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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 24, 1998
REGISTRATION NO. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
(INCLUDING REGISTRATION OF SHARES FOR RESALE BY MEANS OF A FORM S-3 PROSPECTUS)
UNDER
THE SECURITIES ACT OF 1933
USWEB CORPORATION
(Exact name of issuer as specified in its charter)
DELAWARE 87-0551650
(State of Incorporation) (I.R.S. Employer Identification Number)
2880 LAKESIDE DRIVE, SUITE 300
SANTA CLARA, CA 95054
(Address of principal executive offices)
1996 STOCK OPTION PLAN
1996 EQUITY COMPENSATION PLAN
1997 ACQUISITION STOCK OPTION PLAN
AFFILIATE WARRANT PROGRAM
ACQUISITION RELATED EMPLOYEE STOCK BONUSES
CONSULTANT WARRANTS
(Full title of the plan)
JAMES HEFFERNAN
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
USWEB CORPORATION
2880 LAKESIDE DRIVE, SUITE 300
SANTA CLARA, CA 95054
(408) 987-3200
(Name, address, including zip code and telephone number, including area code, of
agent for service)
Copy to:
Mark Bonham, Esq.
WILSON SONSINI GOODRICH & ROSATI, P.C.
650 Page Mill Road
Palo Alto, California 94306
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED
MAXIMUM PROPOSED
OFFERING MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value
1996 Stock Option Plan-Shares Reserved 58,331 shares $20.25 (1) $ 1,181,203 $ 349
Options granted and not exercised 256,504 shares $ 0.76 (2) $ 194,943 $ 58
Issued 285,165 shares $20.25 (1) $ 5,774,591 $ 1,704
1996 Equity Compensation Plan-Shares Reserved 16,749 shares $20.25 (1) $ 339,167 $ 101
Options granted and not exercised 1,982,585 shares $ 9.77 (3) $ 19,377,389 $ 5,717
Issued 666 shares $20.25 (1) $ 13,487 $ 4
1997 Acquisition Stock Option Plan-Shares Reserved 2,050,324 shares $20.25 (1) $ 41,519,061 $12,249
Options granted and not exercised 7,847,094 shares $ 7.92 (4) $ 62,186,651 $18,346
Issued 102,582 shares $20.25 (1) $ 2,077,286 $ 613
Affiliate Warrant Program-Reserved 64,447 shares $20.25 (1) $ 1,305,052 $ 385
Granted and not exercised 268,886 shares $ 2.55 (5) $ 685,659 $ 203
Acquisition Related Employee Stock Bonus 2,000,000 shares $20.25 (1) $ 40,500,000 $11,984
Consultant warrants 51,388 shares $ 2.75 (6) $ 141,245 $ 42
TOTAL 14,984,721 shares $175,295,733 $51,713
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</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for purposes of calculating the
registration fee on the basis of the closing price of $20.25 per share
reported in The Nasdaq National Market on March 23, 1998 (the "Market
Price").
(2) Calculated pursuant to Rule 457(h) based on a weighted average exercise
price of $.76 per share.
(3) Calculated pursuant to Rule 457(h) based on a weighted average exercise
price of $2.77 per share.
(4) Calculated pursuant to Rule 457(h) based on a weighted average exercise
price of $7.92 per share.
(5) Calculated pursuant to Rule 457(h) based on a weighted average exercise
price of $2.55 per share.
(6) Calculated pursuant to Rule 457(h) based on a weighted average exercise
price of $2.75 per share.
1
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PROSPECTUS
USWEB CORPORATION
398,242 Shares
Common Stock
-------------------
This Prospectus relates to 398,242 shares of the Common Stock (the "COMMON
STOCK") of USWEB Corporation (the "COMPANY"), which may be offered from time to
time by selling stockholders (the "SELLING STOCKHOLDERS") for their own
accounts. It is anticipated that the selling stockholders will offer shares for
sale at prevailing prices in the over-the-counter market on the date of sale.
The Company will receive no part of the proceeds from sales made hereunder. The
Selling Stockholders will bear all sales commissions and similar expenses. Any
other expenses incurred by the Company in connection with the registration and
offering and not borne by the Selling Stockholders will be borne by the Company.
None of the shares offered pursuant to this Prospectus have been registered
prior to the filing of the Registration Statement of which this Prospectus is a
part.
------------------------------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 4.
------------------------------------------
Each Selling Stockholder and any broker executing selling orders on behalf
of a Selling Stockholder may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933, as amended (the "SECURITIES ACT"), in which event
commissions received by such broker may be deemed to be underwriting commissions
under the Securities Act.
The Common Stock is traded on The Nasdaq National Market (Nasdaq Symbol:
USWB). On March 23, 1998, the last reported sale price of the Common Stock was
$20.25 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-------------------------------
The date of this Prospectus is March 24, 1998
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No person is authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering described herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any Selling Stockholder. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, nor shall there be any sale of these
securities by any person in any jurisdiction in which it is unlawful for such
person to make such offer, solicitation or sale. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create an
implication that the information contained herein is correct as of any time
subsequent to the date hereof.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of any
such person, a copy of any and all of the information that has been or may be
incorporated by reference in this Prospectus, other than exhibits to such
documents. Requests for such copies should be directed to James Heffernan, Chief
Financial Officer, USWeb Corporation, 2880 Lakeside Drive, Suite 300, Santa
Clara, CA 95054. The Company's telephone number at that location is (408) 987-
3200.
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934 and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the Public Reference Room of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
at 500 West Madison Street, Suite 1400, Chicago, IL 60661 and Seven World Trade
Center, 13th Floor, New York, NY 10048; and copies of such material can be
obtained from the Public Reference Section of the Commission, Washington, D.C.
20549, at prescribed rates. The Company's Common Stock is traded on the Nasdaq
National Market. The foregoing materials should also be available for
inspection at the National Association of Securities Dealers, Inc., 1735 K.
Street N.W., Washington, D.C. 20006. The Commission maintains a web site on
the Internet that contains or will contain reports, proxy and information
statements and other information regarding the Company at http://www.sec.gov.
This prospectus contains information concerning the Company and the sale of
its Common Stock by the Selling Stockholders, but does not contain all the
information set forth in the Registration Statement which the Company has filed
with the Securities and Exchange Commission under the Securities Act. The
Registration Statement, including various exhibits, may be inspected at the
Commission's office in Washington, D.C.
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THE COMPANY
The Company was incorporated in Utah in December 1995 and changed its
jurisdiction of incorporation to Delaware in December 1997. The Company's
principal executive offices are located at 2880 Lakeside Drive, Suite 300, Santa
Clara, CA 95054; its Internet address is http://www.usweb.com and its telephone
number is (408) 987-3200.
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including the
factors set forth below and elsewhere in this Prospectus. The following risk
factors should be considered carefully in addition to the other information
contained in this Prospectus before purchasing the Common Stock offered hereby.
Limited Operating History; Accumulated Deficit. The Company was founded in
December 1995 and enrolled its first franchisee ("Affiliate") in April 1996.
Accordingly, the Company has only a limited operating history on which to base
an evaluation of its business and prospects. The Company and its prospects
must be considered in light of the risks, expenses and difficulties frequently
encountered by companies in an early stage of development, particularly
companies in new and rapidly evolving markets such as Internet professional
services. Such risks for the Company include, but are not limited to, an
evolving business model and the management of both internal and acquisition-
based growth. To address these risks, the Company must, among other things,
continue to expand its network of consulting offices, continue to develop the
strength and quality of its operations, maximize the value delivered to
clients by the USWeb Internet Strategy and Solutions Center (the "Strategy and
Solutions Center"), enhance the USWeb brand, respond to competitive
developments and continue to attract, retain and motivate qualified employees.
There can be no assurance that the Company will be successful in meeting these
challenges and addressing such risks and the failure to do so could have a
material adverse effect on the Company's business, results of operations and
financial condition.
The Company has incurred net losses since inception, and as of December 31,
1997 had an accumulated deficit of $72.1 million. Although the Company has
experienced revenue growth in recent months, such growth rates may not be
sustainable or indicative of future operating results. In addition, the
Company intends to continue to invest heavily in acquisitions, infrastructure
development and marketing. As a result, the Company expects to continue to
incur substantial operating losses at least through 1998, and there can be no
assurance that the Company will achieve or sustain profitability.
Risks Related to Acquisitions. A key component of the Company's growth
strategy is the acquisition of Internet professional service firms that meet
the Company's criteria for revenues, profitability, growth potential and
operating strategy. The successful implementation of this strategy depends on
the Company's ability to identify suitable acquisition candidates, acquire
such companies on acceptable terms and integrate their operations successfully
with those of the Company. As of February 28, 1998, the Company had acquired
20 companies and one additional acquisition was probable. There can be no
assurance that the Company will be able to continue to identify additional
suitable acquisition candidates or that the Company will be able to acquire
such candidates on acceptable terms. Moreover, in pursuing acquisition
opportunities the Company may compete with other companies with similar growth
strategies, certain of which competitors may be larger and have greater
financial and other resources than the Company. Competition for these
acquisition targets likely could also result in increased prices of
acquisition targets and a diminished pool of companies available for
acquisition. Acquisitions also involve a number of other risks, including
adverse effects on the Company's reported operating results from increases in
goodwill amortization, acquired in-process technology, stock compensation
expense and increased compensation expense resulting from newly hired
employees, the diversion of management attention, potential disputes with the
sellers of one or more acquired entities and the possible failure to retain
key acquired personnel. Client satisfaction or performance problems with an
acquired firm could also have a material adverse impact on the reputation of
the Company as a whole, and any acquired subsidiary could significantly
underperform relative to the Company's expectations. Because substantially all
of the Company's acquisitions were completed in the past 12 months, the
Company is currently facing all of these challenges and its ability to meet
them over the long term has not been established. For all these reasons, the
Company's pursuit of an overall acquisition strategy or any individual
completed, pending or future acquisition may have a material adverse effect on
the Company's business,
4
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results of operations and financial condition. To the extent the Company
chooses to use cash consideration for acquisitions in the future, the Company
may be required to obtain additional financing, and there can be no assurance
that such financing will be available on favorable terms, if at all. As the
Company issues stock to complete future acquisitions, existing stockholders
will experience further ownership dilution.
Potential Fluctuations in Quarterly Results. As a result of the Company's
limited operating history, rapid growth and the emerging nature of the markets
in which it competes, the Company's historical financial data is of limited
value in planning future operating expenses. Accordingly, the Company's
expense levels are based in part on its expectations concerning future
revenues and are fixed to a large extent. The Company's revenues are derived
primarily from consulting fees for Internet solution engagements, which are
difficult to forecast accurately. The Company may be unable to adjust spending
in a timely manner to compensate for any unexpected shortfall in revenues.
Accordingly, a significant shortfall in demand for the Company's services
could have an immediate and material adverse effect on the Company's business,
results of operations and financial condition. Further, the Company intends to
increase its business development and marketing expenses significantly to
expand operations and enhance the Company's brand name and to increase other
operating expenses as required to build the Strategy and Solutions Center and
support the operations of the Company's consulting offices. To the extent that
such expenses precede or are not rapidly followed by increased revenues, the
Company's business, results of operations and financial condition may be
materially adversely affected.
The Company's quarterly operating results may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside the
Company's control. These factors include the level of demand for Intranet,
Extranet and Web site development; the productivity of the Company's
consulting offices; the Company's success in finding and acquiring suitable
acquisition candidates; the Company's ability to attract and retain personnel
with the necessary strategic, technical and creative skills required to
service clients effectively; the cost of advertising and related media; the
amount and timing of expenditures by USWeb clients for Internet professional
services; client budgetary cycles; the amount and timing of capital
expenditures and other costs relating to the expansion of the Company's
operations; the introduction of new products or services by the Company or its
competitors; pricing changes in the industry; technical difficulties with
respect to the use of the Internet; economic conditions specific to Internet
technology usage; government regulation and legal developments regarding the
use of the Internet; and general economic conditions. As a strategic response
to changes in the competitive environment, the Company may from time to time
make certain pricing, service, technology or marketing decisions or business
or technology acquisitions that could have a material adverse effect on the
Company's business, results of operations and financial condition. The Company
may also experience seasonality in its business in the future, resulting in
diminished revenues to the Company as a consequence of decreased demand for
Internet professional services during summer and year-end vacation and holiday
periods. Due to all of the foregoing factors, in some future quarter the
Company's operating results may fall below the expectations of securities
analysts and investors. In such event, the trading price of the Company's
Common Stock would likely be materially and adversely affected and litigation
may ensue.
Recruitment and Retention of Internet Solutions Professionals. The Company's
business of delivering Internet professional services is labor intensive.
Accordingly, the Company's success depends in part on its ability to identify,
hire, train and retain consulting professionals who can provide the Internet
strategy, technology, marketing, audience development and creative skills
required by clients. There is currently a shortage of such personnel, and this
shortage is likely to continue for the foreseeable future. The Company
competes intensely for qualified personnel with other companies, and there can
be no assurance that the Company will be able to attract, assimilate or retain
other highly qualified technical, marketing and managerial personnel in the
future. The inability to attract and retain the necessary technical, marketing
and managerial personnel would have a material adverse effect on the Company's
business, results of operations and financial condition.
5
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Competition; Low Barriers to Entry. The market for Internet professional
services is relatively new, intensely competitive, rapidly evolving and
subject to rapid technological change. The Company expects competition to
persist, intensify and increase in the future. The Company's competitors can
be divided into several groups: computer hardware and service vendors such as
International Business Machines Corporation ("IBM"), Digital Equipment
Corporation ("DEC") and Hewlett-Packard Company ("Hewlett-Packard");
advertising and media agencies such as CKS Group, Inc. ("CKS"), Foote, Cone &
Belding and Ogilvy & Mather; Internet integrators and Web presence providers
such as iXL Holding, Inc. ("iXL"), Organic Online, Inc. ("Organic Online"),
Poppe Tyson and Proxicom, Inc. ("Proxicom"); large information technology
consulting service providers such as Andersen Consulting, Cambridge Technology
Partners and Electronic Data Systems Corporation ("EDS"); telecommunications
companies such as AT&T Corporation ("AT&T") and MCI Communications Group
("MCI"); Internet and online service providers such as America Online
Incorporated ("America Online"), NETCOM On-Line Communications Services Inc.
("NETCOM") and UUNet Technologies, Inc. ("UUNet"); and software vendors such
as Lotus Development Corporation ("Lotus"), Microsoft Corporation
("Microsoft"), Netscape Communications Corp. ("Netscape"), Novell, Inc.
("Novell") and Oracle Corporation ("Oracle"). Although only a few of these
competitors have to date offered a full range of Internet professional
services, several have announced their intention to offer comprehensive
Internet technology solutions. Furthermore, most of the Company's current and
potential competitors have longer operating histories, larger installed
customer bases, longer relationships with clients and significantly greater
financial, technical, marketing and public relations resources than the
Company, and could decide at any time to increase their resource commitments
to the Company's market. In addition, the market for Intranet, Extranet and
Web site development is relatively new and subject to continuing definition,
and, as a result, may better position the Company's competitors to compete in
this market as it matures. Competition of the type described above could
materially adversely affect the Company's business, results of operations and
financial condition.
There are relatively low barriers to entry into the Company's business.
Because professional services firms such as the Company rely on the skill of
their personnel and the quality of their client service, the Company has no
patented technology that would preclude or inhibit competitors from entering
the Internet professional services market. The Company expects that it will
face additional competition from new entrants into the market in the future.
There can be no assurance that existing or future competitors will not develop
or offer services that provide significant performance, price, creative or
other advantages over those offered by the Company, which could have a
material adverse effect on the Company's business, results of operations and
financial condition.
Management of Growth; Integration of Acquisitions. The Company's rapid
growth has placed, and is expected to continue to place, a significant strain
on the Company's managerial, operational, financial and other resources. As of
February 28, 1998, the Company had grown to 606 employees since its inception
in December 1995, and the Company expects that continued hiring of new
personnel will be required to support its business. The Company's future
success will depend, in part, upon its ability to manage its growth
effectively, which will require that the Company continue to implement and
improve its operational, administrative and financial and accounting systems
and controls and to expand, train and manage its employee base. There can be
no assurance that the Company's systems, procedures or controls will be
adequate to support the Company's operations or that the Company's management
will be able to achieve the rapid execution necessary to exploit the market
for the Company's business model. Furthermore, the Company's future
performance will depend on the Company's ability to integrate the
organizations acquired by the Company, which, even if successful, may take a
significant period of time, will place a significant strain on the Company's
resources, and could subject the Company to additional expenses during the
integration process. As a result, there can be no assurance that the Company
will be able to integrate acquired businesses successfully or in a timely
manner in accordance with its strategic objectives. If the Company is unable
to manage internal or acquisition-based growth effectively, the Company's
business, results of operations and financial condition will be materially
adversely affected.
6
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Dilution. The Company has outstanding a large number of stock options and
warrants to purchase the Company's Common Stock with exercise prices
significantly below the current market price. To the extent such options or
warrants are exercised, there will be further dilution. The Company expects to
continue its acquisition program through at least the end of 1998, and pursuant
to a "shelf" Registration Statement has registered 16,666,667 shares of its
Common Stock which the Company intends to issue as acquisition consideration in
addition to granting substantial stock options and stock bonuses to the
employees of the acquired companies. Furthermore, the Company may be required,
pursuant to the terms of the definitive acquisition agreements, to issue
additional shares, stock options and stock bonuses to the shareholders and
employees of the acquired companies at each of six and twelve months after
acquisition of the acquired companies. For these reasons, the Company's
acquisition program will result in further substantial ownership dilution to
investors participating in this offering.
Uncertain Maintenance and Strengthening of the USWeb Brand. The Company
believes that maintaining and strengthening the USWeb brand is an important
aspect of its efforts to attract clients and that the importance of brand
recognition will increase due to the increasing number of companies entering
the market for Internet professional services. Promoting and positioning the
USWeb brand will depend largely on the success of the Company's marketing
efforts and the ability of the Company to provide high quality, reliable and
cost effective Internet solution strategy consulting, analysis and design,
technology development, implementation and integration, audience development
and maintenance services. If clients do not perceive the Company's services as
meeting their needs, or if the Company fails to market those services
effectively, the Company will be unsuccessful in maintaining and strengthening
its brand. In addition, while the Company centralizes its marketing efforts,
it provides client service through the individual consulting offices and
client dissatisfaction with the performance of a single office could tarnish
the perception of the USWeb brand as a whole. Furthermore, in order to promote
the USWeb brand in response to competitive pressures, the Company may find it
necessary to increase its marketing budget or otherwise increase its financial
commitment to creating and maintaining brand loyalty among clients. If the
Company fails to promote and maintain its brand, or incurs excessive expenses
in an attempt to promote and maintain its brand, the Company's business,
results of operations and financial condition will be materially adversely
affected.
Reliance Upon Key Strategic Relationships. The Company has established a
number of strategic relationships with leading hardware and software
companies, including Intel Corporation ("Intel"), Microsoft, Hewlett-Packard,
Pandesic LLC ("Pandesic," the Internet company from Intel and SAP America Inc.
("SAP")), Sun Microsystems, Inc. ("Sun Microsystems") and Reuters Ltd.
("Reuters"). The loss of any one of these strategic relationships would
deprive the Company of the opportunity to gain early access to leading-edge
technology, cooperatively market products with the vendor, cross-sell
additional services and gain enhanced access to vendor training and support.
Maintenance of the Company's strategic relationships is based primarily on an
ongoing mutual business opportunity and a good overall working relationship.
The legal contracts associated with these relationships, certain of which are
terminable at-will by the parties, would not be sufficient to force the
strategic relationship to continue effectively if that were otherwise not in
the strategic partners' best interests. In the event that any strategic
relationship is terminated, the Company's business, results of operations and
financial condition may be materially adversely affected.
Uncertain Adoption of Internet Solutions; Dependence on Client
Outsourcing. The market for the Company's services will depend upon the
adoption of Internet solutions by companies to improve their business
processes. The Internet may not prove to be a viable commercial marketplace
because of inadequate development of the necessary infrastructure, lack of
development of complementary products, such as high speed modems and high
speed communication lines, implementation of competing technology, delays in
the development or adoption of new standards and protocols required to handle
increased levels of Internet activity, governmental regulation, or other
reasons. The Internet has experienced, and is expected to continue
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to experience, significant growth in the number of users and volume of
traffic. There can be no assurance that the Internet infrastructure will
continue to be able to support the demands placed on it by this continued
growth. Moreover, critical issues concerning the use of Internet solutions
(including security, reliability, cost, ease of deployment and administration
and quality of service) remain unresolved and may affect the growth of the use
of such technologies to solve business problems. The adoption of Internet
solutions for commerce and communications, particularly by those individuals
and enterprises that have historically relied on alternative means of commerce
and communication, generally requires the acceptance of a new way of
conducting business and exchanging information, which may be difficult for
those with substantial investments in alternate means that might be made
obsolete. If critical issues concerning the ability of Internet solutions to
improve business processes are not resolved or if the necessary infrastructure
is not developed, the Company's business, results of operations and financial
condition will be materially adversely affected.
Even if these issues are resolved, there can be no assurance that businesses
will elect to outsource the design, development and maintenance of their
Intranets, Extranets and Web sites to Internet professional services firms.
Companies may decide to assign the design, development and implementation of
Internet solutions to their internal information technology divisions, which
have ready access to both key client decision makers and the information
required to prepare proposals for such solutions. If independent providers of
Internet professional services prove to be unreliable, ineffective or too
expensive, or if software companies develop tools that are sufficiently user-
friendly and cost-effective, enterprises may choose to design, develop or
maintain all or part of their Intranets, Extranets or Web sites in-house. If
the market for the Company's services does not continue to develop or develops
more slowly than expected, or if the Company's services do not achieve market
acceptance, the Company's business, results of operations and financial
condition will be materially adversely affected.
Rapid Technological Change. The market for Internet professional services is
characterized by rapid technological change, changes in user and client
requirements and preferences, frequent new product and service introductions
embodying new processes and technologies and evolving industry standards and
practices that could render the Company's existing service practices and
methodologies obsolete. The Company's success will depend, in part, on its
ability to improve its existing services, develop new services and solutions
that address the increasingly sophisticated and varied needs of its current
and prospective clients, and respond to technological advances, emerging
industry standards and practices, and competitive service offerings. There can
be no assurance that the Company will be successful in responding quickly,
cost-effectively and sufficiently to these developments. If the Company is
unable, for technical, financial or other reasons, to adapt in a timely manner
in response to changing market conditions or client requirements, its
business, results of operations and financial condition would be materially
adversely affected.
Risks Associated with International Operations and Expansion. The Company
intends to expand its operations into international markets. However, to date
the Company has acquired only one consulting office outside of the United
States and has no experience in either managing an international network of
consulting offices or in marketing services to international clients. The
Company expects to incur significant costs to do both. If revenues from
international consulting offices are not adequate to offset the expenses of
establishing and maintaining an international network and of localizing the
Company's marketing programs, the Company's business, results of operations
and financial condition could be materially adversely affected. There can be
no assurance that the Company will be able to establish and maintain
international consulting offices or market its services to international
clients. In addition to the uncertainty as to the Company's ability to
generate revenues from foreign operations and expand its international
presence, there are certain risks inherent in doing business on an
international level, such as unexpected changes in regulatory requirements,
export and import restrictions, tariffs and other trade barriers; difficulties
in staffing and managing foreign operations; potentially adverse differences
in business customs, practices, and norms; longer payment cycles; problems in
collecting accounts receivable; political instability; fluctuations in
currency exchange rates; software piracy; seasonal reductions in business
activity; and potentially adverse tax consequences, any of which could
8
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adversely affect the Company's international operations. There can be no
assurance that one or more of the factors described above will not have a
material adverse effect on the Company's future international operations and,
consequently, on the Company's business, results of operations and financial
condition.
Risks of Fixed-Price Engagements. The Company intends to increase the
percentage of its engagements that are billed on a fixed-price basis, as well
as the percentage of revenues derived from fixed-price engagements, as
distinguished from the Company's current principal method of billing on a time
and materials basis. To date, the Company has had only limited experience with
fixed-price engagements. The Company's failure to estimate accurately there
sources and time required for an engagement, to manage client expectations
effectively regarding the scope of services to be delivered for the estimated
fees or to complete fixed-price engagements within budget, on time and to
clients' satisfaction would expose the Company to risks associated with cost
overruns and, in certain cases, penalties, any of which could have a material
adverse effect on the Company's business, results of operations and financial
condition.
Risks of Franchising. USWeb has entered into franchise agreements with
Affiliates, which manage a number of its consulting offices. While these
agreements permit the Company to terminate the franchise relationship if an
Affiliate continues to under perform relative to other Affiliates, such an
Affiliate must be given at least 12 months to improve its performance.
Consequently, a significantly underperforming Affiliate could adversely affect
the Company's reputation. In addition, a terminated Affiliate may refuse to
comply with the terms of the franchise agreement relating to relinquishment of
the USWeb brand and other Company intellectual property or initiate litigation
against the Company. The operational autonomy granted to each Affiliate
through the franchise structure, together with the absence of certain
territorial restrictions on its activities, may inhibit the Company's control
over its market presence or enable the Affiliate to compete with Company-owned
offices for client engagements. Further, despite implementation of contractual
safeguards and insurance against such a possibility, USWeb may be held by a
court to be responsible for some action or liability of an Affiliate. Varying
rights and protections under different state laws, lack of control of
Affiliate actions, or findings of vicarious liability for Affiliate actions
could have a material adverse effect on the Company's business, operating
results and financial condition. In addition, if a significant portion of the
Affiliates chose not to work cooperatively, or if any significant Affiliate or
group of Affiliates were to leave the USWeb network, the network would be
correspondingly weaker. Furthermore, although for a period of two years after
the end of the Affiliate relationship the Affiliate and key persons associated
with the Affiliate are prohibited from certain activities in competition with
USWeb and from soliciting USWeb employees for alternate employment,
enforceability of these restrictions will vary depending on applicable state
law. To the extent that the action or inaction of any Affiliate proves
deleterious to the reputation associated with the USWeb brand, the Company's
business, results of operations and financial condition could be materially
adversely affected.
Dependence on Key Personnel. The Company's performance is substantially
dependent on the continued services and on the performance of its executive
officers and other key employees, many of whom have worked together for only a
short period of time. Particularly in light of the Company's relatively early
stage of development, the Company is dependent on retaining and motivating
highly qualified personnel, especially its senior management. The Company does
not have "key person" life insurance policies on any of its executive
officers. The loss of the services of any of its executive officers or other
key employees could have a material adverse effect on the business, results of
operations or financial condition of the Company.
Intellectual Property Risks. The Company regards its copyrights, trademarks,
trade secrets (including its methodologies, practices and tools) and other
intellectual property rights as critical to its success. To protect its rights
in these various intellectual properties, the Company relies on a combination
of trademark and copyright law, trade secret protection and confidentiality
agreements and other contractual arrangements
9
<PAGE>
with its employees, Affiliates, clients, strategic partners, acquisition
targets and others to protect its proprietary rights. The Company has also
registered several of its trademarks in the U.S. and internationally.
Effective trademark, copyright and trade secret protection may not be
available in every country in which the Company offers or intends to offer its
services. There can be no assurance that the steps taken by the Company to
protect its proprietary rights will be adequate or that third parties will not
infringe or misappropriate the Company's copyrights, trademarks and similar
proprietary rights, or that the Company will be able to detect unauthorized
use and take appropriate steps to enforce its rights. In addition, although
the Company believes that its proprietary rights do not infringe on the
intellectual property rights of others, there can be no assurance that other
parties will not assert infringement claims against the Company. Such claims,
even if not meritorious, could result in the expenditure of significant
financial and managerial resources.
Potential Liability to Clients. Many of the Company's consulting engagements
involve the development, implementation and maintenance of applications that
are critical to the operations of its clients' businesses. The Company's
failure or inability to meet a client's expectations in the performance of its
services could injure the Company's business reputation or result in a claim
for substantial damages against the Company, regardless of the Company's
responsibility for such failure. In addition, the Company aggregates and makes
available through the Strategy and Solutions Center methodologies,
technologies and content, which may include confidential or proprietary client
information. Although the Company has implemented policies to prevent such
client information from being disclosed to unauthorized parties or used
inappropriately, any such unauthorized disclosure or use could result in a
claim for substantial damages. The Company attempts to limit contractually its
damages arising from negligent acts, errors, mistakes or omissions in
rendering Internet professional services; however there can be no assurance
that any contractual protections will be enforceable in all instances or would
otherwise protect the Company from liability for damages. Although the Company
maintains general liability insurance coverage, including coverage for errors
and omissions, there can be no assurance that such coverage will continue to
be available on reasonable terms or will be available in sufficient amounts to
cover one or more large claims, or that the insurer will not disclaim coverage
as to any future claim. The successful assertion of one or more large claims
against the Company that are uninsured, exceed available insurance coverage or
result in changes to the Company's insurance policies, including premium
increases or the imposition of a large deductible or co-insurance
requirements, could adversely affect the Company's business, results of
operations and financial condition.
Year 2000 Compliance. Many currently installed computer systems and software
products are coded to accept only two-digit entries in the date code field.
These date code fields will need to accept four digit entries to distinguish
21st century dates from 20th century dates. As a result, in less than two
years, computer systems and software used by many companies, including
customers and potential customers of the Company, may need to be upgraded to
comply with such "Year 2000" requirements. Although the Company believes that
its internal systems are Year 2000 compliant, failure to provide Year 2000
compliant business solutions to its customers could have a material adverse
effect on the Company's business, results of operations and financial
condition. Furthermore, the Company believes that the purchasing patterns of
customers and potential customers may be affected by Year 2000 issues as
companies expend significant resources to correct or patch their current
software systems for Year 2000 compliance. These expenditures may result in
reduced funds available to purchase products and services such as those
offered by the Company, which could result in a material adverse effect on the
Company's business, results of operations and financial condition.
Future Capital Needs; Uncertainty of Additional Financing. The Company
currently anticipates that its available cash resources and credit facilities
will be sufficient to meet its presently anticipated working capital and
capital expenditure requirements for at least the next 12 months. However, the
Company may need to raise additional funds in order to support more rapid
expansion, develop new or enhanced services and products, respond to
competitive pressures, acquire complementary businesses or technologies or
take advantage of unanticipated opportunities. The Company's future liquidity
and capital requirements will depend upon numerous factors, including the
success of the Company's existing and new service offerings and competing
technological and market developments. The Company may be required to raise
additional funds through public or private financing, strategic relationships
or other arrangements. There can be no
10
<PAGE>
assurance that such additional funding, if needed, will be available on terms
acceptable to the Company, or at all. Furthermore, any additional equity
financing may be dilutive to stockholders, and debt financing, if available,
may involve restrictive covenants, which may limit the Company's operating
flexibility with respect to certain business matters. Strategic arrangements,
if necessary to raise additional funds, may require the Company to relinquish
its rights to certain of its intellectual property. If additional funds are
raised through the issuance of equity securities, the percentage ownership of
the stockholders of the Company will be reduced, stockholders may experience
additional dilution in net book value per share, and such equity securities
may have rights, preferences or privileges senior to those of the holders of
the Company's Common Stock. If adequate funds are not available on acceptable
terms, the Company may be unable to develop or enhance its services and
products, take advantage of future opportunities or respond to competitive
pressures, any of which could have a material adverse effect on the Company's
business, results of operations and financial condition.
Government Regulation and Legal Uncertainties. The Company is not currently
subject to direct government regulation, other than pursuant to certain
franchising regulations, the securities laws and the regulations thereunder
applicable to all publicly owned companies, and laws and regulations
applicable to businesses generally, and there are currently few laws or
regulations directly applicable to access to or commerce on the Internet.
However, due to the increasing popularity and use of the Internet, it is
likely that a number of laws and regulations may be adopted at the local,
state, national or international levels with respect to the Internet covering
issues such as user privacy, freedom of expression, pricing of products and
services, taxation, advertising, intellectual property rights, information
security or the convergence of traditional communications services with
Internet communications. For example, the Telecommunications Act of 1996
imposes criminal penalties on anyone who distributes obscene or indecent
communications over the Internet. Although the federal courts have declared
the anti-indecency provisions of the Telecommunications Act unconstitutional,
the increased attention focused upon these liability issues as a result of the
Telecommunications Act could adversely affect the growth of the Internet and
therefore demand for the Company's services. In addition, because of the
growth in the electronic commerce market, Congress has held hearings on
whether to regulate providers of services and transactions in the electronic
commerce market, which regulations could negatively affect client demand for
Internet solutions that facilitate electronic commerce. Moreover, the adoption
of any such laws or regulations may decrease the growth of the Internet, which
could in turn decrease the demand for the Company's services or increase the
cost of doing business or in some other manner have a material adverse effect
on the Company's business, results of operations or financial condition. In
addition, the applicability to the Internet of existing laws governing issues
such as property ownership, copyrights and other intellectual property issues,
taxation, libel and personal privacy is uncertain. The vast majority of such
laws were adopted prior to the advent of the Internet and related technologies
and, as a result, do not contemplate or address the unique issues of the
Internet and related technologies. Changes to such laws intended to address
these issues, including some recently proposed changes, could create
uncertainty in the marketplace which could reduce demand for the Company's
services or increase the cost of doing business as a result of costs of
litigation or increased service delivery costs, or could in some other manner
have a material adverse effect on the Company's business, results of
operations and financial condition.
Volatility of Stock Price. Prior to the Company's initial public offering in
December 1997, there was no public market for the Company's Common Stock. The
market price of the Company's Common Stock is likely to continue to be highly
volatile and could be subject to wide fluctuations in response to quarterly
variations in operating results, announcements of technological innovations or
new products by the Company or its competitors, changes in financial estimates
by securities analysts, or other events or factors. In addition, the stock
market, which has recently been at or near historic highs, has experienced
significant price and volume fluctuations that have particularly affected the
market prices of equity securities of many technology companies and that often
have been unrelated to the operating performance of such companies. In the
past, following periods of volatility in the market price of a company's
securities, securities class action litigation
11
<PAGE>
has often been instituted against such a company. Such litigation could result
in substantial costs and a diversion of management's attention and resources,
which would have a material adverse effect on the Company's business,
operating results and financial condition.
Effect of Certain Charter Provisions; Antitakeover Effects of Certificate of
Incorporation, Bylaws and Delaware Law. The Board of Directors has the
authority to issue up to 1,000,000 shares of Preferred Stock and to determine
the price, rights, preferences, privileges and restrictions, including voting
rights, of those shares without any further vote or action by the
stockholders. The rights of the holders of Common Stock will be subject to,
and may be adversely affected by, the rights of the holders of any Preferred
Stock that may be issued in the future. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult
for a third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue shares of Preferred Stock.
Further, certain provisions of the Company's Amended and Restated Certificate
of Incorporation and Bylaws and of Delaware law could delay or make difficult
a merger, tender offer or proxy contest involving the Company.
Concentration of Stock Ownership. The present directors, executive officers
and their respective affiliates of the Company beneficially own a substantial
portion of the outstanding Common Stock. As a result, these stockholders will be
able to exercise significant influence over all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. Such concentration of ownership may also have the effect
of delaying or preventing a change in control of the Company.
FORWARD LOOKING STATEMENTS
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act which are
subject to the "safe harbor" created by those sections. These forward-looking
statements include, but are not limited to, statements concerning the Company's
strategy, mission, acquisition program, opportunities and goals and the
potential development of the market for Intranet, Extranet and Web site
solutions and services.
These forward-looking statements may be found in "Risk Factors" and the
documents and information incorporated by reference in this Prospectus and the
Company's Registration Statement on Form S-8. Forward-looking statements not
specifically set forth above may also be found in these and other sections of
this Prospectus. Actual results could differ materially and adversely from those
discussed in the forward-looking statements as a result of certain factors,
including those discussed in "Risk Factors" and elsewhere in this Prospectus.
See "Risk Factors."
12
<PAGE>
SELLING STOCKHOLDERS
None of the Selling Stockholders is an executive officer, director or
controlling stockholder of the Company. The Selling Stockholders do not
beneficially own, individually, more than 1% of the outstanding Common Stock of
the Company prior to this offering. The following table shows the names of the
Selling Stockholders and the number of shares of Common Stock to be sold by them
pursuant to this Prospectus. The table excludes certain unnamed stockholders,
each of whom is a non-affiliate holding less than the lesser of 1000 shares or
1% of the shares issuable under any plan to which this Registration Statement
relates and each of whom may use this Prospectus for sales of up to that amount.
Each of the Selling Stockholders is an employee or consultant of the Company.
NAME NUMBER OF SHARES
- ---------------------- ----------------
Albert, Robert A. 2,917
Allen, Donald R. 6,250
Balmaseda, Robert 2,500
Brown, Michael 1,624
Cary, Thomas H. 15,000
Chronister, Cecile 1,041
Crandall, Craig 1,667
Cuthrell, Stephen 13,333
Findley, Bruce 99,424
Frankland, Kathy 13,333
Harrington, Neil 4,167
John, George W. 25,000
Johnson, Dwayne E. 47,222
Jones, Benjamin A. 1,354
Keala, Linda 15,000
Lucero, Michael 9,167
Mathias, Robin 10,000
McCracken, Patricia 6,667
McQuown, Rob 1,223
Minter, Anna J. 13,333
Mork, Nils 1,945
Perugini, Gregory M. 7,500
Rybarczyk, Carrie 2,872
Sedwick, Nils 6,667
Shapiro, Judy 3,472
Smith, Brian J. 5,333
Spaulding, Bryan 3,205
Taylor, Christopher 25,000
Tebelak, Eric 4,000
Tsuchitani, Wayne 10,000
Upchurch, Thomas W. 5,833
Vail, Timothy J. 15,000
Vierra, Jennifer 3,333
Waters, Kenneth R. 6,667
Other Shareholders 7,193
TOTAL 398,242
13
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they intend
to sell all or a portion of the shares offered hereby from time to time in the
over-the-counter market and that sales will be made at prices prevailing in the
public market at the times of such sales. The Selling Stockholders may also
make private sales directly or through a broker or brokers, who may act as agent
or as principal. Further, the Selling Stockholders may choose to dispose of the
shares offered hereby by gift to a third party or as a donation to a charitable
or other non-profit entity. In connection with any sales, the Selling
Stockholders and any brokers participating in such sales may be deemed to be
underwriters within the meaning of the Securities Act. Any broker-dealer
participating in such transactions as agent may receive commissions from the
Selling Stockholders (and from any purchaser of shares in such transaction).
Usual and customary brokerage fees will be paid by the Selling Stockholder.
There can be no assurance that the Selling Stockholders will sell any or
all of the shares of Common Stock offered hereunder.
MATERIAL CHANGES
Pursuant to the Company's Registration Statement on Form S-1 (file no. 333-
46821), initially filed on February 24, 1998, as amended from time to time, and
any associated registration statement filed pursuant to Rule 462, 5,000,000
shares of Common Stock are intended to be offered, 1,000,000 shares to be issued
and sold by the Company and 4,000,000 shares to be sold by certain stockholders
of the Company. See Information Incorporated by Reference.
INFORMATION INCORPORATED BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed with the Securities and Exchange
Commission:
(1) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, dated December 5, 1997, filed
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including any amendment or report filed for the purpose of
updating such description.
(2) The Company's Annual Report on Form 10-K for the year ended December
31, 1997, filed pursuant to Section 13 of the Exchange Act.
(3) The Company's Current Report on Form 8-K, dated March 13, 1998, filed
pursuant to Section 13 of the Exchange Act.
(4) The Company's Registration Statement on Form S-1
(file no. 333-46821), initially filed on February 24, 1998, as amended from time
to time, and any associated registration statement filed pursuant to Rule 462.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment which indicates that all securities registered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be part
hereof from the date of filing of such documents.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation, the Company's Bylaws,
Section 145 of the Delaware General Corporation Law and the form of
indemnification agreement entered into between the Company and certain of its
directors and its officers, subject to certain conditions, authorize the Company
to indemnify, or indemnify by their terms, as the case may be, the directors and
officers of the Company against certain liabilities and expenses incurred by
such persons in connection with claims made by reason of their being such a
director or officer.
The Underwriting Agreement with respect to the initial public
offering made under the Company's Registration Statement on Form S-1 (file no.
333-36827), dated December 5, 1998, provides, and the Company anticipates the
Underwriting Agreement with respect to the follow-on offering made under the
Company's Registration Statement on Form S-1 (file no. 333-46821), initially
filed on February 24, 1998, as amended from time to time, and any associated
registration statement filed pursuant to Rule 462, will provide, for
indemnification by the Underwriters and their controlling persons, on the one
hand, and of the Company and its controlling persons on the other hand, for
certain liabilities arising under the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended, or otherwise .
The Company has obtained directors' and officers' insurance providing
indemnification for certain of the Company's directors, officers, affiliates,
partners or employees for certain liabilities.
The Company has entered into agreements to indemnify its directors
and executive officers, in addition to indemnification provided for in the
Company's Bylaws. These agreements, among other things, indemnify the Company's
directors and executive officers for certain expenses (including attorney's
fees), judgments, fines and settlement amounts incurred by any such person in
any action or proceeding, including any action by or in the right of the
Company, arising out of such person's services as a director or executive
officer of the Company, any subsidiary of the Company or any other company or
enterprise to which the person provides services at the request of the Company.
The Company believes that these provisions and agreements are necessary to
attract and retain qualified directors and executive officers.
At present, there is no pending litigation or proceeding involving
any director, officer, employee or agent of the Company where indemnification is
expected to be required or permitted. The Company is not aware of any threatened
litigation or proceeding that might result in a claim for such indemnification.
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<PAGE>
REGISTRATION STATEMENT ON FORM S-8/S-3
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
---------------------------------------
The following documents and information previously filed with the
Securities and Exchange Commission by USWeb Corporation (the "Company") are
hereby incorporated by reference in this Registration Statement:
(1) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, dated December 5, 1997, filed
pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), including any amendment or report filed for the purpose of
updating such description.
(2) The Company's Annual Report on Form 10-K for the year ended December
31, 1997, filed pursuant to Section 13 of the Exchange Act.
(3) The Company's Current Report on Form 8-K, dated March 13, 1998, filed
pursuant to Section 13 of the Exchange Act.
(4) The Company's Registration Statement on Form S-1
(file no. 333-46821), initially filed on February 24, 1998, as amended from time
to time, and any associated registration statement filed pursuant to Rule 462.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all securities registered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
-------------------------
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
--------------------------------------
Not applicable.
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<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
The Company's Certificate of Incorporation, the Company's Bylaws, Section
145 of the Delaware General Corporation Law and the form of indemnification
agreement entered into between the Company and certain of its directors and
officers, subject to certain conditions, authorize the Company to indemnify, or
indemnify by their terms, as the case may be, the directors and officers of the
Company against certain liabilities and expenses incurred by such persons in
connection with claims made by reason of their being such a director or officer.
The Underwriting Agreement with respect to the initial public offering made
under the Company's Registration Statement on Form S-1 (file no. 333-36827),
dated December 5, 1997, provides, and the Company anticipates the Underwriting
Agreement with respect to the follow-on offering made under the Company's
Registration Statement on Form S-1 (file no. 333-46821), initially filed on
February 24, 1998, as amended from time to time, and any associated registration
statement filed pursuant to Rule 462, will provide, for indemnification by the
Underwriters and their controlling persons, on the one hand, and of the Company
and its controlling persons on the other hand, for certain liabilities arising
under the Securities Act of 1933, as amended, and the Securities Exchange Act of
1934, as amended, or otherwise.
The Company has obtained directors' and officers' insurance providing
indemnification for certain of the Company's directors, officers, affiliates,
partners or employees for certain liabilities.
The Company has entered into agreements to indemnify its directors and
executive officers, in addition to indemnification provided for in the Company's
Bylaws. These agreements, among other things, indemnify the Company's directors
and executive officers for certain expenses (including attorneys' fees),
judgments, fines and settlement amounts incurred by any such person in any
action or proceeding, including any action by or in the right of the Company,
arising out of such person's services as a director or executive officer of the
Company, any subsidiary of the Company or any other company or enterprise to
which the person provides services at the request of the Company. The Company
believes that these provisions and agreements are necessary to attract and
retain qualified directors and executive officers.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification is
expected to be required or permitted. The Company is not aware of any threatened
litigation or proceeding that might result in a claim for such indemnification.
See also the undertakings set out in response to Item 9 herein.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
-----------------------------------
Since the Registrant's inception on December 6, 1995, the Registrant has
sold and issued the following securities:
1. During the period from December 6, 1995 through March 20, 1998, the
Registrant granted options to purchase an aggregate of 541,669 shares of
Common Stock (options for 256,504 of which are outstanding) to 57
directors, employees and consultants pursuant to the Registrant's 1996
Stock Option Plan in reliance on Rule 701 promulgated under the
Securities Act or in reliance on the exemption from registration provided
by Section 4(2) of the Securities Act.
2. During the period from December 6, 1995 through March 20, 1998, the
Registrant granted options to purchase an aggregate of 1,983,251 shares
of Common Stock (options for 1,982,585 of which are outstanding) to 241
directors, employees and consultants pursuant to the Registrant's 1996
Equity Compensation Plan in reliance on Rule 701 promulgated under the
Securities Act or in reliance on the exemption from registration provided
by Section 4(2) of the Securities Act.
3. During the period from December 6, 1995 through March 20, 1998, the
Registrant granted options to purchase an aggregate of 7,949,676 shares
of Common Stock (options for 7,847,094 of which are outstanding) to 306
directors, employees and consultants pursuant to the Registrant's 1997
Acquisition Stock Option Plan in reliance on Rule 701 promulgated under
the Securities Act or in reliance on the exemption from registration
provided by Section 4(2), Section 3(a)(10), or Regulation S of the
Securities Act.
4. During the period from December 6, 1995 through September 30, 1997, the
Registrant granted warrants to purchase an aggregate of 268,886 shares of
Common Stock all of which are outstanding) to 144 owners of Affiliates
pursuant to the Registrant's Affiliate Warrant Program in reliance on
Rule 701 promulgated under the Securities Act (including a no-action
letter with respect to the Affiliate Warrant Program).
16
<PAGE>
5. On July 19, 1996 the Registrant issued a warrant to purchase up to
18,055 shares of Common Stock at an exercise price of $0.90 per share
to 1 individual in connection with a consulting agreement. The warrant
expires, if not earlier exercised, on July 18, 2001. Issuance of the
warrant to purchase Common Stock was made in reliance on the exemption
from registration provided by Section 4(2) of the Securities Act.
6. On December 4, 1996 the Registrant issued a warrant to purchase up to
33,333 shares of Common Stock at an exercise price of $3.75 per share
to 1 individual in connection with a consulting agreement. The warrant
expires, if not earlier exercised, on December 3, 2001. Issuance of the
warrant to purchase Common Stock was made in reliance on the exemption
from registration provided by Section 4(2) of the Securities Act.
7. During the period from December 6, 1995 through March 20, 1998, the
Registrant granted stock bonuses to receive a maximum aggregate value of
Common Stock equal to $61,107,036 (as of March 20, 1998, equal to an
aggregate of approximately 3,050,000 shares of Common Stock), of which
$12,518,830 have vested and 9,829 shares have been issued to 373 new
employees and consultants in connnection with the Registrant's
acquisition program in reliance on the exemption from registration
provided by Section 4(2), Section 3(a)(10), or Regulation S of the
Securities Act.
17
<PAGE>
ITEM 8. EXHIBITS.
--------
EXHIBIT
NUMBER DESCRIPTION
------- ----------------------------------------------------
4.1* Form of Registrant's Signing Warrant.
4.2* Form of Registrant's AGR Warrant.
4.3 Description of Acquisition Related Employee Stock Bonuses.
5.1 Opinion of counsel as to legality of securities being
registered.
10.1* 1996 Stock Option Plan and related agreements.
10.2* 1996 Equity Compensation Plan and related agreements.
10.3* 1997 Acquisition Stock Option Plan and related
agreements.
23.1 Consent of counsel (contained in Exhibit 5.1).
23.2 Consent of Independent Accountants.
24.1 Power of Attorney (see page 20).
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1, as amended (File No. 333-36827).
18
<PAGE>
ITEM 9. UNDERTAKINGS.
------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Clara, State of California, on this 24th day
of March, 1997.
USWEB CORPORATION
/s/ Joseph P. Firmage
-------------------------------------
Joseph P. Firmage
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Joseph P. Firmage and James
Heffernan, and each of them acting individually, as his attorney-in-fact, each
with full power of substitution, for him in any and all capacities, to sign any
and all amendments to this Registration Statement on Form S-8, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the date indicated.
SIGNATURE TITLE DATE
- ----------- ----- ----
/s/ Joseph P. Firmage Chief Executive Officer March 24, 1998
- ----------------------- (Principal Executive Officer) and
Joseph P. Firmage Chairman of the Board
/s/ James Heffernan Chief Financial Officer March 24, 1998
- ----------------------- (Principal Accounting and Financial
James Heffernan Officer), Executive Vice President,
Secretary and Director
/s/ Tobin Corey
- ----------------------- President March 24, 1998
Tobin Corey
/s/ Jeffrey Ballowe
- ----------------------- Director March 24, 1998
Jeffrey Ballowe
/s/ Robert Hoff
- ----------------------- Director March 24, 1998
Robert Hoff
/s/ Gary Rieschel
- ----------------------- Director March 24, 1998
Gary Rieschel
/s/ Barry Rubenstein
- ----------------------- Director March 24, 1998
Barry Rubenstein
20
<PAGE>
USWEB CORPORATION
REGISTRATION STATEMENT ON FORM S-8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------
<C> <S>
4.1* Form of Registrant's Signing Warrant.
4.2* Form of Registrant's AGR Warrant.
4.3 Description of Acquisition Related Employee Stock Bonuses.
5.1 Opinion of counsel as to legality of securities being
registered.
10.1* 1996 Stock Option Plan and related agreements.
10.2* 1996 Equity Compensation Plan and related agreements.
10.3* 1997 Acquisition Stock Option Plan and related
agreements.
23.1 Consent of counsel (contained in Exhibit 5.1).
23.2 Consent of Independent Accountants.
24.1 Power of Attorney (see page 20).
</TABLE>
* Incorporated by reference to the Registrant's Registration Statement on
Form S-1, as amended (File No. 333-36827).
21
<PAGE>
EXHIBIT 4.3
DESCRIPTION OF ACQUISITION RELATED EMPLOYEE STOCK BONUSES
In connection with acquisitions, the employees of the acquired companies (each
a "New Employee") became employees of USWeb Corporation and were granted stock
options to purchase shares of the Company's Common Stock at the fair value of
the Common Stock on the dates of grant. The options granted are exercisable for
a maximum term of five years and vest ratably over a term of thirty-six months
from the date of grant. In the event that the grantee's status as an employee of
the Company terminates prior to the completion of the vesting period, the
employee is entitled only to the vested portion of the options as of such date.
Each optionee is also given the right to receive a stock bonus at the time an
option is granted. The stock bonus vests at the same rate as the corresponding
option and is equal in value to the aggregate exercise price of this option. The
stock bonus is payable at the earlier of three years from the date of grant or
upon termination of employment.
Under the agreements, the stock bonuses vest over a thirty-six month period
from the date of first employment by the Company and will be paid at the
conclusion of the vesting period. However, to the extent that a New Employee's
status as an employee is terminated, the New Employee will be entitled only to
the vested portion of the stock bonus and such bonus shall become due and
payable upon such New Employee's termination.
<PAGE>
EXHIBIT 5.1
March 24, 1998
USWeb Corporation
2880 Lakeside Drive, Suite 300
Santa Clara, CA 95054
RE: REGISTRATION STATEMENT ON FORM S-8
----------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by you
with the Securities and Exchange Commission on or about March 24, 1998 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 14,984,721 shares of your Common Stock
(the "Shares"), 600,000 of which are to be issued pursuant to the 1996 Stock
Option Plan, 2,000,000 of which are to be issued pursuant to the 1996 Equity
Compensation Plan, 10,000,000 of which are to be issued pursuant to the 1997
Acquisition Stock Option Plan, 333,333 of which are to be issued pursuant to
the Affiliate Warrant Program, 2,000,000 of which are to be issued pursuant to
Acquisition Related Employee Stock Bonuses (together, the "Plans") and 51,388
of which are to be issued pursuant to warrants issued to consultants. As your
legal counsel, we have examined the proceedings proposed to be taken in
connection with the issuance and sale of the Shares to be issued under the
Plans.
It is our opinion that the Shares, when issued and sold in the manner referred
to in the Plans and pursuant to the agreements which accompany the Plans or
the agreements otherwise described, will be legally and validly issued, fully
paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including any Prospectus constituting a part thereof,
and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/S/ WILSON SONSINI GOODRICH & ROSATI
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8/S-3 of our reports dated January 20, 1998
(except for Note 12, which is as of March 12, 1998), relating to the
consolidated financial statements of USWeb Corporation, September 17, 1997
related to the financial statements of USWeb San Francisco, September 12, 1997
related to the financial statements of USWeb Milwaukee, September 17, 1997
related to the financial statements of USWeb LA Metro, September 18, 1997
related to the financial statements of USWeb Atlanta, September 18, 1997
related to the financial statements of USWeb DC, September 18, 1997 related to
the financial statements of USWeb Pittsburgh, October 31, 1997 related to the
financial statements of USWeb Chicago Metro, October 31, 1997 related to the
financial statements of USWeb Hollywood (formerly KandH, Inc.), October 29,
1997 related to the financial statements of USWeb Hollywood (formerly Dream
Media, Inc.), October 17, 1997 related to the financial statements of USWeb
Marin, October 31, 1997 related to the financial statements of USWeb Long
Island, October 24, 1997 related to the financial statements of USWeb Detroit,
October 5, 1997 related to the financial statements of USWeb San Mateo,
October 31, 1997 related to the financial statements of USWeb LA Central,
November 4, 1997 related to the financial statements of USWeb Houston and
November 5, 1997 related to the financial statements of USWeb New York Central
(formerly Reach Networks, Inc.) which appear in the Company's Registration
Statement on Form S-1 (No.333-46821).
PRICE WATERHOUSE LLP
San Jose, California
March 23, 1998
