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Filed pursuant to Rule 424(b)(3)
Registration No. 333-77033
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.
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 April 23, 1999, the
closing sale price of our common stock on Nasdaq was $64.75 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 5, 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............................................................. 11
THE ADJACENCY ACQUISITION................................................... 12
SELLING STOCKHOLDERS........................................................ 12
DESCRIPTION OF CAPITAL STOCK................................................ 14
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
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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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On-line information SEC's Internet website at
http://www.sec.gov
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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 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 April 26, 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 Current Report on Form 8-K dated April
23, 1999, filed with the Commission on April 23,
1999;
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(ii) The Company's Current Report on Form 8-K dated March
29, 1999, filed with the Commission on April 7, 1999;
(iii) The Company's Annual Report on Form 10-K for the year
ended December 31, 1998, filed with the Commission on
March 16, 1999;
(iv) 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
(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
and Internet commerce solutions. Through the delivery of integrated services,
form strategy and business transformation consulting through user-centered
design and technology implementation services, Sapient helps emerging and
evolving businesses transform themselves into e-businesses. Using a proven,
fixed-price model designed to ensure on-budget and on-time delivery, we offer a
variety of integrated services to help clients rapidly achieve their critical
business objectives, including:
* implementation and integration of packaged software solutions,
* custom software development,
* implementation of enterprise resource planning systems,
* production support, and
* business and operational consulting.
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We target clients in information-intensive industries, including Financial
Services, Energy Services, Manufacturing, Communications, Health Care and
Government.
We deliver services using our proprietary QUADD (Quality Design and
Delivery) process. QUADD is a workshop-based methodology that emphasizes active
client participation to help visualize, prioritize and create time-critical
business and technology solutions. We believe that the QUADD process is an
important competitive differentiator that allows us and our clients to better
understand the clients' business needs, and to design, develop, integrate and
implement solutions that address those needs. The QUADD process consists of four
stages: RIP workshop, Design, Implementation and Production.
* The RIP (Rapid Implementation Plan) workshop is designed to
rapidly identify the client's needs and develop a strategy and
action plan to meet those needs.
* The Design workshop focuses on outlining the proposed process
changes and required information technology solutions.
* The Implementation stage primarily involves the development
and testing of the new applications or enhancements to
third-party packaged software applications or existing
Sapient-developed solutions.
* The Production stage primarily involves the maintenance,
enhancement and support of the solution after it is
operational.
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), QUADD(R) and
RIP(R) are registered servicemarks 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.
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 staff increased from 817 full-time
employees at December 31, 1997 to 1,450 at December 31, 1998. 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 Sapient in a timely manner. The
integration of acquisitions requires substantial attention
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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.
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 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
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accounted for approximately 30% of our revenues, with four clients each
accounting for more than 5% of such 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 fixed-price 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.
In addition, while the QUADD process is designed as an integrated approach, each
stage of the QUADD process represents a separate contractual commitment at the
end of which the client may elect not to proceed to the next stage. A decision
by any large client not to proceed with a project to the stage we anticipated
could have a material adverse effect on our business, financial condition and
results of operations.
WE ENTER INTO FIXED-PRICE CONTRACTS
An important element of our strategy is to enter into fixed-price,
fixed-timeframe contracts, rather than contracts in which payment to us is
determined on a time and materials basis. Consistent with this strategy, we
currently provide our enterprise resource planning system implementation
services, which historically have been provided by EXOR on a time and materials
basis, on a fixed-price, fixed-timeframe 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.
OUR MARKETS ARE SUBJECT TO RAPID CHANGE
We have derived a significant portion of our revenues from projects
based primarily on Web-based and client/server architectures. These markets are
continuing to develop and are subject to rapid change. Our near-term success is
dependent in part on the continued acceptance of information processing systems
using Web-based and client/server architectures. Any factors negatively
affecting the acceptance of such technology could have a material adverse effect
on our business, financial condition and results of operations. Our success will
also depend in part on our ability to develop information technology solutions
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
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the marketplace. Our failure to address these developments could have a material
adverse effect on our business, financial condition and results of operations.
WE FACE SIGNIFICANT COMPETITION FROM A VARIETY OF SOURCES
The markets for the services we provide are highly competitive. We
believe that we currently compete principally with consulting and software
integration firms, application software vendors and internal information systems
groups. Many of these companies 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:
* quality of service and deliverables,
* speed of development and implementation,
* price,
* project management capability, and
* technical and business expertise.
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
project managers and other senior technical 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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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.
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 QUADD methodology
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
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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.
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.
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THE ADJACENCY ACQUISITION
We acquired all of the outstanding common stock of Adjacency on March
29, 1999 through a series of stock purchase agreements. 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. 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.
SELLING STOCKHOLDERS
The following table sets forth, to our knowledge, certain information,
as of April 26, 1999, with respect to the selling stockholders.
None of the selling stockholders holds any position or office with, has
been party to an employment agreement with, 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 Adjacency we entered
into employment letters with Andrew Sather, Bernie DeChant, Carlo Calica, and
Anton Prastowo providing for their employment by Sapient 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 agreements
with Sapient.
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<TABLE>
<CAPTION>
Number of Percentage of Percentage
Shares of Shares of Number of of Shares of
Common Common Number of Shares of Common
Stock Stock Shares of Common Stock
Beneficially Beneficially Common Stock Beneficially
Owned Prior Owned Prior Stock Beneficially Owned after
Name of Selling to to Offering Offered Owned After Offering
Stockholder Offering(1) (1) Hereby Offering(1)(2) (1)(2)
- -------------- ------------- ------------ --------- -------------- ------------
<S> <C> <C> <C>
Andrew Sather 264,077 * 39,611 224,465 *
Anton Prastowo 149,914 * 22,487 127,427 *
Carlo Calica 80,147 * 12,022 68,125 *
Bernie DeChant 80,147 * 12,022 68,125 *
Andrew Patrick 84,566 * 12,685 71,881 *
Chris DeVore 33,826 * 5,074 28,752 *
Matt Kirchstein 33,826 * 5,074 28,752 *
Ken Raley 33,926 * 5,074 28,852 *
Pascal Balthrop 25,370 * 3,806 21,565 *
Allison Jones 4,228 * 634 3,594 *
Jennifer Shonholtz 42 * 6 36 *
David Wisnom III 705 * 106 599 *
</TABLE>
- ----------
* Less than one percent of the total 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.
(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.
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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 April 13, 1999, there were issued and outstanding an aggregate of
27,770,911 shares of common stock held of record by 288 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.
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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
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
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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
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 may receive
commissions or discounts
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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 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 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) March 29, 2000.
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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 Peat Marwick 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 Peat Marwick LLP,
independent auditors, and upon the authority of said firm as experts in
accounting and auditing.
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