ONLINE SYSTEM SERVICES INC, DEFR14A, 1999-08-09

ONLINE SYSTEM SERVICES INC
DEFR14A, 1999-08-09
COMPUTER INTEGRATED SYSTEMS DESIGN

Previous: ALVEY SYSTEMS INC, 10-Q, 1999-08-09

Next: CARDIAC PATHWAYS CORP, S-8, 1999-08-09

<PAGE>

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 Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement

[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

Online System 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 table below per Exchange Act Rules 14a-6(i)(4) 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:
_______________________________________________________________________________
<PAGE>

[LOGO OF ONLINE SYSTEMS SERVICES, INC.]

ONLINE SYSTEM SERVICES, INC.
1800 Glenarm Place
Suite 700
Denver, Colorado 80202

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD AUGUST 30, 1999

NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Online
System Services, Inc., a Colorado corporation, has been adjourned in order to
permit the nominee holders of the Company's common stock to have sufficient
time to vote their shares and will be held on Monday, August 30, 1999, at
10:00 a.m., Mountain Time, at our offices, 1800 Glenarm Place, Suite 700,
Denver, Colorado for the following purposes:

1. To elect five nominees to our board of directors to serve for a term of
one year.

2. To approve an amendment to our Articles of Incorporation to change our
name to WEBB Interactive Services, Inc.

3. To approve an amendment to the Online System Services, Inc. Stock Option
Plan of 1995 to increase the number of shares authorized under the plan from
2,800,000 to 3,500,000.

4. To ratify the appointment of Arthur Andersen LLP as our independent
accountants for the current fiscal year.

5. To transact such other business as may properly come before the meeting
and any adjournments thereof.

Only holders of record of our common stock at the close of business on July
6, 1999 will be entitled to notice of, and to vote at, the annual meeting or
any adjournment thereof.

YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY AND RETURN IT IN THE ENCLOSED REPLY ENVELOPE AS PROMPTLY AS POSSIBLE.

BY ORDER OF THE BOARD OF DIRECTORS

Lindley S. Branson
Secretary

August 5, 1999

<PAGE>

[LOGO OF ONLINE SYSTEM SERVICES, INC.]

PROXY STATEMENT

ONLINE SYSTEM SERVICES, INC.
1800 Glenarm Place
Suite 700
Denver, Colorado 80202

Annual Meeting of Shareholders--August 5, 1999

GENERAL

The enclosed proxy is solicited by the board of directors of Online System
Services, Inc., a Colorado corporation, for use at its annual meeting to be
held on Thursday, August 5, 1999, at 2:30 p.m., Mountain Time, at our offices,
or any adjournment thereof. Solicitations are being made by mail and may also
be made by our directors, officers and employees. Any proxy given pursuant to
such solicitation may be revoked by the shareholder at any time prior to the
voting thereof by so notifying us in writing at the above address, attention:
Lindley S. Branson, Secretary, or by appearing and voting in person at the
meeting. Shares represented by proxies will be voted as specified in the
proxies. In the absence of specific instructions, proxies will be voted (to
the extent they are entitled to be voted on such matters): (1) FOR the
election to the board of directors of the nominees named in this proxy
statement; (2) FOR the amendment to our Articles of Incorporation to change
our name; (3) FOR the amendment to the Online System Services, Inc. Stock
Option Plan of 1995 to increase the number of shares authorized under such
plan from 2,800,000 to 3,500,000; (4) FOR the ratification of the appointment
of Arthur Andersen LLP as our independent accountants for the current year;
and (5) in the proxy's discretion upon such other business as may properly
come before the annual meeting. So far as our management is aware, no matters
other than those described in this proxy statement will be acted upon at the
annual meeting.

Votes cast by proxy or in person at the annual meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether
or not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval
of any matter submitted to the shareholders for a vote. If a broker indicates
on the proxy that it does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will be considered as
shares that are present for the purposes of determining the presence of a
quorum, but will not be considered as present and entitled to vote with
respect to that matter.

We will pay all of the expenses involved in preparing, assembling and
mailing this proxy statement and the material enclosed herewith. We may
reimburse banks, brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to beneficial owners of stock. This proxy statement and our annual report for
the year ended December 31, 1998 are being mailed to shareholders on or about
July 23, 1999.

1
<PAGE>

OUTSTANDING STOCK

As of July 6, 1999, the record date for determining shares entitled to
notice of and to vote at our annual meeting, the following shares of our
capital stock were outstanding:

. 7,084,420 shares of our common stock;

. 85,000 shares of our 10% preferred stock; and

. 2,500 shares of our Series C preferred stock.

Each holder of our common stock and each holder of our 10% preferred stock
will be entitled to cast one vote in person or by proxy for each share of
common stock or 10% preferred stock held for the election of directors and for
all other matters voted on at the annual meeting. Each holder of Series C
Preferred stock will be entitled to cast 36 votes in person or by proxy for
each share of Series C preferred stock held for the election of directors and
for all other matters voted on at the annual meeting. The holders of our
common stock, 10% preferred stock, and Series C preferred stock will vote as a
single class on all matters voted on at the annual meeting.

Information as to the name, address and stock holdings of each person known
by OSS to be a beneficial owner of more than five percent of our common stock,
our 10% preferred stock, or our Series C preferred stock as of and as to the
name, address and stock holdings of certain officers, each director and
nominee for election to the board of directors, and by all executive officers
and directors, as a group, as of July 6, 1999 is set forth below. Except as
indicated below, we believe that each such person has the sole (or joint with
spouse) voting and investment powers with respect to such shares.

<TABLE>
<CAPTION>
Common Stock 10% Preferred Stock Series C Preferred Stock
------------------------ ----------------------- -----------------------------
Amount Percent Amount Percent Amount
Name/Address of Beneficially of Beneficially of Beneficially Percent of
Shareholder/Director Owned Class (1) Owned Class (1) Owned Class (1)
- -------------------- ------------ --------- ------------ --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
R. Steven Adams 555,584 (2) 7.8% None -- None --
1800 Glenarm Place,
Suite 700
Denver, Colorado 80202
Lee E. Schlessman 93,074 (3) 1.3% 60,000 (4) 70.6% None --
1301 Pennsylvania
Street, Suite 800
Denver, Colorado 80203
Susan M. Duncan 23,268 (5) * 15,000 (6) 17.6% None --
2651 South Wadsworth
Circle
Lakewood, Colorado
80227
Cal J. and Amanda Mae
Rickel 7,756 (7) * 5,000 5.9% None --
P.O. Box 1076
Cortez, Colorado 81321
Rickel, Soderberg, &
Clearing, a Colorado
partnership 7,756 (8) * 5,000 5.9% None --
P.O. Box 719
Cortez, Colorado 81321
Arrow Investors II LLC 386,341 (9) 5.2% None -- 2,500 100%
One World Trade Center
Suite 4563
New York, New York
10048
John M. Liviakis 500,750 (10) 7.1% None -- None --
2420 K Street
Suite 220
Sacramento, California
95816
</TABLE>

2
<PAGE>

<TABLE>
<CAPTION>
Common Stock 10% Preferred Stock Series C Preferred Stock
------------------------ ---------------------- ----------------------------
Amount Percent Amount Percent Amount
Name/Address of Beneficially of Beneficially of Beneficially Percent of
Shareholder/Director Owned Class (1) Owned Class (1) Owned Class (1)
- -------------------- ------------ --------- ------------ --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
William R. Cullen 72,466 (11) 1.0% None -- None --
1800 Glenarm Place,
Suite 700
Denver, Colorado 80202
Gwenael Hagan 20,250 (12) * None -- None --
1800 Glenarm Place,
Suite 700
Denver, Colorado 80202
Michael Murphy 25,250 (13) * None -- None --
1800 Glenarm Place,
Suite 700
Denver, Colorado 80202
Edward Robinson 13,250 (14) * None -- None --
1800 Glenarm Place,
Suite 700
Denver, Colorado 80202
Robert J. Lewis 98,204 (15) 1.4% None -- None --
1800 Glenarm Place,
Suite 700
Denver, Colorado 80202
Richard C. Jennewine 57,500 (16) * None -- None --
1800 Glenarm Place,
Suite 700
Denver, Colorado 80202
Perry Evans 71,429 (17) 1.0% None -- None --
1800 Glenarm Place,
Suite 700
Denver, Colorado 80202
Directors and Executive
Officers as a 987,803 (18) 13.5% None -- None --
Group (8 persons)
</TABLE>
- --------
* Less than one percent of shares outstanding.

(1) In calculating percentage ownership, all shares of our common stock which
a named shareholder has the right to acquire within 60 days from the date
of this proxy statement upon exercise of options or warrants are deemed to
be outstanding for the purpose of computing the percentage of common stock
owned by that shareholder, but are not deemed to be outstanding for the
purpose of computing the percentage of common stock owned by any other
shareholders. No options or warrants to acquire either the 10% preferred
stock or Series C preferred stock are outstanding.

(2) Includes options for the purchase of 58,334 shares of common stock, but
excludes options for the purchase of 116,666 shares of common stock that
are not exercisable during the next 60 days.

(3) Includes 69,074 shares of common stock issuable upon the conversion of
shares of 10% preferred stock, including accrued but unpaid dividends
thereon, if such conversion occurred as of the close of business on July
6, 1999 plus 24,000 shares issuable upon the exercise of warrants to
purchase shares of common stock at a per share exercise price of $15.00.
Upon the actual conversion of the 10% preferred stock, the number of
shares into which the 10% preferred stock is convertible may be more or
less than 69,074 shares, but in no event will be less than 60,000 shares.
Pursuant to the terms of the 10% preferred stock, on July 6, 1999 the
conversion price was approximately $10.00. Also includes shares of common
stock beneficially owned by (i) The Schlessman Family Foundation and (ii)
persons who have granted Mr. Schlessman a power of attorney with respect
to such shares.

3
<PAGE>

(4) Includes 5,000 shares of 10% preferred stock owned by The Schlessman
Family Foundation. Also includes 15,000 shares of 10% preferred stock
owned by persons who have granted Mr. Schlessman a power of attorney with
respect to such shares.

(5) Includes 17,268 shares of common stock issuable upon the conversion of
shares of 10% preferred stock, including accrued but unpaid dividends
thereon, if such conversion occurred as of the close of business on July
6, 1999 plus 6,000 shares issuable upon the exercise of warrants to
purchase shares of common stock at a per share exercise price of $15.00.
Upon the actual conversion of the 10% preferred stock, the number of
shares into which the 10% preferred stock is convertible may be more or
less than 17,268 shares, but in no event will be less than 15,000 shares.
Pursuant to the terms of the 10% preferred stock, on July 6, 1999 the
conversion price was approximately $10.00. Also includes shares of common
stock beneficially owned by the Susan M. Duncan Irrevocable Gift Trust.

(6) Includes 10,000 shares of 10% preferred stock owned by the Susan M. Duncan
Irrevocable Gift Trust.

(7) Includes 5,756 shares of common stock issuable upon the conversion of
shares of 10% preferred stock, including accrued but unpaid dividends
thereon, if such conversion occurred as of the close of business on July
6, 1999 plus 2,000 shares issuable upon the exercise of a warrant to
purchase shares of common stock at a per share exercise price of $15.00.
Upon the actual conversion of the 10% preferred stock, the number of
shares into which the 10% preferred stock is convertible may be more or
less than 5,756 shares, but in no event will be less than 5,000 shares.
Pursuant to the terms of the 10% preferred stock, on July 6, 1999 the
conversion price was approximately $10.00. Does not include shares owned
by Rickel, Soderberg & Clearing, a Colorado partnership.

(8) Includes 5,756 shares of common stock issuable upon the conversion of
shares of 10% preferred stock, including accrued but unpaid dividends
thereon, if such conversion occurred as of the close of business on July
6, 1999 plus 2,000 shares issuable upon the exercise of a warrant to
purchase shares of common stock at a per share exercise price of $15.00.
Upon the actual conversion of the 10% preferred stock, the number of
shares into which the 10% preferred stock is convertible may be more or
less than 5,756 shares, but in no event will be less than 5,000 shares.
Pursuant to the terms of the 10% preferred stock, on July 6, 1999 the
conversion price was approximately $10.00.

(9) Includes 225,941 shares issuable upon the conversion of the Series C
preferred stock, including accrued but unpaid dividends thereon, if such
conversion occurred as of the close of business on July 6, 1999. Upon the
actual conversion of the Series C preferred stock, the number of shares
into which the Series C preferred stock is convertible may be more or less
than 225,941 shares, but in no event will be less than shares.
Pursuant to the terms of the Series C preferred stock, on July 6, 1999 the
conversion price was approximately $11.125. Also includes 100,000 shares
issuable to affiliates of Arrow Investors II LLC upon the exercise of
warrants to purchase shares at a per share exercise price of $16.33.

(10) Includes 490,750 shares owned by Liviakis Financial Communications, Inc.
Mr. Liviakis, together with his spouse, owns all of the outstanding
securities of Liviakis Financial Communications, Inc.

(11) Includes options for the purchase of 43,333 shares of common stock, but
excludes options for the purchase of 116,667 shares of common stock that
are not exercisable during the next 60 days.

(12) Includes options for the purchase of 20,250 shares of common stock, but
excludes options for the purchase of 79,750 shares of common stock that
are not exercisable during the next 60 days.

(13) Includes options for the purchase of 250 shares of common stock, but
excludes options for the purchase of 25,000 shares of common stock that
are not exercisable during the next 60 days.

(14) Includes options for the purchase of 13,250 shares of common stock, but
excludes options for the purchase of 20,667 shares of common stock that
are not exercisable in the next 60 days.

(15) Includes options and warrants for the purchase of 70,834 shares of common
stock, but excludes options for the purchase of 6,666 shares of common
stock that are not exercisable during the next 60 days.

(16) Includes options for the purchase of 57,500 shares of common stock, but
excludes options for the purchase of 10,000 shares of common stock that
are not exercisable during the next 60 days.

4
<PAGE>

(17) Excludes options for the purchase of 280,000 shares of common stock that
are not exercisable during the next 60 days.

(18) Includes options and warrants for the purchase of 250,501 shares of
common stock, but excludes options for the purchase of 784,749 shares of
common stock that are not exercisable during the next 60 days.

PROPOSAL 1:
ELECTION OF DIRECTORS

Nomination and Election of Directors

Our by-laws provide that the size of our board of directors shall be fixed
from time to time by resolution of the shareholders, subject to increase by
resolution of the board of directors. In the event the shareholders do not fix
by resolution the number of directors, the by-laws provide that the number of
directors shall be three, subject to increase by resolution of the board of
directors. The board of directors has set the size of the board at five. The
proxies granted by the shareholders will be voted at the annual meeting for
the election of the five persons listed below as our directors.

Nominees for Director

R. Steven Adams
William R. Cullen
Robert J. Lewis
Richard C. Jennewine
Perry Evans

In the event that one of more of the above named persons shall become
unavailable for election, votes will be cast pursuant to authority granted by
the enclosed proxy for such person or persons as may be designated by the
board of directors, unless the board of directors determines to reduce its
size appropriately.

Directors, Nominees for Director and Executive Officers

Our directors, nominees for director, and executive officers are as
follows:

<TABLE>
<CAPTION>
Director
Name Age Since Position
- ---- --- -------- -------------------------------------------------------------
<S> <C> <C> <C>
R. Steven Adams......... 46 1994 Chairman of the Board, Chief Executive Officer and a Director
William R. Cullen....... 58 1998 Chief Financial Officer and a Director
Perry Evans............. 39 -- President and Nominee for Director
Lindley S. Branson...... 56 -- Executive Vice President--General Counsel and Secretary
Gwenael S. Hagan........ 39 -- Senior Vice President--Strategic Development
Andre Durand............ 31 -- Senior Vice President--Product Development
Robert J. Lewis......... 69 1995 Director
Richard C. Jennewine.... 61 1996 Director
</TABLE>

R. Steven Adams, founder of OSS, has served as President, Chief Executive
Officer and a director since our incorporation in March 1994. From 1985 to
1994, Mr. Adams was President-Sheridan Hotel Management, a full service hotel
management company. Mr. Adams was the creator and founder of HotelNet, which
was an online information system for the hospitality industry. Mr. Adams'
experience includes software development, personal computer manufacturing and
management of online information systems.

William R. Cullen, has served as either Chief Operating Officer or Chief
Financial Officer and a director since March 1998. From May 1997 to March
1998, Mr. Cullen worked as a consultant to businesses in the cable

5
<PAGE>

industry. From April 1994 to May 1997, Mr. Cullen was Chairman and CEO of
Access Television Network, Inc., a privately held company specializing in
providing paid programming to local cable systems. From January 1992 to March
1994, Mr. Cullen was President and CEO of California News Channel, a
programming project of Cox Cable Communications. From July 1984 to December
1991, Mr. Cullen was employed by United Artist Cable Corporation (and its
predecessor United Cable Television Corporation) as Vice President of
Operations and President of its subsidiary United Cable of Los Angeles, Inc.,
and as its Senior Vice President of the Southwest Division. Prior to joining
United Artist Cable Corporation, Mr. Cullen was President of Tribune Company
Cable of California, Inc. and CEO of its United-Tribune Cable of Sacramento
joint venture, served as a top financial officer of three companies, and
worked in banking.

Perry Evans, joined OSS in June 1999 in connection with the merger of OSS
and NetIgnite, Inc. ("NetIgnite"). Mr. Evans founded NetIgnite in 1998. Prior
to founding NetIgnite, Mr. Evans founded MapQuest Publishing Group, where he
created one of the most prominent consumer brands and one of the most widely
licensed business services on the Internet. Prior to founding MapQuest, Mr.
Evans managed the new media development group with R.R. Donnelley that was
responsible for interactive yellow pages, travel and real estate products.

Lindley S. Branson, joined OSS in May 1999 as Executive Vice President--
General Counsel and Secretary. Mr. Branson is a principal of Gray, Plant,
Mooty, Mooty & Bennett, P.A., OSS' outside legal counsel. Mr. Branson has been
employed by Gray, Plant, Mooty, Mooty & Bennett, P.A., for over thirty years.
During that time, Mr. Branson has represented numerous companies, both public
and private, in connection with securities offerings, mergers and
acquisitions, and general corporate matters.

Gwenael S. Hagan, joined OSS in January 1998 as Senior Vice President of
Strategic Development. From June 1996 to January 1998, Mr. Hagan served as
Vice President of New Business Development with International Channel, a cable
television network, where he was responsible for new revenue opportunities,
both domestically and internationally, and developing and implementing
strategies to increase revenue and position International Channel for growth
via evolving digital cable and satellite platforms. From December 1994 to June
1996, Mr. Hagan served as the Internet Marketing Manager for Microsoft's
western region. His work with Microsoft encompassed competitive strategy
development, sales resource allocation, presentations and public relations.
From March 1994 to December 1994, Mr. Hagan worked with Missing Link
Communications, Inc., a developer of television programs to assist consumers
in buying personal computers. At Missing Link, Mr. Hagan was responsible for
programming concepts and establishing alliances. Prior to that time, Mr. Hagan
spent 11 years with Jones International, Ltd., a cable television operator and
television network development company.

Andre Durand, joined OSS in connection with the acquisition of Durand
Communications, Inc. ("DCI") and is Senior Vice President-Product Development
of OSS. Mr. Durand is the founder, President, Chief Executive Officer,
Secretary and a Director of DCI. Mr. Durand is a regular guest speaker at
computer fairs, conferences and expositions, and regularly contributes
articles to trade publications discussing Internet technologies, trends and
predictions. From January 1991 to January 1993, Mr. Durand was an auditor with
KPMG Peat Marwick in Los Angeles, California. Mr. Durand holds two degrees
from the University of California at Santa Barbara, one in Biology and one in
Economics/Accounting.

Robert J. Lewis, has been a director of OSS since February 1995. Mr. Lewis
retired in October 1995 after having spent 37 years in the cable television
industry as an owner and developer of cable systems and senior executive with
several cable television companies. Beginning in March 1997, however, and
continuing through the present, Mr. Lewis has been the General Partner and
Chief Executive Officer of InterMedia Partners, an operator of cable systems
in Kentucky, Tennessee, North Carolina, South Carolina, and Georgia. From 1987
until his retirement in 1995, Mr. Lewis was employed by Western Tele-
Communications, Inc. ("TCI"), one of the largest cable television companies in
the United States. Mr. Lewis served as a Senior Vice President of TCI from
1991 to 1993 and as a Senior Advisor to TCI from 1993 until his retirement in
1995.

6
<PAGE>

Richard C. Jennewine, has been a director of OSS since November 1996. From
September 1995 to the present, Mr. Jennewine has been President-International
Operations and Regional Manager-Western Operations for Computer Aid, Inc. a
leader in strategic outsourcing and information services consulting. From
December 1991 to February 1995, Mr. Jennewine served as the Senior Vice
President of the CONCORD Group, a privately held entrepreneurial group of 40
international enterprises. From January 1994 to February 1995, he served as
the President of the Concord Trading Corporation, a company focusing on
trading and business ventures in Asia, Russia, the Middle East and South
America. Prior to these positions, Mr. Jennewine spent 26 years with IBM
Corporation, including startup operations in mainland China. Mr. Jennewine is
a director of Easter Seals of Colorado and is a member of the Corporate
Management Committee of Computer Aid, Inc.

Committees and Meetings of the Board of Directors

Messrs. Lewis and Jennewine are the current members of the Audit Committee
of the board of directors. The Audit Committee represents the Board in
discharging its responsibilities relating to our accounting, reporting, and
financial control practices. The Committee has general responsibility for
review with management of our financial controls, accounting, and audit and
reporting activities. The Committee annually reviews the qualifications and
engagement of our independent accountants, makes recommendations to the Board
as to their selection, reviews the scope, fees, and results of their audit,
and reviews their management comment letters.

Messrs. Jennewine, Lewis and Adams are the current members of the
Compensation Committee, which oversees compensation for directors, officers
and key employees of OSS.

During 1998, the board of directors met 10 times. Each director attended,
in person or by telephone, 75% or more of the aggregate total of meetings of
the board of directors and meetings of committees of the board of directors on
which such director serves. During 1998, the Audit Committee and the
Compensation Committee each met 6 times. The board of directors does not have
a standing nominating committee.

Vote Required

The affirmative vote of the holders of a majority of the voting power of
the shares of common stock, the 10% preferred stock, and the Series C
preferred stock voting together as a single class, present or represented at
the annual meeting and entitled to vote on Proposal 1, is required to approve
Proposal 1.

The Board Of Directors Recommends That The Shareholders Vote "FOR" The
Election Of The Nominees For Director.

7
<PAGE>

EXECUTIVE COMPENSATION

The following table summarizes the annual compensation paid by OSS during
years ended December 31, 1996, 1997, and 1998 to R. Steven Adams, the chief
executive officer of OSS as of December 31, 1998 and the officers of OSS,
other than Mr. Adams, whose total annual salary and bonus exceeded $100,000
for the year ended December 31, 1998.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------- -------------------
Name and Principal Salary Bonus Other Securities
Position Year $ $ $ Underlying Options
- ------------------ ---- -------- ------- -------- -------------------
<S> <C> <C> <C> <C> <C> <C>
R. Steven Adams.......... 1998 $155,203 -- -- 175,250 shs. (1)
President, Chief
Executive Officer 1997 $120,217 -- -- --
and Director 1996 $110,217 -- -- --
William R. Cullen (2).... 1998 $165,000 -- $271,494 (3) 160,000 shs.
Chief Operating Officer 1997 -- -- -- --
1996 -- -- -- --
Thomas S. Plunkett (4)... 1998 $128,798 $25,000 -- 65,250 shs. (5)
Chief Financial Officer 1997 $103,642 -- -- 90,000 shs. (6)
1996 $ 17,641 -- -- 60,000 shs.
Gwenael Hagan (7)........ 1998 $ 91,549 $13,800 -- 70,000 shs. (8)
Senior Vice President-
Product and 1997 -- -- -- --
Business Development 1996 -- -- -- --
Michael Murphy........... 1998 $100,203 $15,000 -- 250 shs. (9)
Vice President and
General Manager 1997 $ 63,758 -- -- 75,000 shs.
Financial Services 1996 -- -- -- --
Edward Robinson.......... 1998 $ 99,842 $ 3,450 -- 4,250 shs. (10)
Vice President Market
Development 1997 $ 81,667 -- -- 50,000 shs.
1996 -- -- -- --
</TABLE>
- --------
(1) Includes options for the purchase of 25,000 and 250 shares of common stock
initially granted to Mr. Adams on June 3, 1998 and June 7, 1998,
respectively, but repriced on November 20, 1998.

(2) Mr. Cullen was hired as chief operating officer in March, 1998. In March,
1999 Mr. Cullen became OSS' chief financial officer.

(3) Includes 24,000 shares of common stock issued instead of cash
compensation. These shares have an aggregate dollar value of $228,556
(determined by multiplying the last sale price of our common stock by the
amount of common stock on the dates such shares were earned). Also
includes amounts paid to Mr. Cullen for reimbursement of airfare expenses
($17,730) and other commuting expenses ($15,510).

(4) Mr. Plunkett resigned as OSS' chief financial officer in March, 1999.

(5) Includes options for the purchase of 250 shares of common stock initially
granted to Mr. Plunkett on June 7, 1998 but repriced on November 20, 1998.

(6) Includes options for the purchase of 60,000 and 15,000 shares of common
stock initially granted to Mr. Plunkett on October 4, 1996 and January 9,
1997, respectively, but repriced on May 20, 1997.

(7) Mr. Hagan was hired as senior vice president-product and business
development in January 1998.

8
<PAGE>

(8) Includes options for the purchase of 250 shares of common stock initially
granted to Mr. Hagan on June 7, 1998 but repriced on November 20, 1998.

(9) Represents options for the purchase of 250 shares of common stock
initially granted to Mr. Murphy on June 7, 1998 but repriced on November
20, 1998.

(10) Includes options for the purchase of 250 shares of common stock initially
granted to Mr. Robinson on June 7, 1998 but repriced on November 20,
1998.

OSS Stock Options

The following tables summarize the stock option grants and exercises during
1998 to or by the named officers and the value of all options held by the
named officers as of December 31, 1998. Unless otherwise noted, each of these
stock options is exercisable in one-third increments on the 12th, 24th, and
36th month after the date of grant.

OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
Percent of Total Options
Number of Securities Granted to Employees Exercise
Underlying Options During Year Ended Price Expiration
Name Granted December 31, 1998 ($/Share) Date
- ---- -------------------- ------------------------ --------- ----------
<S> <C> <C> <C> <C>
R. Steven Adams......... 100,000 $8.50 2/18/05
25,000 (1)(3) $8.50 6/3/05
250 (2) $8.50 6/7/03
50,000 $7.63 11/24/05
-------
Total 175,250 12.4%
William R. Cullen....... 30,000 $6.81 2/9/05
100,000 $8.25 3/10/05
30,000 $7.63 11/24/05
-------
Total 160,000 11.3%
Thomas S. Plunkett...... 30,000 $8.50 2/18/05
35,000 $4.00 10/8/05
250 (2) $8.50 6/7/03
-------
Total 65,250 4.6%
Gwenael Hagan........... 30,000 $8.50 2/18/05
39,750 $4.00 10/8/05
250 (2) $8.50 6/7/03
-------
70,000 5.0%
Michael Murphy.......... 250 (2) * $8.50 6/7/03
Edward Robinson......... 250 (2) $8.50 6/7/03
4,00 $7.63 11/24/05
-------
Total 4,250 *
</TABLE>
- --------
* Less than 1%.

(1) This option was originally granted on June 3, 1998 at an exercise price of
$13.375 per share. This option was repriced to an exercise price of $8.50
per share on November 20, 1998.

9
<PAGE>

(2) These options were originally granted on June 7, 1998 at an exercise price
of $14.00 per share. These options were repriced to an exercise price of
$8.50 per share on November 20, 1998.

(3) This option was exercisable in full immediately upon grant.

AGGREGATED OPTION EXERCISES DURING YEAR ENDED
DECEMBER 31, 1998 AND OPTION

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Options at In-The-Money Options at
December 31, 1997 December 31, 1997
------------------------- -------------------------
Shares
Acquired Value
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
R. Steven Adams......... 0 $ 0 25,000/150,250 $112,250/$719,875
William R. Cullen....... 0 $ 0 0/160,000 $0/$821,950
Thomas S. Plunkett...... 5,000 $ 35,600 35,000/115,250 $682,200/$735,375
Gwenael Hagan........... 0 $ 0 10,000/90,000 $65,000/$623,875
Michael Murphy.......... 25,000 $278,000 0/50,250 $0/$569,625
Edward Robinson......... 16,667 $162,170 0/37,583 $0/$401,621
</TABLE>
- --------
(1) The value realized was determined by multiplying the number of shares
exercised by the favorable difference between the exercise price per share
and the closing bid price per share on the date of exercise.

(2) The value of unexercised in-the-money options was determined by
multiplying the number of shares subject to such options by the favorable
difference between the exercise price per share and $13.00, the closing
bid price per share on December 31, 1998.

Board of Director Compensation

Our board of directors does not receive cash compensation for their
services as directors, but they are reimbursed for their reasonable expenses
in attending meetings of the board of directors. During 1998, we compensated
Robert J. Lewis and Richard C. Jennewine for their services as consultants and
issued to them options to purchase 42,500 and 32,5000 shares, respectively, of
our common stock.

Change of Control Agreements

We have entered into employment agreements with R. Steven Adams, William R.
Cullen, Perry Evans and Gwenael Hagan which take effect only if a change of
control of 30% or more of our outstanding voting stock occurs. If a change of
control occurs, these agreements provide for the continued employment (at
similar responsibility and salary levels) of the employee for a period of
three years after the change of control. During this three year period, if we
(or a successor entity) terminate the employee's employment without cause or
if the employee terminates his employment for good reason, then we (or the
successor entity) must pay a lump sum severance to the employee equal to three
years salary (including bonus), accelerate the vesting of all outstanding
options held by the employee and allow the employee to continue to participate
in our benefit and welfare plans (or the successor entity) for a period of
three years after the employment terminates.

CERTAIN TRANSACTIONS

During November 1997, we licensed our MD Gateway Web site and related
equipment and software to Medical Education Collaborative, a nonprofit company
formed by Charles P. Spickert, a former director of OSS. We licensed MD
Gateway to MEC in connection with our strategic decision to focus our
activities on non-healthcare related activities. The license agreement
provides that MEC will pay us a license fee of 35% of revenues in excess of
certain MEC expenses related to MD Gateway services.

10
<PAGE>

Our principal offices are located in a building managed by Sheridan
Management Company prior to July 7, 1998 and owned by one of its affiliates.
R. Steven Adams' spouse is a vice president of Sheridan Management Company.
The current base monthly rental is $18,209.

Robert J. Lewis, one of our directors, is the general partner and chief
executive officer of, InterMedia Partners, one of our broadband customers.
InterMedia is an operator of cable systems in Kentucky, Tennessee, North
Carolina, South Carolina, and Georgia. We entered into a contract during
August 1997, as amended, pursuant to which we provide our products and
services to several of InterMedia's markets. The expiration dates of the
contracts and related amendments range from August 1999 to July 2000. We earn
revenue from the sale of computer hardware and third party software,
engineering fees, equipment installation fees, and royalties from subscriber
Internet access and content fees. We recognized revenue in connection with
these contracts totaling $185,768 and $47,092 for the years ended December 31,
1998 and 1997, respectively. Included in accounts receivable at December 31,
1998 and 1997 are amounts due from InterMedia totaling $22,925 and $2,052,
respectively.

On March 10, 1999, we acquired a majority interest in a newly formed
company, NetIgnite 2, LLC. NetIgnite is a development stage company which we
formed with a predecessor company by the name of NetIgnite, Inc., the sole
shareholder and founder of which was Perry Evans. In connection with the
formation of NetIgnite, the predecessor company contributed all of its rights
to specific technology of NetIgnite and we agreed to provide $1,500,000 of
funding which we believe will be required to implement NetIgnite's business
plan during the next 12 to 18 months. As a result of these contributions, we
acquired the rights to 99.5% of NetIgnite's operating income and approximately
60% of any proceeds upon the sale of NetIgnite, and the predecessor company
acquired the rights to .5% of NetIgnite's operating income and approximately
40% of any proceeds upon the sale of NetIgnite.

Effective June 2, 1999, we acquired the predecessor company's interests in
NetIgnite through a merger of the predecessor company into OSS. As
consideration for this merger, we issued 71,429 shares of our common stock to
Mr. Evans and also granted to him an option to purchase 200,000 shares of our
common stock at an exercise price of $13.69 per share that vests in one-third
increments annually during the next three years subject to Mr. Evans'
continued employment by OSS. As a result of this merger, NetIgnite is now a
wholly owned subsidiary of OSS.

Mr. Evans has entered into an employment agreement with OSS and NetIgnite
which has an initial term of two years, provides for a minimum annual salary
of $190,000 and provides for the granting to him of options to purchase 80,000
shares of our common stock at an exercise price of $12.25 per share. These
options vest in one-third increments annually during the next three years
subject to Mr. Evans' continuous employment by OSS.

On June 30, 1999, we completed our acquisition of Durand Communications,
Inc. Mr. Durand was the founder and president and a shareholder of DCI. As a
result of the DCI acquisition, Mr. Durand received 112,370 shares of our
common stock. In addition, Mr. Durand has been employed by OSS as its senior
vice president -product development at an annual base salary of $100,000 and
has been granted a stock option under the Online System Services, Inc. Stock
Option Plan of 1995 to purchase 75,000 shares of our common stock at an
exercise price of $7.625 per share. This stock option has a term of seven
years and will become exercisable in 1/3rd increments during the first three
years.

We believe that the transactions summarized above are on terms no less
favorable than could be obtained from unaffiliated third parties. The board of
directors has determined that any transactions with officers, directors or
principal shareholders will be approved by the disinterested directors and
will be on terms no less favorable than could be obtained from an unaffiliated
third party. The board of directors will obtain independent counsel or other
independent advice to assist in that determination.

11
<PAGE>

PROPOSAL 2:
AMENDMENT TO THE ARTICLES OF INCORPORATION TO CHANGE OUR NAME

General

Under our current articles of incorporation, the name of the corporation is
"Online System Services, Inc." Proposal 2 recommends to the shareholders an
amendment to our articles of incorporation that would change our name to "WEBB
Interactive Services, Inc." Our board of directors has unanimously approved
the amendment contained in Proposal 2.

Our board of directors considers Proposal 2 to be in the best interests of
OSS and its shareholders. The purpose of this amendment is to better promote
our business and provide us with better consumer name recognition by more
closing tying our company name with:

. The tradename of our signature product--WEBBbuilder(TM);

. Our Nasdaq trading symbol WEBB; and

. The common, everyday terms (i.e. the Web or the World Wide Web) used for
the Internet.

If this name change is adopted, we intend to use the trade name WEBB
Interactive Services (along with other tradenames or trademarks that we may
decide to adopt) in our communications with shareholders, customers, the
business community and the investment community.

If this name change is adopted, you will not be required to surrender your
stock certificates in exchange for certificates containing our new name.
However, stock certificates containing the name WEBB Interactive Services,
Inc. will be issued to a shareholder upon any purchase, sale or other
disposition of our capital stock by such shareholder after the effective date
of the name change.

Resolution and Vote Required for Proposal 2

The following resolutions will be submitted for approval at the annual
meeting:

"RESOLVED, That the Articles of Incorporation of Online System
Services, Inc., as heretofore amended, be further amended by
deleting in its entirety Article I thereof and replacing it with
the following:

Article I
Name

The name of the corporation shall be WEBB Interactive Services,
Inc.

FURTHER RESOLVED, That the officers of the OSS be, and hereby
are, authorized and directed to take all steps necessary or
desirable to accomplish the purposes of the foregoing
resolution."

The Board of Directors recommends that shareholders vote "FOR" Proposal 2
to amend OSS' Articles of Incorporation to change the name of the company from
Online System Services, Inc. to WEBB Interactive Services, Inc.

12
<PAGE>

PROPOSAL 3:
AMENDMENT OF ONLINE SYSTEM SERVICES, INC. 1995 STOCK OPTION PLAN

Proposed Amendment

The board of directors proposes that our shareholders approve the amendment
to the Online System Services, Inc. 1995 Stock Option Plan (the "1995 Plan")
to increase the number of shares of common stock that may be issued pursuant
to the 1995 Plan from 2,800,000 to 3,500,000. The 1995 Plan was originally
adopted by the board of directors and the shareholders on March 17, 1995. The
features of the 1995 Plan, a copy of which is attached hereto as Appendix A,
are summarized below.

Summary of Plan

The 1995 Plan terminates March 17, 2005, unless sooner terminated by action
of the Board. The 1995 Plan provides for the grant of options to purchase
shares of our common stock to officers, directors, employees and consultants.
As of July 6, 1999, there were 6 executive officers, 2 directors, 63 employees
and 10 consultants eligible to receive such options. Options granted under the
1995 Plan may have a term of up to ten years. Options which expire, are
canceled or are terminated without having been exercised, may be regranted to
participants under the 1995 Plan. Options granted under the 1995 Plan may be
either "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, or options that do not qualify for
special tax treatment. No incentive stock options may be granted with a per
share exercise price less than the fair market value per share at the date of
grant (or 110% of fair market value in the case of optionees who hold 10% or
more of our outstanding common stock). Under the 1995 Plan, the exercise price
of nonqualified stock options may not be less than 85% of the fair market
value of the common stock on the date of grant. The board of directors has
adopted a policy of not granting nonqualified stock options with an exercise
price less than the fair market value of the common stock on the date of
grant. Not more than $100,000 in value of incentive stock options under all
OSS plans may vest in any calendar year for any option holder and no incentive
stock option may be exercised more than ten years after the date of grant. The
1995 Plan is administered by the board of directors and options may be granted
at such time and in such amounts as the board of directors, in its discretion,
determines.

All of the outstanding options currently held by employees who are not
directors and officers of OSS under the 1995 Plan are incentive stock options.
Options granted under the 1995 Plan and held by non-employee directors and
consultants are nonqualified and have an exercise price equal to the fair
market value of the common stock on the date of grant.

As of July 6, 1999 options for the purchase of an aggregate of 1,993,319
shares of common stock were outstanding under the 1995 Plan, held by 81
persons, with per share exercise prices from $.50 to $18.25 per share and a
weighted average exercise price of approximately $8.91 per share. In addition
an aggregate of 638,341 shares of common stock have been issued to 57 persons
at a weighted average exercise price of approximately $1.61 per share upon the
exercise of options granted under the 1995 Plan.

The following table shows, as of July 6, 1999, outstanding, but
unexercised, options granted to:

. Each of our nominees for director;

. Persons holding five percent or more of our outstanding, but
unexercised, options;

. Certain of our executive officers;

. Our current executive officers, as a group;

13
<PAGE>

. Our current directors, who are not executive officers, as a group; and

. Our current employees, excluding our executive officers, as a group.

Each of these options has a term ranging from five to ten years unless
earlier terminated as provided in the 1995 Plan, and each of these options was
granted at an exercise price equal to the fair market value of our common
stock on the date of grant.

STOCK OPTION AWARDS UNDER THE
ONLINE SYSTEM SERVICES, INC. 1995 STOCK OPTION PLAN

<TABLE>
<CAPTION>
Number
Name and Position of Options
----------------- ----------
<S> <C>
R. Steven Adams, Chief Executive Officer and a nominee for
director 175,250
William R. Cullen, Chief Financial Officer and nominee for
director 160,000
Robert J. Lewis, nominee for director 77,500
Richard C. Jennewine, nominee for director 67,500
Perry Evans, nominee for director 280,000
Gwenael Hagan, Senior Vice President-Product and Business
Development 100,000
Lindley S. Branson, Executive Vice President-General Counsel and
Secretary 100,000
Chris Fanjoy 100,000
Michael Murphy 25,250
Edward Robinson 33,917
Current Executive Officers, as a group (6 persons) 815,250
Current Directors, who are not also executive officers, as a
group (2 persons) 145,000
Employees, excluding executive officers, as a group (63 persons) 663,084
</TABLE>

The last reported sale price for the common stock on the Nasdaq SmallCap
Market on July 6, 1999 was $16.375.

Federal Income Tax Consequences

The following is a brief summary of the principal federal income tax
consequences under current federal income tax laws relating to awards under
the 1995 Plan. This summary is not intended to be exhaustive and, among other
things, does not describe state or local tax consequences.

In general, an optionee will be subject to tax at the time a nonqualified
stock option is exercised (but not at the time of grant), and he or she will
include in ordinary income in the taxable year in which he or she exercises a
nonqualified stock option an amount equal to the difference between the
exercise price and the fair market

14
<PAGE>

value of the shares acquired on the date of exercise, and we will generally be
entitled to deduct such amount for federal income tax purposes except as such
deductions may be limited by the Revenue Reconciliation Act of 1993 ("1993 Tax
Act"), described below. Upon disposition of shares, the appreciation (or
depreciation) after the date of exercise will be treated by the optionee as
either short-term or long-term capital gain or loss depending on whether the
shares have been held for the then-required holding period.

In general, an optionee will not be subject to tax at the time an incentive
stock option is granted or exercised. Upon disposition of the shares acquired
upon exercise of an incentive stock option, long-term capital gain or loss
will be recognized in an amount equal to the difference between the
disposition price and the exercise price, provided that the optionee has not
disposed of the shares within two years of the date of grant or within one
year from the date of exercise. If the optionee disposes of the shares without
satisfying both holding period requirements (a "Disqualifying Disposition"),
the optionee will recognize ordinary income at the time of such Disqualifying
Disposition to the extent of the difference between the exercise price and the
lesser of the fair market value of the share on the date the incentive stock
option was exercised or the date of sale. Any remaining gain or loss is
treated as short-term or long-term capital gain or loss depending upon how
long the shares have been held. We are not entitled to a tax deduction upon
either the exercise of an incentive stock option or upon disposition of the
shares acquired pursuant to such exercise, except to the extent that the
optionee recognizes ordinary income in a Disqualifying Disposition and then
only to the extent that such deduction is not limited by the 1993 Tax Act.

If the optionee pays the exercise price, in full or in part, with
previously acquired shares, the exchange will not affect the tax treatment of
the exercise. However, if such exercise is effected using shares previously
acquired through the exercise of an incentive stock option, the exchange of
the previously acquired shares will be considered a disposition of such shares
for the purpose of determining whether a Disqualifying Disposition has
occurred.

Commencing with our 1995 fiscal year, the federal income tax deduction that
we may take for otherwise deductible compensation payable to executive
officers who, on the last day of the fiscal year, are treated as "named
executive officers" in our proxy statement for such year will be limited by
the 1993 Tax Act to $1,000,000. Under the provisions of the 1993 Tax Act, the
deduction limit on compensation will apply to all compensation, except
compensation deemed under the 1993 Tax Act to be "performance-based" and
certain compensation related to retirement and other employee benefit plans.
The determination of whether compensation related to the 1995 Plan is
performance-based for purposes of the 1993 Tax Act will be dependent upon a
number of factors, including shareholder approval of the 1995 Plan, and the
exercise price at which options are granted. The 1993 Tax Act also prescribes
certain limitations and procedural requirements in order for compensation to
qualify as performance-based, including rules which require that in the case
of compensation paid in the form of stock options, the option price be not
less than the fair market value of the stock at date of grant and that the
plan under which the options are granted states the maximum number of shares
with respect to which options may be granted during a specified period to any
employee. Although we have structured the 1995 Plan to satisfy the
requirements of the 1993 Tax Act with regard to its "performance-based"
criteria, there is no assurance that awards thereunder will so satisfy such
requirements, and accordingly, we may be limited in the deductions it may take
with respect to awards under the 1995 Plan.

Resolution and Vote Required for Proposal 3

The following resolutions will be submitted for approval at the annual
meeting:

"RESOLVED, That the total number of shares of stock hereby made
available and reserved for issuance under the Plan shall be 3,500,000.
The aggregate number of shares of stock available under this Plan shall
be subject to adjustment as provided in section 5.3. The total number
of shares of stock may be authorized but unissued shares of stock, or
shares acquired by purchase as directed by the board of directors from
time to time in its discretion, to be used for issuance upon exercise
of options granted under the Plan.

15
<PAGE>

FURTHER RESOLVED, That the officers of OSS be, and hereby are,
authorized and directed to take all steps necessary or desirable to
accomplish the purposes of the foregoing resolutions."

The Board of Directors recommends that the shareholders vote "FOR" Proposal
3 to amend the Online System Services, Inc. Stock Option Plan of 1995.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires OSS'
directors and executive officers, and persons who own more than ten percent of
a registered class of OSS' equity securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of our common stock and other equity securities. Officers, directors
and greater than ten-percent shareholders are also required by SEC regulation
to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on review of the copies of such reports
furnished to us and written representations that no other reports were
required, during the year ended December 31, 1998, all Section 16(a) filing
requirements applicable to our officers, directors and greater than ten-
percent beneficial owners were timely complied with except for the following:

<TABLE>
<CAPTION>
Number of Transactions Not
Name of Individual Form Late Reports Timely Reported
------------------ ---- ------------ ----------------
<S> <C> <C> <C>
R. Steven Adams........................... 5 1 6
William R. Cullen......................... 3 1 2
5 1 1
Thomas S. Plunkett........................ 5 1 5
Paul E. Beckelheimer...................... 3 1 1
5 1 1
Gwenael S. Hagan.......................... 3 1 2
5 1 4
Paul H. Spieker........................... 5 1 5
Andre Durand.............................. 3 1 1
Robert J. Lewis........................... 5 1 2
Richard C. Jennewine...................... 5 1 1
</TABLE>

PROPOSAL 4:
SELECTION OF INDEPENDENT AUDITORS

The board of directors has appointed Arthur Andersen LLP as our independent
accountants for the fiscal year ending December 31, 1999. Arthur Andersen LLP
served as our independent accountants for the year ended December 31, 1998.
Representatives of Arthur Andersen LLP who are expected to be present at the
meeting, will have an opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.

In the event the holders of the common stock do not ratify the appointment
of Arthur Andersen LLP, the selection of other independent accountants will be
considered by the board of directors. The board of directors recommends that
the holders of the common stock vote for ratification of the appointment of
Arthur Andersen LLP.

16
<PAGE>

Resolution and Vote Required for Proposal 4

The following resolution will be submitted for approval at the annual
meeting:

"RESOLVED, That the appointment by OSS of Arthur Andersen LLP as the
independent accounts for the company for the year ending December 31,
1999 be, and hereby is, ratified and approved by the shareholders of
OSS."

The Board of Directors recommends that shareholders vote "FOR" Proposal 4
to ratify the appointment of Arthur Andersen LLP as the independent
accountants of the company.

PROPOSALS OF SHAREHOLDERS

Any shareholder proposal intended to be considered for inclusion in the
proxy statement for presentation at our 2000 annual meeting must be received
by us by April 5, 2000. The proposal must be in accordance with the provisions
of Rule 14a-8 promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934. We suggest that you submit your proposal by
certified mail--return receipt requested. If you intend to present a proposal
at our 2000 annual meeting without including such proposal in our proxy
statement, then you must provide us with notice of such proposal no later than
June 1, 2000. We reserve the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not comply with
these and other applicable requirements.

OTHER MATTERS

The board of directors does not intend to bring before the meeting any
business other than as set forth in this proxy statement, and has not been
informed that any other business is to be presented to the meeting. However,
if any matters other than those referred to above should properly come before
the meeting, it is the intention of the persons named in the enclosed proxy to
vote such proxy in accordance with their best judgment.

Please sign and return promptly the enclosed proxy in the envelope provided
if you are a holder of common stock. The signing of a proxy will not prevent
your attending the meeting and voting in person.

BY ORDER OF THE BOARD OF DIRECTORS

Lindley S. Branson
Secretary

July 23, 1999

17
<PAGE>

APPENDIX A

ONLINE SYSTEM SERVICES, INC.
1995 STOCK OPTION PLAN

Article I. Establishment and Purpose

1.1 Establishment. Online System Services, Inc., a Colorado Corporation
("Company"), hereby establishes a stock option plan for employees and others
providing services to the Company and its Subsidiary Corporations, as
described herein, which shall be known as the "1995 STOCK OPTION PLAN" (the
"Plan"). It is intended that certain of the options issued pursuant to the
Plan to employees may constitute incentive stock options within the meaning of
section 422A of the Internal Revenue Code and that other options issued
pursuant to the Plan shall constitute nonstatutory options. The Board shall
determine which options are to be incentive stock options and which are to be
nonstatutory options and shall enter into option agreements with recipients
accordingly.

1.2 Purpose. The purpose of this Plan is to enhance stockholder investment
by attracting, retaining and motivating key employees and consultants of the
Company and its Subsidiary Corporations, and to encourage stock ownership by
such employees and consultants by providing them with a means to acquire a
proprietary interest in the Company's success.

Article II. Definitions

2.1 Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below, unless the context clearly requires
otherwise, and when said meaning is intended, the term shall be capitalized.

(a) "Board" means the Board of Directors of the Company.

(b) "Code" means the Internal Revenue Code of 1986, as amended.

(c) "Committee" shall mean the Committee provided for by Article IV hereof,
which may be created at the discretion of the Board.

(d) "Company" means Online System Services, Inc., a Colorado Corporation.

(e) "Consultant" means any person or entity, including an officer or
director of the Company or a Subsidiary Corporation, who provides
services (other than as an Employee) to the Company or a Subsidiary
Corporation, and shall include a Non-Employee Director, as defined
below.

(f) "Date of Exercise" means the date the Company receives notice, by an
Optionee, of the exercise of an Option pursuant to section 8.1 of this
Plan. Such notice shall indicate the number of shares of Stock the
Optionee intends to exercise.

(g) "Employee" means any person, including an officer or director of the
Company or a Subsidiary Corporation, who is employed by the Company or
a Subsidiary Corporation.

(h) "Fair Market Value" means the fair market value of Stock upon which an
option is granted under this Plan.

(i) "Incentive Stock Option" means an Option granted under this Plan which
is intended to qualify as an "incentive stock option" within the
meaning of Section 422A of the Code.

(j) "Non-Employee Director" means a member of the Board who is not an
employee of the Company or of any Subsidiary Corporation at the time an
Option is granted hereunder.

A-1
<PAGE>

(k) "Nonstatutory Option" means an Option granted under this Plan which is
not intended to qualify as an incentive stock option within the meaning
of Section 422A of the Code. Nonstatutory Options may be granted at
such times and subject to such restrictions as the Board shall
determine without conforming to the statutory rules of Section 422A of
the Code applicable to incentive stock options.

(l) "Option" means the right, granted under this Plan, to purchase Stock of
the Company at the option price for a specified period of time. For
purposes of this Plan, an Option may be either an Incentive Stock
Option or a Nonstatutory Option.

(m) "Optionee" means an Employee or Consultant holding an Option under the
Plan.

(n) "Parent Corporation" shall have the meaning set forth in Section 425(e)
of the Code with the Company being treated as the employer corporation
for purposes of this definition.

(o) "Subsidiary Corporation" shall have the meaning set forth in Section
425(f) of the Code with the Company being treated as the employer
corporation for purposes of this definition.

(p) "Significant Shareholder" means an individual who, within the meaning
of Section 422A(b)(6) of the Code, owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of
the Company or of any Parent Corporation or Subsidiary Corporation of
the Company. In determining whether an individual is a Significant
Shareholder, an individual shall be treated as owning stock owned by
certain relatives of the individual and certain stock owned by
corporations in which the individual is a stockholder, partnerships in
which the individual is a partner, and estates or trusts of which the
individual is a beneficiary, all as provided in Section 425(d) of the
Code.

(q) "Stock" means the no par value common stock of the Company.

2.2 Gender and Number. Except when otherwise indicated by the context, any
masculine terminology when used in this Plan also shall include the feminine
gender, and the definition of any term herein in the singular also shall
include the plural.

Article III. Eligibility and Participation

3.1 Eligibility and Participation. All Employees are eligible to
participate in this Plan and receive Incentive Stock Options and/or
Nonstatutory Options hereunder. All Consultants are eligible to participate in
this Plan and receive Nonstatutory Options hereunder. Optionees in the Plan
shall be selected by the Board from among those Employees and Consultants who,
in the opinion of the Board, are in a position to contribute materially to the
Company's continued growth and development and to its long-term financial
success.

Article IV. Administration

4.1 Administration. The Board shall be responsible for administering the
Plan.

The Board is authorized to interpret the Plan; to prescribe, amend, and
rescind rules and regulations relating to the Plan; to provide for conditions
and assurances deemed necessary or advisable to protect the interests of the
Company; and to make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the express
provisions of the Plan. Determinations, interpretations, or other actions made
or taken by the Board, pursuant to the provisions of this Plan, shall be final
and binding and conclusive for all purposes and upon all persons.

At the discretion of the Board this Plan may be administered by a Committee
which shall be an executive committee of the Board, consisting of not less
than three (3) members of the Board. The members of such Committee may be
directors who are eligible to receive Options under this Plan, but Options may
be granted to such persons only by action of the full Board and not by action
of the Committee. Such Committee shall have full power and authority, subject
to the limitations of the Plan and any limitations imposed by the Board, to

A-2
<PAGE>

construe, interpret and administer this Plan and to make determinations which
shall be final, conclusive and binding upon all persons, including, without
limitation, the Company, the stockholders, the directors and any persons
having any interests in any Options which may be granted under this Plan, and,
by resolution or resolution providing for the creation and issuance of any
such Option, to fix the terms upon which, the time or times at or within
which, and the price or prices at which any such shares may be purchased from
the Company upon the exercise of such Option, which terms, time or times and
price or prices shall, in every case, be set forth or incorporated by
reference in the instrument or instruments evidencing such Option, and shall
be consistent with the provisions of this Plan.

The Board may from time to time remove members from, or add members to, the
Committee. The Board may terminate the Committee at any time. Vacancies on the
Committee, howsoever caused, shall be filled by the Board. The Committee shall
select one of its members as Chairman, and shall hold meetings at such times
and places as the Chairman may determine. A majority of the Committee at which
a quorum is present, or acts reduced to or approved in writing by all of the
members of the Committee, shall be the valid acts of the Committee. A quorum
shall consist of two-thirds (2/3) of the members of the Committee.

Where the Committee has been created by the Board, references herein to
actions to be taken by the Board shall be deemed to refer to the Committee as
well, except where limited by this Plan or by the Board.

The Board shall have all of the enumerated powers of the Committee, but
shall not be limited to such powers. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any Option granted under it.

Article V. Stock Subject to the Plan

5.1 Number. The total number of shares of Stock hereby made available and
reserved for issuance under the Plan shall be 1,100,000. The aggregate number
of shares of Stock available under this Plan shall be subject to adjustment as
provided in section 5.3. The total number of shares of Stock may be authorized
but unissued shares of Stock, or shares acquired by purchase as directed by
the Board from time to time in its discretion, to be used for issuance upon
exercise of Options granted hereunder.

5.2 Unused Stock. If an Option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares of Stock subject
thereto shall (unless the Plan shall have terminated) become available for
other Options under the Plan.

5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock by reason of a stock dividend or split,
recapitalization, reclassification, or other similar corporate change, the
aggregate number of shares of Stock set forth in section 5.1 shall be
appropriately adjusted by the Board, whose determination shall be conclusive;
provided, however, that fractional shares shall be rounded to the nearest
whole share. In any such case, the number and kind of shares that are subject
to any Option (including any Option outstanding after termination of
employment) and the Option price per share shall be proportionately and
appropriately adjusted without any change in the aggregate Option price to be
paid therefor upon exercise of the Option.

Article VI. Duration of the Plan

6.1 Duration of the Plan. Subject to stockholder approval, the Plan shall
be in effect for ten years from the date of its adoption by the Board. Any
Options outstanding at the end of said period shall remain in effect in
accordance with their terms. The Plan shall terminate before the end of said
period, if all Stock subject to it has been purchased pursuant to the exercise
of Options granted under the Plan.

A-3
<PAGE>

Article VII. Terms of Stock Options

7.1 Grant of Options. Subject to section 5.1, Options may be granted to
Employees or Consultants at any time and from time to time as determined by
the Board; provided, however, that Consultants may receive only Nonstatutory
Options, and may not receive Incentive Stock Options. The Board shall have
complete discretion in determining the number of Options granted to each
Optionee. In making such determinations, the Board may take into account the
nature of services rendered by such Employees or Consultants, their present
and potential contributions to the Company and its Subsidiary Corporations,
and such other factors as the Board in its discretion shall deem relevant. The
Board also shall determine whether an Option is to be an Incentive Stock
Option or a Nonstatutory Option.

In the case of Incentive Stock Options the total Fair Market Value
(determined at the date of grant) of shares of Stock with respect to which
incentive stock options granted after December 31, 1986 are exercisable for
the first time by the Optionee during any calendar year under all plans of the
Company under which incentive stock options may be granted (and all such plans
of any Parent Corporations and any Subsidiary Corporations of the Company)
shall not exceed $100,000. (Hereinafter, this requirement is sometimes
referred to as the "$100,000 Limitation".)

Nothing in this Article VII of the Plan shall be deemed to prevent the
grant of Options permitting exercise in excess of the maximums established by
the preceding paragraph where such excess amount is treated as a Nonstatutory
Option.

The Board is expressly given the authority to issue amended or replacement
Options with respect to shares of Stock subject to an Option previously
granted hereunder. An amended Option amends the terms of an Option previously
granted and thereby supersedes the previous Option. A replacement Option is
similar to a new Option granted hereunder except that it provides that it
shall be forfeited to the extent that a previously granted Option is
exercised, or except that its issuance is conditioned upon the termination of
a previously granted Option.

7.2 No Tandem Options. Where an Option granted under this Plan is intended
to be an Incentive Stock Option, the Option shall not contain terms pursuant
to which the exercise of the Option would affect the Optionee's right to
exercise another Option, or vice versa, such that the Option intended to be an
Incentive Stock Option would be deemed a tandem stock option within the
meaning of the regulations under Section 422A of the Code.

7.3 Option Agreement; Terms and Conditions to Apply Unless Otherwise
Specified. As determined by the Board on the date of grant, each Option shall
be evidenced by an Option agreement (the "Option Agreement") that includes the
nontransferability provisions required by Section 10.2 hereof and specifies:
whether the Option is an Incentive Stock Option or a Nonstatutory Option; the
Option price; the duration of the Option; the number of shares of Stock to
which the Option applies; any vesting or exercisability restrictions which the
Board may impose; in the case of an Incentive Stock Option, a provision
implementing the $100,000 Limitation; and any other terms or conditions which
the Board may impose. All such terms and conditions shall be determined by the
Board at the time of grant of the Option.

If not otherwise specified by the Board, the following terms and conditions
shall apply to Options granted under the Plan:

(a) Term. The duration of the Option shall be seven (7) years from the date
of grant.

(b) Exercise of Option. Unless an Option is terminated as provided
hereunder, an Optionee may exercise his Option for up to, but not in
excess of, the amounts of shares subject to the Option specified below,
based on the Optionee's number of years of continuous service with the
Company or a Subsidiary Corporation of the Company from the date on
which the Option is granted. In the case of an Optionee

A-4
<PAGE>

who is an Employee, continuous service shall mean continuous employment;
in the case of an Optionee who is a Consultant, continuous service shall
mean the continuous provision of consulting services. In applying said
limitations, the amount of shares, if any, previously purchased by the
Optionee under the Option shall be counted in determining the amount of
shares the Optionee can purchase at any time. The Optionee may exercise
his Option in the following amounts:

(i) After one year of such continuous services for up to but not in
excess of thirty-three and one-third percent (33 1/3%) of the shares
originally subject to the Option;

(ii) After two years of such continuous services, for up to but not in
excess of sixty-six and two-thirds percent (66 2/3%) of the shares
originally subject to the Option; and

(iii) At the expiration of the third year of such continuous services
the Option may be exercised at any time and from time to time
within its terms in whole or in part, but it shall not be
exercisable after the expiration of seven (7) years (five (5)
years in the case of an Incentive Stock Option granted to a
Significant Shareholder) from the date on which it was granted.

The Board shall be free to specify terms and conditions other than those set
forth above, in its discretion.

All Option Agreements shall incorporate the provisions of this Plan by
reference, with certain provisions to apply depending upon whether the Option
Agreement applies to an Incentive Stock Option or to a Nonstatutory Option.

7.4 Option Price. No Incentive Stock Option granted pursuant to this Plan
shall have an Option price that is less than the Fair Market Value of Stock on
the date the Option is granted. Incentive Stock Options granted to Significant
Shareholders shall have an Option price of not less than 110 percent of the
Fair Market Value of Stock on the date of grant. The Option price for
Nonstatutory Options shall be established by the Board and shall not be less
than eighty-five percent (85%) of the Fair Market Value of Stock on the date
this Option is granted.

7.5 Term of Options. Each Option shall expire at such time as the Board
shall determine when it is granted, provided however that no Option shall be
exercisable later than the tenth anniversary date of its grant. By its terms,
an Incentive Stock Option granted to a Significant Shareholder shall not be
exercisable after five years from the date of grant.

7.6 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions
as the Board shall in each instance approve, which need not be the same for
all Optionees.

7.7 Payment. Payment for all shares of Stock shall be made at the time that
an Option, or any part thereof, is exercised, and no shares shall be issued
until full payment therefor has been made. Payment shall be made (i) in cash,
or (ii) if acceptable to the Board, in Stock or in some other form; provided,
however, in the case of an Incentive Stock Option, that said other form of
payment does not prevent the Option from qualifying for treatment as an
"incentive stock option" within the meaning of the Code. Payment may also be
made, in the discretion of the Board, by delivery (including by FAX) to the
Company or its designated agent of an executed irrevocable option exercise
form together with irrevocable instructions to a broker-dealer to sell or
margin a sufficient portion of the shares and deliver the sale or margin loan
proceeds directly to the Company to pay for the exercise price.

Article VIII. Written Notice, Issuance of
Stock Certificates, Stockholder Privileges

8.1 Written Notice. An Optionee wishing to exercise an Option shall give
written notice to the Company, in the form and manner prescribed by the Board.
Full payment for the shares exercised pursuant to the Option must accompany
the written notice.

A-5
<PAGE>

8.2 Issuance of Stock Certificates. As soon as practicable after the
receipt of written notice and payment, the Company shall deliver to the
Optionee or to a nominee of the Optionee a certificate or certificates for the
requisite number of shares of Stock.

8.3 Privileges of a Stockholder. An Optionee or any other person entitled
to exercise an Option under this Plan shall not have stockholder privileges
with respect to any Stock covered by the Option until the date of issuance of
a stock certificate for such stock.

Article IX. Termination of Employment or Services

9.1 Death. Unless provided otherwise for a Nonstatutory Option, if an
Optionee's employment in the case of an Employee, or provision of services as
a Consultant, in the case of a Consultant, terminates by reason of death, the
Option may thereafter be exercised at any time prior to the expiration date of
the Option or within 12 months after the date of such death, whichever period
is the shorter, by the person or persons entitled to do so under the
Optionee's will or, if the Optionee shall fail to make a testamentary
disposition of an Option or shall die intestate, the Optionee's legal
representative or representatives. The Option shall be exercisable only to the
extent that such Option was exercisable as of the date of death.

9.2 Termination Other Than For Cause Or Due to Death. Unless provided
otherwise for a Nonstatutory Option, in the event of an Optionee's termination
of employment, in the case of an Employee, or termination of the provision of
services as a Consultant, in the case of a Consultant, other than by reason of
death, the Optionee may exercise such portion of his Option as was exercisable
by him at the date of such termination (the "Termination Date") at any time
within three (3) months of the Termination Date; provided, however, that where
the Optionee is an Employee, and is terminated due to disability within the
meaning of Code (S) 422A, he may exercise such portion of his Option as was
exercisable by him on his Termination Date within one year of his Termination
Date. In any event, the Option cannot be exercised after the expiration of the
term of the Option. Options not exercised within the applicable period
specified above shall terminate.

In the case of an Employee, a change of duties or position within the
Company or an assignment of employment in a Subsidiary Corporation or Parent
Corporation of the Company, if any, or from such a Corporation to the Company,
shall not be considered a termination of employment for purposes of this Plan.
The Option Agreements may contain such provisions as the Board shall approve
with reference to the effect of approved leaves of absence upon termination of
employment.

9.3 Termination for Cause. Unless provided otherwise for a Nonstatutory
Option, in the event of an Optionee's termination of employment, in the case
of an Employee, or termination of the provision of services as a Consultant,
in the case of a Consultant, which termination is by the Company or a
Subsidiary Corporation for cause, any Option or Options held by him under the
Plan, to the extent not exercised before such termination, shall forthwith
terminate.

Article X. Rights of Optionees

10.1 Service. Nothing in this Plan shall interfere with or limit in any way
the right of the Company or a Subsidiary Corporation to terminate any
Employee's employment, or any Consultant's services, at any time, nor confer
upon any Employee any right to continue in the employ of the Company or a
Subsidiary Corporation, or upon any Consultant any right to continue to
provide services to the Company or a Subsidiary Corporation.

10.2 Nontransferability. All Options granted under this Plan shall be
nontransferable by the Optionee, other than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's lifetime only by
the Optionee.

A-6
<PAGE>

Article XI. Optionee-Employee's
Transfer or Leave of Absence

11.1 Optionee-Employee's Transfer or Leave of Absence. For Plan purposes--

(a) A transfer of an Optionee who is an Employee from the Company to a
Subsidiary Corporation or Parent Corporation, or from one such
Corporation to another, or

(b) a leave of absence for such an Optionee (i) which is duly authorized
in writing by the Company or a Subsidiary Corporation, and (ii) if the
Optionee holds an Incentive Stock Option, which qualifies under the
applicable regulations under the Code which apply in the case of
incentive stock options,

shall not be deemed a termination of employment. However, under no
circumstances may an Optionee exercise an Option during any leave of absence,
unless authorized by the Board.

Article XII. Amendment,
Modification, and Termination of the Plan

12.1 Amendment, Modification, and Termination of the Plan. The Board may at
any time terminate, and from time to time may amend or modify the Plan,
provided, however, that no such action of the Board, without approval of the
stockholders, may--

(a) increase the total amount of Stock which may be purchased through
Options granted under the Plan, except as provided in Article V;

(b) change the class of Employees or Consultants eligible to receive
Options;

No amendment, modification, or termination of the Plan shall in any manner
adversely affect any outstanding Option under the Plan without the consent of
the Optionee holding the Option.

Article XIII. Acquisition, Merger, or Liquidation

13.1 Acquisition. In the event that an Acquisition occurs with respect to
the Company, the Company shall have the option, but not the obligation, to
cancel Options outstanding as of the effective date of Acquisition, whether or
not such Options are then exercisable, in return for payment to the Optionees
of an amount equal to a reasonable estimate of an amount (hereinafter the
"Spread") equal to the difference between the net amount per share payable in
the Acquisition, or as a result of the Acquisition, less the exercise price of
the Option. In estimating the Spread, appropriate adjustments to give effect
to the existence of the Options shall be made, such as deeming the Options to
have been exercised, with the Company receiving the exercise price payable
thereunder, and treating the shares receivable upon exercise of the Options as
being outstanding in determining the net amount per share. For purposes of
this section, an "Acquisition" shall mean any transaction in which
substantially all of the Company's assets are acquired or in which a
controlling amount of the Company's outstanding shares are acquired, in each
case by a single person or entity or an affiliated group of persons and/or
entities. For purposes of this Section a controlling amount shall mean more
than 50% of the issued and outstanding shares of stock of the Company. The
Company shall have such an option regardless of how the Acquisition is
effectuated, whether by direct purchase, through a merger or similar corporate
transaction, or otherwise. In cases where the acquisition consists of the
acquisition of assets of the Company, the net amount per share shall be
calculated on the basis of the net amount receivable with respect to shares
upon a distribution and liquidation by the Company after giving effect to
expenses and charges, including but not limited to taxes, payable by the
Company before the liquidation can be completed.

Where the Company does not exercise its option under this Section 13.1 the
remaining provisions of this Article XIII shall apply, to the extent
applicable.

A-7
<PAGE>

13.2 Merger or Consolidation. Subject to any required action by the
stockholders, if the Company shall be the surviving corporation in any merger
or consolidation, any Option granted hereunder shall pertain to and apply to
the securities to which a holder of the number of shares of Stock subject to
the Option would have been entitled in such merger or consolidation.

13.3 Other Transactions. A dissolution or a liquidation of the Company or a
merger and consolidation in which the Company is not the surviving corporation
shall cause every Option outstanding hereunder to terminate as of the
effective date of such dissolution, liquidation, merger or consolidation.
However, the Optionee either (i) shall be offered a firm commitment whereby
the resulting or surviving corporation in a merger or consolidation will
tender to the Optionee an option (the "Substitute Option") to purchase its
shares on terms and conditions both as to number of shares and otherwise,
which will substantially preserve to the Optionee the rights and benefits of
the Option outstanding hereunder granted by the Company, or (ii) shall have
the right immediately prior to such dissolution, liquidation, merger, or
consolidation to exercise any unexercised Options whether or not then
exercisable, subject to the provisions of this Plan. The Board shall have
absolute and uncontrolled discretion to determine whether the Optionee has
been offered a firm commitment and whether the tendered Substitute Option will
substantially preserve to the Optionee the rights and benefits of the Option
outstanding hereunder. In any event, any Substitute Option for an Incentive
Stock Option shall comply with the requirements of Code Section 425(a).

Article XIV. Securities Registration

14.1 Securities Registration. In the event that the Company shall deem it
necessary or desirable to register under the Securities Act of 1933, as
amended, or any other applicable statute, any Options or any Stock with
respect to which an Option may be or shall have been granted or exercised, or
to qualify any such Options or Stock under the Securities Act of 1933, as
amended, or any other statute, then the Optionee shall cooperate with the
Company and take such action as is necessary to permit registration or
qualification of such Options or Stock.

Unless the Company has determined that the following representation is
unnecessary, each person exercising an Option under the Plan may be required
by the Company, as a condition to the issuance of the shares pursuant to
exercise of the Option, to make a representation in writing (a) that he is
acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of any part thereof, (b)
that before any transfer in connection with the resale of such shares, he will
obtain the written opinion of counsel for the Company, or other counsel
acceptable to the Company, that such shares may be transferred. The Company
may also require that the certificates representing such shares contain
legends reflecting the foregoing.

Article XV. Tax Withholding

15.1 Tax Withholding. Whenever shares of Stock are to be issued in
satisfaction of Options exercised under this Plan, the Company shall have the
power to require the recipient of the Stock to remit to the Company an amount
sufficient to satisfy federal, state, and local withholding tax requirements.

Article XVI. Indemnification

16.1 Indemnification. To the extent permitted by law, each person who is or
shall have been a member of the Board shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit, or proceeding to which he may be a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of
judgment in any such action, suit, or proceeding against him, provided he
shall give the Company an opportunity, at its own expense, to handle and
defend the

A-8
<PAGE>

same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Company's
articles of incorporation or bylaws, as a matter of law, or otherwise, or any
power that the Company or any Subsidiary Corporation may have to indemnify
them or hold them harmless.

Article XVII. Requirements of Law

17.1 Requirements of Law. The granting of Options and the issuance of
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

17.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of
Colorado.

Article XVIII. Effective Date of Plan

18.1 Effective Date. The Plan shall be effective on March 17, 1995, the
effective date of its adoption by the Board.

Article XIX Compliance with Code.

19.1 Compliance with Code. Incentive Stock Options granted hereunder are
intended to qualify as "incentive stock options" under Code (S) 422A. If any
provision of this Plan is susceptible to more than one interpretation, such
interpretation shall be given thereto as is consistent with Incentive Stock
Options granted under this Plan being treated as incentive stock options under
the Code.

Article XX. No Obligation to Exercise Option.

20.1 No Obligation to Exercise. The granting of an Option shall impose no
obligation upon the holder thereof to exercise such Option.

A-9