<PAGE>
As filed with the Securities and Exchange Commission on May 17, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
FIRSTWORLD COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0521976
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
_____________
7100 E. Belleview Avenue, Suite 210
Greenwood Village, Colorado 80111
(303) 874-8010
(Address of principal executive offices, including zip code, and telephone
number)
FirstWorld Communications, Inc. Quarterly Bonus Program
(Full title of the plans)
_____________
JEFFREY L. DYKES, ESQ. Copies to:
General Counsel DAVID A. HAHN, ESQ.
FirstWorld Communications, Inc. Latham & Watkins
7100 E. Belleview Avenue, Suite 210 701 "B" Street, Suite 2100
Greenwood Village, Colorado 80111 San Diego, California 92101
(303) 874-8010 (619) 236-1234
(Name, address, including zip code, and
telephone number, including area
code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================================
Title of Securities Amount Proposed Maximum Proposed Maximum Amount of
to be Registered to be Offering Price Aggregate Offering Registration
Registered(1) Per Share Price Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series B Common Stock, $.0001 par value 200,000 $6.00(2) $1,200,000(2) $334.00
========================================================================================================================
</TABLE>
(1) Pursuant to Rule 416(a), this Registration Statement shall also cover any
additional shares of the Registrant's Series B Common Stock that become
issuable under the FirstWorld Communications, Inc. Quarterly Bonus Program
by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without receipt of consideration that
increases the number of the Registrant's outstanding shares of common
stock.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h)(1). The price per share and
aggregate offering price are based upon the anticipated offering price for
shares to be issued as a bonus under the FirstWorld Communications, Inc.
Quarterly Bonus Program. The following chart shows the calculation of the
registration fee:
<TABLE>
<CAPTION>
Type of Shares Number of Shares Offering Price per Share Aggregate Offering Price
- -------------- ---------------- ------------------------ ------------------------
<S> <C> <C> <C>
Series B Common Stock to be issued as a bonus under the
FirstWorld Communications, Inc. Quarterly Bonus Program 200,000 $ 6.00 $ 1,200,000
</TABLE>
================================================================================
1
<PAGE>
Part I
Item 1. Plan Information.
Not required to be filed with this Registration Statement.
Item 2. Registrant Information and Employee Plan Annual Information.
Not required to be filed with this Registration Statement.
Part II
Item 3. Incorporation of Documents by Reference.
There are hereby incorporated by reference in this Registration
Statement the following documents and information heretofore filed with the
Securities and Exchange Commission:
(a) the Registrant's Annual Report on Form 10-K for the fiscal year
ended September 30, 1998 filed pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(b) the Registrant's Quarterly Reports on Form 10-Q for the transition
period from October 1, 1998 to December 31, 1998 and Form 10-Q for the
period January 1, 1999 to March 31, 1999 filed pursuant to Section 13 of
the Exchange Act;
(c) the Registrant's Current Report on Form 8-K, filed on March 29,
1999, pursuant to Section 13 of the Exchange Act;
(d) the Registrant's Current Report on Form 8-K, filed on January 20,
1999, pursuant to Section 13 of the Exchange Act;
(e) the Registrant's Current Report on Form 8-K, filed on December 15,
1998, pursuant to Section 13 of the Exchange Act;
(f) the Registrant's Current Report on Form 8-K, filed on November 3,
1998, pursuant to Section 13 of the Exchange Act; and
(g) the description of the Registrant's Series B Common Stock
contained in the Registrant's Registration Statement on Form 8-A filed on
October 8, 1998, pursuant to Section 12(g) of the Exchange Act.
All documents filed by the Registrant pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date this Registration Statement
is filed with the Commission and prior to the filing of a post-effective
amendment which indicates that all securities offered 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 a part of it
from the respective dates of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
2
<PAGE>
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Six Latham & Watkins attorneys own an aggregate of 57,351 shares of
Series B Common Stock, warrants to purchase an aggregate of 9,634 shares of
Series B Common Stock and options to purchase 25,000 shares of Series B Common
Stock. John C. Stiska, one of the Registrant's directors, accepted an of-counsel
position with Latham & Watkins in July 1998. Latham & Watkins provides legal
services to the Registrant.
Item 6. Indemnification of Directors and Officers.
The General Corporation Law of the State of Delaware (the "DGCL")
----
permits a Delaware corporation to indemnify officers, directors, employees and
agents for actions taken in good faith and in a manner they reasonably believed
to be in, or not opposed to, the best interests of the corporation, and with
respect to any criminal action, which they had no reasonable cause to believe
was unlawful. The DGCL also provides that a corporation may advance the expenses
of defense (upon receipt of a written undertaking to reimburse the corporation
if it is ultimately determined that such individual is not entitled to
indemnification) and must reimburse a successful defendant for expenses,
including attorneys' fees, actually and reasonably incurred. The DGCL further
provides that indemnification may not be made for any claim, issue or matter as
to which a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation, except
only to the extent a court determines that the person is entitled to indemnify
for such expenses that such court deems proper. The DGCL also permits a
corporation to purchase and maintain liability insurance for its directors and
officers.
The Registrant's Certificate of Incorporation and bylaws provide that
the Registrant shall, to the fullest extent permitted by Section 145 of the
DGCL, as the same may be amended and supplemented from time to time, indemnify
all directors and officers and all other persons whom it has authority to
indemnify under Section 145 of the DGCL. Such limitation of liability does not
affect the availability of equitable remedies such as injunctive relief or
rescission. The Registrant has entered into indemnification agreements with its
officers and directors containing provisions which may require the Registrant,
among other things, to indemnify the officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature), and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified. The Registrant maintains
insurance on behalf of its directors and officers, insuring them against
liabilities that they may incur in such capacities or arising out of such
status.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The Exhibit Index immediately preceding the exhibits is incorporated
herein by reference.
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;
3
<PAGE>
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act");
--------------
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that the undertakings set forth in paragraphs (a)(1)(i)
-------- -------
and (a)(1)(ii) above do not apply if the Registration Statement is on Form
S-3, Form S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated
by reference in this 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 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this 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 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 Securities Act and will be governed by the final
adjudication of such issue.
4
<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 Greenwood Village, State of Colorado, on this 17 day
of May 1999.
FirstWorld Communications, Inc.
By: /s/ SHELDON S. OHRINGER
----------------------------
Sheldon S. Ohringer
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below: (i) hereby constitutes and appoints Jeffrey L. Dykes his or her true and
lawful attorney-in-fact and agent, acting alone, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign this Registration Statement and any and all
amendments thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission;
and (ii) hereby grants unto the attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith as fully as to all intents and purposes as he
or she might or could do in person, thereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ------ ----
<S> <C> <C>
/s/ SHELDON S. OHRINGER President, Chief Executive Officer and May 17, 1999
- -------------------------------
Sheldon S. Ohringer Director (Principal Executive Officer)
/s/ PAUL C. ADAMS Vice President of Finance, Treasurer and May 17, 1999
- -------------------------------
Paul C. Adams Assistant Secretary (Principal Financial
and Accounting Officer)
/s/ DONALD L. STURM Chairman of the Board May 17, 1999
- -------------------------------
Donald L. Sturm
/s/ C. KEVIN GARLAND Director May 17, 1999
- -------------------------------
C. Kevin Garland
/s/ STEPHEN R. HORN Director May 17, 1999
- -------------------------------
Stephen R. Horn
/s/ JAMES O. SPITZENBERGER Director May 17, 1999
- -------------------------------
James O. Spitzenberger
/s/ MELANIE STURM Director May 17, 1999
- -------------------------------
Melanie Sturm
/s/ JOHN C. STISKA Director May 17, 1999
- -------------------------------
John C. Stiska
</TABLE>
5
<PAGE>
EXHIBIT INDEX
EXHIBIT
- -------
4.1 FirstWorld Communications, Inc. Quarterly Bonus Program
5.1 Opinion of Latham & Watkins.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Latham & Watkins (included in Exhibit 5.1 hereto).
24.1 Power of Attorney (included on signature page hereto).
6
<PAGE>
Exhibit 4.1
-----------
FirstWorld Communications, Inc.
-------------------------------
Quarterly Bonus Program
-----------------------
PLAN DESCRIPTION
This document describes the terms and conditions which govern the
FirstWorld Communications, Inc. ("FirstWorld") Quarterly Bonus Program (the
----------
"Program" or the "Plan"). The terms and conditions set forth herein shall
------- ----
control the payment of bonuses to those employees covered by the Program. The
Program does not alter, vary or amend the provisions contained in FirstWorld's
employee handbook; provided, however, to the extent the employee handbook
-------- -------
includes provisions regarding bonuses which contradict the terms and conditions
of the Program, the terms and conditions of the Program shall control.
Neither the existence of the Program, nor the terms and conditions set
forth herein, create nor should they be construed to create an express or
implied contract of employment. All employment with FirstWorld is "at will," and
may be terminated at any time, with or without notice and with or without cause,
by FirstWorld or the employee. FirstWorld managers do not have the authority to
modify or alter an employee's "at will" status. An employee's "at will" status
may be modified or altered only by written agreement signed by the employee and
FirstWorld's President.
This Program has been adopted and exists at the sole discretion of
FirstWorld. FirstWorld (acting through its Compensation Committee) may cancel,
modify or alter the Program, in whole or in part, at any time, for any reason,
with or without prior notice. FirstWorld (acting through its Compensation
Committee) shall have the exclusive authority to interpret and apply the terms
and conditions of the Program. Interpretations and applications made by the
Compensation Committee shall be binding on participants in the Program.
I. COVERED EMPLOYEES
Except as otherwise described herein, the Program applies to non-
commissioned employees of FirstWorld, including employees of controlled
subsidiaries of FirstWorld, who are scheduled to work 40 hours or more per
week ("Plan Participants").
-----------------
Temporary contract employees are not eligible to participate in the
Program.
II. TERM
The Program shall become effective on the date on which the Program is
approved by FirstWorld's Board of Directors. The Program covers the period
of January 1, 1999 through December 31, 1999 and each year thereafter so
long as the Program remains in effect (each, a "Plan Year"). FirstWorld
---------
(acting through its Compensation Committee) reserves the right to cancel,
modify or alter the Program, in whole or in part, at any time, for any
reason, with or without prior notice.
III. ADMINISTRATION OF THE PROGRAM
The Program shall be administered by the Compensation Committee of
FirstWorld (the "Compensation Committee"). Subject to the provisions of
----------------------
the Program, the Compensation Committee shall have the plenary authority
to: (i) interpret the Program; (ii) make such rules as it deems necessary
for the proper administration of the Program; (iii) make all other
determinations necessary or advisable for the administration of the
Program; and (iv) correct any defect or supply any omission or reconcile
any inconsistency in the Plan in the manner and to the extent that the
Compensation Committee deems advisable. All determinations and decisions
made by the Compensation Committee shall be made in its discretion pursuant
to the provisions of the Plan, and shall be final, conclusive and binding
on all persons including FirstWorld and Plan Participants.
IV. MAXIMUM BONUS
The following are the maximum bonuses ("Maximum Bonuses") available
---------------
quarterly to Plan Participants under the Program:
<PAGE>
Senior Vice Presidents -
Executive Vice Presidents 30% - 35% of total quarterly
compensation,
unless a different target
percentage bonus is set
forth in the applicable
employment agreement
Vice Presidents 25% of total quarterly compensation
Directors 20% of total quarterly
compensation
Managers 15% of total quarterly
compensation
Positions Subordinate to Manager 10% of total quarterly compensation
This Program is implemented, in part, to encourage retention, as such,
the Fourth Quarter Bonus (as defined in Section VI) includes an amount
equal to the First, Second and Third Quarter Bonuses (as defined in Section
VI) and is earned and payable if the Plan Participant is employed on the
date the Fourth Quarter Bonus is paid.
For the purposes of the Program, "total compensation" includes base
pay, overtime, shift differential and any paid time off (holidays,
vacation, etc.) used by the Plan Participant during the quarter for which
the bonus is calculated.
V. BONUS CRITERIA
Bonuses will be calculated based upon the following weighted criteria:
(i) FirstWorld Revenues - weighted 75%
(ii) Individual Employee Performance - weighted 25%
1. The Revenue Criteria.
--------------------
Seventy-five percent (75%) of a Plan Participant's bonus will
be based upon the revenues of the FirstWorld profit and loss center
(each a "Profit and Loss Center") in which the Plan Participant works.
----------------------
At beginning of the Plan Year, FirstWorld will establish quarterly
revenue goals for each of its Profit and Loss Centers. FirstWorld
shall have complete discretion over the setting of the quarterly
revenue goals. Quarterly revenue goals will be made available to Plan
Participants on an annual basis for each Plan Year that the Program
remains in effect. Quarterly revenue goals are subject to adjustment
by FirstWorld.
If the Plan Participant's Profit and Loss Center achieves its
quarterly revenue goal, then the Plan Participant will qualify for the
full 75% revenue bonus. If the Plan Participant's Profit and Loss
Center fails to meet its quarterly revenue goal, then the revenue
bonus will be reduced based upon the amount of quarterly revenue
actually achieved. For example, if a Profit and Loss Center achieves
90% of its quarterly revenue goal, then Plan Participants will qualify
for a revenue bonus of 67.5% (90% of the full 75% revenue based
portion of the bonus).
If a Profit and Loss Center fails to achieve 75% of its
quarterly revenue goal, then Plan Participants in the Profit and Loss
Center will not receive a quarterly bonus, regardless of their
individual performance.
2. Individual Employee Performance Criteria.
----------------------------------------
The remaining twenty-five percent (25%) of the total quarterly
bonus will be based upon the Plan Participant's individual performance
during the quarter. At the end of each quarter, the Plan Participant's
direct supervisor will conduct a performance review. A copy of the
performance appraisal form which supervisors will utilize during the
review process is attached as Appendix A.
----------
<PAGE>
As part of the review, the Plan Participant will receive a
rating, based upon his or her overall performance. The following
ratings will be utilized:
Rating Levels: (5) Outstanding
(4) Very Good
(3) Competent
(2) Needs Improvement
(1) Unsatisfactory
Only those Plan Participants who receive an overall rating of 3.0
-----------------------------------------------------------------
or higher will qualify for a quarterly bonus. Plan Participants
--------------------------------------------
scoring below 3.0 will not qualify for a quarterly bonus, regardless
of whether their Profit and Loss Center achieves its revenue goals.
Additionally, any Plan Participant scoring below 3.0 should expect to
have a performance counseling session with their supervisor to discuss
individual performance expectations and strategies for improvement.
Outstanding Performance: Plan Participants who receive
performance ratings of 4.5 to 5.0 will receive an additional 5%
towards their individual performance criteria. This will allow such
employees to receive a 30% individual performance bonus, versus the
standard 25%.
Based upon their performance ratings, Plan Participants will
receive the following individual performance bonuses:
Rating Bonus
------ -----
4.5 to 5.0 30% out of a possible 25%
3.75 to 4.49 25% out of a possible 25%
3.0 to 3.74 20% out of a possible 25%
3. Employee Retention Criteria.
----------------------------
As stated earlier, this Program is structured, in part, to
encourage retention, as such, the Fourth Quarter Bonus (as defined in
Section VI) includes an amount equal to the First, Second and Third
Quarter Bonuses (as defined in Section VI) and is earned and payable
if the Plan Participant is employed on the date the Fourth Quarter
Bonus is paid.
VI. BONUS CALCULATIONS
Once the quarterly revenue for each Profit and Loss Center is
calculated (approximately four to six weeks after the end of the quarter),
and the individual performance reviews are complete, FirstWorld will
determine each Plan Participant's eligibility for a quarterly bonus. If
Plan Participants meet the minimum revenue and individual performance
requirements discussed above, and are still employed by FirstWorld, their
bonuses for each quarter will be calculated as follows:
First Quarter
-------------
((revenue bonus + individual performance bonus) x maximum bonus) x .5
= First Quarter Bonus
Second Quarter
--------------
((revenue bonus + individual performance bonus) x maximum bonus) x .5
= Second Quarter Bonus
Third Quarter
-------------
((revenue bonus + individual performance bonus) x maximum bonus) x .5
= Third Quarter Bonus
Fourth Quarter
--------------
<PAGE>
((revenue bonus + individual performance bonus) x maximum bonus) +
First Quarter Bonus + Second Quarter Bonus + Third Quarter Bonus =
Fourth Quarter Bonus
If a Plan Participant qualifies for a bonus, bonus checks will be
issued according to FirstWorld's regular payroll practices. Plan
Participants have no vested interest in any bonus under the Program until a
bonus check is issued. Plan Participants must be employed with FirstWorld
on the date the bonus check is issued in order to earn the bonus.
VII. EXAMPLE OF BONUS CALCULATION
The following example is presented as an illustration of the bonus
formulas, criteria, and rules utilized in the Program.
Example: Employee is a non-commissioned Manager. Employee's total
compensation is $40,000 per year, or $10,000 per quarter.
During the first quarter of the Plan Year, employee's Profit and Loss
Center achieves 80% of its quarterly goal, and employee receives an
individual performance rating of 4.1.
During the second quarter of the Plan Year, Employee's Profit and Loss
Center achieves 90% of its quarterly goal, and employee receives an
individual performance rating of 3.7.
During the third quarter of the Plan Year, Employee's Profit and Loss
Center achieves 70% of its quarterly goal, and employee receives an
individual performance rating of 4.5.
During the fourth quarter of the Plan year, Employee's Profit and Loss
Center achieves 100% of its quarterly goal, and employee receives an
individual performance rating of 4.7.
First Quarter Bonus Calculations: Based upon his revenue bonus and
--------------------------------
individual performance bonus scored, employee qualifies for a bonus for the
first quarter. As noted above, the first quarter bonus formula is:
((revenue bonus + individual performance bonus) x maximum bonus)
x .5 = First Quarter Bonus
Employee's revenue bonus is 60% (80% of 75%). His individual
performance bonus is 25% (3.75-4.49 = 25% out of a possible 25%). His
maximum bonus is $1,500 (15% of quarterly total compensation). Thus,
Employee's first quarter bonus calculates as follows:
((60% + 25%) x $1,500) x .5 = $637.50 First Quarter Bonus
Second Quarter Bonus Calculations: Based upon his revenue bonus and
---------------------------------
individual performance bonus scored, employee qualifies for a bonus for the
second quarter. As noted above, the second quarter bonus formula is:
((revenue bonus + individual performance bonus) x maximum bonus)
x .5 = Second Quarter Bonus
Employee's revenue bonus is 67.5% (90% of 75%). His individual
performance bonus is 20% (3.0-3.74 = 20% out of a possible 25%). His
maximum bonus is $1,500 (15% of quarterly total compensation). Thus,
Employee's second quarter bonus calculates as follows:
((67.5% + 20%) x $1,500) x .5 = $656.25 Second Quarter Bonus
Third Quarter Bonus: Even though employee's individual performance
-------------------
bonus score placed him in the exceptional range, employee's Profit and Loss
Center did not achieve 75% of its quarter goal for the third quarter.
Therefore, employee's third quarter bonus is $0.
<PAGE>
Fourth Quarter Bonus Calculations: Based upon his revenue bonus and
---------------------------------
individual performance bonus scored, employee qualifies for a bonus for
the fourth quarter. As noted above, the fourth quarter bonus formula is:
((revenue bonus + individual performance bonus) x maximum
bonus) + First Quarter Bonus + Second Quarter Bonus + Third
Quarter Bonus = Fourth Quarter Bonus
Employee's revenue bonus is 75% (100% of 75%). His individual
performance bonus is 30% (4.5-5.0 = 30% out of a possible 25%). His
maximum bonus is $1,500 (15% of quarterly total compensation). Thus,
employee's fourth quarter bonus calculates as follows:
((75% + 30%) x $1,500) + $637.50 + $656.25 + $0 = $2,868.75
Fourth Quarter Bonus
VIII. OPTION TO ACQUIRE BONUS IN STOCK
1. Eligibility. Certain Plan Participants may elect to receive the
-----------
bonus they earned during a particular period in shares of Series B Common
Stock, $0.0001 par value per share of FirstWorld ("Shares") in lieu of a
------
cash payment. Subject in all cases to compliance with applicable state
and federal securities laws, Plan Participants who report directly to
FirstWorld's President and Chief Executive Officer ("Eligible Plan
-------------
Participants") are eligible to make an election to receive their bonus in
------------
Shares.
2. Shares Subject to the Program.
-----------------------------
a. Number of Shares. Subject to adjustment as provided in
----------------
subsection (c) below, the aggregate number of Shares that may be
awarded under the Program shall be Two Hundred Thousand (200,000).
b. Shares to be Delivered. Shares delivered under the Program
----------------------
shall be authorized but unissued Shares or, if the Compensation
Committee so decides in its sole discretion, previously issued
Shares acquired by FirstWorld and held in its treasury.
c. Changes in Stock. In the event of a stock dividend, stock
----------------
split or combination of shares, recapitalization or other change in
FirstWorld's capital stock, the maximum number of shares or
securities that may be delivered under the Program and other
relevant provisions shall be appropriately adjusted by the
Compensation Committee, whose determination shall be binding on all
persons.
3. Issuance of Shares. An Eligible Plan Participant must notify
------------------
FirstWorld of his/her election to receive his/her bonus in Shares before
the date bonuses would be paid out. An Eligible Plan Participant may
elect to receive all or a certain portion of his/her bonus in Shares;
provided, however, that an election to receive Shares must be for a
-------- -------
minimum of 50% of such Eligible Plan Participant's bonus. The number of
Shares to which the Eligible Plan Participant would be entitled will
equal the cash bonus that the Eligible Plan Participant would have
received but for his/her election to receive Shares, divided by the Fair
Market Value of a Share (as defined below) on the date the bonus payment
is made. The Eligible Plan Participant would be required to pay taxes and
other applicable withholdings on the dollar value of the quarterly bonus
received before FirstWorld is required to issue the Shares. The number of
Shares to be issued will be rounded down to the next full Share.
Certificates representing such Shares will be issued in the name of the
Eligible Plan Participant as soon as reasonably practical.
As used herein, "Fair Market Value of a Share" as of a given date
----------------------------
shall be: (i) the closing price of a Share on the principal exchange on
which Shares are then trading, if any (or as reported on any composite
index which includes such principal exchange), on the trading day
previous to such date, or if Shares were not traded on the trading day
previous to such date, then on the next preceding date on which a trade
occurred; or (ii) if Shares are not traded on an exchange but are quoted
on NASDAQ or a successor quotation system, the mean between the closing
representative bid and asked prices for the Shares on the trading day
previous to such date as reported by NASDAQ or such successor quotation
system; or (iii) if Shares are not publicly traded on an exchange and not
quoted on NASDAQ or a successor quotation system, the Fair Market Value
of a Share shall be established by the Board of Directors acting in good
<PAGE>
faith, giving predominate weight to the earnings history, book value and
prospects of FirstWorld in light of market and industry conditions
generally.
4. Legal and Regulatory Matters. The delivery of Shares pursuant to
----------------------------
the Program shall be subject to compliance with: (i) any actions required
by governmental authorities in connection with the authorization, issuance,
sale or delivery of such Shares, as well as applicable federal, state and
foreign securities laws; (ii) if the outstanding Shares are listed at the
time on any securities exchange or automated quotation system, the listing
requirements of such exchange or system; and (iii) FirstWorld's counsel's
approval of all other legal matters in connection with the issuance and
delivery of the Shares.
5. No Rights as a Stockholder Until Certificate Issued. An Eligible
---------------------------------------------------
Plan Participant shall not be deemed to be a stockholder and shall not have
any of the rights or privileges of a stockholder until a stock certificate
has been issued in the name of such Eligible Plan Participant in accordance
with the terms and conditions of the Program.
IX. TRANSFER TO POSITION NOT COVERED BY PROGRAM
FirstWorld may, in its sole discretion, transfer a Plan Participant to
a new or different job position at any time. If a Plan Participant is
transferred to a position not covered by the Program, the Plan Participant
will cease participation under the Program as of the effective date of the
transfer. However, for the quarter when the transfer occurs, the Plan
Participant will receive a pro rata share of any bonus for which he or she
would otherwise qualify under the Program.
X. HIRE OR TRANSFER TO COVERED POSITION OR CHANGE IN PROFIT AND LOSS CENTER
If a non-Plan Participant is hired or transferred to a position
covered by the Program, he or she will become a Plan Participant effective
the first day of the quarter beginning after the effective date of the hire
or transfer. If a Plan Participant is transferred from one Profit and Loss
Center to another, the Plan Participant's bonus calculation will be based
on the Profit and Loss Center in which that Plan Participant is located at
the end of the quarter for which the bonus is calculated.
XI. TERMINATION OF EMPLOYMENT
As stated above, all FirstWorld personnel are employed on an "at will"
basis. The employment relationship may be terminated by FirstWorld or the
employee at any time, for any reason, with or without cause or notice. As a
condition of their participation in the Program, Plan Participants
understand and agree that the bonuses under the Program are provided to
encourage employee retention. Plan Participants further understand and
agree that, unless the terms and conditions of the Program specifically
provide otherwise, they must be employed on the date a bonus check is
issued in order to receive a bonus.
A. Reduction in Force
If a Plan Participant's employment is terminated due to a "reduction
in force," the Plan Participant will cease participation under the Program
as of the effective date of the termination. However, if the Plan
Participant is so terminated in the first, second, or third quarter, the
Plan Participant will receive a pro rata share of any bonus for which he or
she would otherwise qualify under the Program. If the Plan Participant is
so terminated in the fourth quarter, the Plan Participant will receive a
pro rata share of a bonus for the fourth quarter, such proration will be
calculated against the following formula: Fourth Quarter ((revenue bonus +
individual performance bonus) x maximum bonus) x .5.
As used herein, "reduction in force" means a workforce reduction
------------------
resulting in the termination of multiple personnel motivated by economic or
business considerations, including without limitation, an internal
reorganization, overstaffing or declining demand for FirstWorld services in
the marketplace, as opposed to individual terminations, whether or not
motivated by poor performance.
B. Termination by the Plan Participant
<PAGE>
If a Plan Participant voluntarily terminates his or her employment
with FirstWorld, the Plan Participant will have no right to any bonus
under the Program after the date of the termination.
C. Termination by FirstWorld
Unless the terms and conditions of the Program specifically provide
otherwise, if FirstWorld terminates a Plan Participant from his or her
employment, the Plan Participant will have no right to any bonus under
the Program after the date of the termination.
XII. WITHHOLDING REQUIREMENTS AND ARRANGEMENTS
Each recipient of a bonus under the Program shall pay to FirstWorld
or make provision satisfactory to the Compensation Committee for payment
of any taxes required by law to be withheld in respect of bonuses under
the Program no later than the date of the event creating the tax
liability. In the Compensation Committee's discretion, such tax
obligations may be paid in whole or in part in Shares, including Shares
obtained in connection with the bonus, valued at their Fair Market Value
on the date of delivery. FirstWorld may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise
due to the recipient.
XIII. AMENDMENTS OR MODIFICATIONS
The Compensation Committee may at any time discontinue granting
bonuses under the Program. The Compensation Committee also may modify,
amend, suspend or terminate the Program in whole or in part at any time;
provided, however, that no modification, amendment, suspension or
-------- -------
termination of the Program shall be made without stockholder approval if
such approval is necessary to comply with any applicable tax, regulatory
or securities requirements or the requirements of any exchange or
automated quotation system which Shares are then trading; and provided,
--------
further, that such modification, amendment, suspension or termination
-------
shall not affect adversely the rights of any previous recipient of a
bonus under the Program regardless of whether such bonus was paid in cash
or Shares.
XIV. GOVERNING LAW
This Plan shall be governed and construed in accordance with the
laws of the State of Delaware to the extent not preempted by federal law.
XV. NO GUARANTEE OF TAX CONSEQUENCES
FirstWorld does not make any commitment or guarantee that any tax
treatment will apply or be available to any person participating or
eligible to participate in the Program, including, without limitation,
any tax imposed by the United States or any state thereof, any estate tax
or any tax imposed by a foreign government.
XVI. ADOPTION BY FIRSTWORLD
The above description of the FirstWorld Communications Quarterly
Bonus Program is duly approved and adopted as of this 3rd day of May
1999.
/s/ Sheldon S. Ohringer
---------------------------------------
Sheldon S. Ohringer,
President
FirstWorld Communications, Inc.
<PAGE>
ACKNOWLEDGMENT OF PLAN PARTICIPANT
I HAVE READ, UNDERSTAND, AND ACCEPT THE TERMS AND CONDITIONS OF THE
QUARTERLY BONUS PROGRAM (THE "PROGRAM"), OF FIRSTWORLD COMMUNICATIONS, INC.
-------
("FIRSTWORLD"), I UNDERSTAND AND ACKNOWLEDGE THAT THE PROGRAM DOES NOT CREATE AN
- ------------
EXPRESS OR IMPLIED CONTRACT OF EMPLOYMENT, OR ANY OTHER RIGHTS AS TO DURATION OR
ANY OTHER CONDITION OF EMPLOYMENT. ALL EMPLOYMENT AT FIRSTWORLD IS "AT WILL"
AND MAY BE TERMINATED BY FIRSTWORLD OR BY ME AT ANY TIME, WITH OR WITHOUT
NOTICE, PROCEDURE OR FORMALITY, FOR ANY REASON OR NO REASON AT ALL. I
UNDERSTAND AND ACKNOWLEDGE THAT FIRSTWORLD RESERVES THE RIGHT, IN ITS SOLE
DISCRETION, TO CANCEL, AMEND, OR MODIFY THE PROGRAM FOR ANY REASON, AT ANY TIME,
WITH OR WITHOUT PRIOR NOTICE. I ACKNOWLEGE RECEIPT OF THE PROGRAM AND
UNDERSTAND THE TERMS AND CONDITIONS THEREOF.
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF LATHAM & WATKINS]
May 17, 1999
FirstWorld Communications, Inc.
7100 E. Belleview Avenue, Suite 210
Greenwood Village, Colorado 80111
Re: Form S-8 Registration Statement
-------------------------------
Ladies and Gentlemen:
In connection with the registration by FirstWorld Communications,
Inc., a Delaware corporation (the "Registrant"), of 200,000 shares of Series B
common stock, par value $.0001 per share (the "Shares"), of the Registrant to be
issued pursuant to the FirstWorld Communications, Inc. Quarterly Bonus Program
(the "Plan") under the Securities Act of 1933, as amended (the "Act"), on a
Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on May 17, 1999 (as amended from time to time, the "Registration
Statement"), you have requested our opinion with respect to the matters set
forth below.
In our capacity as your counsel in connection with such registration,
we are familiar with the proceedings taken and proposed to be taken by the
Registrant in connection with the authorization, issuance and sale of the
Shares. In addition, we have made such legal and factual examinations and
inquiries, including an examination of originals or copies certified or
otherwise identified to our satisfaction of such documents, corporate records
and instruments, as we have deemed necessary or appropriate for purposes of this
opinion.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies.
We are opining herein as to the effect on the subject transaction only
of the General Corporation Law of the State of Delaware, and we express no
opinion with respect to the applicability thereto, or the effect thereon, of the
laws of any other jurisdiction or any other laws, or as to any matters of
municipal law or the laws of any other local agencies within the state.
Subject to the foregoing, it is our opinion that as of the date hereof
the Shares have been duly authorized, and, upon the issuance of the Shares in
accordance with the terms set forth in the Plan, the Shares will be validly
issued, fully paid and nonassessable.
We consent to your filing this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ LATHAM & WATKINS
LATHAM & WATKINS
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated December 11, 1998, relating to the
financial statements of FirstWorld Communications, Inc. (the "Registrant"),
which appears on page F-2 of the Registrant's Annual Report on Form 10-K for the
year ended September 30, 1998, as amended.
PRICEWATERHOUSECOOPERS LLP
San Diego, California
May 17, 1999
