OF AMERICA AND THE STATE OF
GEORGIA, EXCLUDING CHOICE OF LAW PRINCIPLES.

     The Company and the Shareholders irrevocably consent to the exclusive
jurisdiction and venue of the courts of any county in the State of Georgia and
the United States Federal District Court of Georgia, in any judicial proceeding
brought to enforce this Agreement. The parties agree that any forum other than
the State of Georgia is an inconvenient forum and that a

<PAGE>   10

lawsuit (or non-compulsory counterclaim) brought by one party against another
party, in a court of any jurisdiction other than the State of Georgia should be
forthwith dismissed or transferred to a court located in the State of Georgia.

     19. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

     20. Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Company Stock. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

     21. No Assignment; Parties Benefited. The rights provided the Holders under
this Agreement are not transferable. If any Registrable Securities are sold,
exchanged, encumbered or otherwise transferred in any manner, the rights
provided the Holder of such Registrable Securities pursuant to this Agreement
shall immediately terminate as to all such transferred shares. Neither party may
assign their rights, duties or obligations under this Agreement without the
express written consent of the other party. Any attempted assignment without
such written consent shall be null and void. Nothing in this Agreement, express
or implied, is intended to confer upon any third party any rights, remedies,
obligations or liabilities.

<PAGE>   11

     The parties have executed this Registration Rights Agreement as of the date
first above written.

                                    TOWNE SERVICES, INC.

                                    By:   /s/ Bruce F. Lowthers
                                        ----------------------------
                                    Name:  Bruce F. Lowthers
                                    Title: Secretary and CFO

                                    SHAREHOLDERS

                                          /s/ Lori R. Frank
                                    --------------------------------
                                    Name:  Lori R. Frank

                                          /s/ Jerry L. Bucher
                                    --------------------------------
                                    Name:  Jerry L. Bucher

                                          /s/ Russell L. Bengston
                                    --------------------------------
                                    Name:  Russell L. Bengston

                                          /s/ Mark J. Mollers
                                    --------------------------------
                                    Name:  Mark J. Mollers

                                          /s/ Ron Randall
                                    --------------------------------
                                    Name:  Ron Randall

                                          /s/ Paul Frank
                                    --------------------------------
                                    Name:  Paul Frank

                                          /s/ Edna Frank
                                    --------------------------------
                                    Name:  Edna Frank

                                          /s/ Pierce A. McNally
                                    --------------------------------
                                    Name:  Pierce A. McNally

                                          /s/ Judson Bemis, Jr.
                                    --------------------------------
                                    Name:  Judson Bemis, Jr.

                                          /s/ Stephen L. Becher
                                    --------------------------------
                                    Name:  Stephen L. Becher

                                          /s/ Steve Schewe
                                    --------------------------------
                                    Name:  Steve Schewe

<PAGE>   12

                                    Dakota County Capital, LLC

                                    By:   /s/ Steven C. King
                                        -----------------------------
                                        Name:  Steven C. King
                                        Title: President

                                    Kenneth E. Dawkins Trust

                                    By:   /s/ Kenneth E. Dawkins
                                        ----------------------------
                                        Name:  Kenneth E. Dawkins
                                        Title: Trustee

                                    Cardinal Capital, LLC

                                    By:   /s/ Terry Adams
                                        ----------------------------
                                        Name:  Terry Adams
                                        Title: Managing Director

<PAGE>   13

                                 EXERCISE NOTICE

     Pursuant to that certain Registration Rights Agreement, dated as of July
__, 1999, by and among Towne Services, Inc. (the "Company") and the shareholders
listed on the signature pages thereto (the "Agreement"), the undersigned hereby
causes this Exercise Notice to be delivered to the Company in accordance with
Section 12 of such Agreement and certifies that the information contained herein
is true and correct to the knowledge of the undersigned.

         Shareholder Name:  ___________________

         Aggregate Number of Registrable Securities Owned: _____________

         Amount of Repurchase Shares Requested: ______________

         Dollar Value for such Repurchase Shares:__________________

         Duly executed this ____ day of _____, 2000.

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

         --------------------------------
         Date

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