$14 Million Lawsuit Filed Against USWEB Corp. for Breach of Contract, Fraud and Misrepresentation.

LOS ANGELES--(BUSINESS WIRE)--June 10, 1998--USWEB Corp. (NASDAQ:USWB), which claims to be the world's largest strategic Internet services firm, and one of its affiliates were the subjects of a $14 million lawsuit filed by an Orange County, Calif., corporation Wednesday in Los Angeles Superior Court.

The charges include breach of contract, fraud, negligent misrepresentation, unfair competition and false advertising.

The lawsuit was filed by Larmark Inc., a Huntington Beach, Calif.-based marketing company, against USWEB; its affiliate SystemLogic Inc.; based in Santa Monica, Calif.; USWEB SystemLogic, LLC., a subsidiary of SystemLogic; and Kumar Rajha, owner of SystemLogic and USWEB SystemLogic.

According to Michael J. Emling of Emling & Associates, a Long Beach, Calif., law firm that filed the lawsuit on behalf of Larmark, the lawsuit seeks $257,785 for fees paid by Larmark to the defendants for services not provided; $300,000 for lost business expenditures; $13 million for future loss of revenue; and legal fees and court costs.

Larmark was founded in 1997 for the purpose of establishing an Internet site that would be dedicated to the jewelry trade. By purchasing memberships from Larmark, jewelry retailers and wholesalers would be able to display and sell their merchandise on the World Wide Web. Larmark had secured the domain name, "JewelryChannel.com."

As the quality and capabilities of the Internet Web site were the keys to the success of this venture, Emling stressed, Larmark officials undertook an exhaustive search to find the most credible consulting and development firm to build the Web site.

From its advertising and promotional materials on the Internet, Larmark selected USWEB and contacted its office in Santa Monica -- which was the closest of its 40 offices to Larmark's Huntington Beach office.

The lawsuit stipulates that Larmark entered into a $277,055 contract with USWEB SystemLogic and, subsequently, on Dec. 12, 1997 received a "project plan" that set out "milestones" for the work to be done and included completion time deadlines. The plan called for a "functional working model" to be completed by Feb. 2, 1998, and the entire project by April 6, 1998.

Emling stressed that Larmark made payments as required as the project progressed. By the time the project was to be completed, it had paid 93 percent of the contract.

When the due date arrived, he noted, Larmark was informed by USWEB SystemLogic that the work was not done because of the quantity and quality of the personnel assigned to the project. In early May, Larmark contacted USWEB at its corporate headquarters in Santa Clara, Calif., and requested it complete the project. When USWEB failed to act, the lawsuit was filed, Emling pointed out.

Due to the alleged failure of USWEB and its affiliate to complete the project, Larmark has lost the opportunity to participate in two of the three most important annual national jewelry trade shows, which were held in Las Vegas.

The third critical trade show will be held July 18 in New York. "These lost opportunities undercut Larmark's ability to meaningfully conduct business for one year," Emling said.

CONTACT: Fisher & Associates Inc.

Bob Fisher or Lynn Homsy, 818/593-2202