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Filed pursuant to Rule 424(b)(3)
Registration No. 333-79185
PROSPECTUS
SAPIENT CORPORATION
77,155 SHARES OF COMMON STOCK
---------------------
In August 1998, Sapient Corporation issued 498,314 shares of common stock
to the former stockholders of Studio Archetype, Inc. in connection with our
acquisition of that company. This prospectus relates to resales of some of those
shares by certain former stockholders of Studio Archetype, Inc. We will not
receive any of the proceeds from the sale of the shares.
Sapient has agreed to pay certain expenses of registering the shares being
offered by the selling stockholders. The selling stockholders will pay all
brokerage fees, underwriting discounts and selling commissions, if any, in
connection with the sale of the shares.
The selling stockholders, or their pledgees, donees, transferees or other
successors in interest, may sell the shares in public or private transactions at
prevailing market prices, at prices related to prevailing market prices or at
privately negotiated prices. Sapient's common stock is traded on the Nasdaq
National Market under the symbol SAPE. On May 28, 1999, the closing sale price
of our common stock on Nasdaq was $63.75 per share.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is May 28, 1999.
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TABLE OF CONTENTS
Page
WHERE TO FIND MORE INFORMATION.................................................3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................3
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION.............................4
SUMMARY DESCRIPTION OF OUR BUSINESS............................................4
RISK FACTORS...................................................................6
USE OF PROCEEDS...............................................................12
THE STUDIO ACQUISITION........................................................12
SELLING STOCKHOLDERS..........................................................12
DESCRIPTION OF CAPITAL STOCK..................................................13
PLAN OF DISTRIBUTION..........................................................16
LEGAL MATTERS.................................................................18
EXPERTS.......................................................................18
WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT
FROM THAT CONTAINED IN THIS PROSPECTUS. THE SELLING STOCKHOLDERS ARE OFFERING TO
SELL, AND SEEKING OFFERS TO BUY, SHARES OF SAPIENT COMMON STOCK ONLY IN
JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF SUCH INFORMATION, REGARDLESS
OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF THE SHARES.
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WHERE TO FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and other
documents with the Securities and Exchange Commission and with Nasdaq. Here are
ways you can access this information:
WHAT IS AVAILABLE WHERE TO GET IT
------------------------------- -----------------------------
SEC's Public Reference Room
Judiciary Plaza Building
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
Paper copies of information
The Nasdaq Stock Market, Inc.
1735 K Street, N.W.
Washington, D.C. 20006
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SEC's Internet website at
On-line information http://www.sec.gov
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Information about the Call the SEC at
SEC's Public Reference Room 1-800-SEC-0330
------------------------------- -----------------------------
This prospectus is part of a registration statement that we filed with the
SEC. The registration statement contains more information than this prospectus
regarding Sapient and its common stock, including certain exhibits and
schedules. You can get a copy of the registration statement from the sources
listed above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate into this prospectus information that we
file with the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus, and information that we file after May 24, 1999 (the initial
filing date of this prospectus) with the SEC will automatically update and may
supersede this information. We are incorporating by reference the documents
listed below and any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 prior to the sale of
all the shares covered by this prospectus.
The following documents filed by Sapient with the SEC are incorporated
herein by reference:
(i) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999, filed with the Commission on May 14,
1999, as amended by Form 10-Q/A filed with the Commission on
May 21, 1999;
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(ii) The Company's Current Report on Form 8-K dated April 23, 1999,
filed with the Commission on April 23, 1999, as amended by
Form 8-K/A filed with the Commission on April 23, 1999;
(iii) The Company's Current Report on Form 8-K dated March 29, 1999,
filed with the Commission on April 7, 1999;
(iv) The Company's Annual Report on Form 10-K for the year ended
December 31, 1998, filed with the Commission on March 16,
1999, as amended by Form 10-K/A filed with the Commission on
April 30, 1999;
(v) The Company's Registration Statement on Form 8-A, filed with
the Commission on March 26, 1996, as amended by Form 8-A/A on
March 28, 1996.
You may request a copy of these documents, which will be provided to you at
no cost, by telephone or by writing to:
Sapient Corporation
One Memorial Drive
Cambridge, Massachusetts 02142
Attention: Investor Relations
(617) 621-0200
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus contains or incorporates "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The words "believes," "anticipates,"
"plans," "expects," "may," "will," "intends," "estimates" and similar
expressions, whether in the negative or affirmative, are intended to identify
forward-looking statements. We can give no assurance that we actually will
achieve these plans, intentions or expectations. Our actual results could differ
materially from the plans, intentions and expectations disclosed in these
forward-looking statements. We have included important factors in the cautionary
statements below that we believe could cause our actual results to differ
materially from our forward-looking statements. We do not intend to update
information contained in any of our forward-looking statements.
SUMMARY DESCRIPTION OF OUR BUSINESS
Sapient Corporation is an innovative provider of e-Business consulting
services. Through the delivery of integrated services, from strategy and
business transformation consulting through user-centered design and technology
implementation services, Sapient helps emerging and evolving businesses
transform themselves into e-Businesses. eBusinesses are businesses that combine
the reach and efficiency of the Internet with both emerging and existing
technologies to enable companies to strengthen relationships with customers and
business partners, create new revenue opportunities, reduce costs, improve
operating efficiencies, shorten cycle times and improve communications. We have
developed an integrated methodology that allows us to provide integrated
eBusiness strategy, design and technology implementation services to clients
who are creating eBusinesses or are rethinking or expanding their existing
businesses to integrate eBusiness capabilities. Our services are designed to
rapidly improve a client's competitive position through the development of
innovative business strategies enabled by the integration of emerging and
existing technologies. We deliver our services through collaborative,
multidisciplinary teams that apply the collective strengths of their strategy,
creative and technology professionals. We deliver our services through teams
organized in six main industries, or business units: Financial Services, Energy
Services, MRD (manufacturing, retail and distribution), Communications,
HealthCare and Government. This allows us to build industry expertise and
develop market-specific solutions for our clients. We have developed a
methodology that provides a framework for each stage of a client engagement
from helping the client conceive its strategy to architecting, engineering and
extending its eBusiness.
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In December 1997, we acquired EXOR Technologies, Inc., a Dallas-based
consulting and systems integration firm recognized as a leader in implementing
ERP solutions using Oracle applications. In August 1998, we acquired Studio
Archetype, Inc., a San Francisco-based company that provides consultation and
design services in the areas of Internet website design, brand and identity
design, user interface design, content development, and 3D modeling and
animation. In March 1999, we acquired Adjacency, Inc., a San Francisco-based
consulting firm that provides a broad range of consulting services, including
Internet strategy, interactive design, technology development, and management of
Internet and e-commerce solutions.
Our executive offices are located at One Memorial Drive, Cambridge, MA
02142, and our telephone number is (617) 621-0200. Sapient(R)is a registered
servicemark of Sapient, Studio Archetype(R) is a registered servicemark of
Studio, a wholly owned subsidiary of Sapient, and Adjacency(R) is a registered
servicemark of Adjacency, a wholly owned subsidiary of Sapient.
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RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. If any of the events described below actually occur, our
business, financial condition, or results of operations could be materially
adversely affected. In such case, the trading price of our common stock could
decline and you may lose all or part of your investment.
This prospectus contains forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in such forward-looking statements as a result of a variety of factors,
including those set forth in the following risk factors and elsewhere in, or
incorporated by reference into, this prospectus. In evaluating an investment in
the shares, you should consider carefully the following risk factors in addition
to the other information presented in this prospectus or incorporated by
reference into this prospectus.
OUR SUCCESS DEPENDS ON INCREASED ADOPTION OF THE INTERNET AS A MEANS FOR
COMMERCE
Our future success depends heavily on the acceptance and use of the Internet as
a means for commerce. The widespread acceptance and adoption of the Internet for
conducting business is likely only in the event that the Internet provides
businesses with greater efficiencies and improvements. If commerce on the
Internet does not continue to grow, or grows more slowly than expected, our
growth would decline and our business would be seriously harmed. Consumers and
businesses may reject the Internet as a viable commercial medium for a number of
reasons, including:
- potentially inadequate network infrastructure,
- delays in the development of Internet enabling technologies
and performance improvements,
- delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet
activity,
- delays in the development of security and authentication
technology necessary to effect secure transmission of
confidential information,
- changes in, or insufficient availability of,
telecommunications services to support the Internet, and
- failure of companies to meet their customers'
expectations in delivering goods and services over the
Internet.
OUR BUSINESS IS DEPENDENT ON OUR ABILITY TO KEEP PACE WITH THE LATEST
TECHNOLOGICAL CHANGES
Our market and the enabling technologies used by our clients are characterized
by rapid technological change. Failure to respond successfully to these
technological developments, or to respond in a timely or cost-effective way,
will result in serious harm to our business and operating results. We expect to
derive a substantial portion of our revenues from creating eBusiness systems
that are based upon today's leading technologies and that are capable of
adapting to future technologies. As a result, our success will depend, in part,
on our ability to offer services that keep pace with continuing changes in
technology, evolving industry standards and changing client preferences. In
addition, we must hire, train and retain technologically knowledgeable
professionals so that they can fulfill the increasingly sophisticated needs of
our clients. There can be no assurance that we will be successful in addressing
these developments on a timely basis or that if addressed we will be successful
in the marketplace. Our failure to address these developments could have a
material adverse effect on our business, financial condition and results of
operations.
WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH
Our growth has placed significant demands on our management and other
resources. Our revenues increased approximately 77% in 1998 from $90.3 million
in 1997 to $160.3 million in 1998. Our revenues for the first three months of
1999 increased 83% over our revenues for the first three months of 1998. Our
staff increased from 954 full-time employees at March 31, 1998 to 1,647 at March
31, 1999. Our future success will depend on our ability to manage our growth
effectively, including by:
- developing and improving our operational, financial and other
internal systems,
- improving our business development capabilities,
- continuing to train, motivate and manage our employees,
- continuing to set fixed-price fees accurately,
- maintaining high rates of employee utilization, and
- maintaining project quality.
Our management has limited experience managing a business of Sapient's size. If
we are unable to manage our growth and projects effectively, such inability
could have a material adverse effect on the quality of our services and
products, our ability to retain key personnel and our business, financial
condition and results of operations.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE ARE UNABLE TO INTEGRATE
BUSINESSES WE ACQUIRE
In December 1997, we completed the acquisition of EXOR, in August 1998, we
completed the acquisition of Studio, and in March 1999, we completed the
acquisition of Adjacency. The anticipated benefits from these and future
acquisitions may not be achieved unless the operations of the acquired business
are successfully combined with those of
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Sapient in a timely manner. The integration of acquisitions requires substantial
attention from management. The diversion of the attention of management, and any
difficulties encountered in the transition process, could have an adverse impact
on our business, financial condition and results of operations. In addition, the
process of integrating various businesses could cause the interruption of, or a
loss of momentum in, the activities of some or all of these businesses, which
could have an adverse effect on our business, financial condition and results of
operations.
WE MAY NOT BE ABLE TO ATTRACT AND RETAIN PROFESSIONAL STAFF
Our business is labor intensive and our success will depend in large part
upon our ability to attract, retain, train and motivate highly-skilled
employees. There is significant competition for employees with the skills
required to perform the services we offer. There can be no assurance that we
will be successful in attracting a sufficient number of highly skilled employees
in the future, or that we will be successful in retaining, training and
motivating the employees we are able to attract. Any inability to retain, train
and motivate our employees could impair our ability to adequately manage and
complete our existing projects and to bid for or obtain new projects. If our
employees are unable to achieve expected performance levels, our business,
financial condition and results of operations could be adversely affected.
THE PRICE OF OUR COMMON STOCK IS SUBJECT TO SIGNIFICANT FLUCTUATION
The trading price of our common stock could be subject to wide fluctuations
in response to:
- quarterly variations in operating results,
- changes in earnings estimates by analysts,
- any differences between reported results and analysts' published
or unpublished expectations,
- announcements of new contracts or service offerings by us or our
competitors,
- general economic or stock market conditions unrelated to our
operating performance, and
- other events or factors.
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WE DEPEND HEAVILY ON OUR PRINCIPAL CLIENTS
We have derived, and believe that we will continue to derive, a significant
portion of our revenues from a limited number of large clients. In 1998, our
five largest clients accounted for approximately 30% of our revenues, with four
clients each accounting for more than 5% of such revenues. For the first three
months of 1999, our five largest clients accounted for approximately 32.1% of
our revenues. During this period no client accounted for more than 10% of our
revenues. The volume of work performed for specific clients is likely to vary
from year to year, and a major client in one year may not use our services in a
subsequent year. The loss of any large client could have a material adverse
effect on our business, financial condition and results of operations. In
addition, revenues from a large client may constitute a significant portion of
our total revenues in a particular quarter.
WE DEPEND HEAVILY ON LARGE PROJECTS
Most of our contracts are terminable by the client following
limited notice and without significant penalty. The cancellation or a
significant reduction in the scope of a large project could have a material
adverse effect on our business, financial condition and results of operations.
WE ENTER INTO FIXED-PRICE CONTRACTS
Many of our projects are based on fixed-price, fixed-timeframe
contracts, rather than contracts in which payment to us is determined on a time
and materials basis. Our failure to accurately estimate the resources required
for a project (including an enterprise resource planning system implementation,
with respect to which we have limited experience) or our failure to complete
our contractual obligations in a manner consistent with the project plan upon
which our fixed-price, fixed-timeframe contract was based would adversely
affect our overall profitability and could have a material adverse effect on
our business, financial condition and results of operations. We have been
required to commit unanticipated additional resources to complete certain
projects, which has resulted in losses on certain contracts. We recognize that
we will experience similar situations in the future. In addition, for certain
projects we may fix the price before the design specifications are finalized,
which could result in a fixed price that turns out to be too low and therefore
adversely affect our profitability.
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WE FACE SIGNIFICANT COMPETITION IN MARKETS THAT ARE NEW, INTENSELY COMPETITIVE
AND RAPIDLY CHANGING
The markets for the services we provide are highly competitive. We
believe that we currently compete principally with strategy consulting firms,
Internet and eBusiness professional services providers, software integration
firms, application software vendors and internal information systems groups.
Many of the companies that provide such services have significantly greater
financial, technical and marketing resources than we do and generate greater
revenues and have greater name recognition than we do. In addition, there are
relatively low barriers to entry into our markets and we have faced, and expect
to continue to face, additional competition from new entrants into our markets.
We believe that the principal competitive factors in our markets include:
- Internet expertise and talent,
- quality of service, price and speed of delivery,
- ability to integrate strategy, technology and creative design
services,
- vertical industry knowledge, and
- project management capability.
We believe that our ability to compete also depends in part on a number of
competitive factors outside our control, including:
- the ability of our competitors to hire, retain and motivate
their senior staff,
- the development by others of software that is competitive with
our products and services, and
- the extent of our competitors' responsiveness to client needs.
There can be no assurance that we will be able to compete successfully with our
competitors.
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OUR BUSINESS IS SENSITIVE TO ECONOMIC DOWNTURNS
Our revenues and results of operations are likely to be influenced by
general economic conditions. In the event of a general economic downturn or a
recession in the United States, Europe or Asia, our clients and potential
clients may substantially reduce their information technology and related
budgets. Such an economic downturn may materially and adversely affect our
business, financial condition and results of operations.
WE HAVE SIGNIFICANT FIXED OPERATING COSTS AND OUR OPERATING RESULTS ARE SUBJECT
TO FLUCTUATIONS
A high percentage of our operating expenses, particularly personnel and
rent, are fixed in advance of any particular quarter. As a result, unanticipated
variations in the number, or progress toward completion, of our projects or in
employee utilization rates may cause significant variations in operating results
in any particular quarter and could result in losses for such quarter.
An unanticipated termination of a major project, a client's decision not to
proceed to the stage of a project we anticipated, or the completion during a
quarter of several major client projects could require us to maintain
underutilized employees and could therefore have a material adverse effect on
our business, financial condition and results of operations. Our revenues and
earnings may also fluctuate from quarter to quarter based on such factors as:
- the contractual terms and degree of completion of such projects,
- any delays incurred in connection with projects,
- the adequacy of provisions for losses,
- the accuracy of estimates of resources required to complete
ongoing projects, and
- general economic conditions.
INCREASING GOVERNMENT REGULATION COULD AFFECT OUR BUSINESS
We are subject not only to regulations applicable to businesses generally, but
also laws and regulations directly applicable to electronic commerce. Although
there are currently few such laws and regulations, both state, federal and
foreign governments may adopt a number of these laws and regulations. Any such
legislation or regulation could dampen the growth of the Internet and decrease
its acceptance as a communications and commercial medium. If such a decline
occurs, companies may decide in the future not to use our services to create an
electronic business channel. This decrease in the demand for our services would
seriously harm our business and operating results. Any new laws and regulations
may govern or restrict any of the following issues:
- user privacy,
- the pricing and taxation of goods and services offered over the
Internet,
- the content of websites,
- consumer protection, and
- the characteristics and quality of products and services offered
over the Internet.
For example, the Telecommunications Act of 1996 prohibits the transmission of
certain types of information and content over the Internet. The scope of the
Act's prohibition is currently unsettled. In addition, although courts recently
held unconstitutional substantial portions of the Communications Decency Act,
federal or state governments may enact, and courts may uphold, similar
legislation in the future. Future legislation could expose companies involved in
Internet commerce to liability.
YEAR 2000 ISSUES MAY AFFECT OUR BUSINESS
The purchasing patterns of clients or potential clients may be affected by
year 2000 issues as companies expend significant resources to ensure that their
current systems are year 2000 compliant. These expenditures may result in
reduced funds being available to purchase services offered by Sapient, which
could have a material adverse effect on our business, financial condition and
results of operations. Although we do not believe that year 2000 issues will
have a significant impact on our internal operations or on solutions developed
for clients where we have provided an express warranty regarding the year 2000
issue, there can be no assurance that we will not experience interruptions of
operations because of year 2000 problems or become involved in disputes with
clients regarding year 2000 problems involving solutions we developed or
implemented or the interaction of such solutions with other applications. Year
2000 problems could require us to incur unanticipated expenses, and such
expenses could have a material adverse effect on our business, financial
condition and results of operations.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE ARE UNABLE TO PROTECT OUR
PROPRIETARY TECHNOLOGY
Our success depends, in part, upon our proprietary methodologies and
other intellectual property rights. We rely upon a combination of trade secret,
nondisclosure and
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other contractual arrangements, and copyright and trademark laws to protect our
proprietary rights. We enter into confidentiality agreements with our employees,
generally require that our consultants and clients enter into such agreements,
and limit access to and distribution of our proprietary information. There can
be no assurance that the steps taken by us in this regard will be adequate to
deter misappropriation of our proprietary information or that we will be able to
detect unauthorized use and take appropriate steps to enforce our intellectual
property rights. In addition, although we believe that our services and products
do not infringe on the intellectual property rights of others, there can be no
assurance that such a claim will not be asserted against us in the future, or
that if asserted any such claim will be successfully defended. A successful
claim against us could materially and adversely affect our business, financial
condition and results of operations.
WE MAY NOT HAVE THE RIGHT TO RESELL OR REUSE APPLICATIONS DEVELOPED FOR SPECIFIC
CLIENTS
A portion of our business involves the development of software applications
for specific client engagements. Ownership of such software is the subject of
negotiation and is frequently assigned to the client, although we may retain a
license for certain uses. Issues relating to the ownership of and rights to use
software applications can be complicated and there can be no assurance that
disputes will not arise that affect our ability to resell or reuse such
applications.
OUR OFFICERS AND DIRECTORS HAVE SIGNIFICANT VOTING POWER
Messrs. Greenberg and Moore, our co-Chairmen of the Board of Directors and
co-Chief Executive Officers, beneficially own approximately 41% of our
outstanding Common Stock. As a result, these stockholders have the ability to
substantially influence, and may effectively control, the outcome of corporate
actions requiring stockholder approval, including the election of directors.
This concentration of ownership may have the effect of delaying or preventing a
change in control of Sapient.
WE ARE DEPENDENT ON A NUMBER OF KEY PERSONNEL
Our success will depend in large part upon the continued services of a
number of key employees, including Sapient's founders and co-Chairmen of the
Board of Directors and co-Chief Executive Officers, Jerry A. Greenberg and J.
Stuart Moore. The employment contracts with Messrs. Greenberg and Moore and with
our other key personnel provide that employment is terminable at will by either
party. The loss of the services of either of Messrs. Greenberg or Moore or of
one or more of our other key personnel could have a material adverse effect on
Sapient. In addition, if one or more of our key employees resigns from Sapient
to join a competitor or to form a competing company, the loss of such personnel
and any resulting loss of existing or potential clients to any such competitor
could have a material adverse effect on our business, financial condition and
results of operations. In the event of the loss of any such personnel, there can
be no assurance that we would be able to prevent the unauthorized disclosure or
use of our technical knowledge, practices or procedures by such personnel.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the selling
stockholders. Also, we will bear most of the costs of registering the shares
covered by this prospectus. Those costs include registration and filing fees and
Nasdaq listing fees and fees and expenses of our counsel and accountants.
However, the selling stockholders will be responsible for any underwriting
discounts and commissions or expenses incurred by the selling stockholders for
brokerage, accounting, tax or legal services.
THE STUDIO ACQUISITION
We acquired all of the outstanding common stock of Studio on August 25,
1998 through a series of stock purchase agreements. As a result of the
acquisition, Studio became a wholly owned subsidiary of Sapient. The acquisition
of Studio has been treated as a taxable purchase and sale of Studio shares for
U.S. federal income tax purposes and has been accounted for under the purchase
method of accounting.
In exchange for the Studio stock, we issued an aggregate of 498,314 shares
of Sapient common stock, which were valued at approximately $24.4 million based
on the last sale price of Sapient common stock on the Nasdaq National Market on
August 25, 1998, and paid an aggregate of $250,000 in cash to the former
stockholders of Studio. 49,829 of the shares were placed in escrow to secure the
indemnification obligations of certain of the selling stockholders.
We agreed to use our best efforts to register 351,815 of the shares for
resale by the former Studio stockholders at various dates during the twelve
months following the acquisition. In August 1998, we registered 205,315 of these
shares and in February 1999, we registered an additional 73,250 of these shares.
SELLING STOCKHOLDERS
The following table sets forth, to our knowledge, certain information, as
of May 21 1999, with respect to the selling stockholders.
None of the selling stockholders holds any position or office with, has
been employed by, or has otherwise had a material relationship with Sapient or
any of its subsidiaries within the past three years, except that in connection
with the acquisition of Studio we entered into an employment letter with Clement
Mok, formerly Chairman, President and Chief Identity Architect of Studio,
providing for his employment as Chief Creative Officer of Sapient and with each
of Mark Crumpacker, Chief Executive Officer and Executive Creative Director of
Studio, Peter Rack, Chief Financial Officer and Secretary of Studio, Eric
Wilson, Senior Vice President of Studio and Todd Holcomb, Vice President of
Operations of Studio, providing for their continued employment by Studio in
positions similar to those held by them prior to the acquisition and at their
current rate of compensation. The employment relationships are not for a stated
term but are "employment at will" relationships. In connection with the purchase
agreements, certain of the selling stockholders also entered into
non-competition and non-
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solicitation agreements with Sapient or Studio, and we lent to each selling
stockholder funds to facilitate the payment of taxes by such selling
stockholders.
<TABLE>
<CAPTION>
Percentage of Percentage of
Number of Shares Shares of Common Number of Shares Shares of Common
of Common Stock Stock of Common Stock Stock
Beneficially Beneficially Number of Shares Beneficially Beneficially
Name of Selling Owned Prior Owned Prior to of Common Stock Owned After Owned after
Stockholder to Offering(1) Offering (1)(2) Offered Hereby Offering(1)(2) Offering (1)(2)
- ------------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Clement Mok 90,840 * 39,152 51,688 *
Mark Crumpacker 60,625 * 24,905(3) 35,720 *
Peter Rack 11,650 * 4,981 6,669 *
Eric Wilson 9,173 * 3,457(4) 5,716 *
Todd Holcomb 1,735 * 755 980 *
</TABLE>
- -------------------
* Less than one percent of the number of shares of common stock outstanding.
(1) The number of shares beneficially owned is determined under rules
promulgated by the SEC, and the information is not necessarily indicative
of beneficial ownership for any other purpose. The selling stockholders
have sole voting power and investment power with respect to all shares
listed as owned by the selling stockholders. Certain of such shares may be
registered in the name of a nominee holder, including, without limitation,
Goldman, Sachs & Co. Does not include an aggregate of 49,829 shares of
Sapient's common stock placed in escrow to secure the indemnification
obligations of certain selling stockholders.
(2) We do not know when or in what amounts a selling stockholder may offer
shares for sale and there can be no assurance that the selling stockholders
will sell any or all of the shares offered hereby. Because each selling
stockholder may offer all or some of the shares pursuant to this offering,
and because there are currently no agreements, arrangements or
understandings with respect to the sale of any of the shares that will be
held by the selling stockholders after completion of the offering, no
estimate can be given as to the amount of the shares that will be held by
the selling stockholders after completion of the offering. However, for
purposes of this table, we have assumed that, after completion of the
offering, none of the shares covered hereby will be held by the selling
stockholders.
(3) In addition to the 24,905 shares of common stock held by Mr. Crumpacker
registered hereby, Sapient previously registered 2,765 shares held by
Mr. Crumpacker in connection with Registration Statement No. 333-72675
that were not sold by Mr. Crumpacker as of May 21, 1999.
(4) In addition to the 3,457 shares of common stock held by Mr. Wilson
registered hereby, Sapient previously registered 1,140 shares held
by Mr. Wilson in connection with Registration Statement No. 333-72675
that were not sold by Mr. Wilson as of May 21, 1999.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Sapient consists of 100,000,000 shares of
common stock, par value $.01 per share, and 5,000,000 shares of preferred stock,
par value $.01 per share.
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COMMON STOCK
As of May 10, 1999, there were issued and outstanding an aggregate of
27,868,320 shares of common stock held of record by 314 stockholders.
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to the preferential dividend rights of
any outstanding preferred stock. Upon the liquidation, dissolution or winding-up
of Sapient, holders of common stock are entitled to receive ratably the net
assets of Sapient available for distribution after the payment of all debts and
other liabilities of Sapient and subject to any prior rights of any outstanding
preferred stock. Holders of common stock have no preemptive, subscription,
redemption or conversion rights. The outstanding shares of common stock are, and
the shares will be, when issued and paid for, fully paid and nonassessable. The
rights, preferences and privileges of holders of common stock are subject to,
and may be adversely affected by, the rights of holders of shares of any series
of preferred stock that we may designate and issue in the future.
PREFERRED STOCK
The Board of Directors is authorized, subject to any limitations prescribed
by law, without further stockholder approval, to issue from time to time up to
an aggregate of 5,000,000 shares of preferred stock, in one or more series. Each
such series of preferred stock shall have such number of shares, designations,
preferences, voting powers, qualifications, restrictions and special or relative
rights or privileges as shall be determined by the Board of Directors, which may
include, among others, dividend rights, voting rights, redemption and sinking
fund provisions, liquidation preferences, conversion rights and preemptive
rights.
The stockholders of Sapient have granted the Board of Directors authority
to issue preferred stock and to determine its rights and preferences in order to
eliminate delays associated with a stockholder vote on specific issuances. 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, or of discouraging a
third party from attempting to acquire, a majority of our outstanding voting
stock. No shares of preferred stock are issued or outstanding and we have no
present plans to issue any shares of preferred stock.
DELAWARE LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
We are subject to the provisions of Section 203 of the General Corporation
Law of Delaware. Section 203 prohibits a publicly-held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. A "business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the
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interested stockholder. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within three years did own, 15% or more of the corporation's voting stock.
Our Amended and Restated Certificate of Incorporation and our Restated
Bylaws provide for the division of the Board of Directors into three classes as
nearly equal in size as possible with staggered three-year terms. In addition,
the Amended and Restated Certificate of Incorporation and Restated Bylaws
provide that directors may be removed only for cause by the affirmative vote of
the holders of two-thirds of the shares of capital stock of Sapient entitled to
vote. Under the Amended and Restated Certificate of Incorporation and the
Restated Bylaws, any vacancy on the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the Board, may only be
filled by vote of a majority of the directors then in office. The classification
of the Board of Directors and the limitations on the removal of directors and
filling of vacancies could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from acquiring, control
of Sapient.
The Amended and Restated Certificate of Incorporation and the Restated
Bylaws also provide that any action required or permitted to be taken by our
stockholders at an annual meeting or special meeting of stockholders may only be
taken if it is properly brought before such meeting and may not be taken by
written action in lieu of a meeting. The Amended and Restated Certificate of
Incorporation and the Restated Bylaws further provide that special meetings of
the stockholders may only be called by a Chairman of the Board of Directors, a
Chief Executive Officer or, if none, a President of the Company or by the Board
of Directors. Under our Restated Bylaws, in order for any matter to be
considered "properly brought" before a meeting, a stockholder must comply with
certain requirements regarding advance notice to the Company. The foregoing
provisions could have the effect of delaying until the next stockholders'
meeting stockholder actions which are favored by the holders of a majority of
our outstanding voting securities. These provisions may also discourage another
person or entity from making a tender offer for our common stock, because such
person or entity, even if it acquired a majority of our outstanding voting
securities, would be able to take action as a stockholder (such as electing new
directors or approving a merger) only at a duly called stockholders' meeting,
and not by written consent.
The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's Certificate of Incorporation or Bylaws, unless
a corporation's Certificate of Incorporation or Bylaws, as the case may be,
require a greater percentage. Our Amended and Restated Certificate of
Incorporation and the Restated Bylaws require the affirmative vote of the
holders of at least 75% of the shares of capital stock of Sapient issued and
outstanding and entitled to vote to amend or repeal any of the provisions
described in the prior two paragraphs.
The Amended and Restated Certificate of Incorporation contains certain
provisions permitted under the General Corporation Law of Delaware relating to
the liability of directors. The provisions eliminate a director's liability to
Sapient or its stockholders for monetary damages for a breach of fiduciary duty,
except in circumstances involving certain wrongful acts, such as the breach of a
director's duty of loyalty or acts or omissions which involve intentional
misconduct or a knowing violation of law. The Amended and Restated
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Certificate of Incorporation also contains provisions obligating us to indemnify
our officers and directors to the fullest extent permitted by the General
Corporation Law of Delaware. We believe that these provisions will assist us in
attracting and retaining qualified individuals to serve as directors.
PLAN OF DISTRIBUTION
We are registering all of the shares on behalf of the selling stockholders.
"Selling stockholders," as used in this prospectus, includes donees, pledgees,
transferees or other successors in interest selling shares received from a named
selling stockholder after the date of this prospectus. The selling stockholders
may sell their shares from time to time. The selling stockholders will act
independently of Sapient in making decisions with respect to the timing, manner
and size of each sale. The sales may be made on one or more exchanges or in the
over-the-counter market or otherwise, at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The selling stockholders may sell their shares by one or more of,
or a combination of, the following methods:
- purchases by a broker-dealer as principal and the resale by such
broker or dealer for its account pursuant to this prospectus,
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers,
- block trades in which the broker-dealer so engaged will attempt
to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction,
- an over-the-counter distribution in accordance with the rules of
the Nasdaq National Market,
- in privately negotiated transactions,
- in options transactions, and
- for shares that qualify for resale under Rule 144 of the
Securities Act, under that rule rather than this prospectus.
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate. Broker-dealers will receive
commissions or discounts from the selling stockholders in amounts to be
negotiated immediately prior to the sale. In offering the shares covered hereby,
the selling stockholders and any broker-dealers who execute sales for the
selling stockholders may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. Any profits realized by the
selling stockholders and the compensation of any broker-dealer may be deemed to
be underwriting discounts and commissions.
To the extent required, this prospectus may be amended and supplemented
from time to time to describe a specific plan of distribution. In connection
with distributions of the
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shares or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial institutions. In connection
with such transactions, broker-dealers or other financial institutions may
engage in short sales of the common stock in the course of hedging the positions
they assume with selling stockholders. The selling stockholders may also sell
the common stock short and redeliver the shares to close out such short
positions. The selling stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions which require
the delivery to such broker-dealer or other financial institutions of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction). The selling stockholders may also pledge shares to
a broker-dealer or other financial institution, and, upon a default, such
broker-dealer or other financial institution, may effect sales of the pledged
shares pursuant to this prospectus (as supplemented or amended to reflect such
transaction). In addition, any shares that qualify for sale pursuant to Rule 144
may be sold under Rule 144 rather than pursuant to this prospectus.
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, we will make copies of this prospectus available to the selling
stockholders and have informed them of the need for delivery of copies of this
prospectus to purchasers at or prior to the time of any sale of the shares
offered hereby. The selling stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.
At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
We have agreed to indemnify the selling stockholders against certain
liabilities, including certain liabilities under the Securities Act.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of (i) such time as all of the shares have been disposed of pursuant to
and in accordance with such registration statement and (ii) August 25, 1999.
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LEGAL MATTERS
Hale and Dorr LLP will pass on the validity of the shares offered by this
prospectus.
EXPERTS
The consolidated balance sheets of Sapient Corporation and subsidiaries as
of December 31, 1998 and 1997, and the related consolidated statements of income
and comprehensive income, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1998, have been incorporated
by reference herein and in the registration statement in reliance upon the
report of KPMG LLP, independent auditors, and upon the authority of
said firm as experts in accounting and auditing.
The supplemental consolidated balance sheets of Sapient Corporation and
subsidiaries as of December 31, 1998 and 1997, and the related supplemental
consolidated statements of income and comprehensive income, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1998, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP,
independent auditors, and upon the authority of said firm as experts in
accounting and auditing.
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