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Filed pursuant to Rule 424(b)(3)
Registration No. 333-87837
PROSPECTUS
SAPIENT CORPORATION
118,601 SHARES OF COMMON STOCK
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In March 1999, Sapient Corporation issued 790,674 shares of common stock to
the former stockholders of Adjacency, Inc. in connection with our acquisition of
that company. This prospectus relates to resales of some of those shares by
certain former stockholders of Adjacency, Inc. We will not receive any of the
proceeds from the sale of the shares.
We have 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 offer the shares from time to time through public or
private transactions at prevailing market prices, at prices related to
prevailing market prices or at privately negotiated prices. Our common stock is
traded on the Nasdaq National Market under the symbol SAPE. On October 8, 1999,
the closing sale price of our common stock on Nasdaq was $86.3125 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this prospectus is October 8, 1999.
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TABLE OF CONTENTS
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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......................... 5
RISK FACTORS................................................ 6
USE OF PROCEEDS............................................. 11
THE ADJACENCY ACQUISITION................................... 11
SELLING STOCKHOLDERS........................................ 12
DESCRIPTION OF CAPITAL STOCK................................ 13
PLAN OF DISTRIBUTION........................................ 15
LEGAL MATTERS............................................... 16
EXPERTS..................................................... 16
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WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT
FROM THAT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THE SELLING
STOCKHOLDERS ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF OUR
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 THIS
PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE
OF COMMON STOCK.
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WHERE TO FIND MORE INFORMATION
We file reports, proxy statements, and other documents with the Securities
and Exchange Commission and with Nasdaq. Here are ways you can access this
information:
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WHAT IS AVAILABLE WHERE TO GET IT
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Paper copies of information SEC's Public Reference Room
Judiciary Plaza Building
450 Fifth Street, N.W., Room 1024
Washington, D.C. 20549
The Nasdaq Stock Market, Inc.
1735 K Street, N.W.
Washington, D.C. 20006
On-line information SEC's Internet website at
http://www.sec.gov
Information about the Call the SEC at
SEC's Public Reference Room 1-800-SEC-0330
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This prospectus is part of a registration statement that we filed with the
SEC. The registration statement contains more information than this prospectus
regarding us and our common stock, including certain exhibits and schedules. You
can obtain 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. Information contained in this prospectus and information
that we file with the SEC in the future and incorporate by reference in this
prospectus automatically updates and supercedes previously filed 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:
(i) Our Annual Report on Form 10-K for the year ended December 31, 1998,
filed with the SEC on March 16, 1999, as amended by Form 10-K/A
filed with the SEC on April 30, 1999;
(ii) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, filed with the SEC on May 14, 1999, as amended by Form 10-Q/A
filed with the SEC on May 21, 1999;
(iii) Our Quarterly Report on Form 10-Q for the quarter ended June 30,
1999, filed with the SEC on August 13, 1999;
(iv) Our Current Report on Form 8-K/A, filed with the SEC on February 23,
1999;
(v) Our Current Report on Form 8-K, filed with the SEC on April 7, 1999;
(vi) Our Current Report on Form 8-K, filed with the SEC on April 23,
1999, as amended by Form 8-K/A filed with the SEC on April 23, 1999;
(vii) Our Current Report on Form 8-K, filed with the SEC on July 26, 1999;
(viii) All of our filings pursuant to the Exchange Act after the date of
filing the initial registration statement and prior to effectiveness
of the registration statement; and
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(ix) The description of our common stock contained in our Registration
Statement on Form 8-A, filed with the SEC on March 26, 1996, as
amended by Form 8-A/A filed with the SEC on March 28, 1996.
You may request a copy of these documents, which will be provided to you at
no cost, by contacting:
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. You can identify these forward-looking
statements by our use of the words "believes," "anticipates," "plans,"
"expects," "may," "will," "would," "intends," "estimates" and similar
expressions, whether in the negative or affirmative. We cannot guarantee that we
actually will achieve these plans, intentions or expectations. Actual results or
events could differ materially from the plans, intentions and expectations
disclosed in the forward-looking statements that we make. We have included
important factors in the cautionary statements contained or incorporated by
reference in this prospectus, particularly under the heading "Risk Factors" that
we believe could cause actual results to differ materially from the
forward-looking statements that we make. We do not assume any obligation to
update any forward-looking statements that we make.
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SUMMARY DESCRIPTION OF OUR BUSINESS
Sapient Corporation is an innovative provider of e-business consulting
services. Through the delivery of integrated services, from business strategy
and organizational transformation consulting through user-centered design and
technology implementation services, Sapient helps emerging and evolving
businesses transform themselves into e-businesses. e-businesses 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
e-business strategy, design and technology implementation services to clients
who are creating e-businesses or are rethinking or expanding their existing
businesses to integrate e-business 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 five main industries, or business units: Financial Services; Energy
Services; Manufacturing, Retail and Distribution; Public Sector; and Media,
Entertainment and Communications. 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 e-business.
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), Studio
Archetype(R) and Adjacency(R) are registered service marks of Sapient.
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RISK FACTORS
You should carefully consider the risks described below before you decide
to buy our common stock. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties may also impair
our business operations. If any of the following risks actually occur, our
business, financial condition, or results of operations would likely suffer. In
such case, the trading price of our common stock could fall, and you may lose
all or part of the money you paid to buy our common stock.
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 e-business
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. 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 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. Because of the rapid growth of the Internet, there is intense
competition for employees who have strategic, technical or creative experience
relating to the Internet. We cannot be certain 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.
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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 six months of 1999
increased 79% over our revenues for the first six months of 1998. Our staff
increased from 1,035 full-time employees at June 30, 1998 to 1,790 at June 30,
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 acquired EXOR, in August 1998, we acquired Studio, and
in March 1999, we acquired 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 Sapient in a timely manner. The
integration of acquisitions requires substantial attention from management. We
may also encounter difficulties in integrating these acquired businesses. We
cannot be certain that customers of the acquired businesses will continue to
order services from us without reduction or that employees of the acquired
businesses will continue their employment and become well integrated into our
operations and culture. 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.
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.
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 six
months of 1999, our five largest clients accounted for approximately 29% 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
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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 HAVE SIGNIFICANT FIXED OPERATING COSTS AND OUR OPERATING RESULTS ARE SUBJECTS
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.
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.
MANY OF OUR CONTRACTS CAN BE CANCELLED WITH LIMITED NOTICE AND WITHOUT
SIGNIFICANT PENALTY
Many of our contracts are terminable by the client following limited notice
and without significant penalty. Such terminations could result in a loss of
expected revenue and additional, unreimbursed expenses for staff which were
allocated to that client's project. The cancellation or 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 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 e-business 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.
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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 Internet solutions or 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.
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.
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.
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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 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 Internet and 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. Any limitation on our ability to resell or reuse an
application could require us to incur additional expenses to develop new
applications for future projects.
OUR OFFICERS AND DIRECTORS HAVE SIGNIFICANT VOTING POWER
Jerry A. Greenberg and J. Stuart Moore, our co-Chairmen of the Board of
Directors and co-Chief Executive Officers, beneficially own approximately 42% 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, Messrs. Greenberg and 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,
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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.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the selling
stockholders.
The selling stockholders will pay any underwriting discounts and
commissions and expenses incurred by the selling stockholders for brokerage,
accounting, tax or legal services or any other expenses incurred by the selling
stockholders in disposing of the shares. We will bear all other costs, fees and
expenses incurred in effecting the registration of the shares covered by this
prospectus, including, without limitation, all registration and filing fees,
Nasdaq listing fees and fees and expenses of our counsel and our accountants.
THE ADJACENCY ACQUISITION
We acquired all of the outstanding common stock of Adjacency on March 29,
1999 through a series of stock purchase agreements. Adjacency was merged into
Sapient on June 30, 1999 and its operations combined with those of Sapient. The
acquisition of Adjacency has been treated as a "tax-free reorganization" for
U.S. federal income tax purposes and has been accounted for as a pooling of
interests for financial reporting purposes under U.S. GAAP.
In exchange for the Adjacency stock, we issued an aggregate of 790,674
shares of Sapient common stock, which were valued at approximately $50.6 million
based on the last sale price of Sapient common stock on the Nasdaq National
Market on March 29, 1999. 79,067 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 355,804 of the shares for
resale by the former Adjacency stockholders at various dates during the twelve
months following the acquisition.
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SELLING STOCKHOLDERS
The following table sets forth, to our knowledge, certain information about
the selling stockholders as of September 15, 1999.
Beneficial ownership is determined in accordance with the rules of the SEC,
and includes voting or investment power with respect to shares. Unless otherwise
indicated below, to our knowledge, all persons named in the table have sole
voting and investment power with respect to their shares of common stock, except
to the extent authority is shared by spouses under applicable law. The inclusion
of any shares in this table does not constitute an admission of beneficial
ownership for the person named below.
<TABLE>
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NUMBER OF PERCENTAGE OF NUMBER OF PERCENTAGE OF
SHARES OF SHARES OF SHARES OF SHARES OF
COMMON STOCK COMMON STOCK NUMBER OF COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY SHARES OF BENEFICIALLY BENEFICIALLY
OWNED PRIOR OWNED PRIOR TO COMMON STOCK OWNED AFTER OWNED AFTER
NAME OF SELLING STOCKHOLDER TO OFFERING(1) OFFERING(1) OFFERED HEREBY OFFERING(1)(2) OFFERING(1)(2)
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Andrew Sather............... 224,466 * 39,611 184,855 *
Anton Prastowo.............. 142,938 * 22,487(3) 120,451 *
Carlo Calica................ 68,125 * 12,022 56,103 *
Bernie DeChant.............. 78,171 * 12,022(4) 66,149 *
Andrew Patrick.............. 71,881 * 12,685 59,196 *
Chris DeVore................ 30,826 * 5,074(5) 25,752 *
Matt Kirchstein............. 29,776 * 5,074(6) 24,702 *
Ken Raley................... 28,826 * 5,074(7) 23,752 *
Pascal Balthrop............. 21,564 * 3,806 17,758 *
Allison Jones............... 4,228 * 634(8) 3,594 *
Jennifer Shonholtz.......... 42 * 6(9) 36 *
David Wisnom III............ 705 * 106(10) 599 *
</TABLE>
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* Less than one percent of the number of shares of common stock outstanding.
(1) The selling stockholders have sole voting power and investment power with
respect to all shares listed as owned by the selling stockholders. Of the
total shares of common stock listed as owned by the selling stockholders, a
total of 79,067 shares are held in an escrow account to secure
indemnification obligations of certain of the former stockholders of
Adjacency to us. It is expected that these shares (less any shares that may
be distributed from the escrow account to us in satisfaction of
indemnification claims) will be released from escrow and distributed to
such selling stockholders on March 29, 2000. The number of shares indicated
as owned by each such selling stockholder includes those shares
(representing 10% of the number of shares listed as beneficially owned by
each selling stockholder) which such selling stockholder is entitled to
receive upon distribution of these shares from the escrow account.
(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 22,487 shares of common stock held by Mr. Prastowo
registered hereby, we previously registered 15,511 shares held by Mr.
Prastowo in connection with Registration Statement No. 333-77033 that were
not sold by Mr. Prastowo as of September 23, 1999.
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(4) In addition to the 12,022 shares of common stock held by Mr. DeChant
registered hereby, we previously registered 10,046 shares held by Mr.
DeChant in connection with Registration Statement No. 333-77033 that were
not sold by Mr. DeChant as of September 23, 1999.
(5) In addition to the 5,074 shares of common stock held by Mr. DeVore
registered hereby, we previously registered 2,074 shares held by Mr. DeVore
in connection with Registration Statement No. 333-77033 that were not sold
by Mr. DeVore as of September 23, 1999.
(6) In addition to the 5,074 shares of common stock held by Mr. Kirchstein
registered hereby, we previously registered 1,024 shares held by Mr.
Kirchstein in connection with Registration Statement No. 333-77033 that
were not sold by Mr. Kirchstein as of September 23, 1999.
(7) In addition to the 5,074 shares of common stock held by Mr. Raley
registered hereby, we previously registered 74 shares held by Mr. Raley in
connection with Registration Statement No. 333-77033 that were not sold by
Mr. Raley as of September 23, 1999.
(8) In addition to the 634 shares of common stock held by Ms. Jones registered
hereby, we previously registered 634 shares held by Ms. Jones in connection
with Registration Statement No. 333-77033 that were not sold by Ms. Jones
as of September 23, 1999.
(9) In addition to the 6 shares of common stock held by Ms. Shonholtz
registered hereby, we previously registered 6 shares held by Ms. Shonholtz
in connection with Registration Statement No. 333-77033 that were not sold
by Ms. Shonholtz as of September 23, 1999.
(10) In addition to the 106 shares of common stock held by Mr. Wisnom registered
hereby, we previously registered 106 shares held by Mr. Wisnom in
connection with Registration Statement No. 333-77033 that were not sold by
Mr. Wisnom as of September 23, 1999.
None of the selling stockholders has held any position or office with, or
has otherwise had a material relationship with, us or any of our subsidiaries
within the past three years, except that the selling stockholders have been
employed by us and/or Adjacency. In connection with our acquisition of
Adjacency, we also entered into employment letters with Andrew Sather, Bernie
DeChant, Carlo Calica and Anton Prastowo, each a former employee of Adjacency.
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 agreements with Sapient,
and we lent to Adjacency funds which Adjacency lent to the selling stockholders
to facilitate the payment of taxes by such selling stockholders.
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.
COMMON STOCK
As of September 1, 1999, there were issued and outstanding an aggregate of
27,779,928 shares of common stock held of record by 289 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
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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 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
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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 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
The shares covered by this prospectus may be offered and sold from time to
time by the selling stockholders. The term "selling stockholders" includes
donees, pledgees, transferees or other successors-in-interest selling shares
received after the date of this prospectus from a selling stockholder as a gift,
pledge, partnership distribution or other non-sale related transfer. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale. Such sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and under
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 resale by such
broker-dealer for its own 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; and
- in options transactions.
In addition, any shares that qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this prospectus.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In connection with
distributions of the 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 institution
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
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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 effecting sales, broker-dealers or agents engaged by the selling
stockholders may arrange for other broker-dealers to participate. Broker-dealers
or agents may receive commissions, discounts or concessions from the selling
stockholders in amounts to be negotiated immediately prior to the sale.
In offering the shares covered by this prospectus, 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.
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 for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. 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 covered by this prospectus have
been disposed of pursuant to and in accordance with the Registration Statement
or (ii) March 29, 2000.
LEGAL MATTERS
Hale and Dorr LLP has passed on the validity of the shares offered by this
prospectus.
EXPERTS
The consolidated balance sheets of Sapient as of December 31, 1998 and 1997
and the consolidated statements of 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, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
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