10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    

Commission file number: 0-28074

SAPIENT CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	04-3130648
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
25 First Street, Cambridge, MA	02141
(Address of principal executive offices)	(Zip Code)

617-621-0200

(Registrant’s telephone number, including area code)

[None]

(Former name, former address and former fiscal year, if changed since last report)

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ                     No o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ          Accelerated filer o            Non-accelerated filer o

          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o                     No þ

          Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at November 5, 2007
Common Stock, $0.01 par value per share	124,622,142 shares

SAPIENT CORPORATION
INDEX

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	3
Consolidated and Condensed Balance Sheets as of September 30, 2007 and December 31, 2006	3
Consolidated and Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2007 and 2006	4
Consolidated and Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006	5
Notes to Consolidated and Condensed Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	25
Item 4. Controls and Procedures	26
PART II. OTHER INFORMATION	27
Item 1. Legal Proceedings	27
Item 1A. Risk Factors	27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 4. Submission of Matters to a Vote of Security Holders	33
Item 6. Exhibits	34
Signatures	34
Ex-10.1 Alan J. Herrick Employment Agreement
EX-10.2 - Form of Restricted Stock Units Agreement for annual grants to reelected members of the Board of Directors
EX-10.3 - Form of Restricted Stock Units Agreement for initial grant to newly appointed members of the Board of Directors
EX-10.4 - Form of Restricted Stock Units Agreement for employees
EX-10.5 - Amendment to Sapient Corporation 1998 Stock Incentive Plan
Ex-31.1 Section 302 Certification of Alan J. Herrick
Ex-31.2 Section 302 Certification of Joseph S. Tibbetts
Ex-32.1 Section 906 Certification of Alan J. Herrick
Ex-32.2 Section 906 Certification of Joseph S. Tibbetts

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

          This Quarterly Report on Form 10-Q contains “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. All statements included in this Quarterly Report, other than statements of historical facts, regarding our strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives are forward-looking statements. When used in this Quarterly Report, the words “will,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee future results, levels of activity, performance or achievements and you should not place undue reliance on our forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks described below in Part II, Item 1A, “Risk Factors” in this Quarterly Report and in and in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or strategic investments. In addition, any forward-looking statements represent our expectation only as of the day this Quarterly Report was first filed with the Securities and Exchange Commission (“SEC”) and should not be relied on as representing our expectations as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our expectations change.

2

SAPIENT CORPORATION

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

CONSOLIDATED AND CONDENSED BALANCE SHEETS

	September 30,			December 31,
	2007			2006
	(Unaudited)
	(In thousands, except
	per share and share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	113,794		$	75,022
Marketable securities		31,949			51,859
Restricted cash, current portion		450			551
Accounts receivable, less allowance for doubtful accounts of $2,330 and $2,573 at September 30, 2007 and December 31, 2006, respectively		84,218			75,402
Unbilled revenues		37,344			34,201
Prepaid expenses and other current assets		25,146			20,565
Total current assets		292,901			257,600
Restricted cash, net of current portion		1,254			1,338
Property and equipment, net		36,021			27,623
Purchased intangible assets, net		5,998			7,550
Goodwill		40,329			38,929
Other assets		7,890			9,024
Total assets	$	384,393		$	342,064
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,009		$	9,818
Accrued compensation		44,448			33,077
Accrued restructuring costs, current portion		3,735			3,867
Deferred revenues, current portion		18,725			14,871
Other current accrued liabilities		48,794			47,068
Total current liabilities		121,711			108,701
Accrued restructuring costs, net of current portion		8,557			11,741
Deferred revenues, net of current portion		651			865
Other long-term liabilities		11,281			5,780
Total liabilities		142,200			127,087
Commitments and contingencies (Note 4)
Redeemable common stock, par value $0.01 per share, 134,995 and 224,469 shares issued and outstanding at September 30, 2007 and December 31, 2006		290			480
Stockholders’ equity:
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized and none issued at September 30, 2007 and December 31, 2006		—			—
Common stock, par value $0.01 per share, 200,000,000 shares authorized, 131,785,758 shares issued at September 30, 2007 and December 31, 2006		1,318			1,318
Additional paid-in capital		558,765			547,369
Treasury stock, at cost, 7,067,641 and 8,489,614 shares at September 30, 2007 and December 31, 2006, respectively		(27,644	)		(30,673	)
Accumulated other comprehensive income		12,720			5,782
Accumulated deficit		(303,256	)		(309,299	)
Total stockholders’ equity		241,903			214,497
Total liabilities, redeemable common stock and stockholders’ equity	$	384,393		$	342,064

The accompanying notes are an integral part of these Consolidated and Condensed Financial Statements.

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SAPIENT CORPORATION

CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
				(Unaudited)
	(In thousands, except per share amounts)
Revenues:
Service revenues	$	141,590		$	106,924		$	391,479		$	292,021
Reimbursable expenses		4,825			4,193			13,850			10,540
Total gross revenues		146,415			111,117			405,329			302,561
Operating expenses:
Project personnel expenses		96,694			72,811			267,681			196,984
Reimbursable expenses		4,825			4,193			13,850			10,540
Total project personnel expenses and reimbursable expenses		101,519			77,004			281,531			207,524
Selling and marketing expenses		8,664			5,670			24,413			17,092
General and administrative expenses		29,223			29,993			90,168			77,552
Restructuring and other related charges (benefits)		(35	)		187			(204	)		1,335
Amortization of purchased intangible assets		487			842			1,552			2,722
Total operating expenses		139,858			113,696			397,460			306,225
Income (loss) from operations		6,557			(2,579	)		7,869			(3,664	)
Interest and other income, net		1,596			1,180			4,115			4,719
Income (loss) from continuing operations before income taxes, discontinued operations and cumulative effect of accounting change		8,153			(1,399	)		11,984			1,055
Provision (benefit) for income taxes		3,732			(2,134	)		5,941			1,370
Income (loss) from continuing operations before discontinued operations and cumulative effect of accounting change		4,421			735			6,043			(315	)
Loss from discontinued operations		—			—			—			(433	)
Gain on disposal of discontinued operations (net of tax provision of $342)		—			—			—			4,834
Income before cumulative effect of accounting change		4,421			735			6,043			4,086
Cumulative effect of accounting change		—			—			—			154
Net income	$	4,421		$	735		$	6,043		$	4,240
Basic income (loss) per share from continuing operations	$	0.04		$	0.01		$	0.05		$	(0.00	)
Diluted income (loss) per share from continuing operations	$	0.03		$	0.01		$	0.05		$	(0.00	)
Basic net income per share	$	0.04		$	0.01		$	0.05		$	0.03
Diluted net income per share	$	0.03		$	0.01		$	0.05		$	0.03
Weighted average common shares		124,875			123,051			123,895			123,861
Weighted average dilutive common share equivalents		3,439			3,074			3,728			—
Weighted average common shares and dilutive common share equivalents		128,314			126,125			127,623			123,861

The accompanying notes are an integral part of these Consolidated and Condensed Financial Statements.

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SAPIENT CORPORATION

CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 30,
	2007			2006
	(Unaudited)
	(In thousands)
Cash flows from operating activities:
Net income	$	6,043		$	4,240
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Loss recognized on disposition of fixed assets		85			84
Depreciation expense		10,852			7,216
Amortization of purchased intangible assets		1,552			2,722
Deferred income taxes		1,707			428
(Recovery of) provision for allowance for doubtful accounts, net		(182	)		1,551
Stock-based compensation expense		13,303			8,427
Gain on disposal of discontinued operations		—			(4,834	)
Cumulative effect of accounting change		—			(154	)
Changes in operating assets and liabilities, net of acquisition and disposition:
Accounts receivable		(6,285	)		(17,728	)
Unbilled revenues		(2,132	)		(13,392	)
Prepaid expenses and other current assets		(3,830	)		(4,502	)
Other assets		60			(3,158	)
Accounts payable		(5,510	)		1,242
Accrued compensation		8,640			1,762
Other accrued liabilities		(682	)		13,718
Accrued restructuring costs		(3,467	)		(5,285	)
Deferred revenues		2,497			1,299
Other long-term liabilities		3,886			763
Net cash provided by (used in) operating activities		26,537			(5,601	)
Cash flows from investing activities:
Cash paid for acquisitions, including transaction costs, net of cash received		(883	)		(27,655	)
Cash received for sale of discontinued operations, net of cash disposed of and payment to minority stockholders		436			5,142
Purchases of property and equipment and cost of internally developed software		(14,971	)		(9,060	)
Sales and maturities of marketable securities		78,742			114,411
Purchases of marketable securities		(58,818	)		(82,157	)
Restricted cash		353			(729	)
Net cash provided by (used in) investing activities		4,859			(48	)
Cash flows from financing activities:
Principal payments under capital lease obligations		(85	)		(102	)
Proceeds from stock option and purchase plans		6,008			4,881
Repurchases of common stock		(3,776	)		(18,110	)
Net cash provided by (used in) financing activities		2,147			(13,331	)
Effect of exchange rate changes on cash and cash equivalents		5,229			(14	)
Increase (decrease) in cash and cash equivalents		38,772			(18,994	)
Cash and cash equivalents, at beginning of period		75,022			69,948
Cash and cash equivalents, at end of period	$	113,794		$	50,954
Supplemental Cash Flow Information:
Non-cash financing transaction:
Issuance of common stock with acquisition	$	—		$	5,855
Note receivable related to the sale of HWT	$	—		$	1,350

The accompanying notes are an integral part of these Consolidated and Condensed Financial Statements.

5

NOTES TO UNAUDITED CONSOLIDATED AND CONDENSED FINANCIAL STATEMENTS

1. Basis of Presentation

     The accompanying unaudited consolidated and condensed financial statements have been prepared by Sapient Corporation pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2006 included in the Company’s Annual Report on Form 10-K. These financial statements reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented. The results of operations for the three and nine months ended September 30, 2007 are not necessarily indicative of the results to be expected for any future period or the full fiscal year.

     The results of discontinued operations for the nine months ended September 30, 2006 are presented separately in the consolidated and condensed statement of operations.

     Unless the context requires otherwise, references in this Quarterly Report to “Sapient,” “the Company,” “we,” “us” or “our” refer to Sapient Corporation and its consolidated subsidiaries.

2. Stock-Based Compensation

     Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123R, Share-Based Payment (“SFAS No. 123R”). Stock-based compensation expense for all share-based payment awards granted since January 1, 2006 is based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R. The Company recorded the following stock-based compensation expense:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2007		2006		2007		2006
	(In thousands)
Project personnel expenses	$	2,241	$	1,527	$	6,760	$	4,343
Selling and marketing expenses		883		738		2,799		1,951
General and administrative expenses		1,324		603		3,744		2,133
	$	4,448	$	2,868	$	13,303	$	8,427

     Stock-based compensation expenses capitalizable related to internally developed software were not material for the three and nine months ended September 30, 2007 and 2006. The Company uses the Black-Scholes valuation model for estimating the fair value of the stock options granted under SFAS No. 123R. The fair value per share of the Restricted Stock Unit (“RSU”) awards is equal to the quoted market price of the Company’s common stock on the date of grant. RSU awards with market-based vesting criteria are valued using a lattice model.

     The Company recognizes stock-based compensation expense net of a forfeiture rate and recognizes expense for only those shares expected to vest on a straight-line basis over the requisite service period of the award when the only condition to vesting is continued employment. If vesting is subject to a market or performance condition, vesting is based on the derived service period. The Company estimates its forfeiture rate based on its historical experience.

     Upon the adoption of SFAS No. 123R, the Company calculated the estimated forfeitures for previously recorded stock-based compensation. As a result of this calculation, the Company recorded a cumulative effect of the accounting change, resulting in a gain of $154,000 which was recognized in the consolidated and condensed statement of operations in the first fiscal quarter of 2006.

     In connection with the Company’s internal review of its historical stock-based compensation practices from 1996 to 2006, the Company determined that certain options exercised in 2006 by current and former employees of the Company (the “Affected Employees”) had been mispriced and, therefore, were subject to an excise tax, and associated interest charges, under Section 409A of the Internal Revenue Code (“Section 409A”). As a result, during the first quarter of 2007 the Compensation Committee of the Company’s Board Directors approved a remediation plan under which the Company will pay this tax (and interest charges) on behalf of the Affected Employees. Accordingly, the Company recorded an expense of $750,000 during the first quarter of 2007 related to this tax and associated interest charges. In the second and third quarter of 2007, the Company paid $244,000 and $144,000 of this liability, respectively.

     Additionally, with respect to mispriced, unexercised stock options held by Affected Employees that also are subject to an excise tax (and interest charges) under Section 409A (the “409A Affected Options”), the Company implemented a remediation plan in the second quarter of 2007. Under this plan, on May 18, 2007 the Company increased the exercise price of 1.9 million 409A Affected Options to the fair market value of the Company’s stock on the correct measurement date for these option awards. In turn, to compensate the Affected Employees for the increase to the exercise price of their 409A Affected Options, the Compensation Committee authorized Management to issue (a) current employees additional stock options at an exercise price equal to the Company’s stock price on the date of the price increase (May 18, 2007) and (b) former employees a cash payment. In connection with this make whole provision, the Company issued 155,000 stock options, made cash bonus payments of $20,000 through September 30, 2007 and estimates paying an

6

additional $14,000 in cash bonuses. The Company incurred no compensation expense associated with additional option grants issued to current employees, as the fair value of the employees’ repriced and new option grants equaled the fair value of the original 409A Affected Options.

     Further, due to the Company’s delayed filing of its quarterly reports on Form 10-Q for the three and six months ended June 30, 2006, the three and nine months ended September 30, 2006 and the three months ended March 31, 2007 and Annual Report on Form 10-K for the year-ended December 31, 2006 in connection with its historical stock-based compensation review, some employees were unable to exercise stock options from the fourth quarter of 2006 until June 15, 2007 (the date on which the Company completed the filing of all reports required to be filed pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, for the preceding 12 months) (“Compliance Date”). As a result, during the first quarter of 2007, the Compensation Committee approved the extension of certain options that otherwise would have expired during this “trading blackout period,” to enable the affected employees a reasonable period of time after the Compliance Date to exercise their vested options. The Company recorded compensation expense of $560,000 during the three months ended March 31, 2007 and $350,000 during the three months ended June 30, 2007, related to these modifications.

     The following table summarizes activity under all stock option plans for the nine months ended September 30, 2007:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term		Value (2)
	(In thousands)					(years)		(In thousands)
Outstanding as of December 31, 2006		14,610		$	11.05		4.90	$	12,974
Options granted		155		$	7.05		—		—
Options exercised		(1,444	)	$	4.16		—		—
Options forfeited/cancelled		(1,320	)	$	12.92		—		—
Outstanding as of September 30, 2007		12,001		$	11.69		4.21	$	15,706
Exercisable as of September 30, 2007		10,999		$	12.13		3.97	$	15,147
Exercisable as of September 30, 2007 and expected to become exercisable (1)		11,753		$	11.79		4.16	$	15,543

(1)	In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options.
(2)	The aggregate intrinsic value in this table was calculated based on the positive difference between the closing market value of the Company’s common stock on December 31, 2006 and September 30, 2007 ($5.49 and $6.71, respectively) and the exercise price of the underlying stock options.

     The unrecognized compensation expense related to the unvested stock options as of September 30, 2007 was $3.4 million with a weighted average remaining recognition period of 1.2 years.

     The table below summarizes activity relating to RSU’s for the nine months ended September 30, 2007:

	Number of Shares			Aggregate
	Underlying			Intrinsic Value of
	Restricted Units			Restricted Units (2)
	(In thousands)
Outstanding as of December 31, 2006		3,965		$	21,786
Granted		2,208
Released		(710	)
Forfeitures		(290	)
Outstanding as of September 30, 2007		5,173		$	34,704
Expected to vest (1)		4,355		$	29,222

(1) In addition to the vested RSU’s, the Company expects a portion of the unvested RSU’s to vest at some point in the future. RSU’s expected to vest are calculated by applying an estimated forfeiture rate to the unvested RSU’s.

7

(2)  The aggregate intrinsic value in this table was calculated based on the market value of the Company’s common stock on December 31, 2006 and September 30, 2007 ($5.49 and $6.71, respectively) and the number of underlying RSU’s.

     As of September 30, 2007, the unrecognized compensation expense related to unvested RSU’s was $23.2 million. This cost is expected to be recognized over a weighted average period of 2.6 years.

     The unrecognized compensation expense for all outstanding stock options and RSU’s as of September 30, 2007 was $26.6 million.

3. Income per Share from Continuing Operations and Net Income Per Share

     The following information presents the Company’s computation of basic and diluted income per share from continuing operations and basic and diluted net income per share for the periods presented in the consolidated and condensed statements of operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2007		2006		2007		2006
	(Unaudited)
	(In thousands, except per share amounts)
Income (loss) from continuing operations before discontinued operations and cumulative effect of accounting change	$	4,421	$	735	$	6,043	$	(315	)
Loss from discontinued operations		—		—		—		(433	)
Gain on disposal of discontinued operations (net of tax provision of $342)		—		—		—		4,834
Cumulative effect of accounting change		—		—		—		154
Net income	$	4,421	$	735	$	6,043	$	4,240
Weighted average common shares outstanding		124,875		123,051		123,895		123,861
Weighted average dilutive common share equivalents		3,439		3,074		3,728		—
Weighted average common shares and dilutive common share equivalents		128,314		126,125		127,623		123,861
Basic income per share:
Income (loss) from continuing operations	$	0.04	$	0.01	$	0.05	$	(0.00	)
Loss from discontinued operations		0.00		0.00		0.00	$	(0.00	)
Gain on disposal of discontinued operations		0.00		0.00		0.00		0.04
Cumulative effect of accounting changes		0.00		0.00		0.00		0.00
Basic net income per share:	$	0.04	$	0.01	$	0.05	$	0.03
Diluted income (loss) per share:
Income (loss) from continuing operations		0.03		0.01		0.05		(0.00	)
Loss from discontinued operations		0.00		0.00		0.00		(0.00	)
Gain on disposal of discontinued operations		0.00		0.00		0.00		0.04
Cumulative effect of accounting changes		0.00		0.00		0.00		0.00
Diluted net income per share:	$	0.03	$	0.01	$	0.05	$	0.03
Anti-dilutive options and share based awards not included in the calculation		9,282		11,442		8,526		11,164

4. Commitments and Contingencies

     The Company has certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. The Company is subject to various legal claims in which the damages claimed under such actions, in the aggregate, total approximately $4.4 million as of September 30, 2007. The Company has accrued at September 30, 2007 approximately $1.3 million related to certain of these items. The Company is also subject to various administrative audits, each of which has arisen in the ordinary course of business. The Company intends to defend these matters vigorously, however the ultimate outcome of these items is uncertain and the potential loss, if any, may be significantly higher or lower than the amounts that the Company has accrued.

     In connection with the internal review into the Company’s historical stock-based compensation practices, the Company reviewed the payroll withholding tax effect associated with certain stock options that had incorrect measurement dates. Certain stock options were originally intended to be Incentive Stock Options(“ISOs”) under U.S. tax regulations. However, by definition, ISOs may not be granted with an exercise price less than the fair market value of the underlying stock on the date of grant. Because these options had incorrect measurement dates, they do not qualify as ISOs under the regulations. Therefore, the affected ISOs were accounted for as if they were non-qualified stock options for payroll tax accounting purposes. The Company recorded a liability for the unpaid income and employment taxes plus potential penalties and interest based upon the change in status of the affected options. The Company recorded a liability for the taxes, penalties and interest due based upon the change in status of the options in the amount of $17.8 million. The Company recorded reversals of this accrual in the amount of $16.5 million between 2003 and 2006 due to the expiration of the tax statute of limitations. These adjustments resulted in a net charge to income of $1.3 million over the period 1996 to 2006, which

8

represent management’s best estimate of the Company’s liability.

     The Company is also subject to certain other legal proceedings and claims that have arisen in the course of business and that have not been fully adjudicated, including the legal proceedings and claims described below. In the opinion of management, the Company does not have a potential liability related to any current legal proceedings and claims that would individually or in the aggregate have a material adverse effect on its financial condition, liquidity or results of operations. However, the results of legal proceedings cannot be predicted with certainty. Should the Company fail to prevail in any of these legal matters or should several of these legal matters be resolved against the Company in the same reporting period, the operating results of a particular reporting period could be materially adversely affected.

     On August 17, 2006 a derivative action, captioned as Alex Fedoroff, Derivatively on Behalf of Nominal Defendant Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore, Susan D. Johnson, et al., was filed in the Superior Court for Middlesex County, Massachusetts, against Sapient, as a nominal defendant, and sixteen of Sapient’s current and former directors and officers. On August 31, 2006, a nearly identical complaint, captioned as Jerry Hamilton, Derivatively on Behalf of Nominal Defendant Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore, Susan D. Johnson, et al., was filed in the same court by a different Company shareholder. Both plaintiffs claimed breaches of fiduciary duty by all defendants for allegedly backdating stock options between 1997 and 2002. The plaintiffs also claimed that some of the defendants were unjustly enriched by receipt of purportedly backdated stock options, and seek unspecified damages, disgorgement of “backdated” stock options and any proceeds received from the exercise and sale of any “backdated” options, costs and attorneys’ fees.

     On October 13, 2006, the Superior Court for Middlesex County, Massachusetts, entered an order consolidating the foregoing derivative actions under the caption In re Sapient Corporation Derivative Litigation. On February 20, 2007, the consolidated complaint was transferred into the Business Litigation Session of the Suffolk Superior Court, Massachusetts under docket number 07-0629 BLS1. On April 25, 2007, the defendants filed a motion to dismiss, which was heard by the Court on May 23, 2007. The case was dismissed on October 30, 2007 and the court further denied the plaintiffs an opportunity to refile a similar claim.

     On October 27, 2006 and October 31, 2006, three additional shareholder derivative actions were filed in the United States District Court for the District of Massachusetts; Mike Lane, Derivatively on Behalf of Sapient Corporation v. J. Stuart Moore, Jerry A. Greenberg, Sheeroy D. Desai, et al. and Sapient Corporation; Marc Doyle, Derivatively on Behalf of Sapient Corporation v. J. Stuart Moore, Jerry A. Greenberg, Sheeroy D. Desai, et al. and Sapient Corporation; and Laurence Halaska, Derivatively on Behalf of Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore, Scott J. Krenz, et al. and Sapient Corporation. The federal derivative actions are substantially similar to the state derivative actions, except that federal derivative actions assert violations of Sarbanes-Oxley and violations of Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act. None of the foregoing derivative actions asserts a claim against the Company for specific monetary damages. On June 21, 2007, the United States District Court for the District of Massachusetts entered an order consolidating the foregoing derivative actions under the caption In re Sapient Corporation Derivative Litigation. On July 21, 2007, the plaintiffs filed an amended complaint, adding five current and former Sapient officers. The defendants filed a motion to dismiss on August 20, 2007, which will be scheduled to be heard by the Court in late 2007 or early 2008.

     On November 30, 2006, the SEC notified us that it had commenced a formal inquiry into our historical stock-based compensation practices. Subsequently, on March 8, 2007, we received a subpoena from the SEC requesting documents relating to this matter, and responded by producing documents. We are cooperating with the SEC and will continue to do so as the inquiry moves forward. At this point, we are unable to predict what, if any, consequences the SEC investigation may have on us. However, the investigation could result in considerable legal expenses, divert management’s attention from other business concerns and harm our business. If the SEC were to commence legal action, we could be required to pay significant penalties and/or fines and could become subject to an administrative order and/or a cease and desist order.

5. Restructuring and Other Related Charges

2006 — Restructure Event

     During the first quarter of 2006, the Company initiated a restructuring plan in the United Kingdom to better position itself to capitalize on market opportunities. As a result, 28 employees were terminated and the Company recorded $332,000 and $240,000 in restructuring and other related charges for severance and termination benefits in the first and second quarters of 2006, respectively, in accordance with SFAS Statement No. 112, Employers’ Accounting for Postemployment Benefits and SFAS No. 146, Accounting for Costs Associated with Exit of Disposal Activities . These charges were recorded in the Europe segment in the Results by Operating Segment. The Company paid approximately $572,000 during 2006. As of December 31, 2006, there was no remaining accrual amount related to this restructuring event.

2005 — Restructure Event

     During the fourth quarter of 2005, the Company initiated a restructuring plan to streamline general and administrative (“G&A”) activities. This initiative included the transfer of certain finance, human resources, and internal IT functions to India and resulted in the reduction of 28 employees and charges of approximately $730,000 cumulative for the 2005 plan to restructuring and other related charges, for severance, termination benefits and stay-bonuses in accordance with SFAS No. 112 and SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. These charges were not recorded to a segment because they impacted an area of the business that supports all business units, but is included in ‘Reconciling items’ in the Results by Operating Segment. The Company paid approximately $505,000 through the end of 2006 and paid approximately $225,000 in the nine months ended September 30, 2007. The following table shows activity during the nine months ended September 30, 2007 related to this restructure event:

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	Workforce
	(In thousands)
Balance, December 31, 2006	$	225
Cash utilized		(225	)
Balance, September 30, 2007	$	—

2001, 2002, 2003 — Restructure Events

     As a result of the decline in the demand for advanced technology consulting services that began in 2000, the Company restructured its workforce and operations in 2001, 2002 and 2003. These charges were not recorded to a segment because they impacted areas of the business that supported the business units, but are included in “Reconciling Items” in the Results by Operating Segment. The restructuring consisted of ceasing operations and consolidating or closing excess offices. Estimated costs for the consolidation of facilities included contractual rental commitments or lease buy-outs for office space vacated and related costs, offset by estimated sublease income.

     During the three and nine months ended September 30, 2007, the Company recorded a net benefit to restructuring and other related charges of approximately $35,000 and $204,000, respectively, primarily related to an increase in sub-lease income associated with the previously restructured facilities. During the three and nine months ended September 30, 2006, the Company recorded restructuring charges of approximately $146,000 and $423,000 respectively, primarily due to changes in assumptions associated with the Company’s various restructured locations. The Company has not finalized sublease agreements for all leases and is currently involved in negotiations to sublease vacant spaces. The following table shows activity during the nine months ended September 30, 2007 related to this restructure event:

	Facilities
	(In thousands)
Balance, December 31, 2006	$	15,383
Adjustment		(204	)
Non-cash, utilized		(53	)
Cash utilized		(2,834	)
Balance, September 30, 2007	$	12,292

     The total remaining accrued restructuring for all events is $12.3 million at September 30, 2007, of which the cash outlay over the next 12 months is expected to be $3.7 million, and the remainder will be paid through 2011.

6. Income Taxes

     The Company has deferred tax assets that have arisen primarily as a result of net operating losses incurred in 2001, 2002 and 2003, as well as other temporary differences between book and tax accounting. SFAS Statement No. 109, Accounting for Income Taxes (“SFAS No. 109”), requires the establishment of a valuation allowance when the realization of deferred tax assets is not considered likely. Significant management judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the net deferred tax assets. As a result of net operating losses incurred from 2001 through 2003, and uncertainty as to the extent, and timing of profitability in future periods at September 30, 2007 the Company has continued to record a valuation allowance against its deferred tax assets in the United States. For the nine months ended September 30, 2007 and 2006, the Company recorded an income tax provision related to continuing operations of approximately $5.9 million and $1.4 million, respectively. The Company’s income tax provision related to continuing operations is primarily related to foreign, federal alternative minimum tax and state tax obligations. Included in the tax provision for the three months ended September 30, 2007 is a deferred tax asset adjustment of approximately $0.9 million that has been recorded on a discrete basis as a result of enacted tax rate changes in Germany and the United Kingdom.

     The Company’s effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction and as a result of acquisitions.

     In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”), which became effective for the Company on January 1, 2007. FIN 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than fifty (50) percent likely of being realized upon ultimate settlement.

     As a result of the implementation of FIN 48, the Company did not recognize a material adjustment in the liability for unrecognized income tax benefits. The Company has gross unrecognized tax benefits of approximately $2.7 million as of January 1, 2007. Of this amount, $2.7 million (net of federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would result in a reduction of the Company’s effective tax rate.

     The Company recognizes interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. As of January 1, 2007, interest accrued was approximately $313,000. As of January 1, 2007, penalties accrued are approximately $33,000.

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          The Company conducts business globally and, as a result, one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as Canada, Germany, India, United Kingdom and the United States. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2002. However, carryforward attributes may still be adjusted upon examination by tax authorities if they are used in a future period.

          On September 5, 2007, the US Parent was selected for audit by the Internal Revenue Service for the year ended 2005. Also, the Company is currently under audit by the Assessing Office in India for the 2004 through 2005 tax year. It is unlikely that these examinations will conclude during 2007.

          The Company does not anticipate that prior to September 30, 2008, total unrecognized tax benefits will significantly change due to the settlement of audits and the expiration of statute of limitations.

          At December 31, 2006, the Company has a federal net operating loss (“NOL”) carryforward of approximately $204 million expiring at various dates through 2025 and research and development (“R&D”) credit carryforwards of $4.8 million expiring at various dates beginning in 2017. Utilization of the NOL and R&D credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future provided by Section 382 of the Internal Revenue Code of 1986 and similar provisions under state and foreign tax codes. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than fifty (50) percentage points over a three-year period. Since the Company’s formation, the Company has raised capital through the issuance of capital stock on several occasions (both pre and post initial public offering) which, combined with the purchasing shareholders’ subsequent disposition of those shares, may have resulted in a change of control, as defined by Section 382, or could result in a change of control in the future upon subsequent disposition. The Company has not currently completed a study to assess whether a change of control has occurred or whether there have been multiple changes of control since the Company’s formation. If we have experienced a change of control at any time since Company formation, utilization of our NOL or R&D credit carryforwards would be subject to an annual limitation under Section 382 which is determined by first multiplying the value of our stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL or R&D credit carryforwards before utilization. Further, until a study is completed and any limitation known, no amounts are being presented as an uncertain tax position under FIN 48.

7. Comprehensive Income

          The components of comprehensive income are presented below for the periods presented in the consolidated and condensed statements of operations:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2007		2006		2007		2006
			(In thousands)
Net income	$	4,421	$	735	$	6,043	$	4,240
Foreign currency translation gain		2,586		917		6,924		1,896
Unrealized gain on investments		27		88		14		446
Comprehensive income	$	7,034	$	1,740	$	12,981	$	6,582

8. Segment Information

          The Company has discrete financial data by operating segments available based on its method of internal reporting, which disaggregates its operations. Operating segments are defined as components of the Company concerning which separate financial information is available to manage resources and evaluate performance. Beginning in the first quarter of 2007, the Company combined its Experience Marketing operating segment with North America Commercial to form “North America” and also combined its United Kingdom and Germany business units to form “Europe.” All operating segment information presented below for prior periods has been updated to conform to current period presentation as a result of these changes.

          Beginning in the first quarter of 2006, the Company stopped allocating certain marketing and general and administrative expenses to its business unit segments, with the exception of Government Services, because these activities are managed separately from the business units. The Company does allocate certain marketing and general and administrative expenses to its Government Services business unit as these activities are managed within that business unit. The Company did not allocate the costs associated with its restructuring events across all operating segments for internal measurement purposes, given that the substantial majority of the restructuring costs were related to the initiative to reengineer general and administrative activities and the consolidation of facilities. The Company did allocate the workforce reduction costs of $572,000 for the nine months ended September 30, 2006 associated with the United Kingdom’s 2006 restructuring plan due to the specific identification of the terminated employees to the Europe business unit. Management does not allocate stock-based compensation to the segments for the review of results for the Chief Operating Decision Maker (“CODM”). Asset information by operating segment is not reported to or reviewed by the CODM and, therefore, the Company has not disclosed asset information for each operating segment.

         The tables below present the service revenues and income from continuing operations before income taxes, discontinued operations

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and cumulative effect of accounting change attributable to these operating segments for the periods presented.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
				(In thousands)
Service Revenues:
North America	$	92,183		$	74,975		$	258,856		$	203,583
Government Services		5,662			4,052			17,146			12,885
Europe		43,745			27,897			115,477			75,553
Consolidated total	$	141,590		$	106,924		$	391,479		$	292,021
Income (Loss) From Continuing Operations:
North America (1)	$	20,314		$	19,141		$	62,046		$	55,587
Government Services (1)		434			980			4,507			2,280
Europe (1)		12,857			8,609			31,813			18,028
Total reportable segments (1)		33,605			28,730			98,366			75,895
Less reconciling items (2)		(25,452	)		(30,129	)		(86,382	)		(74,840	)
Consolidated income (loss) from continuing operations before income taxes, discontinued operations and cumulative effect of accounting change	$	8,153		$	(1,399	)	$	11,984		$	1,055

(1)	Reflects only the direct controllable expenses of each business unit segment. It does not represent the total operating results for each business unit as it does not contain an allocation of certain corporate and general and administrative expenses incurred in support of the business unit segments.
(2)	Adjustments that are made to the total of the segments’ operating income to arrive at consolidated income from continuing operations before income taxes, discontinued operations and cumulative effect of accounting change include the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
				(In thousands)
Centrally managed functions (a)	$	21,663		$	23,591		$	67,696		$	61,582
Restructuring and other related charges (benefits)		(35	)		187			(204	)		763
Amortization of purchased intangible assets		487			842			1,552			2,722
Stock-based compensation expense		4,448			2,868			13,303			8,427
Interest and other income, net		(1,596	)		(1,180	)		(4,115	)		(4,719	)
Unallocated expenses (b)		485			3,821			8,150			6,065
	$	25,452		$	30,129		$	86,382		$	74,840

(a)	Includes marketing, general and administrative and support costs controlled separately from operating segments.
(b)	Includes costs controlled directly by corporate headquarters.

9. Geographic Data

          Data for the geographic regions in which the Company operates is presented below for the periods presented in the consolidated and condensed statements of operations and the consolidated and condensed balance sheets:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2007		2006		2007		2006
			(In thousands)
Service revenues:
United States	$	87,057	$	70,889	$	250,360	$	194,792
International		54,533		36,035		141,119		97,229
Total service revenues	$	141,590	$	106,924	$	391,479	$	292,021

	September 30,		December 31,
	2007		2006
	(In thousands)
Long-lived assets:
United States	$	17,951	$	13,871
International		27,214		24,114
Total long-lived assets	$	45,165	$	37,985

10. Goodwill and Purchased Intangible Assets

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          The following is a summary of goodwill allocated to the Company’s operating segments as of September 30, 2007:

	North America
	(In thousands)
Goodwill as of December 31, 2006	$	38,929
Contingent consideration recorded during the period (1)		1,400
Goodwill as of September 30, 2007	$	40,329

(1)

In May 2007, the Company amended the terms of its earn-out arrangement with the former owners of BIS. Due to the Company’s integration of BIS with its existing segments, the Company agreed to amend the earn-out, to facilitate the calculation of the amount based on the lack of discrete SAP related financial information being readily available post integration. The amendment provides for year two and year three payments of $700,000 in each period. On June 1, 2007, the Company made a cash payment of $700,000 to the former owners of BIS, decreasing the remaining maximum potential future consideration to $1.2 million. A second payment of $700,000 is due on June 1, 2008. Additional potential for performance based payouts of $233,000 may be made in 2007 and 2008, based on performance against set revenue goals for those years. The $700,000 payments under the amendment approximates what management believes the BIS stockholders would have earned under the original agreement if the information to calculate those amounts were readily available. The guaranteed payments were recorded as an increase to goodwill of $1.4 million as of the execution of the amendment. Additional payments, if any, earned as a result of the performance based payments will result in increases to goodwill at the time of payment.

In the second quarter of 2007, the Company paid an additional $183,000 in purchase price consideration related to its acquisition of Business Information Systems, LLC (“BIS”) consummated in June of 2005. The additional consideration is the second of three annual installments. Approximately 28.5% of the redeemable common stock, or 89,474 shares, issued as part of the total purchase consideration for BIS vested during the second quarter of 2007 and as a result the Company reclassified approximately $190,000 of redeemable common stock to additional paid-in capital during the second quarter of 2007.

     The following is a summary of intangible assets as of September 30, 2007 and December 31, 2006:

	September 30, 2007
	Gross					Net
	Carrying		Accumulated			Book
	Amount		Amortization			Value
	(In thousands)
Customer lists and customer relationships	$	8,100	$	(2,977	)	$	5,123
SAP license agreement		1,100		(985	)		115
Non-compete agreements		1,170		(410	)		760
Total purchased intangible assets	$	10,370	$	(4,372	)	$	5,998

	December 31, 2006
	Gross					Net
	Carrying		Accumulated			Book
	Amount		Amortization			Value
	(In thousands)
Customer lists and customer relationships	$	8,100	$	(1,812	)	$	6,288
SAP license agreement		1,100		(775	)		325
Non-compete agreements		1,170		(233	)		937
Total purchased intangible assets	$	10,370	$	(2,820	)	$	7,550

          Amortization expense related to the purchased intangible assets was $487,000 and $842,000 for the three months ended September 30, 2007 and 2006, respectively and $1.6 million and $2.7 million for the nine months ended September 30, 2007 and 2006, respectively.

          The estimated future amortization expense of purchased intangible assets as of September 30, 2007, is as follows:

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	(In thousands)
2007	$	486
2008		1,850
2009		1,785
2010		788
2011		363
2012		363
2013		363
Total	$	5,998

11. Foreign Currency Translation

     Foreign exchange losses of approximately $115,000 and foreign exchange gains of approximately $82,000 for the three months ended September 30, 2007 and 2006, respectively, are included in general and administrative expenses in the consolidated and condensed statements of operations. Foreign exchange losses of approximately $1.2 million and foreign exchange gains of approximately $875,000 for the nine months ended September 30, 2007 and 2006, respectively, are included in general and administrative expenses in the consolidated and condensed statements of operations. These gains and losses were primarily related to intercompany foreign currency transactions that were of a short-term nature.

12. Stock Buyback

          On November 16, 2004, the Company’s Board of Directors authorized up to $25.0 million in funds for use in the Company’s common stock repurchase program. On February 10, 2006 the Board of Directors authorized an additional $25.0 million in funds for use in such programs. Sapient has announced that it will repurchase shares on the open market or in private transactions from time to time depending on market conditions. Each authorization shall continue for a period of two years from its inception or until it is discontinued by the Board of Directors. The Company repurchased approximately 3.4 million shares of its common stock at an average price of $5.26 per share for an aggregate purchase price of approximately $18.1 million during the nine months ended September 30, 2006. No repurchases were made in the first or second quarter of 2007. In the third quarter of 2007, the Company repurchased approximately 608,000 shares of its common stock at an average price of $6.20 per share for an aggregate purchase price of $3.8 million. The first $25.0 million of authorized funds had been used in its entirety prior to its expiration. As of September 30, 2007, $10.5 million remained available for repurchase under the buy back plan authorized on February 10, 2006.

13. Discontinued Operations

     On May 2, 2006, the Company sold 100% of its investment in HWT, Inc. (“HWT”), the Company’s majority-owned, fully consolidated subsidiary, for which it received net cash proceeds of approximately $5.4 million and recorded a gain of $4.8 million on disposal (after tax) during the second quarter of fiscal 2006. Net assets sold included cash of approximately $274,000. At the time of the sale, the Company recorded a receivable for $1.4 million related to the holdback and escrow and also recorded a payable of $213,000 representing the portion of the escrow and holdback that is due to minority stockholders. During the first quarter of 2007, the Company received approximately $530,000 of proceeds related to the holdback and escrow and paid approximately $94,000 to minority stockholders. In addition, the Company could receive up to $4.0 million in earn-out payments over 2007 and 2008, cumulatively, which will be recorded when and if earned. Gross revenues for HWT were $1.3 million for the nine months ended September 30, 2006. The loss of the discontinued operation was $433,000 for the nine months ended September 30, 2006. The Company has reflected HWT’s historical results as discontinued operations in its consolidated and condensed statements of operations for the three and nine months ended September 30, 2006. During the second quarter of 2007, the Company was notified by the purchaser that the Company did not qualify for an earnout payment. The maximum remaining amount the Company could receive in earnout payments is $4.0 million.

14. Recent Accounting Pronouncements

           In September 2006, the FASB issued SFAS Statement No. 157, Fair Value Measurement (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company has not yet determined the effect, if any, that the application of SFAS No. 157 will have on its consolidated financial statements.

          In February 2007, the FASB issued SFAS Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115 , (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. If the fair value option is elected, a business entity shall report unrealized gains and losses on elected items in earnings at each subsequent reporting date. Upon initial adoption of this Statement, an entity is permitted to elect the fair value option for available-for-sale and held-to-maturity securities previously accounted for under SFAS Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities (“SFAS No. 115”). The effect of reclassifying those securities into the trading category should be included in a cumulative-effect adjustment of retained earnings and not in current-period earnings and should be separately disclosed. SFAS 159 is effective as of the beginning of the first fiscal year that

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begins after November 15, 2007. The Company has not yet determined the effect, if any, that the application of SFAS No. 159 will have on its consolidated financial statements.

15. Prepaid Expenses and Other Current Assets, Other Assets and Other Current Accrued Liabilities

          The following is a table summarizing the components of selected balance sheet items as of September 30, 2007 and December 31, 2006.

	September 30, 2007		December 31, 2006
	(In thousands)
Prepaid expenses and other current assets:
Deferred tax assets, current portion	$	856	$	815
Prepaid insurance		1,362		1,053
Prepaid media		6,792		7,910
Prepaid rent		2,416		1,715
VAT tax receivable		4,186		2,803
Other current assets		9,534		6,269
	$	25,146	$	20,565
Other Assets:
Deferred tax assets, net of current portion	$	3,695	$	5,085
Other assets		4,195		3,939
	$	7,890	$	9,024
Other current accrued liabilities:
Accrued media	$	13,859	$	12,796
Accrued accounts payable		16,658		16,798
VAT tax payable		8,173		5,262
Other accrued expenses		8,764		7,291
Income taxes payable		1,340		4,921
	$	48,794	$	47,068

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SAPIENT CORPORATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

     Sapient helps clients innovate their businesses in the areas of marketing, business operations and technology. Leveraging a unique approach, breakthrough thinking and disciplined execution, Sapient strives to deliver the right business results on time and on budget. Founded in 1991, Sapient is headquartered in Cambridge, Massachusetts, and has offices throughout the United States and Canada, and in Germany, the Netherlands, India, United Kingdom, Sweden and Switzerland.

     On January 3, 2006, we acquired Planning Group International, Inc. (“PGI”). Through this acquisition we have enhanced our strengths in advertising, digital and direct marketing, brand development, data mining, customer acquisition and loyalty, paid search, and media planning and buying strategies and services. We believe that our acquisition of PGI expands our opportunities to help our clients exploit the possibilities created by the rapid evolution of media, advertising, and technology and derive measurable value from their marketing investments.

     Our service revenues for the third quarter of 2007 were $141.6 million, a 32% increase compared to service revenues for the third quarter of 2006. The growth in service revenues is due to an increase in demand for our services on a worldwide basis. Revenues increased by 57% in our Europe operating segment, and by 40% and 23% in our Government Services and North America operating segments, respectively.

     Our Global Distributed Delivery (“GDD”) methodology continues to be important to our clients’ success. This proprietary methodology allows us to provide high-quality, cost-effective solutions under accelerated project schedules. By engaging our staff in India, which is comprised of researchers, project managers, creative designers and technologists, we can provide services at lower total costs as well as offer a continuous delivery capability resulting from time differences between India and the countries we serve. We also employ our GDD methodology to provide application management services. Our billable days, or level of effort, incurred by our India people as a percentage of total Company billable days remained constant for the third quarter of 2007 at 61% compared to the second quarter of 2007 and 57% in the third quarter of 2006.

     For the third quarter of 2007, we reported income from continuing operations of $4.4 million compared to income from continuing operations of $735,000 in the third quarter of 2006, and we reported net income of $4.4 million compared to net income of $735,000 in the third quarter of 2006. The improvement in income from continuing operations is the result of multiple factors including decreases in restructuring and other related charges, lower amortization of intangible assets and operational performance improvement partially offset by greater compensation costs and expenses incurred related to our review of (and restatement resulting from) our historical stock—based compensation practices. For the nine months ended September 30, 2007, we reported income from continuing operations of $6.0 million compared to a loss from continuing operations of $315,000 for the nine months ended September 30, 2006 and we reported net income of $6.0 million for the nine months ended September 30, 2007 compared to $4.2 million for the nine months ended September 30, 2006. Our net income for the nine months ended September 30, 2006 includes $1.6 million related to insurance proceeds included in interest and other income as well as a gain on disposal of discontinued operations of $4.8 million.

     Any decline in our service revenues will have a significant impact on our financial results, particularly because a significant portion of our operating costs (such as salary expense, rent expense, depreciation expense and amortization of intangible assets) are fixed in advance of a particular quarter. In addition, our future operating segment and overall Company revenues and operating results may fluctuate from quarter to quarter based on the number, size and scope of projects in which we are engaged, the contractual terms and degree of completion of such projects, any delays incurred in connection with a project, employee utilization rates, the adequacy of provisions for losses, the use of estimates of resources required to complete ongoing projects, general economic conditions and other factors.

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Summary of Critical Accounting Policies; Significant Judgments and Estimates

     We have identified the accounting policies which are critical to understanding our business and our results of operations. Management believes that there have been no significant changes during the nine months ended September 30, 2007 to the items disclosed as our summary of critical accounting policies, significant judgments and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 other than those described herein.

Accounting for Income Taxes

     In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”), which became effective for the Company on January 1, 2007. FIN 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than fifty (50) percent likely of being realized upon ultimate settlement.

     As a result of the implementation of FIN 48, the Company did not recognize a material adjustment to our liability for unrecognized income tax benefits. The Company has gross unrecognized tax benefits of approximately $2.7 million as of January 1, 2007. Of this amount, $2.7 million (net of federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would result in a reduction of the Company’s effective tax rate.

     The Company recognizes interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. As of January 1, 2007, interest accrued was approximately $313,000. As of January 1, 2007, penalties accrued are approximately $33,000.

     The Company conducts business globally and, as a result, one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the United States, Canada, Germany, India, and the United Kingdom. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2002. However, carryforward attributes may still be adjusted upon examination by tax authorities if they are used in a future period.

          On September 5, 2007, the US Parent was selected for audit by the Internal Revenue Service for the year ended 2005. Also, the Company is currently under audit by the Assessing Office in India for the 2004 through 2005 tax year. It is unlikely that these examinations phase of the audit will conclude during 2007.

     The Company does not anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits and the expiration of statute of limitations prior to September 30, 2008.

     At December 31, 2006, the Company has a federal net operating loss (“NOL”) carryforward of approximately $204 million expiring at various dates through 2025 and research and development (“R&D”) credit carryforwards of $4.8 million expiring at various dates beginning in 2017. Utilization of the NOL and R&D credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future provided by Section 382 of the Internal Revenue Code of 1986 and similar provisions under state and foreign tax codes. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than fifty (50) percentage points over a three-year period. Since the Company’s formation, the Company has raised capital through the issuance of capital stock on several occasions (both pre and post initial public offering) which, combined with the purchasing shareholders’ subsequent disposition of those shares, may have resulted in a change of control, as defined by Section 382, or could result in a change of control in the future upon subsequent disposition. The Company has not currently completed a study to assess whether a change of control has occurred or whether there have been multiple changes of control since the Company’s formation. If we have experienced a change of control at any time since Company formation, utilization of our NOL or R&D credit carryforwards would be subject to an annual limitation under Section 382 which is determined by first multiplying the value of our stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL or R&D credit carryforwards before utilization. Further, until a study is completed and any limitation known, no amounts are being presented as an uncertain tax position under FIN 48.

Results of Operations

     The following table sets forth the percentage of our service revenues of items included in our consolidated and condensed statements of operations:

17

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
Revenues:
Service revenues		100	%		100	%		100	%		100	%
Reimbursable expenses		3	%		4	%		4	%		4	%
Total gross revenues		103	%		104	%		104	%		104	%
Operating expenses:
Project personnel expenses		68	%		68	%		68	%		67	%
Reimbursable expenses		3	%		4	%		4	%		4	%
Total project personnel expenses and reimbursable expenses		72	%		72	%		72	%		71	%
Selling and marketing expenses		6	%		5	%		6	%		6	%
General and administrative expenses		21	%		28	%		23	%		27	%
Restructuring and other related charges (benefits)		0	%		0	%		0	%		0	%
Amortization of purchased intangible assets		0	%		1	%		0	%		1	%
Total operating expenses		99	%		106	%		102	%		105	%
Income (loss) from operations		5	%		(2	%)		2	%		(1	%)
Interest and other income, net		1	%		1	%		1	%		2	%
Income (loss) from continuing operations before income taxes, discontinued operations and cumulative effect of accounting change		6	%		(1	%)		3	%		0	%
Provision (benefit) for income taxes		3	%		(2	%)		2	%		0	%
Income (loss) from continuing operations before discontinued operations and cumulative effect of accounting change		3	%		1	%		2	%		(0	%)
Loss from discontinued operations		0	%		0	%		0	%		0	%
Gain on disposal of discontinued operations, net of tax provision		0	%		0	%		0	%		2	%
Income before cumulative effect of accounting change		3	%		1	%		2	%		2	%
Cumulative effect of accounting change		0	%		0	%		0	%		0	%
Net income		3	%		1	%		2	%		2	%

     Three and Nine Months Ended September 30, 2007 Compared to Three and Nine Months Ended September 30, 2006

Service Revenues

     Our service revenues for the three and nine months ended September 30, 2007 and 2006 were as follows:

	Three Months Ended
	September 30,		September 30,				Percentage
	2007		2006		Increase		Increase
	(In thousands, except percentages)
Service revenues	$	141,590	$	106,924	$	34,666		32	%

	Nine Months Ended
	September 30,		September 30,				Percentage
	2007		2006		Increase		Increase
	(In thousands, except percentages)
Service revenues	$	391,479	$	292,021	$	99,458		34	%

     Our service revenues increased by 32% in U.S. dollars and 29% in local currency terms during the three months ended September 30, 2007 compared to the same period in 2006. Our service revenues increased by 34% in U.S. dollars and 31% in local currency terms during the nine months ended September 30, 2007 compared to the same period in 2006. The increases for both periods were driven by organic growth in all of our operating segments. Our recurring revenues were 40% of our service revenues in the third quarter of 2007 compared to 33% in the third quarter of 2006. Recurring revenues are revenue commitments of one year or more in which the client has committed spending levels to us or chosen us as an exclusive provider of certain services.

     For the three and nine months ended September 30, 2007, our five largest customers accounted for approximately 27% of our service revenues in the aggregate, which represents an increase compared to 25% for the three and nine months ended September 30, 2006. Sprint Nextel accounted for approximately 10% of our service revenues in the third quarter of 2007 and 11% of our service revenues in the third quarter 2006. For the nine months ended September 30, 2007, Sprint Nextel accounted for approximately 10% of our service revenues. No customers accounted for more than 10% of our service revenues for the nine months ended September 30, 2006.

     Our utilization of 74% for the three and nine months ended September 30, 2007 was slightly lower than the 77% and 78% rate we had during the three and nine months ended September 30, 2006, respectively, however we increased our average number of delivery people by 36% as compared to the three months ended September 30, 2006 and by 41% as compared to the nine months ended September 30, 2006.

Project Personnel Expenses

     Project personnel expenses consist principally of salaries and employee benefits for personnel dedicated to client projects, independent contractors and direct expenses incurred to complete projects that were not reimbursed by the client. These expenses represent the most significant expense we incur in providing our services.

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	Three Months Ended
	September 30,			September 30,					Percentage
	2007			2006			Increase		Increase
	(In thousands, except percentages)
Project personnel expenses	$	96,694		$	72,811		$	23,883		33	%
Project personnel expenses as a percentage of service revenues		68	%		68	%		—

	Nine Months Ended
	September 30,			September 30,					Percentage
	2007			2006			Increase		Increase
	(In thousands, except percentages)
Project personnel expenses	$	267,681		$	196,984		$	70,697		36	%
Project personnel expenses as a percentage of service revenues		68	%		67	%		1

     Project personnel expenses increased by $23.9 million for the three months ended September 30, 2007 as compared to the same period in 2006. The increase in expense was due to the addition of 1,162 people from September 30, 2006 through September 30, 2007, which increased salary and travel related expenses by $17.2 million, additional stock-based and other incentive compensation-related expenses of $2.4 million and incremental fees paid to independent contractors of $3.5 million for the three months ended September 30, 2007 as compared to the same period in 2006. Project personnel expenses as a percentage of service revenues for the three months ended September 30, 2007 remained constant as compared to the same period in 2006.

     Project personnel expenses increased by $70.7 million for the nine months ended September 30, 2007 as compared to the same period in 2006 and also increased as a percentage of service revenues over the nine months ended September 30, 2007 compared to the same period in 2006. The increase in expense was due to the addition of 1,162 people from September 30, 2006 through September 30, 2007, which increased salary and travel related expenses by $49.1 million, additional stock-based and other incentive compensation-related expenses of $8.0 million and incremental fees paid to independent contractors of $12.0 million for the nine months ended September 30, 2007 as compared to the same period in 2006. The increase in project personnel expenses as a percentage of service revenues for the nine months ended September 30, 2007 as compared to the same period in 2006 is primarily a result of the additional stock based compensation-related expenses and the use of independent contractors, which was partially offset by lower costs per person as the average mix of India-based people increased from 58% for the nine months ended September 30, 2006 to 66% for the nine months ended September 30, 2007.

Selling and Marketing Expenses

     Selling and marketing expenses consist principally of salaries, employee benefits and travel expenses of selling and marketing personnel, and promotional expenses.

	Three Months Ended
	September 30,			September 30,					Percentage
	2007			2006			Increase		Increase
	(In thousands, except percentages)
Selling and marketing expenses	$	8,664		$	5,670		$	2,994		53	%
Selling and marketing expenses as a percentage of service revenues		6	%		5	%		1

	Nine Months Ended
	September 30,			September 30,					Percentage
	2007			2006			Increase		Increase
	(In thousands, except percentages)
Selling and marketing expenses	$	24,413		$	17,092		$	7,321		43	%
Selling and marketing expenses as a percentage of service revenues		6	%		6	%		—

     Selling and marketing expenses increased by $3.0 million for the three months ended September 30, 2007 as compared to the same period in 2006. The increase in expense was primarily due to an increase in commission and compensation expenses of $2.3 million.

     Selling and marketing expenses increased by $7.3 million for the nine months ended September 30, 2007 as compared to the same period in 2006. The increase in expense was primarily due to an increase in commission and compensation expenses of $3.6 million, stock-based and other incentive compensation of $1.1 million and increased training and other marketing related expenses of $1.0 million for the nine months ended September 30, 2007.

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General and Administrative Expenses

     General and administrative expenses relate principally to salaries and employee benefits associated with our management, legal, finance, information technology, hiring, training and administrative groups, and depreciation and occupancy expenses.

	Three Months Ended
	September 30,			September 30,			Increase			Percentage
	2007			2006			(Decrease)			Decrease
	(In thousands, except percentages)
General and administrative expenses	$	29,223		$	29,993		$	(770	)		(3	)%
General and administrative expenses as a percentage of service revenues		21	%		28	%		(7	)

	Nine Months Ended
	September 30,			September 30,			Increase			Percentage
	2007			2006			(Decrease)			Increase
	(In thousands, except percentages)
General and administrative expenses	$	90,168		$	77,552		$	12,616			16	%
General and administrative expenses as a percentage of service revenues		23	%		27	%		(4	)

     General and administrative expenses decreased $0.8 million for the three months ended September 30, 2007 as compared to the same period in 2006, and decreased as a percentage of service revenues over the same period. An increase in expense of $2.1 million for the three months ended September 30, 2007 was due to an increase in headcount and related compensation expense to support the Company’s growth. The average general and administrative headcount for the three months ended September 30, 2007 was 785 compared to an average of 551 for the three months ended September 30, 2006. An increase in depreciation expense of $1.7 million for the three months ended September 30, 2007 was due to the addition of new software licenses as well as additions for leasehold improvement for new office facilities. These increases were offset by a decrease of $3.9 million in expenses related to the Company’s restatement effort. General and administrative expenses for the three months ended September 30, 2007 and 2006 include approximately $115,000 of foreign exchange losses and approximately $82,000 of foreign exchange gains, respectively.

     General and administrative expenses increased by $12.6 million for the nine months ended September 30, 2007 as compared to the same period in 2006, but decreased as a percentage of service revenues over the same period. Expenses associated with the Company’s restatement effort in the nine months ended September 30, 2007 were responsible for $2.6 million of the increase. An increase in expense of $5.1 million for the nine months ended September 30, 2007 was due to an increase in headcount and related compensation expense to support the Company’s growth. The average general and administrative headcount for the nine months ended September 30, 2007 was 777 compared to an average of 538 for the nine months ended September 30, 2006. An increase of $1.6 million for the nine months ended September 30, 2007 was due to an increase in stock based compensation expense. General and administrative expenses for the nine months ended September 30, 2007 and 2006 include approximately $1.2 million of foreign exchange losses and approximately $875,000 of foreign exchange gains, respectively. General and administrative expenses for the nine months ended September 30, 2007 and 2006 include a recovery of allowance for doubtful accounts of approximately $0.1 million and a provision for doubtful accounts of $1.6 million, respectively.

     The decrease in general and administrative expenses for the three and nine months ended September 30, 2007 as a percentage of service revenues is a result of lower personnel costs per person associated with the increased mix of India-based general and administration personnel. As of September 30, 2007, we had 779 general and administrative people of which 530, or 68% were India-based. By comparison, as of September 30, 2006, we employed 546 people of which 356, or 65% were India-based.

Restructuring and Other Related Charges

2006 — Restructure Event

     During the first quarter of 2006, we initiated a restructuring plan in the United Kingdom to better position us to capitalize on market opportunities. As a result, 28 employees were terminated and we recorded $332,000 and $240,000 in restructuring and other related charges for severance and termination benefits in the first and second quarters of 2006, respectively, in accordance with SFAS Statement No. 112, Employers’ Accounting for Postemployment Benefits and SFAS No. 146, Accounting for Costs Associated with Exit of Disposal Activities. These charges were recorded in the Europe segment in our Results by Operating Segment. The Company paid approximately $572,000 during 2006. As of December 31, 2006, there was no remaining accrual amount related to this restructuring event.

2005 — Restructure Event

     During the fourth quarter of 2005, we initiated a restructuring plan to streamline general and administrative (“G&A”) activities. This initiative included the transfer of certain finance, human resources, and internal IT functions to India and resulted in the reduction of 28 employees and charges of approximately $730,000 cumulative for the 2005 plan to restructuring and other related charges, for severance, termination benefits and stay-bonuses in accordance with SFAS No. 112 and SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. These charges were not recorded to a segment because they impacted an area of the business that supports all business units, but is included in ‘Reconciling items’ in the Results by Operating Segment. We paid approximately $505,000 through the end of 2006 and paid approximately $225,000 in the

20

nine months ended September 30, 2007. The following table shows activity during the nine months ended September 30, 2007 related to this restructure event:

	Workforce
	(In thousands)
Balance, December 31, 2006	$	225
Cash utilized		(225	)
Balance, September 30, 2007	$	—

2001, 2002, 2003 — Restructure Events

     As a result of the decline in the demand for advanced technology consulting services that began in 2000, we restructured our workforce and operations in 2001, 2002 and 2003. These charges were not recorded to a segment because they impacted areas of the business that supported the business units, but are included in “Reconciling Items” in the Results by Operating Segment. The restructuring consisted of ceasing operations and consolidating or closing excess offices. Estimated costs for the consolidation of facilities included contractual rental commitments or lease buy-outs for office space vacated and related costs, offset by estimated sublease income.

     During the three and nine months ended September 30, 2007, we recorded a net benefit to restructuring and other related charges of approximately $35,000 and $204,000 respectively, primarily related to an increase in sub-lease income associated with the previously restructured facilities. During the three and nine months ended September 30, 2006, the Company recorded restructuring charges of approximately $146,000 and $423,000 respectively, primarily due to changes in assumptions associated with the Company’s various restructured locations. We have not finalized sublease agreements for all leases and is currently involved in negotiations to sublease vacant spaces. The following table shows activity during the nine months ended September 30, 2007 related to this restructure event:

	Facilities
	(In thousands)
Balance, December 31, 2006	$	15,383
Adjustment		(204	)
Non-cash, utilized		(53	)
Cash utilized		(2,834	)
Balance, September 30, 2007	$	12,292

     The total remaining accrued restructuring for all events is $12.3 million at September 30, 2007, of which the cash outlay over the next 12 months is expected to be $3.7 million, and the remainder will be paid through 2011.

     These restructuring charges and accruals require significant estimates and assumptions, including sub-lease income assumptions. The consolidation of facilities required us to make estimates, which included contractual rental commitments or lease buy-outs for office space vacated and related costs, offset by estimated sub-lease income. Our sub-lease assumptions include anticipated rates to be charged to a sub-tenant and the timing of the sub-lease arrangement. These estimates and assumptions are monitored on a quarterly basis for changes in circumstances. It is reasonably possible that such estimates could change in the future, resulting in additional adjustments and these adjustments could be material.

Amortization of Intangible Assets

     During the third quarter of 2007, amortization of intangible assets consisted of amortization of intangible assets related to: non-compete and non-solicitation agreements and customer list related to the 2006 Planning Group International (“PGI”) acquisition, SAP license agreement and customer list relating to the 2005 Business Information Solutions, LLC (“BIS”) acquisition. Amortization expense related to intangible assets was $487,000 and $842,000 for the three months ended September 30, 2007 and 2006, respectively, and $1.6 million and $2.7 million for the nine months ended September 30, 2007 and 2006, respectively. The decrease in amortization expense was due to backlog related to the PGI acquisition which became fully amortized in the fourth quarter of 2006.

Interest and Other Income, Net

     Interest and other income are derived primarily from investments in U.S. government securities, tax-exempt, short-term municipal bonds and commercial paper.

	Three Months Ended
	September 30,		September 30,				Percentage
	2007		2006		Increase		Increase
	(In thousands, except percentages)
Interest and other income, net	$	1,596	$	1,180	$	416		35	%

	Nine Months Ended
	September 30,		September 30,		Increase			Percentage
	2007		2006		(Decrease)			Decrease
	(In thousands, except percentages)
Interest and other income, net	$	4,115	$	4,719	$	(604	)		(13	%)

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     The increase for the three months ended September 30, 2007 as compared to the same period in 2006 was primarily related to an increase in interest income due to a higher average cash balances on hand. The decrease for the nine months ended September 30, 2007 as compared to the same period in 2006 was primarily due to the decrease in other income. During the three and nine months ended September 30, 2006, interest and other income included approximately $127,000  and $1.7 million of insurance proceeds, respectively. Other income included business interruption proceeds of approximately $394,000 in the first quarter of 2006 and $283,000 in the second quarter of 2006. These amounts were received in connection with a fire that occurred in our Gurgaon, India office during the first quarter of 2005. The fire did not have a material effect on our business or in our ability to serve our clients. The decrease in other income was partially offset by an increase in interest income. Interest income has increased as a result of improved interest rates.

Provision for Income Taxes

     We have deferred tax assets which have arisen primarily as a result of net operating losses incurred in 2001, 2002 and 2003, as well as other temporary differences between book and tax accounting. Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We evaluate all available evidence, such as recent and expected future operating results by tax jurisdiction, current and enacted tax legislation and other temporary differences between book and tax accounting, to determine whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. As a result of operating losses incurred in 2001, 2002 and 2003, and uncertainty as to the extent and timing of profitability in future periods, we have recorded a full valuation allowance as of September 30, 2007 relating to our deferred tax assets in the United States. Having assessed the ability to realize the deferred tax assets in certain foreign jurisdictions, we believe that future taxable income will be sufficient to realize the benefit of the deferred tax assets in Canada, the United Kingdom, and Germany. The establishment and amount of the valuation allowance requires significant estimates and judgment and can materially affect our results of operations. If the realization of our United States deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such determination was made.

     Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction and as a result of acquisitions. For the nine months ended September 30, 2007 and 2006, the Company recorded an income tax provision related to continuing operations of approximately $5.9 million and $1.4 million, respectively. Included in the tax provision for the three months ended September 30, 2007 is a deferred tax asset adjustment of approximately $0.9 million that has been recorded as a result of enacted tax rate changes in Germany and the United Kingdom. The Company’s income tax provision related to continuing operations is primarily related to foreign, federal alternative minimum tax and state obligations. Our forecasted 2007 annual effective tax rate is greater than the US statutory income tax rate due to profitability in foreign jurisdictions and US losses that do not benefit our rate due to the current full valuation allowance against the US deferred tax assets.

Results by Operating Segment

     We have discrete financial data by operating segments available based on our method of internal reporting, which disaggregates our operations. Operating segments are defined as components of the Company concerning which separate financial information is available to manage resources and evaluate performance. Beginning in the first quarter of 2007, the Company combined its Experience Marketing operating segment with North America Commercial to form “North America” and also combined its United Kingdom and Germany business units to form “Europe”. All operating segment information presented below for prior periods has been updated to conform to current period presentation as a result of these changes.

     Beginning in the first quarter of 2006, we do not allocate certain marketing and general and administrative expenses to our operating segments because these activities are managed separately from the business units. We do allocate certain marketing and general and administrative expenses to our Government Services business unit as these activities are managed within the business unit. We did not allocate the costs associated with our restructuring events across our operating segments for internal measurement purposes, given that the substantial majority of the restructuring costs were related to the initiative to reengineer general and administrative activities and the consolidation of facilities. We did allocate the workforce reduction costs of $572,000 for the nine months ended September 30, 2006 associated with the United Kingdom’s 2006 restructuring plan due to the specific identification of the terminated employees to the Europe business unit. Management does not allocate stock-based compensation to the segments for the review of results for the Chief Operating Decision Maker (“CODM”). Asset information by operating segment is not reported to or reviewed by the CODM and, therefore, we have not disclosed asset information for each operating segment.

     The tables below present the service revenues and income (loss) from continuing operations before income taxes, discontinued operations and cumulative effect of accounting change attributable to these operating segments for the periods presented.

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	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
	(In thousands)
Service Revenues:
North America	$	92,183		$	74,975		$	258,856		$	203,583
Government Services		5,662			4,052			17,146			12,885
Europe		43,745			27,897			115,477			75,553
Consolidated total	$	141,590		$	106,924		$	391,479		$	292,021
Income (Loss) From Continuing Operations:
North America (1)	$	20,314		$	19,141		$	62,046		$	55,587
Government Services (1)		434			980			4,507			2,280
Europe (1)		12,857			8,609			31,813			18,028
Total reportable segments (1)		33,605			28,730			98,366			75,895
Less reconciling items (2)		(25,452	)		(30,129	)		(86,382	)		(74,840	)
Consolidated income (loss) from continuing operations before income taxes, discontinued operations and cumulative effect of accounting change
	$	8,153		$	(1,399	)	$	11,984		$	1,055

(1)	Reflects only the direct controllable expenses of each business unit segment. It does not represent the total operating results for each business unit as it does not contain an allocation of certain corporate and general and administrative expenses incurred in support of the business unit segments.
(2)	Adjustments that are made to the total of the segments’ operating income to arrive at consolidated income from continuing operations before income taxes, discontinued operations and cumulative effect of accounting change include the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2007			2006			2007			2006
	(In thousands)
Centrally managed functions (a)	$	21,663		$	23,591		$	67,696		$	61,582
Restructuring and other related charges (benefits)		(35	)		187			(204	)		763
Amortization of purchased intangible assets		487			842			1,552			2,722
Stock-based compensation expense		4,448			2,868			13,303			8,427
Interest and other income, net		(1,596	)		(1,180	)		(4,115	)		(4,719	)
Unallocated expenses (b)		485			3,821			8,150			6,065
	$	25,452		$	30,129		$	86,382		$	74,840

(a)	Includes marketing, general and administrative and support costs controlled separately from operating segments.
(b)	Includes costs controlled directly by corporate headquarters.

Service Revenues by Operating Segments

     Consolidated service revenues for the third quarter of 2007 compared to the third quarter of 2006 increased 32% in U.S. dollars and 29% in local currency terms. Service revenues for our North America operating segment increased 23% for the third quarter of 2007 as compared to the third quarter of 2006. Service revenues for our Europe operating segment increased 57%, or 46% in local currency, for the third quarter of 2007 as compared to the third quarter of 2006. The increases in both operating segments are a result of organic growth, as we continue to experience strong demand in both marketplaces. Service revenues for our Government Services operating segment increased 40% in the third quarter of 2007 as compared to the third quarter of 2006.

     Consolidated service revenues for the nine months ended September 30, 2007, compared to the same period of 2006, increased 34% in U.S. dollars and 31% in local currency terms. Service revenues for our North America operating segment increased 27% for the nine months ended September 30, 2007 as compared to the same period of 2006. Service revenues for our Europe operating segment increased 53%, or 41% in local currency, for the nine months ended September 30, 2007 as compared to the same period of 2006. The increases in both operating segments are a result of organic growth, as we continue to experience strong demand in both marketplaces. Service revenues for our Government Services operating segment increased 33% for the nine months ended September 30, 2007 as compared to the same period of 2006.

Operating Income by Operating Segments

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     Our North America operating segment experienced an increase in operating profit of $1.2 million, or 6%, in the third quarter of 2007 as compared to the third quarter of 2006. Our Europe operating segment experienced an increase in operating profit of $4.2 million, or 49%, in the third quarter of 2007 as compared to the third quarter of 2006. Our Government Services operating segment experienced a decrease in operating profit of $0.5 million in the third quarter of 2007 as compared to the third quarter of 2006.

     Our North America operating segment experienced an increase in operating profit of $6.5 million, or 12%, in the nine months ended September 30, 2007 as compared to the same period of 2006. Our Europe operating segment experienced an increase in operating profit of $13.8 million, or 76%, in the nine months ended September 30, 2007 as compared to the same period of 2006. Our Government Services operating segment experienced an increase in operating profit of $2.2 million in the nine months ended September 30, 2007 as compared to the same period of 2006.

Liquidity and Capital Resources

     We invest our excess cash predominantly in instruments that are highly liquid, investment grade securities. At September 30, 2007, we had approximately $147.4 million in cash, cash equivalents, restricted cash and marketable securities, compared to $128.8 million at December 31, 2006. We have deposited approximately $1.7 million with various banks as collateral for letters of credit and performance bonds and have classified this cash as restricted on our consolidated and condensed balance sheet at September 30, 2007.

     In our Annual Report on the Form 10-K for the year ended December 31, 2006, under the heading Liquidity and Capital Resources, we outlined our contractual obligations. For the nine months ended September 30, 2007, there have been no material changes in our contractual obligations except for those disclosed in footnote 6 relating to the adoption of FIN 48.

        Cash provided by operating activities was $26.6 million for the nine months ended September 30, 2007. This resulted primarily from an increase in accrued compensation of $8.6 million, an increase in deferred revenues of $2.5 million, net income of $6.0 million and non-cash charges of $27.3 million, including depreciation and amortization expense of $12.4 million, stock-based compensation expense of $13.3 million and deferred income taxes of $1.7 million. This was partially offset by an increase in accounts receivable of $6.3 million, an increase in unbilled revenues of $2.1 million, an increase in prepaid expenses and other current assets of $3.8 million, a decrease in accrued restructuring costs of $3.5 million and a decrease in accounts payable of $5.5 million.

     Days sales outstanding (“DSO”) is calculated based on actual three months of total revenue and period end receivables, unbilled and deferred revenue balances. DSO decreased to 62 days for the third quarter of 2007 as compared to 80 days in the second quarter of 2007. Approximately 51% of our services revenue for the third quarter of 2007 was derived from time and materials arrangements as compared to 49% for the third quarter of 2006. Because of the growing trend in revenue generated from time and materials arrangements and the fact that they are billed one month in arrears, we expect our unbilled revenue balance to increase at the end of a fiscal quarter as our service revenues increase. We expect our unbilled revenues to be short-term in nature, with a majority being billed within 90 days.

     Cash provided by investing activities was $4.9 million for the nine months ended September 30, 2007. This was due to $19.9 million of net sales and maturities of marketable securities, $0.4 million of net proceeds related to our sale of HWT and an increase in restricted cash of $0.4 million, partially offset by $15.0 million of purchases of property and equipment and costs of internally developed software and $0.9 million of cash payments related to our BIS acquisition, which included $0.7 million paid to the former owners of BIS related to the earn-out arrangement and a scheduled deferred purchase price payment of $0.2 million.

        Cash provided by financing activities was $2.1 million for the nine months ended September 30, 2007 as a result of proceeds from stock option and purchase plans of $6.0 million, offset by $3.8 million in the repurchase of common stock and principal payments under capital lease obligations of $0.1 million.

     During the fourth quarter, the Company began entering into a number of zero cost currency hedges to partially protect its India Rupee denominated operating expenses against appreciation in the Rupee relative to the US dollar by selling the majority of its right to gains if the Rupee depreciates relative to the US dollar. Appreciation of the Rupee relative to the US dollar could result in payments to the Company that would partially offset income statement currency losses while depreciation of the Rupee relative to the U.S. dollar could result in payments by the Company that would partially offset income statement currency gains. Currently, the Company is entering into 30 day average rate instruments covering a rolling 90 day period with notional amounts of 250 million Rupees per month (approximately $6.5 million USD).

     On November 16, 2004, the Company’s Board of Directors authorized up to $25.0 million in funds for use in the Company’s common stock repurchase program. On February 10, 2006 the Board of Directors authorized an additional $25.0 million in funds for use in such programs. Sapient has announced that it will repurchase shares on the open market or in private transactions from time to time depending on market conditions. Each authorization shall continue for a period of two years from its inception or until it is discontinued by the Board of Directors. The Company repurchased approximately 3.4 million shares of its common stock for an aggregate purchase price of approximately $18.1 million during the nine months ended September 30, 2006. No repurchases were made in the first or second quarter of 2007. In the third quarter of 2007, the Company repurchased approximately 608,000 shares of its common stock for an aggregate purchase price of $3.8 million. The first $25.0 million of authorized funds had been used in its entirety prior to its expiration. As of September 30, 2007, $10.5 million remained available for repurchase under the buy back plan authorized on February 10, 2006.

     The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. The Company is subject to various legal claims totaling approximately $4.4 million and various administrative audits, each of which have arisen in the ordinary course of our business. The Company has an accrual at September 30, 2007 of approximately $1.3 million related to certain of these items. The Company intends to defend these matters vigorously, although the ultimate outcome of these items is uncertain and the potential loss, if any, may be significantly higher or lower than the amounts that the Company has previously accrued. The pending derivative actions do not assert a claim against the Company for specific monetary

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damages and, accordingly, the amounts described herein are exclusive of any potential future monetary damages that the company may incur as a result of the derivative actions.

     In connection with the internal investigation into the Company’s historical stock-based compensation practices, the Company reviewed the payroll withholding tax effect associated with certain stock options that had incorrect measurement dates. Certain stock options were originally intended to be Incentive Stock Options (“ISOs”) under U.S. tax regulations. However, by definition, ISOs may not be granted with an exercise price less than the fair market value of the underlying stock on the date of grant. Because these options had incorrect filing dates, they do not qualify as ISOs under the regulations. Therefore, the affected ISOs were accounted for as if they were non-qualified stock options for payroll tax accounting purposes. The Company recorded a liability for the unpaid income and employment taxes plus potential penalties and interest based upon the change in status of the affected options. The Company recorded a liability for the taxes, penalties and interest due based upon the change in status of the options in the amount of $17.8 million. The Company recorded reversals of this accrual in the amount of $16.5 million between 2003 and 2006 due to the expiration of the tax statute of limitations. These adjustments resulted in a net charge to income of $1.3 million over the period 1996 to 2006, which represent management’s best estimate of the Company’s liability.

     The Company is also subject to certain other legal proceedings and claims that have arisen in the course of business and that have not been fully adjudicated, including the legal proceedings and claims described below. In the opinion of management, the Company does not have a potential liability related to any current legal proceedings and claims that would individually or in the aggregate have a material adverse effect on its financial condition, liquidity or results of operations. However, the results of legal proceedings cannot be predicted with certainty. Should the Company fail to prevail in any of these legal matters or should several of these legal matters be resolved against the Company in the same reporting period, the operating results of a particular reporting period could be materially adversely affected.

     On November 30, 2006, the SEC notified us that it had commenced a formal inquiry into our historical stock-based compensation practices. Subsequently, on March 8, 2007, we received a subpoena from the SEC requesting documents relating to this matter, and responded by producing documents. We are cooperating with the SEC and will continue to do so as the inquiry moves forward. At this point, we are unable to predict what, if any, consequences the SEC investigation may have on us. However, the investigation could result in considerable legal expenses, divert management’s attention from other business concerns and harm our business. If the SEC were to commence legal action, we could be required to pay significant penalties and/or fines and could become subject to an administrative order and/or a cease and desist order.

     Changes in future minimum rental commitments under non-cancelable operating leases in the nine months ended September 30, 2007 were not material.

     We believe that our existing cash, cash equivalents, restricted cash and marketable investments will be sufficient to meet our working capital, capital expenditures, restructuring requirements and stock repurchase initiatives for at least the next 12 months.

New Accounting Pronouncements

     In September 2006, FASB issued SFAS Statement No. 157, Fair Value Measurement (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company has not yet determined the effect, if any, that the application of SFAS No. 157 will have on its consolidated financial statements.

     In February 2007, the FASB issued SFAS Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115 , (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value at specified election dates. If the fair value option is elected, a business entity shall report unrealized gains and losses on elected items in earnings at each subsequent reporting date. Upon initial adoption of this Statement, an entity is permitted to elect the fair value option for available-for-sale and held-to-maturity securities previously accounted for under SFAS Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities (“SFAS No. 115”). The effect of reclassifying those securities into the trading category should be included in a cumulative-effect adjustment of retained earnings and not in current-period earnings and should be separately disclosed. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. The Company has not yet determined the effect, if any, that the application of SFAS No. 159 will have on its consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     We face exposure to adverse movements in foreign currency exchange rates, because a significant portion of our revenues, expenses, assets, and liabilities are denominated in currencies other than the U.S. dollar, primarily the British pound, the Euro, the Indian rupee and the Canadian dollar. This exposure may change over time as business practices evolve. As of September 30, 2007, we do not hold any derivative contracts that hedge our foreign currency risk. In October of 2007, the Company began to enter into derivative contracts designated as economic hedges of our exposure to near term movements in the Indian Rupee.

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For additional quantitative and qualitative disclosures about market risk affecting Sapient, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

     Under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness, as of September 30, 2007, of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Our evaluation has identified the following material weakness in our internal control over financial reporting, as fully described in our Annual Report on Form 10-K for the year ended December 31, 2006. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement to the annual or interim financial statements will not be prevented or detected.

Control Environment. We did not maintain an effective control environment as we did not maintain a sufficient complement of personnel with an appropriate level of accounting knowledge, experience and training in the application of accounting principles generally accepted in the United States commensurate with our financial reporting requirements. This control deficiency could result in a misstatement to our financial statement accounts and disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. This control deficiency could also impede our ability to complete our financial reporting process and prepare financial statements on a timely basis. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

     Based on the evaluation of this material weakness, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2007 to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Plan for Remediation of the Material Weakness in Internal Control Over Financial Reporting

     During the second half of 2006 and the nine months ended September 30, 2007, we have been adding members to our accounting and finance staff and implementing additional review procedures in our financial statement close processes to address these issues. While the impact of these enhancements to the internal control over financial reporting were positive, management’s assessment of our internal control over financial reporting for 2006 and the first three quarters of 2007 indicated that additional resources, training, and experience were necessary for certain of these controls to operate effectively.

     Management’s actions to further address these issues in 2007 include:

• assigning the new Chief Administrative Officer direct responsibility for resolving the issues with the core transaction team in India;

• adding a significant number of resources to help stabilize the accounting and finance team in India and providing additional training to ensure the processes and controls there are being followed; and

• hiring and training of additional key personnel in corporate accounting, purchasing, financial planning and analysis, Sarbanes-Oxley compliance and other open roles.

Changes in Internal Control Over Financial Reporting

     No changes in our internal control over financial reporting occurred during the three months ended September 30, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

SAPIENT CORPORATION

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Regulatory Proceedings

          On November 30, 2006, the SEC notified us that it had commenced a formal inquiry into our historical stock-based compensation practices. Subsequently, on March 8, 2007, we received a subpoena from the SEC requesting documents relating to this matter and responded by providing documents. We have been cooperating with the SEC as it continues its investigation. We are cooperating fully with the SEC and will continue to do so as the inquiry moves forward. At this point, we are unable to predict what, if any, consequences the SEC investigation may have on us. However, the investigation could result in considerable legal expenses, divert management’s attention from other business concerns and harm our business. If the SEC were to commence legal action, we could be required to pay significant penalties and/or fines and could become subject to an administrative order and/or a cease and desist order.

Private Litigation

          We are subject to certain legal proceedings and claims, as discussed below. We are also subject to certain other legal proceedings and claims that have arisen in the course of business and that have not been fully adjudicated. In the opinion of management, we do not have a potential liability related to any current legal proceedings and claims that would individually or in the aggregate have a material adverse effect on our financial condition, liquidity or results of operations. However, the results of legal proceedings cannot be predicted with certainty. Should we fail to prevail in any of these legal matters or should several of these legal matters be resolved against us in the same reporting period, the operating results of a particular reporting period could be materially adversely affected.

          On August 17, 2006 a derivative action, captioned as Alex Fedoroff, Derivatively on Behalf of Nominal Defendant Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore, Susan D. Johnson, et al. , was filed in the Superior Court for Middlesex County, Massachusetts, against Sapient as a nominal defendant and sixteen of Sapient’s current and former directors and officers. On August 31, 2006, a nearly identical complaint, captioned as Jerry Hamilton, Derivatively on Behalf of Nominal Defendant Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore, Susan D. Johnson, et al., was filed in the same court by a different Company shareholder. Both plaintiffs claimed breaches of fiduciary duty by all defendants for allegedly backdating stock options between 1997 and 2002. The Plaintiffs also claimed that some of the defendants were unjustly enriched by receipt of purportedly backdated stock options, and seek unspecified damages, disgorgement of “backdated” stock options and any proceeds received from the exercise and sale of any “backdated” options, costs and attorneys’ fees.

          On October 13, 2006, the Superior Court for Middlesex County, Massachusetts, entered an order consolidating the foregoing derivative actions under the caption In re Sapient Corporation Derivative Litigation. On February 20, 2007, the consolidated complaint was transferred into the Business Litigation Session of the Suffolk Superior Court, Massachusetts under docket number 07-0629 BLS1. On April 25, 2007, the defendants filed a motion to dismiss, which was heard by the Court on May 23, 2007. The case was dismissed on October 30, 2007 and the court further denied the plaintiffs an opportunity to refile a similar claim.

          On October 27, 2006 and October 31, 2006, three additional shareholder derivative actions were filed in the United States District Court for the District of Massachusetts; Mike Lane, Derivatively on Behalf of Sapient Corporation v. J. Stuart Moore, Jerry A. Greenberg, Sheeroy D. Desai , et al. and Sapient Corporation; Marc Doyle, Derivatively on Behalf of Sapient Corporation v. J. Stuart Moore, Jerry A. Greenberg, Sheeroy D. Desai, et al. and Sapient Corporation; and Laurence Halaska, Derivatively on Behalf of Sapient Corporation v. Jerry A. Greenberg, J. Stuart Moore, Scott J. Krenz, et al. and Sapient Corporation. The federal derivative actions are substantially similar to the state derivative actions, except that federal derivative actions assert violations of Sarbanes-Oxley and violations of Sections 10(b), 14(a) and 20(a) of the Securities Exchange Act. On June 21, 2007, the United States District Court for the District of Massachusetts entered an order consolidating the foregoing derivative actions under the caption In re Sapient Corporation Derivative Litigation. On July 21, 2007, the plaintiffs filed an amended complaint, adding five current and former Sapient officers. The defendants filed a motion to dismiss on August 20, 2007, which will be scheduled to be heard by the Court in late 2007 or early 2008.

          None of the foregoing derivative actions asserts a claim against the Company for specific monetary damages.

Item 1A. Risk Factors

Risk Factors

     The following important factors, among others, could cause our actual business and financial results to differ materially from those contained in forward-looking statements made in this Quarterly Report or presented elsewhere by management from time to time.

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Our business, financial condition and results of operations may be materially impacted by economic conditions and related fluctuations in customer demand for marketing, business, technology and other consulting services.

     The market for our consulting services and the technologies used in our solutions historically have tended to fluctuate with economic cycles — particularly those cycles in the United States and Europe, where we earn the majority of our revenues. During economic cycles in which many companies are experiencing financial difficulties or uncertainty, clients and potential clients may cancel or delay spending on marketing, technology and other business initiatives. Military actions in Iraq and elsewhere, global terrorism, natural disasters and political unrest are among the factors that may adversely impact regional and global economic conditions and, concomitantly, client investments in our services. Although economic conditions in our industry have been improving in recent years, a sudden or gradual downturn in these conditions may cause large companies to cancel or delay consulting initiatives for which they have engaged us. Further, if the rate of cancellations or delays significantly increases, our business, financial condition and results of operations could be materially and adversely impacted.

Our market is highly competitive and we may not be able to continue to compete effectively.

     The markets for the services we provide are highly competitive. We believe that we compete principally with large systems consulting and implementation firms, offshore outsourcing companies, and clients’ internal information systems departments. Other competitors include interactive and traditional advertising agencies, and, to a lesser extent, boutique consulting firms that maintain specialized skills and/or are geography based. Regarding our Government Services practice, we both compete and partner with large defense contractors. Some of our competitors have significantly greater financial, technical and marketing resources, and generate greater revenues and have greater name recognition, than we do. Often, these competitors offer a larger and more diversified suite of products and services than we offer. These competitors may win client engagements by significantly discounting their services in exchange for a client’s promise to purchase other goods and services from the competitor, either concurrently or in the future. If we cannot keep pace with the intense competition in our marketplace, our business, financial condition and results of operations will suffer.

Our international operations and Global Distributed Delivery (“GDD”) model subject us to increased risk.

     We currently have international offices in the United Kingdom, Germany, the Netherlands, Sweden, India, Canada and Switzerland. Our international operations are a significant percentage of our total revenues, and our GDD model is a key component of our ability to deliver our services successfully. Our international operations are subject to inherent risks, including:

• economic recessions in foreign countries;

• fluctuations in currency exchange rates or impositions of restrictive currency controls;

• political instability, war or military conflict;

• changes in regulatory requirements;

• complexities and costs in effectively managing multi-national operations and associated internal controls and procedures;

• significant changes in immigration policies or difficulties in obtaining required immigration approvals for international assignments;

• restrictions imposed on the import and export of technologies in countries where we operate; and

• reduced protection for intellectual property in some countries.

     In particular, our GDD model depends heavily on our offices in New Delhi and Bangalore, India. Any escalation in the political or military instability in India or Pakistan or the surrounding countries, or a business interruption resulting from a natural disaster, such as an earthquake, could hinder our ability to use GDD successfully and could result in material adverse effects to our business, financial condition and results of operations. Furthermore, the delivery of our services from remote locations causes us to rely on data, phone, power and other networks which are not as reliable in India as those in other countries where we operate. Any failures of these systems could affect the success of our GDD model. Remote delivery of our services also increases the complexity and risk of delivering our services, which could affect our ability to satisfy our clients’ expectations or perform our services within the estimated time frame and budget for each project.

If we do not attract and retain qualified professional staff, we may be unable to perform adequately our client engagements and could be limited in accepting new client engagements.

     Our business is labor intensive, and our success depends upon our ability to attract, retain, train and motivate highly skilled employees. The improvement in demand for business and technology consulting services has further increased the need for employees with specialized skills or significant experience in business, marketing and technology consulting, particularly at senior levels. We have been expanding our operations in all locations, and these expansion efforts will be highly dependent on attracting a sufficient number of highly skilled people. We may not be successful in attracting enough employees to achieve our desired expansion or staffing plans. Furthermore, the industry turnover rates for these types of employees are high, and we may not be successful in retaining, training and motivating the employees we attract. Any inability to attract, retain, train and motivate employees could impair our ability to manage adequately and complete existing projects and to bid for or accept new client engagements. Such inability may also force us to increase our hiring of expensive independent contractors, which may increase our costs and reduce our profitability on client engagements. We

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must also devote substantial managerial and financial resources to monitoring and managing our workforce and other resources. Our future success will depend on our ability to manage the levels and related costs of our workforce and other resources effectively.

We earn revenues, incur costs and maintain cash balances in multiple currencies, and currency fluctuations affect our financial results.

     We have significant international operations, and we frequently earn our revenues and incur our costs in various foreign currencies. Our international revenues were $54.5 million for the three months ended September 30, 2007 and $141.1 million for the nine months ended September 30, 2007. Doing business in these foreign currencies exposes us to foreign currency risks in numerous areas, including revenues and receivables, purchases, payroll and investments. We also have a significant amount of foreign currency net asset exposures. Certain foreign currency exposures, to some extent, are naturally offset within an international business unit, because revenues and costs are denominated in the same foreign currency, and certain cash balances are held in U.S. dollar denominated accounts. However, due to the increasing size and importance of our international operations, fluctuations in foreign currency exchange rates could materially impact our financial results. Our GDD model also subjects us to increased currency risk, because we frequently incur a significant portion of our project costs in Indian rupees and earn revenue from our clients in other currencies. While we have entered into foreign currency forward contracts to hedge certain transaction and translation exposures in major currencies, and may in the future enter into foreign currency exchanges swaps and purchases as well as sales of foreign currency options, we will continue to experience foreign currency gains and losses in certain instances where it is not possible or cost effective to hedge foreign currencies.

     Our cash position includes amounts denominated in foreign currencies. We manage our worldwide cash requirements considering available funds from our subsidiaries and the cost effectiveness with which these funds can be accessed. The repatriation of cash balances from certain of our subsidiaries outside the United States could have adverse tax consequences and be limited by foreign currency exchange controls. However, those balances are generally available without legal restrictions to fund ordinary business operations. We have transferred, and will continue to transfer, cash from those subsidiaries to the parent company, and to other international subsidiaries, when it is cost effective to do so. However, any fluctuations in foreign currency exchange rates could materially impact the availability and size of these funds for repatriation or transfer.

We have significant fixed operating costs, which may be difficult to adjust in response to unanticipated fluctuations in revenues.

     A high percentage of our operating expenses, particularly salary expense, rent, depreciation expense and amortization of intangible assets, are fixed in advance of any particular quarter. As a result, an unanticipated decrease in the number or average size of, or an unanticipated delay in the scheduling for, our projects may cause significant variations in operating results in any particular quarter and could have a material adverse effect on operations for that quarter.

     An unanticipated termination or decrease in size or scope of a major project, a client’s decision not to proceed with a project we anticipated or the completion during a quarter of several major client projects could require us to maintain underutilized employees and could 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 because of such factors as:

• the contractual terms and timing of completion of projects, including achievement of certain business results;

• any delays incurred in connection with projects;

• the adequacy of provisions for losses and bad debts;

• the accuracy of our estimates of resources required to complete ongoing projects;

• loss of key highly-skilled personnel necessary to complete projects; and

• general economic conditions.

We may lose money if we do not accurately estimate the costs of fixed-price engagements.

     Many of our projects are based on fixed-price contracts, rather than contracts in which payment to us is determined on a time and materials basis. Our failure to estimate accurately the resources and schedule required for a project, or our failure to complete our contractual obligations in a manner consistent with the project plan upon which our fixed-price contract was based, could adversely affect our overall profitability and could have a material adverse effect on our business, financial condition and results of operations. We are consistently entering into contracts for large projects that magnify this risk. We have been required to commit unanticipated additional resources to complete projects in the past, which has resulted in losses on those contracts. We will likely experience similar situations in the future. In addition, we may fix the price for some projects at an early stage of the project engagement, which could result in a fixed price that is too low. Therefore, this incorrect estimation could adversely affect our business, financial condition and results of operations.

Our profitability will be adversely impacted if we are unable to maintain our pricing and utilization rates as well as control our costs.

     Our profitability derives from and is impacted by three factors, primarily: (i) the prices for our services; (ii) our consultants’ utilization or billable time, and (iii) our costs. To achieve our desired level of profitability our utilization must remain at an appropriate rate, and we must contain our costs. Should we reduce our prices in the future as a result of pricing pressures, or should we be unable to achieve

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our target utilization rates and costs, our profitability could be adversely impacted and the price of our securities could decline materially.

We partner with third parties on certain complex engagements in which our performance depends upon, and may be adversely impacted by, the performance of such third parties.

     Certain complex projects may require that we partner with specialized software or systems vendors or other partners to perform our services. Often in these circumstances, we are liable to our clients for the performance of these third parties. Should the third parties fail to perform timely or satisfactorily, our clients may elect to terminate the projects or withhold payment until the services have been completed successfully. Additionally, the timing of our revenue recognition may be affected or we may realize lower profits if we incur additional costs due to delays or because we must assign additional personnel to complete the project. Furthermore, our relationships with our clients and our reputation generally may suffer harm as a result of our partners’ unsatisfactory performance.

Our clients could unexpectedly terminate their contracts for our services.

     Some of our contracts can be canceled by the client with limited advance notice and without significant penalty. A client’s termination of a contract for our services could result in a loss of expected revenues and additional expenses for staff that were allocated to that client’s project. We could be required to maintain underutilized employees who were assigned to the terminated contract. The unexpected cancellation or significant reduction in the scope of any of our large projects, or client termination of one or more recurring revenue contracts (see definition of “recurring revenues” in Part 1, Item 2, above), could have a material adverse effect on our business, financial condition and results of operations.

We may be liable to our clients for damages caused by unauthorized disclosures of confidential information or by our failure to remedy system failures.

     We frequently receive confidential information from our clients, including confidential customer data that we use to develop solutions. If any person, including a Company employee, misappropriates client confidential information, or if client confidential information is inappropriately disclosed due to a breach of our computer systems, system failures or otherwise, we may have substantial liabilities to our clients or client customers.

     Further, many of our projects involve technology applications or systems that are critical to the operations of our clients’ businesses and handle very large volumes of transactions. If we fail to perform our services correctly, we may be unable to deliver applications or systems to our clients with the promised functionality or within the promised time frame, or to satisfy the required service levels for support and maintenance. While we have taken precautionary actions to create redundancy and back-up systems, any such failures by us could result in claims by our clients for substantial damages against us.

     Although we attempt to limit the amount and type of our contractual liability for breaches of confidentiality and defects in the applications or systems we provide and carry insurance coverage which mitigates these liabilities in certain instances, we cannot be assured that these limitations and insurance coverages will be applicable and enforceable in all cases. Even if these limitations and insurance coverages are found to be applicable and enforceable, our liability to our clients for these types of claims could be material in amount and affect our business, financial condition and results of operations. Additionally, such claims may harm our reputation and cause us to lose clients.

Our services may infringe the intellectual property rights of third parties, and create liability for us as well as harm our reputation and client relationships.

     The services that we offer to clients may infringe the intellectual property (“IP”) rights of third parties and result in legal claims against our clients and Sapient. These claims may damage our reputation, adversely impact our client relationships and create liability for us. Moreover, although we generally agree in our client contracts to indemnify the clients for expenses or liabilities they incur as a result of third party IP infringement claims associated with our services, the resolution of these claims, irrespective of whether a court determines that our services infringed another party’s IP rights, may be time-consuming, disruptive to our business and extraordinarily costly. Finally, in connection with an IP infringement dispute, we may be required to cease using or developing certain IP that we offer to our clients. These circumstances could adversely impact our ability to generate revenue as well as require us to incur significant expense to develop alternative or modified services for our clients.

We may be unable to protect our proprietary methodology

     Our success depends, in part, upon our proprietary methodology and other IP rights. We rely upon a combination of trade secrets, nondisclosure and other contractual arrangements, and copyright and trademark laws to protect our proprietary rights. We enter into confidentiality agreements with our employees, subcontractors, vendors, consultants and clients, and limit access to and distribution of our proprietary information. We cannot be certain that the steps we take 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 IP rights.

Our stock price is volatile and may result in substantial losses for investors.

     The trading price of our common stock has been subject to wide fluctuations. Our trading price could continue to be subject to wide fluctuations in response to:

• quarterly variations in operating results and achievement of key business metrics by us or our competitors;

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• changes in operating results estimates by securities analysts;

• any differences between our reported results and securities analysts’ published or unpublished expectations;

• announcements of new contracts or service offerings made by us or our competitors;

• announcements of acquisitions or joint ventures made by us or our competitors; and

• general economic or stock market conditions.

     In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of their securities. The commencement of this type of litigation against us could result in substantial costs and a diversion of management’s attention and resources.

Our former Chairmen and Chief Executive Officers have significant voting power and may effectively control the outcome of any stockholder vote.

     Jerry A. Greenberg, our former Co-Chairman of the Board and Chief Executive Officer of the Company and J. Stuart Moore, our former Chairman of the Board and Chief Executive Officer and current member of our Board of Directors, own, in the aggregate, approximately 30% of our outstanding common stock. As a result, they 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 also have the effect of delaying or preventing a change in control of Sapient, even if such a change in control would benefit other investors.

We are dependent on our key employees.

     Our success depends in large part upon the continued services of a number of key employees. Our employment arrangements with key personnel provide that employment is terminable at will by either party. The loss of the services of any of our key personnel could have a material adverse effect on our business, financial condition and results of operations. In addition, if our key employees resign 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. Although, to the extent permitted by law, we require our employees to sign agreements prohibiting them from joining a competitor, forming a competing company or soliciting our clients or employees for certain periods of time, we cannot be certain that these agreements will be effective in preventing our key employees from engaging in these actions or that courts or other adjudicative entities will substantially enforce these agreements.

We may be unable to achieve anticipated benefits from acquisitions and joint ventures.

     The anticipated benefits from any acquisitions or joint ventures that we may undertake might not be achieved. For example, if we acquire a company, we cannot be certain that clients of the acquired business will continue to conduct business with us, or that employees of the acquired business will continue their employment or integrate successfully into our operations and culture. The identification, consummation and integration of acquisitions and joint ventures require substantial attention from management. The diversion of management’s attention, as well as any difficulties encountered in the integration process, could have an adverse impact on our business, financial condition and results of operations. Further, we may incur significant expenses in completing any such acquisitions, and we may assume significant liabilities, some of which may be unknown at the time of such acquisition. We note, in particular, our ongoing efforts to integrate and assimilate our acquisition of PGI in early 2006. Failure to complete this initiative in a timely and efficient manner may adversely impact our business, financial condition and results of operations.

If we do not effectively improve our operational and financial processes and systems, our ability to achieve efficiencies and cost savings may be delayed and our results of operations may be adversely impacted.

     To streamline our general and administrative infrastructure and costs as a percentage of revenue and ensure that the Company can appropriately scale as our business expands, in early 2006 we began redesigning many operational processes as well as transitioned certain internal, non-billable roles to our India office, the activities of which principally relate to finance, human resources and certain IT functions. If we do not timely, efficiently and effectively upgrade or replace systems, and continue to redesign processes as our business requires, we may be unable to support our growth effectively, realize cost savings as quickly as expected or maintain effective internal controls over financial reporting, which could cause a decline in the quality of our services and adversely impact our results of

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operations. In fact, as indicated in Part 1, Item 4 of this Quarterly Report, the transition of several finance functions to our offices in India is a principal reason that management is reporting the existence of a material weakness in the Company’s internal control over financial reporting.

The failure to successfully and timely implement certain financial system changes to improve operating efficiency and enhance our reporting controls could harm our business.

     In parallel with the foregoing operational process redesign and role transition activities, we have implemented and continue to install several upgrades and enhancements to our financial systems. We expect these initiatives to enable us to achieve greater operating and financial reporting efficiency and also enhance our existing control environment through increased levels of automation of certain processes. Failure to successfully execute these initiatives in a timely, effective and efficient manner could result in the disruption of our operations, the inability to comply with our Sarbanes-Oxley obligations and the inability to report our financial results in a timely and accurate manner.

Management’s determination that a material weakness exists in our internal controls over financial reporting could have a material adverse impact on the Company.

     We are required to maintain internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles. In Item 4 of this Quarterly Report, management reports that a material weakness exists in the Company’s internal control over financial reporting, as a result of a significant disruption to our financial accounting organization, processes and workload during 2006 that was attributable to the (i) transition of key accounting and administrative functions and processes to India during 2006; (ii) changes in the finance organization and resultant significant turnover in the Company’s finance and accounting staff, including the departure of two Chief Financial Officers during 2006; and (iii) investigation and restatement of our financial statements relating to the Company’s historical stock-based compensation practices, which required significant financial research, analysis and incremental recordkeeping during 2006. These factors indicated that we had an insufficient complement of personnel with an appropriate level of accounting knowledge, experience, and training in the application of generally accepted accounting principles commensurate with our financial reporting requirements. Due to this material weakness, management has concluded that as of the end of 2006, the Company’s disclosure controls and procedures were not effective. Consequently, pending the Company’s remediation of the matters that caused the control deficiencies underlying the material weakness, our business and results of operations could be harmed, we may be unable to report properly or timely the results of our operations, and investors may lose faith in the reliability of our financial statements. Accordingly, the price of our securities may be adversely and materially impacted.

We face risks related to the restatement of our financial statements and the ongoing SEC investigation regarding our historical stock-based compensation practices.

     On November 30, 2006, the Securities and Exchange Commission (“SEC”) notified us that it had commenced a formal inquiry into our historical stock-based compensation practices. Subsequently, on March 8, 2007, we received a subpoena from the SEC requesting several documents relating to this matter. We are cooperating fully with the SEC and will continue to do so as the inquiry moves forward. At this point, we are unable to predict what effect, if any, consequences of the SEC investigation may have on us. However, the investigation could result in considerable legal expenses, divert management’s attention from other business concerns and harm our business. If the SEC were to commence legal action, we could be required to pay significant penalties and/or fines and could become subject to an administrative order and/or a cease and desist order. The filing of our restated financial statements to correct the discovered accounting errors did not resolve the SEC investigation. Further, the resolution of the SEC investigation could require the filing of additional restatements of our prior financial statements, and/or our restated financial statements, or require that we take other actions not presently contemplated.

Our corporate governance provisions may deter a financially attractive takeover attempt.

     Provisions of our charter and by-laws may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable, including a transaction in which stockholders would receive a premium for their shares. These provisions include the following:

• our Board of Directors has the authority, without further action by the stockholders, to fix the rights and preferences of and issue shares of preferred stock;

• any action that may be taken by stockholders must be taken at an annual or special meeting and may not be taken by written consent;

• stockholders must comply with advance notice requirements before raising a matter at a meeting of stockholders or nominating a director for election; and

• the Chairman of the Board or the Chief Executive Officer are the only persons who may call a special meeting of stockholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) The following table includes information with respect to repurchases we made of our common stock during the three-month period ended September 30, 2007 (in thousands except per share price):

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					Total Number of Shares		Maximum Number (or
					(or Units) Purchased as		Approximate Dollar Value) of
	Total Number of				Part of Publicly		Shares (or Units) that may Yet
	Shares (or units)		Average Price Paid		Announced Plans or		be Purchased Under the
Period	Purchased		per Share (or Unit)		Programs		Plans or Programs (1)
July 1, 2007 - July 31, 2007		—	$	—		6,446	$	14,300
August 1, 2007 - August 31, 2007		246	$	6.09		6,692	$	12,800
September 1, 2007 - September 30, 2007		362	$	6.27		7,054	$	10,500

(1)  On November 16, 2004, the Company’s Board of Directors authorized up to $25.0 million in funds for use in the Company’s common stock repurchase program. On February 10, 2006 the Board of Directors authorized an additional $25.0 million in funds for use in such programs. As of September 30, 2007, $10.5 million remained available for repurchase under the buy back plan.

Item 4.   Submission of Matters to a Vote of Security Holders

     At the Company’s Annual Meeting of Stockholders held on August 16, 2007, the following proposals were adopted by the votes specified below:

     1. The election of James M. Benson, Hermann Buerger, Jeffrey M. Cunningham, Darius W. Gaskins, Jr., Alan J. Herrick, Gary S. McKissock, J. Stuart Moore and Bruce D. Parker as Directors to serve until the 2008 Annual Meeting of Stockholders. The vote totals for the Director Nominees were as follows:

Name	Votes For		Votes Withheld
James M. Benson		104,602,853		8,833,651
Hermann Buerger		109,301,022		4,135,482
Jeffrey M. Cunningham		84,645,287		28,791,217
Darius W. Gaskins, Jr.		74,030,211		39,406,293
Alan J. Herrick		109,551,928		3,884,576
Gary S. McKissock		84,628,035		28,808,469
J. Stuart Moore		109,429,690		4,006,814
Bruce D. Parker		73,533,633		39,902,871

     2. The approval of an amendment to the Company’s 1998 Stock Incentive Plan. For this proposal, 64,358,554 shares of common stock voted in favor, 31,127,508 shares of common stock voted against, 45,174 shares of common stock abstained, and 17,905,268 broker non-votes were received.

     3. The ratification of the selection of PricewaterhouseCoopers LLP as independent auditors of the Company. For this proposal, 113,047,275 shares of common stock voted in favor, 377,484 shares of common stock voted against, and 11,744 shares of common stock abstained.

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SAPIENT CORPORATION

PART II. OTHER INFORMATION

Item 6. Exhibits

3.1(1)	Second Amended and Restated Certificate of Incorporation
3.2(1)	Amended and Restated Bylaws
10.1	Alan J. Herrick Employment Agreement
10.2	Form of Restricted Stock Units Agreement for annual grants to reelected members of the Board of Directors
10.3	Form of Restricted Stock Units Agreement for initial grant to newly appointed members of the Board of Directors
10.4	Form of Restricted Stock Units Agreement for employees
10.5	Amendment to Sapient Corporation 1998 Stock Incentive Plan
31.1	Certification of Alan J. Herrick pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Joseph S. Tibbetts, Jr. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Alan J. Herrick pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Joseph S. Tibbetts, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1) Filed as an exhibit to the Company’s Form 10-Q for the three months ended September 30, 2004 (File No. 000-28074) and incorporated herein by reference.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Signature	Title	Date
/s/ Alan J. Herrick	President and Chief Executive Officer	November 8, 2007
Alan J. Herrick	(Principal Executive Officer)
/s/ Joseph S. Tibbetts, Jr.	Chief Financial Officer	November 8, 2007
Joseph S. Tibbetts, Jr.	(Principal Financial Officer)

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EX-10.1

Exhibit 10.1

Execution Copy

[Sapient Corporation Letterhead]

July 18, 2007

Mr. Alan Herrick
870 Buckhead Trace
Atlanta, GA 30342

Dear Alan,

     This letter (the “Agreement”) will confirm your employment with Sapient Corporation (together with its successors, the “Company” or “Sapient”), under the terms and conditions that follow:

     1.      Positions, Term and Duties.

              (a) Positions; Reporting. You will be employed by the Company, on a full-time basis as its President and Chief Executive Officer (“CEO”), reporting directly to the Company’s Board of Directors (the “Board”). In addition, and without further compensation, you will serve as a member of the Board for so long as you continue to be employed hereunder as President and CEO on a full-time basis.

              (b) Term; Renewal. Subject to earlier termination as hereinafter provided, your employment hereunder shall be for an initial term of three (3) years, which term commenced on November 1, 2006, and shall renew automatically thereafter for successive terms of one year each, unless either party gives written notice to the other not less than sixty (60) days prior to the expiration of the initial or a renewal term that this Agreement shall not be renewed. The term of this Agreement, as from time to time renewed, is hereafter referred to as “the term of this Agreement” or “the term hereof.”

              (c) Duties & Responsibilities. You agree to perform the duties of your positions, which shall be consistent with those customarily assigned to individuals serving in such positions, and such other duties consistent with your positions as may reasonably be assigned to you by the Board from time to time. You also agree that, while employed by the Company, you will devote your full business time and your best efforts, business judgment, skill and knowledge exclusively to the advancement of the business and interests of the Company in a manner consistent with your duties and to the discharge of your duties and responsibilities for the Company, except for vacation time, absence for sickness or disability, and reasonable time spent performing services for any charitable, religious or community organizations, so long as such services do not violate the Sapient Confidentiality Agreement or the Sapient Fair Competition Agreement (as defined in Section 3 hereof, or otherwise materially interfere with the performance of your duties hereunder.

     2.      Compensation and Benefits. During the term hereof, as compensation for all services performed by you for the Company, the Company will provide you the following pay and benefits:

              (a) Base Salary. The Company will pay you a base salary at the rate of Four Hundred and Seventy Five Thousand Dollars ($475,000) per year, payable in accordance with the regular payroll practices of the Company and subject to review and increase (but not decrease) by the Company’s Compensation Committee (the “Compensation Committee”) on an annual basis. Such base salary, as may be increased from time to time, is hereafter referred to as the “Base Salary”. The Base Salary of $475,000 per year will be retroactive to November 1, 2006. The Company will provide you with a payment to reflect the difference between this rate and the rate at which your Base Salary was paid from November 1, 2006 through the date this Agreement is fully executed, such payment to be made as soon as practicable after this Agreement is fully executed, but in no event more than five business days after such full execution.

              (b) One-Time Bonus. You acknowledge that the Company has paid you a one-time bonus payment of Seventy Thousand Dollars ($70,000) related to the period from November 1, 2006 through December 31, 2006 (the “2006 Bonus”). You acknowledge that you have already been paid the 2006 Bonus, as part of the annual bonus paid by the Company in March 2007 under its various bonus plans.

              (c) Bonus Compensation. You will have an annual bonus opportunity with a target amount of not less than Four Hundred and Twenty Five Thousand Dollars ($425,000), such target amount to be set on an annual basis by the Compensation Committee (the “Annual Bonus”). For 2007, (i.e. January 1, 2007 through December 31, 2007), your target Annual Bonus amount will be Four Hundred Twenty Five Thousand Dollars ($425,000) (the “2007 Bonus”). The amount of the Annual Bonus actually paid to you will be determined on the basis of objective performance metrics under a program that is intended to comply with section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Your actual Annual Bonus, if any, will be payable to you solely in cash in a single lump sum not later than two and one-half months following the end of the fiscal year for which the Annual Bonus was earned. After consultation with you, performance metrics will be agreed to and formally adopted by the Compensation Committee on an annual basis within the time frame required by any applicable laws or regulations and communicated to you as soon as practicable thereafter, but in any event, the Compensation Committee will endeavor to set these metrics during the first fiscal quarter of the relevant Annual Bonus year. This Section 2(c) supersedes all other bonus arrangements between you and the Company.

              (d) Pay Benchmarking. In general, the Company will attempt in good faith to align your total compensation package (i.e., Base Salary, Annual Bonus and long-term incentives) with the median pay practices among a group of peer organizations selected by the Compensation Committee. For the avoidance of doubt, such alignment shall not reduce your total compensation package below the levels specified in this Agreement. The pay data of these peer organizations will be regressed to the Company’s revenue base. The peer group will be periodically reviewed by the Compensation Committee for continued appropriateness. The initial peer group consists of the following organizations: Accenture, Keane, Perot Systems,

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Parametric Technology Corporation, Cognizant, Monster Worldwide, aQuantive, CIBER and Diamond Management and Technology Consultants.

              (e) Long-Term Incentives.

                         (i)        You will be granted 150,000 restricted stock units of common stock of the Company (the “RSUs”) (the “Year 1 Grant”). The grant date for the Year 1 Grant will be the first NASDAQ trading date of the month immediately following the date of execution of this Agreement. Provided you are still employed as President and CEO, you will receive an additional grant of 150,000 RSUs in each of 2008 (the “Year 2 Grant”) and 2009 (the “Year 3 Grant”). The grant dates for the Year 2 Grant and the Year 3 Grant will be the first NASDAQ trading date of February in the respective year. (Together, the Year 1 Grant, the Year 2 Grant and the Year 3 Grant, as adjusted or modified in accordance with this Section 2(e), are sometimes referred to as the “CEO Grants.”) Notwithstanding the actual grant dates, the vesting of the Year 1, Year 2 and Year 3 Grants will be measured beginning from January 1 of the relevant year (the “Vesting Start Date”). Each of the CEO Grants will “straight-line” vest 33-1/3% annually on January 1st of each of the three years following the year in which that particular grant was made, provided you are still employed by the Company as President and Chief Executive Officer on each such vesting date (each, an “Annual Vesting Date”). The CEO Grants will be made pursuant to the Company’s 1998 Stock Incentive Plan, as amended from time to time (or a successor equity incentive plan then in effect) (the “Incentive Plan”). The RSUs are subject to the terms and conditions in the Incentive Plan and in each RSU agreement issued thereunder applicable to the CEO Grants and any other restrictions or limitations generally applicable to equity held by Company executives or otherwise required by law; provided that, such terms, conditions, restrictions and limitations (x) shall be no less favorable or more restrictive than those applicable to Company senior executives generally, and (y) shall not be inconsistent with the provisions of this Agreement.

                         (ii)      Notwithstanding the provisions of Section 2(e)(i), the Company retains the right in its sole discretion to change the form of the long-term incentive equity award each year, provided that the grant-date value of each year’s award, regardless of the form used, will be approximately the same economic value (disregarding any vesting conditions or discounts for marketability or lack of control) as reasonably determined by the Compensation Committee in good faith as would be delivered if 150,000 time-vested RSUs were granted on each scheduled grant date (as described, and subject to the provisions, in Section 2(e)(i)).

                         (iii)      Notwithstanding the provisions of Section 2(e)(i) and 2(e)(ii), in the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure, or the payment of an extraordinary dividend, the Compensation Committee shall adjust the number of RSUs (or other form as determined under Section 2(e)(ii)) granted or to be granted as CEO Grants in each year to prevent dilution or enlargement of grant values. Further, if the Company commences payment of a regular dividend, the Compensation Committee may, in its sole discretion, make such an adjustment.

-Page 3 of 14 Pages-

                         (iv)      You will not be eligible to receive any stock options, restricted stock or other equity of the Company, whether under an equity incentive plan or otherwise, except as expressly provided in this Agreement or as otherwise expressly authorized for you individually by the Board (or applicable committee thereof).

              (f) Participation in Employee Benefit Plans. You will be entitled to participate (and your eligible dependents and beneficiaries will be entitled to participate to the same extent that eligible dependents and beneficiaries of other executives of the Company are allowed to participate) in all employee benefit plans from time to time in effect for executives of the Company generally, except to the extent such plans are duplicative of benefits otherwise provided you under this Agreement. Your (and your eligible dependents’ and beneficiaries’) participation will be subject to the terms of the applicable plan documents and generally applicable Company policies.

              (g) Perquisites. You will be entitled to receive perquisites commensurate in value and design with your positions, provided you meet the eligibility requirements for such perquisites. These perquisites will be at least equal in value to the average perquisite value provided generally by the Company to the Company’s other officers who are subject to Section 16 of the Securities Exchange Act of 1934, as amended.

              (h) Vacations. Vacation time shall be governed by the policies of the Company, as in effect from time to time.

              (i) Business Expenses. The Company will pay or reimburse you for all reasonable, customary and necessary business expenses incurred or paid by you in the performance of your duties and responsibilities hereunder, subject to any maximum annual limit and other restrictions on such expenses set by the Board from time to time or included in the Company’s expense policy as then in effect (the “Expense Policy”) and to such reasonable substantiation and documentation as may be specified by the Board from time to time or required under the Expense Policy, in all cases, which are known by you or made reasonably available to you prior to your incurrence of such business expense.

     3.      Confidentiality and Fair Competition. As a condition of your employment, you must execute the Sapient Confidentiality Agreement and the Sapient Fair Competition Agreement that are attached hereto as Exhibit A and Exhibit B no later than the date you execute this Agreement. Further, you must execute additional, reasonable Confidentiality Agreements and Fair Competition Agreements at such future times as the Company may reasonably require in the event that the Company or any of its subsidiaries undertakes a new line of business, whether through an acquisition or otherwise; such additional Agreements shall be reasonably similar to those attached as Exhibit A and Exhibit B, other than changes that are necessary or desirable to conform the Agreements to cover the new line of business.

     4.      Termination of Employment. Notwithstanding the provisions of Section 1(b) hereof, your employment hereunder will terminate prior to the expiration of the term of this Agreement under the following circumstances:

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              (a) By the Company for Cause. The Company may terminate your employment for Cause (as defined immediately below) upon written notice to you setting forth in reasonable detail the nature of the Cause. The following shall constitute “Cause” for termination if (x) the Company provides you with the written notice described immediately above within 120 days after the Board learns of the nature of the Cause, provided that such 120 day period will be tolled during the pendency of any internal investigation that may occur to determine whether Cause exists; (y) in the case of clauses (i), (iii), (iv), (v), (vi) and (vii) of the definition of Cause, you are given at least 30 days to cure the nature of the Cause if the nature of the Cause is susceptible to cure, and the nature of Cause remains uncured at the end of such period or recurs within six (6) months of the delivery of the notice, provided, that if the nature of the Cause is not susceptible to cure, such written notice must be provided by the Company ten (10) days prior to the date of termination, and provided further that the Board may elect to waive the period of notice, or any portion thereof, and pay you your salary for the notice period (or any remaining portion thereof); and (z) such termination is pursuant to a resolution adopted at a meeting of the Board by the affirmative vote of the independent directors then in office, which resolution specifies the specific grounds on which the termination for Cause is based, the material substance of which must have been set forth in the original written notice:

                         (i)        Your intentional failure to perform your duties and responsibilities to the Company (other than by reason of your death or Disability), or your gross negligence in the performance of such duties and responsibilities which has caused or can reasonably be expected to cause material harm to the Company;

                         (ii)      Your conviction of, or entering a plea of guilty or nolo contendere to any crime that constitutes a felony in the jurisdiction involved;

                         (iii)      Your fraud or willful misconduct (including violations of Company policies, for example policies concerning insider trading, sexual harassment and the Company’s Code of Conduct) that has caused or is reasonably expected to cause material harm to the Company;

                         (iv)      Your material breach of your fiduciary duty;

                         (v)        Your material breach of any provision of this Agreement;

                         (vi)      Your material breach of any provision of the Sapient Confidentiality Agreement or the Sapient Fair Competition Agreement; or

                         (vii)      Your failure to cooperate, if requested by the Board, with any investigation or inquiry into your or the Company’s business practices, whether internal or external, including but not limited to your failure to be deposed or to provide testimony at any inquiry or trial.

              (b) By the Company Other than for Cause. The Company also may terminate your employment at any time other than for Cause upon notice to you. The Company’s notice of non-renewal at the end of the initial term of this Agreement shall constitute a termination by the Company other than for Cause.

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              (c) By You for Good Reason. You may terminate your employment for Good Reason as follows: You shall provide written notice to the Company within 60 days of the occurrence of one of the following events, without your consent, setting forth in reasonable detail the nature of the event constituting Good Reason (the “Notice”):

                         (i)        Removal from the positions of President and CEO of the Company;

                         (ii)      Material diminution in the nature or scope of your responsibilities, duties or authority, or any material change in your reporting lines; provided, however, that a change in reporting relationships resulting from a Change of Control (as defined in Section 5(d) below) shall not constitute “Good Reason”;

                         (iii)      Material failure of the Company to provide you the compensation and benefits in accordance with the terms of Section 2 hereof;

                         (iv)      Material breach of this Agreement by the Company; or

                         (v)        A requirement that your principal place of business be located more than 50 miles from Atlanta, Georgia.

The Company will have thirty (30) days from receipt of the Notice to cure the event specified in the Notice, and if it fails to do so, your employment will terminate for Good Reason on the first day following the expiration of such thirty (30) day cure period.

              (d) By You for Other Than Good Reason. You may terminate your employment at any time other than for Good Reason upon notice to the Company.

              (e) Death. In the event of your death during the term hereof, your employment hereunder shall immediately and automatically terminate.

              (f) Disability. The Company may terminate your employment hereunder, upon notice to you, in the event that you become disabled during your employment hereunder through any illness, injury, accident or condition of either a physical or psychological nature (collectively, “Disability”) and, as a result, are unable to perform substantially all of your duties and responsibilities hereunder, notwithstanding the provision of any reasonable accommodation, for one hundred and eighty (180) days during any period of three hundred and sixty-five (365) consecutive calendar days. If any question shall arise as to whether during any period you are disabled through any Disability so as to be unable to perform substantially all of your duties and responsibilities hereunder, you may, and at the reasonable request of the Company shall, submit to a reasonable medical examination by a physician reasonably selected by the Company (and to whom you or your duly appointed guardian, if any, has no reasonable objection) to determine whether you are so disabled and such determination shall, for the purposes of this Agreement, be conclusive of the issue. If such question shall arise and you shall fail to submit to such medical examination (other than due to your disability), the Company’s determination of the issue shall be binding on you.

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     5.      Severance Benefits, Change in Control Benefits and Other Matters Related to Termination.

              (a) Termination for Cause or for Other Than Good Reason. In the event of termination of your employment (1) by the Company for Cause or (2) by you other than for Good Reason, the Company will pay to you (i) any Base Salary earned but not paid during the final payroll period of your employment through the date of termination; (ii) any vacation time earned but not used through the date of termination; (iii) any Annual Bonus to which you are entitled for the fiscal year preceding that in which termination occurs, but unpaid on the date of termination; and (iv) reimbursement for any business expenses incurred by you but un-reimbursed on the date of termination, provided that such expenses and required substantiation and documentation are submitted within sixty (60) days of termination and that such expenses are reimbursable under Company policy (all of the foregoing, “Final Compensation”). Except for any right you may have under the federal law known as “COBRA” to continue participation in the Company’s group health and dental plans at your cost, and your right to vested benefits under the applicable Company benefit plans, all benefits shall terminate in accordance with the terms of the applicable benefit plans based on the date of termination of your employment.

              (b) Termination Entitling You to Severance Pay. In the event of termination of your employment (1) by the Company other than for Cause, (2) by the Company based on your Disability, (3) by you for Good Reason or (4) on account of your death, provided that no greater benefits are payable to you under a separate plan or agreement as a result of such termination (in which case you may elect to receive the package of payments and benefits that are available to you under either this Agreement or the separate plan or agreement, but not both), you (or, in the event of your death, your designated beneficiary or, if no beneficiary has been designated by you in writing, your estate) shall be entitled to the following:

                         (i)        Final Compensation;

                         (ii)      A lump sum amount equal to 100% of your Base Salary in effect on the date of termination plus 100% of your target bonus amount for the year in which such termination occurs (provided, however, that if the target bonus amount for the year in which termination occurs has not yet been set, the actual bonus amount for the preceding year will be used in this calculation), which amounts will be paid in cash within fifteen (15) days of the Effective Date of the Employee Release, as defined in Section 5(f) below, but in no event later than two and one-half months following the end of the fiscal year in which termination occurred;

                         (iii)      A pro rata portion (calculated as described below with respect to the CEO Grants) of the unvested CEO Grants and all other unvested Company equity awards that have already been issued to you as of the date of the termination of your employment will vest immediately on the date of such termination (the “Termination Date”). Such pro rata portion will be calculated, for each applicable grant based on a fraction, the numerator of which shall be the number of monthly anniversaries of such grant’s Vesting Start Date or such other initial vesting date in respect of such other unvested Company equity

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awards (a “Monthly Anniversary”) that have occurred on or before the Termination Date and the denominator of which shall be the total number of Monthly Anniversaries required to occur in order for each annual tranche of shares underlying such grant to vest (together, the pay and benefits set forth in Sections 5(b)(ii) and 5(b)(iii) are sometimes referred to as “Severance Benefits”).

     By way of example with respect to the CEO Grants only: if, on June 20, 2008 (“year two” of your employment hereunder), your employment terminates for any of the reasons described above in this Section 5(b), then the following then still unvested RSU shares (or shares of another equity award issued in lieu of RSUs) underlying your Year 1 Grant and Year 2 Grant will immediately vest on the Termination Date:

     Year 1 Grant: 59,028 underlying RSU shares will immediately vest (i.e., (50,000 X 17/24) + (50,000 X 17/36) = (35,417 + 23,611) = 59,028). (Note: The first 50,000 RSU tranche of the Year 1 Grant vested before the Termination Date and you “own” that tranche already; this calculation applies only to the unvested tranches.)

     Year 2 Grant: 38,194 underlying RSU shares will immediately vest (i.e., (50,000 X 5/12) + (50,000 X 5/24) + (50,000 X 5/36) = (20,833 + 10,417 + 6,944) = 38,194).

     Year 3 Grant: You will not receive your Year 3 Grant, because your employment has been terminated prior to the scheduled grant date.

                         (iv)      Except for any right you may have under the federal law known as “COBRA” to continue participation in the Company’s group health and dental plans at your cost, and your right to vested benefits under applicable Company benefit plans, all benefits shall terminate in accordance with the terms of the applicable benefit plans based on the date of termination of your employment, without regard to any continuation of Base Salary or other payment to you following termination.

              (c) Termination Following Change in Control. In the event of termination of your employment by the Company other than for Cause or by you for Good Reason within two years following the consummation of a Change in Control (as defined in Section 5(d) below), in lieu of any benefits otherwise payable to you under Section 5 of this Agreement and provided that no greater benefits are payable to you under a separate plan or agreement as a result of such Change in Control (in which case you may elect to receive the package of payments and benefits that are available to you under either this Agreement or the separate plan or agreement, but not both), you shall be entitled to the following:

                         (i)        Final Compensation;

                         (ii)      A lump sum amount equal to 150% of your Base Salary in effect on the date of termination plus 150% of your target bonus amount for the year in which such termination occurs (provided, however, that if the target bonus amount for the year in which termination occurs has not yet been set, the actual bonus amount for the preceding year will be used in this calculation), which amounts will be paid in cash within fifteen (15) days of the Effective Date of the Employee Release, as defined in Section 5(f)

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below, but in no event later than two and one-half months following the end of the fiscal year in which termination occurred;

                         (iii)      All of the unvested CEO Grants and all other unvested Company equity awards that have been previously issued to you (including any equity award of the surviving corporation) shall become vested effective as of the date of such termination;

                         (iv)      For a period of twenty-four (24) months following the date of termination, you will be entitled to continue to participate in the Company’s medical, dental, disability and life insurance plans, subject to any employee contribution applicable to you on the date of termination; and your 401(k) plan will continue to vest, provided you are eligible to continue such participation and vesting under applicable law and plan terms. All other benefits shall terminate in accordance with the terms of the applicable benefit plans based on the date of termination of your employment, without regard to any continuation of Base Salary or other payment to you following termination. For the avoidance of doubt, if it is permitted by applicable law and plan terms, you will be allowed to participate in such plans for this twenty-four (24) month period as if you were an active employee, and if such participation is not permitted, you may elect to participate in the Company’s group health and dental plans under the federal law known as “COBRA” for so long as you are so eligible. (Together, the pay and benefits set forth in Sections 5(c)(ii), 5(c)(iii) and 5(c)(iv) are sometimes referred to as “Change of Control Benefits”).

              (d) A Change in Control shall be deemed to have occurred if any one or more of the following events occur:

                         (i)        the acquisition by any person, entity or “group” (as defined in section 13(d) of the Exchange Act) of 50% or more of the combined voting power of the Company’s then outstanding voting securities;

                         (ii)      A merger, consolidation or other corporate transaction that results in the voting shares of the Company before the transaction constituting less than 50% of the combined voting power of all shareholders of the surviving corporation following the transaction;

                         (iii)      A change in majority of the non-employee directors of the Company or the board of directors of any successor to the Company over a two-year period (other than by reason of election or nomination by directors constituting a majority of the directors on the effective date of this Agreement or directors who were chosen by those directors, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of an individual, entity or “group” other than the Board (including, but not limited to, any such assumption that results from clauses (i), (ii), (iv), (v) or (vi) of this definition));

                         (iv)      The approval by the stockholders of the Company of the liquidation or dissolution of the Company;

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                         (v)        The sale, transfer or other disposition of all or substantially all of the Company’s assets; or

                         (vi)      A determination by the Board that a Change in Control has occurred.

              (e) Section 409A. The compensation, benefits and other payments described in this Agreement (collectively, the “Payments”) are intended either to comply with Section 409A of the Code (“Section 409A”) (to the extent they are subject to such Section) or to be exempt from the requirements of Section 409A (where an exemption is available), and shall be construed accordingly. If, however, the Compensation Committee and you reasonably determine that any such Payments are or may become subject to a tax imposed by Section 409A, the Company and you will use their commercially reasonable efforts to structure such Payments to eliminate or minimize the impact of any tax that might be imposed on you pursuant to Section 409A. In addition, with respect to the Severance Benefits and Change in Control Benefits, if the Compensation Committee and you reasonably determine that such Severance Benefits and Change in Control Benefits are potentially subject to additional tax under Section 409A absent this sentence, any and all amounts that constitute deferred compensation subject to Section 409A and that would (but for this sentence) be payable within six (6) months following separation from service (as defined in Section 409A) shall instead be paid on the date that follows the date of such separation from service by six (6) months plus one day. In any event, you shall be responsible for any tax or other amount imposed by Section 409A on all of the Payments. The Company shall not be obligated to indemnify you or reimburse you for any payments made by you on account of Section 409A or otherwise be liable for any additional taxes or other payments that may be due as a result of any of the Payments being subject to Section 409A.

              (f) Release of Claims. Any obligation of the Company to provide you Severance Benefits or Change in Control Benefits under this Section 5 is conditioned upon your (or, in the event of your death, your estate) signing a reasonable and customary separation agreement containing a release of claims in the form provided by the Company (the “Employee Release”) within twenty one (21) days of the date on which your employment terminates, or such longer period as specified by the Company, and upon your not revoking the Employee Release thereafter. The Employee Release shall become effective seven (7) days after your execution of the Employee Release, provided that you do not revoke your acceptance of the Employee Release during that time (the “Effective Date of the Employee Release”). Any Severance Benefits or Change in Control Benefits required to be made under this Section 5 (other than Final Compensation) shall be made within fifteen (15) days of the Effective Date of the Employee Release. The Employee Release creates legally binding obligations on your part, and the Company therefore advises you to seek the advice of an attorney before signing it.

              (g) Reimbursement of Incentive Compensation. In the event the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the U.S. securities laws, as a result of any material misconduct on your part or on the part of any U.S. employee under your direct supervision (whether or not such misconduct constitutes “Cause” within the meaning of Section 4(a) hereof), you shall reimburse the Company for any Annual Bonus or other performance-based compensation (including, but not limited to, equity compensation) that was paid or issued

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to you on the basis of having met or exceeded specific targets for performance period(s) in which the financial statement was required to be restated. In connection with the foregoing, you shall only be required to reimburse the Company to the extent of the excess (if any), determined as of the payment or grant date, between (x) the after-tax value to you of any such Annual Bonus or other performance-based compensation that was payable for each applicable performance period less (y) the after-tax value of any such Annual Bonus or other performance-based compensation that would have been payable upon the achievement of Company performance taking into such accounting restatement for the applicable performance period.

     6.      Conflicting Agreements. You hereby represent and warrant that your signing of this Agreement and the performance of your obligations under it will not breach or be in conflict with any other agreement to which you are a party or are bound and that you are not now subject to any covenants against competition or similar covenants or any court order that could affect the performance of your obligations under this Agreement. You agree that you will not disclose to or use on behalf of the Company any proprietary information of a third party without that party’s consent.

     7.      Withholding. All payments made by the Company under this Agreement shall be reduced by any tax or other amounts required to be withheld by the Company under applicable law.

     8.      Assignment. Neither you nor the Company may make any assignment of this Agreement or any interest in it, by operation of law or otherwise, without the prior written consent of the other; provided, however, that this Agreement shall be binding upon any successor to the Company (by whatever means, including but not limited to, pursuant to any reorganization, consolidation, merger or sale, disposition or other transfer all or substantially all of its properties or assets. This Agreement shall inure to the benefit of and be binding upon you and the Company, and each of our respective successors, executors, administrators, heirs and permitted assigns.

     9.      Reformation; Severability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then such portion or provision shall be reformed so that it is valid and enforceable to the fullest extent permitted by law, and the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby.

     10.     Survivability; Continuing Obligations. Provisions of this Agreement shall survive any termination if so provided in this Agreement or if necessary or desirable to accomplish the purposes of other surviving provisions. The obligation of the Company to make payments to you under Section 5 is expressly conditioned upon your continued full performance of obligations under the Sapient Confidentiality Agreement and the Sapient Fair Competition Agreement, and your continued obligation to comply with such agreements is conditioned upon the Company’s full performance of its payment obligations under this Agreement and any other applicable plan, program or agreement, provided, however, that you have provided the Company with thirty (30) days’ written notice specifying the nature of the Company’s failure to perform its obligations and the Company has not cured such failure within such thirty (30) day period. Upon

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termination by either you or the Company, all rights, duties and obligations of you and the Company to each other shall cease, except as otherwise expressly provided in this Agreement, the Sapient Confidentiality Agreement and the Sapient Fair Competition Agreement.

     11.      Miscellaneous. This Agreement sets forth the entire agreement between you and the Company and replaces all prior and contemporaneous communications, agreements and understandings, written or oral, with respect to the terms and conditions of your employment, excluding only the Sapient Confidentiality Agreement, the Sapient Fair Competition Agreement and any obligations and rights you may have with respect to the securities of the Company, all of which shall remain in full force and effect. This Agreement may not be modified or amended, unless agreed to in writing by you and an expressly authorized representative of the Board. No breach of any obligation under this Agreement shall deemed to be waived, unless the party entitled to the benefit of such obligation shall have specifically consented to such waiver in writing. No such waiver shall be deemed to be a waiver of any other obligation under this Agreement or of a subsequent breach of the same obligation. The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement. This is a Massachusetts contract and shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to the conflict of laws principles thereof. Any suit brought pursuant to this Agreement shall be brought in the state or federal courts sitting in Boston or Cambridge, Massachusetts, and the parties hereby waive any claim or defense that such forum is not convenient or proper. Each party hereby agrees that any such court shall have personal jurisdiction over it and consents to service of process in any manner authorized by Massachusetts law. In the event of any inconsistency between any provision of this Agreement and any provision of any Company plan, program or arrangement, the provision that is more favorable to you shall control unless you otherwise agree in a signed writing that expressly refers to the provision whose control you are waiving (for the avoidance of doubt, to the extent you are entitled to severance or change of control payments and benefits pursuant to a separate plan, program or arrangement, you may elect to receive the package of payments and benefits that are available to you under either this Agreement or the separate plan, program or arrangement, but not both). The Company represents that it is fully authorized, by action of the Board (and any other person or body whose action is required), to enter into this Agreement and to perform its obligations under it, and that the execution, delivery and performance of this Agreement by it will not violate any applicable law, regulation, order, judgment, decree or Company plan, program or arrangement to which it is a party or by which it is bound. Subject to Section 3 hereof, the Company agrees not to impose any restrictions, enforceable by injunction, on your post-employment activities, other than those expressly set forth in this Agreement, the Sapient Confidentiality Agreement or the Sapient Fair Competition Agreement.

     12.      Notices. Any notices provided for in this Agreement shall be in writing and shall be delivered in person, by a reputable overnight courier service, by registered or certified United States mail, or by telecopy. Such notices shall be addressed to you at your last known address on the books of the Company or, in the case of the Company, to it at its principal place of business, attention of the Chairman of the Board, or to such other address as either party may specify by notice to the other actually received. Such notices shall be effective upon receipt when delivered or sent by telecopy or in person, and upon mailing when sent by registered or certified mail or overnight courier service.

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     13.      Legal Fees. The Company shall reimburse you for reasonable attorneys’ or other professional fees and for any other reasonable expenses incurred by you in negotiating this Agreement, up to a maximum of fifteen thousand dollars ($15,000). Such reimbursement shall be made within thirty (30) days following presentation to the Company of appropriate invoices or other documentation for the amount of such fees and expenses.

     14.      Indemnification. During your employment and thereafter, and to the maximum extent permitted by law and by the Company’s articles of incorporation and by-laws, you shall be promptly indemnified against, and shall be entitled to prompt advancement of attorneys’ fees and other costs incurred in connection with, any and all claims, costs, expenses, judgments and/or liabilities arising out of, or in connection with, your employment by the Company or membership on the Board; provided, that in no event shall such indemnity of the Executive at any time during the period of your employment by the Company be less than the maximum indemnity provided by the Company at any time during such period to any other officer or director under an indemnification insurance policy or the bylaws or charter of the Company or by agreement.

[The remainder of this page has been left blank intentionally.]

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     If the foregoing is acceptable to you, please sign this letter in the space provided and return it to me no later than July 23. At the time you sign and return it this letter will take effect as a binding agreement between you and the Company on the basis set forth above. The enclosed copy is for your records.

Best regards, Sapient Corporation
By:	/s/ Jeffrey M. Cunningham
	Jeffrey M. Cunningham, Chairman
	Board of Directors

Accepted and Agreed:
/s/ Alan J. Herrick
Name:	Alan Herrick
Date:	July 21, 2007

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Exhibit A

Sapient Confidentiality Agreement

Parties. In this Agreement, the terms “we,” “us,” and “our” refer to Sapient Corporation and its subsidiaries. The terms “you” and “your” refer to the individual who signs this Agreement. The term “the parties” refers to both us and you.

Background

• We are in the business of helping clients innovate their businesses to achieve extraordinary results from their customer relationships, business operations and technology.

• You are an individual in whom we have great confidence, and with whom we entrust responsibilities to help our clients achieve these results.

• We also entrust you with information — our own or our clients’ — that we need you to protect.

Therefore, in consideration of the promises contained in this Agreement and in the agreement between yourself and us dated July 18, 2007 (the “Employment Agreement”), the parties agree as follows.

Terms and Conditions

1 Your Employment

As stated in Section 3 of the Employment Agreement, your employment with us is contingent on your making the promises laid out in this Agreement.

2 Protecting Confidential information

2.1	Our Confidential information Defined. Our ability to help clients succeed depends, in part, on information we possess that gives us an advantage over our competitors who lack this information. In this Agreement, we refer to this information as “our confidential information.” We have gathered or developed our confidential information by expending time, energy and resources to better enable us to help our clients succeed. If our competitors were to learn our confidential information, they would gain an unfair advantage over us in the marketplace. If others were to learn our confidential information, it could jeopardize our relationships with our clients.
2.2	Protecting Our Confidential Information. Because you are a valued member of our leadership team, we entrust you with our confidential information. You promise to protect our confidential information, and you promise that you will not share it with anyone, except in the performance of your fiduciary duties as our Chief Executive Officer (“CEO”) or as the independent members of our Board of Directors (the “Board”) may direct (collectively, your “Duties”). You also promise that you will not use our confidential information for your own use, or for anyone else’s use, except in the performance of your Duties. This promise extends beyond the term of your employment with us, and does not end unless the independent members of our Board (the “Independent Directors”) expressly release you from it in writing beforehand.
2.3	Our Clients’ Confidential Information. Our clients often share with us their confidential information: that is, information they wish to keep secret from their competitors. You often will have access to this confidential information. You promise that you: (a) will protect this confidential information; and, except in the performance of your Duties, (b) will not share it with anyone; and (c) will not use this confidential information for your own use, or for anyone else’s use. This promise extends beyond the term of your employment with us, and does not end unless the Independent Directors expressly release you from it in writing beforehand.
2.4	Your Former Employers’ Confidential Information. In your previous jobs with other employers, they may have entrusted you with their own confidential information. We have no desire to have

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you violate their confidential information. Therefore, you promise that, during your employment with us, you will not share your former employers’ confidential information with us or anyone else beyond whom your former employers direct. By signing this Agreement, you assure us that nothing in it conflicts with (or would cause you to violate) any nondisclosure agreement you have signed with a previous employer of yours. If, during the course of your employment with us, you come to learn of a conflict you have with a previous nondisclosure agreement, you will notify us immediately.

3 Inventions and Other Things You Create

We strive to hire creative people, and creative people create things. This Agreement spells out who owns these creations.

3.1 Creations You Own. We claim no ownership of anything you create or invent that:

(A)	you develop entirely on your own time without using our equipment, supplies, facilities or trade secrets; and
(B)	is not related to our business, research or development (or business, research or development we can show that we anticipate doing); and
(C)	does not result from any work you did (or are doing) for us.

3.2

Creations We Own. Anything you create or invent during your employment with us, and for a period of one year after, that does not fall under paragraph 3.1 will be considered ours. You agree to assign any title or other rights in these creations to us. You agree that any of these creations that are protectable by US copyright law will be considered “works made for hire” for our benefit. You agree to maintain adequate written records of these creations, and you promise to help us in all reasonable ways (at our expense), both during and after your employment, in the acquisition, protection and defense of our rights to these creations.

3.3

Your Previous Creations. Before you joined us, you may have created things on your own or for previous employers. We have no desire to take ownership of these creations. Therefore, to avoid any conflict over when you created something and who owns it, you must list in Exhibit A all your previous creations to which you assert ownership. You need only include creations that relate to our business, services or products.

4 Our Property

You promise to return our property at the termination of your employment with us, or at any time that we ask you to do so. “Our property” includes both tangible and intangible things, such as information (whether confidential or not) in whatever form you have it.

5 Assignment

We may assign our duties or interests under this Agreement to any parent, affiliate, successor or subsidiary that we may have. You may not assign your duties or interests under this Agreement.

6 Miscellaneous Provisions

6.1

Entire Agreement; Modification. This Agreement contains all the terms and conditions agreed on by the parties relating to the protection of our confidential information and our clients’ confidential information (except for the Sapient Fair Competition Agreement). Any previous agreements (except for the Sapient Fair Competition Agreement and the Employment Agreement) on this subject between the parties are replaced by this Agreement. This Agreement can be modified or changed only by a written document signed by both parties.

6.2

Waiver. A party’s waiver of enforcement of any of this Agreement’s terms or conditions will be effective only if in writing. A waiver by us will be effective only if signed by the Chairman of our Board (or, if he/she is not “independent” under the rules of the Securities and Exchange Commission, then the lead independent director of the Board). A party’s specific waiver will not be considered a waiver of any earlier, concurrent or later breach.

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6.3	Survival. This Agreement will remain in effect, regardless of any future changes to your job, title, compensation or the termination of your employment.
6.4	Counterparts. This Agreement may be executed in two counterparts, each of which is considered an original.
6.5	Reformation; Severability. If a court rules that any part of this Agreement is unenforceable, the parties agree to have the court modify that part in the least way needed to make it enforceable. If the court declines to modify the Agreement, then the parties agree that the unenforceable part will be ignored and that the rest of the Agreement will continue in full force.
6.6	Litigation. This Agreement is governed by and must be interpreted under Massachusetts law, without regard to its choice-of-law principles. If we need to use the court system to enforce the promises in this Agreement, you agree to consent to the jurisdiction of the state and federal courts of Massachusetts. You also promise to pay our litigation costs and attorneys’ fees if a court finds that you breached any of the promises you make in this Agreement.
6.7	Headings. All headings are for reference purposes only and must not affect the interpretation of this Agreement.

Dated: July 18, 2007
SAPIENT CORPORATION (referred to as “we” throughout)
By:	/s/ Jeffrey M. Cunningham
	Jeffrey M. Cunningham
	Chairman, Board of Directors

INDIVIDUAL EMPLOYEE (referred to as “you” throughout):
 

/s/ Alan J. Herrick  

Alan J. Herrick 

Address: 

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Exhibit A: Your Previous Creations

Creation Date Created Description

This list is complete as of today.

Date Your signature

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Exhibit B

Sapient Fair Competition Agreement

Parties. In this Agreement, the terms “we,” “us,” and “our” refer to Sapient Corporation and its subsidiaries. The terms “you” and “your” refer to the individual who signs this Agreement. The term “the parties” refers to both us and you.

Background

• We are in the business of helping clients innovate their businesses to achieve extraordinary results from their customer relationships, business operations and technology.

• You are an individual in whom we have great confidence, and with whom we entrust responsibilities to help our clients achieve these results.

• We also entrust you with information — our own and our clients’ — that we need you to protect, as well as entrusting you with developing and maintaining our good relationships with our clients (“our goodwill”).

• While we are firm believers in the value of ordinary competition in the marketplace, we need to protect ourselves from unfair competition.

Therefore, in consideration of the promises contained in this Agreement and in the agreement between yourself and us dated July 18, 2007 (the “Employment Agreement”), the parties agree as follows.

Terms and Conditions

1 Your Employment

As stated in Section 3 of the Employment Agreement, your employment with us is contingent on your making the promises laid out in this Agreement.

2 Our Promise

In addition to this Agreement and the Sapient Confidentiality Agreement, the terms of your employment will be governed by the Employment Agreement.

3 Working Elsewhere during Your Employment with Us

To best help our clients succeed, we need you to be fully committed to working here. Therefore, during the term of your employment, you may not perform work or other services — directly or indirectly, whether for compensation or not — for a person or entity that competes with us. You also may not solicit, encourage or help any of our people to do so. Similarly, you may not perform work or other services — directly or indirectly, whether for compensation or not — for any other person or entity, if doing so would diminish your ability to work for us.

4 Working Elsewhere after Your Employment with Us

4.1

Protecting Our Goodwill. In the course of working for us, you will help develop and maintain our goodwill with clients. By doing this, you may become the “face” of Sapient to clients — in other words, a client might associate our services or products more with you than with us. If you were to leave us and go to work for someone who competes with us (or if you were to compete, on your own, with us), you would be in a position to use this association to convince clients to leave us and do business with you at your new employer (or on your own). This would give your new employer (and you) an unfair advantage over us in the marketplace. To prevent this from happening, we need time after you leave to help our clients understand that they will continue to receive excellent care and service from our other people.

4.2

Protecting Our Confidential Information. Our ability to help clients succeed depends in part on information we possess that gives us an advantage over our competitors who lack this

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information. We refer to this information as “our confidential information.” We have gathered or developed our confidential information by expending time, energy and resources to better enable us to help our clients succeed. If our competitors were to learn our confidential information, they would gain an unfair advantage over us in the marketplace. If others were to learn our confidential information, it could jeopardize our relationships with our clients. We protect this confidential information with the Sapient Confidentiality Agreement that you sign. If you were to leave us and go to work for someone who competes with us (or if you were to compete, on your own, with us), you may be influenced by your knowledge of our confidential information — even inadvertently. This could give your new employer (and you) an unfair advantage over us in the marketplace. To prevent this from happening, we need time after you leave for the relevance of this confidential information to diminish.

4.3

Working for a Competitor (or Competing with Us Individually). For the reasons spelled out in the previous two paragraphs, for 12 months from the time you leave our employment, you promise not to — directly or indirectly, whether for compensation or not, in the markets in the United States of America or in the markets in any other country where we do business — (i) own, manage, operate, or control any person or entity whose business is competitive with the business conducted or contemplated by us, as of the date hereof (a “Competitor”), (ii) participate in the ownership, management, operation, or control of any Competitor or (iii) render executive services which are reasonably related, substantially similar or identical to the services which you rendered to us, to any Competitor.

4.4

Working for a Client. Your work for us in developing and maintaining our client goodwill could lead to opportunities for you to leave us and go to work for a client. Unfortunately, this could have the effect of encouraging — even inadvertently — the client to diminish or end its client relationship with us. Similarly, in working for a client, you may be influenced by your knowledge of our confidential information — even inadvertently. So, for a period 12 months from the time you leave our employment, you promise not to perform work or other services — directly or indirectly, whether for compensation or not — for any client of ours. For purposes of this Agreement, the term “client” refers to (1) any current client of ours at the time you leave our employment; (2) any prospective client being actively sought by us at the time you leave our employment; and (3) any former client of ours for whom we have sold or performed at least $1 million in services during the 12 month-period prior to the date you leave our employment.

5 Clients and Solicitation

5.1

Discussions with Clients; Accepting Employment. Our clients need to know that we and you are completely committed to helping them succeed. Any discussions you might have with a client about the prospect of your going to work for the client — no matter who initiates these discussions — could cause the client to question whether you were acting in the client’s interest or in your own personal interest. Therefore, you promise that, during the term of your employment with us and for 12 months after, you will not engage in any discussions with our clients about your working for them, nor will you accept employment from them during that time.

5.2

You Soliciting Clients. You agree that, during the term of your employment with us and for 12 months after, you will not solicit or take away (or attempt to solicit or take away) any of our clients, either for your own business or for any other person or entity, nor will you induce or encourage any client to sever or diminish its relationship or business with us.

6 Soliciting Employees

You agree that, during the term of your employment, you will not — directly or indirectly — solicit, encourage, assist or hire any of our people to work for a competitor in the United States of America or in the markets in any other country where we do business. In addition, you agree that, for 12 months after your employment with us ends, you will not — directly or indirectly — solicit, encourage or assist any of our people to stop working for us, nor will you solicit, encourage, assist or hire any of our people to work for a competitor, for a client of ours or for you

-Page 2 of 4 Pages-

in the markets in the United States of America or in the markets in any other country where we do business.

7 Assignment

We may assign our duties or interests under this Agreement to any parent, affiliate, successor or subsidiary that we may have. You may not assign your duties or interests under this Agreement.

8 Miscellaneous Provisions

8.1	Entire Agreement; Modification. This Agreement contains all the terms and conditions agreed on by the parties relating to the protection of our confidential information (except for the Sapient Confidentiality Agreement) and goodwill. Any previous agreements (except for the Sapient Confidentiality Agreement and the Employment Agreement) between the parties on this subject are replaced by this Agreement. This Agreement can be modified or changed only by a written document signed by both parties.
8.2	Reasonableness of Restraints. You acknowledge that you have carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed upon you by the Agreement. You agree without reservation that each of the restraints contained herein is necessary for the reasonable and proper protection of our goodwill, confidential information and other legitimate interests; that each and every one of those restraints is reasonable in respect to subject matter, length of time and geographic area; and that these restraints, individually or in the aggregate, will not prevent you from obtaining other suitable employment during the period in which you are bound by these restraints. You also acknowledge and agree that if you violate any of the restraints in this Agreement that the damage to us would be irreparable and, therefore you agree that we, in addition to any other remedy available to us, will be entitled to preliminary and permanent injunctive relief against any such violation or threatened violation, as determined by a court of competent jurisdiction, of these restraints, without having to post bond.
8.3	Waiver. A party’s waiver of enforcement of any of this Agreement’s terms or conditions will be effective only if in writing. A waiver by us will be effective only if signed by the Chairman of our Board (or, if he/she is not “independent” under the rules of the Securities and Exchange Commission, then the lead independent director of the Board). A party’s specific waiver will not be considered a waiver of any earlier, concurrent or later breach.
8.4	Survival. This Agreement will remain in effect, regardless of any future changes to your job, title, compensation or the termination of your employment.
8.5	Reformation; Severability. If a court rules that any part of this Agreement is unenforceable, the parties agree to have the court modify that part in the least way needed to make it enforceable. If the court declines to modify the Agreement, then the parties agree that the unenforceable part will be ignored and that the rest of the Agreement will continue in full force.
8.6	Counterparts. This Agreement may be executed in two counterparts, each of which is considered an original.
8.7	Litigation. This Agreement is governed by and must be interpreted under Massachusetts law, without regard to its choice-of-law principles. If we need to use the court system to enforce the promises in this Agreement, you agree to consent to the jurisdiction of the state and federal courts of Massachusetts. You also promise to pay our litigation costs and attorneys’ fees, if a court finds that you breached any of the promises you make in this Agreement.
8.8	Headings. All headings are for reference purposes only and must not affect the interpretation of this Agreement.
8.9	Broad Interpretation of Employment, Work, Solicitation and Persons and Entities. You recognize that it is possible to create many different types of arrangements under which you (or another person) might provide services, or perform work, for a competitor or client of ours (or for you). (For instance, instead of being an employee, you might act as an independent contractor or

-Page 3 of 4 Pages-

consultant, or in return for an equity ownership interest, or in other ways.) You understand that the intention of this Agreement is to prevent you from taking the actions that this Agreement prohibits, whether you may be engaged in a formal employer-employee arrangement with a third party, or in another sort of arrangement where work or services are performed. You agree that the restrictions on employment, work and solicitation contained in this Agreement will be interpreted broadly to include these other types of arrangements as well. In addition, throughout this Agreement, we refer to certain persons and entities, including, without limitation, clients, employees, competitors and yourself. You understand and agree that references to such persons and entities include any and all affiliates of the person or entity described and that any restrictions or prohibitions set forth in this Agreement will be interpreted broadly to apply equally to the person or entity described, as well as any and all affiliates of that person or entity.

Dated: July 18, 2007
SAPIENT CORPORATION (referred to as “we” throughout)
By:	/s/ Jeffrey M. Cunningham
	Jeffrey M. Cunningham
	Chairman, Board of Directors

INDIVIDUAL EMPLOYEE (referred to as “you” throughout):
 

/s/ Alan J. Herrick  

Alan J. Herrick 

Address:

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EX-10.2

Exhibit 10.2

SAPIENT CORPORATION
RESTRICTED STOCK UNITS
AGREEMENT

     In recognition of the important contributions that __________ (the “Director”) makes to the success of Sapient Corporation (the “Company”) and its Affiliates (together with the Company, the “Company Group”) as a member of the Company’s Board of Directors, the Company hereby grants to the Director, pursuant to the Sapient Corporation 1998 Stock Incentive Plan (the “Plan”), the Restricted Stock Units Award described below.

1. The Restricted Stock Units Award. The Company hereby grants to the Director _______________(_____) Units, subject to the terms and conditions of this Agreement and the Plan. An Award shall be paid hereunder, only to the extent that such Award is Vested, as provided in this Agreement. The Director’s rights to the Units are subject to the restrictions described in this Agreement and the Plan in addition to such other restrictions, if any, as may be imposed by law.

2. Definitions. The following definitions will apply for purposes of this Agreement. Capitalized terms not defined in this Agreement are used as defined in the Plan.

(a)	“Agreement” means this Restricted Stock Units Agreement granted by the Company and agreed to by the Director.
(b)	“Award” means the grant of Units in accordance with this Agreement.
(c)	“Change in Control” means the occurrence of any of the following events: (i) any “person”, as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company, J. Stuart Moore, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities; (ii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; (iii) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale of disposition by the Company of all or substantially all of the Company’s assets; or (iv) individuals who, on the date on which the Plan was adopted by the Board, constituted the Board of

Directors of the Company, together with any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who were directors on the date on which the Plan was adopted by the Board or whose election or nomination was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors.

(d)	“Common Stock” means common stock of the Company, $.01 par value.
(e)	“Grant Date” means __________, _____.
(f)	“NASDAQ” means the Nasdaq Stock Market.
(g)	“Payment Date” means, as to Vested Units, within 30 days of the date on which the Units become Vested, except that in connection with a Change in Control, the Payment Date shall mean immediately prior to or coincident with the occurrence of the Change in Control.
(h)	“Unit” means a notional unit which is equivalent to a single share of Common Stock on the Grant Date, subject to Section 4.
(i)	“Vested” means that portion of the Award to which the Director has a nonforfeitable right.
(j)	“Vesting Dates” means the dates set forth in Section 3.

3. Vesting.

(a)	An Award shall become Vested only upon the Vesting Dates described in this Section 3, except as otherwise provided herein or determined by the Company in its sole discretion. No portion of any Award shall become Vested on the Vesting Date unless the Director is then, and since the Grant Date has continuously been, a Director of the Company.
(b)	Subject to subsections (c), (d) and (e), below, an Award shall become Vested based on the following schedule.

Vesting Date	Percentage Vested on Anniversary Date
First Anniversary of Grant Date	100%

(c)	Upon the occurrence of a Change in Control, an Award shall become 100% Vested, such shares to be distributed immediately prior to or coincident with the Change in Control.
(d)	Notwithstanding Section 3(b), if the service of the Director terminates by reason of death or disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code), the length of the Director’s service shall be deemed to be six months longer than the actual length; provided, however, that in no event shall such deemed time

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extension serve to increase the number of Vested shares to more than the number of shares of Common Stock as equals that number of Units which have been awarded hereunder.

(e)

Notwithstanding Section 3(b), in the event that the Director has completed the full term of service as a Director for which he or she was elected at an Annual Meeting of Stockholders of the Company, but is not standing for re-election to a subsequent term as a Director at the Annual Meeting of Stockholders of the Company at which he or she would otherwise have been re-elected (the “Retirement Meeting”), all Award shares which are scheduled to vest subsequent to the Retirement Meeting but within the same fiscal quarter in which the Retirement Meeting is held shall become Vested shares as of the date immediately preceding such Retirement Meeting; provided, however, that in no event shall such deemed time extension serve to increase the number of Vested Shares to more than the number of shares of Common Stock as equals that number of Units which have been awarded hereunder.

(f)

In the event that the Director’s tenure as a member of the Company’s Board of Directors terminates prior to a Vesting Date for any reason other than as set forth in this Section 3, including without limitation termination by the Company or the Company Group, any portion of the Award that has not then become Vested will be forfeited automatically.

4. Adjustments Based on Certain Changes in the Common Stock. In the event of any stock split, reverse stock split, stock dividend, recapitalization or similar change affecting the Common Stock, the Award shall be equitably adjusted.

5. No Voting Rights/Dividends. The Award shall not be interpreted to bestow upon the Director any equity interest or ownership in the Company Group prior to the Payment Date. The Director is not entitled to vote any Common Stock by reason of the granting of this Award or to receive or be credited with any dividends declared and payable on any Common Stock underlying any Award prior to any Payment Date

6. Payment of Award. On the Payment Date, the Company shall issue to the Director that number of shares of Common Stock as equals that number of Units which have become Vested.

7. Unfunded Status. The obligations of the Company Group hereunder shall be contractual only. The Director shall rely solely on the unsecured promise of the Company and nothing herein shall be construed to give the Director or any other person or persons any right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company Group.

8. No Assignment. No right or benefit or payment under the Plan shall be subject to assignment or other transfer nor shall it be liable or subject in any manner to attachment, garnishment or execution.

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9.	Amendment or Termination. This Agreement may be amended by mutual written agreement of the parties.
10.	Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts.

        IN WITNESS WHEREOF, Sapient Corporation and _______________ have executed this Restricted Stock Units Agreement effective as of the _____ day of __________, _____.

Sapient Corporation	Director
By:
Title:

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EX-10.3

Exhibit 10.3

SAPIENT CORPORATION

RESTRICTED STOCK UNITS

AGREEMENT

In recognition of the important contributions that __________ (the “Director”) makes to the success of Sapient Corporation (the “Company”) and its Affiliates (together with the Company, the “Company Group”) as a member of the Company’s Board of Directors, the Company hereby grants to the Director, pursuant to the Sapient Corporation 1998 Stock Incentive Plan (the “Plan”), the Restricted Stock Units Award described below.

1. The Restricted Stock Units Award. The Company hereby grants to the Director _______________ (_____) Units, subject to the terms and conditions of this Agreement and the Plan. An Award shall be paid hereunder, only to the extent that such Award is Vested, as provided in this Agreement. The Director’s rights to the Units are subject to the restrictions described in this Agreement and the Plan in addition to such other restrictions, if any, as may be imposed by law.

2. Definitions. The following definitions will apply for purposes of this Agreement. Capitalized terms not defined in this Agreement are used as defined in the Plan.

(a)	“Agreement” means this Restricted Stock Units Agreement granted by the Company and agreed to by the Director.
(b)	“Award” means the grant of Units in accordance with this Agreement.
(c)	“Change in Control” means the occurrence of any of the following events: (i) any “person”, as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Company, J. Stuart Moore, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities; (ii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; (iii) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale of disposition by the Company of all or substantially all of the Company’s assets; or (iv) individuals who,

on the date on which the Plan was adopted by the Board, constituted the Board of Directors of the Company, together with any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who were directors on the date on which the Plan was adopted by the Board or whose election or nomination was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors.

(d)	“Common Stock” means common stock of the Company, $.01 par value.
(e)	“Grant Date” means __________, _____.
(f)	“NASDAQ” means the Nasdaq Stock Market.
(g)	“Payment Date” means, as to Vested Units, within 30 days of the date on which the Units become Vested, except that in connection with a Change in Control, the Payment Date shall mean immediately prior to or coincident with the occurrence of the Change in Control.
(h)	“Unit” means a notional unit which is equivalent to a single share of Common Stock on the Grant Date, subject to Section 4.
(i)	“Vested” means that portion of the Award to which the Director has a nonforfeitable right.
(j)	“Vesting Dates” means the dates set forth in Section 3.

3. Vesting.

(a)	An Award shall become Vested only upon the Vesting Dates described in this Section 3, except as otherwise provided herein or determined by the Company in its sole discretion. No portion of any Award shall become Vested on the Vesting Date unless the Director is then, and since the Grant Date has continuously been, a Director of the Company.
(b)	Subject to subsections (c), (d) and (e), below, an Award shall become Vested based on the following schedule.

Vesting Date	Percentage Vested on Anniversary Date
First Anniversary of Grant Date		25	%
Second Anniversary of Grant Date		25	%
Third Anniversary of Grant Date		25	%
Fourth Anniversary of Grant Date		25	%

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(c)	Upon the occurrence of a Change in Control, an Award shall become 100% Vested, such shares to be distributed immediately prior to or coincident with the Change in Control.
(d)	Notwithstanding Section 3(b), if the service of the Director terminates by reason of death or disability (within the meaning of Section 22(e)(3) of the Internal Revenue Code), the length of the Director’s service shall be deemed to be six months longer than the actual length; provided, however, that in no event shall such deemed time extension serve to increase the number of Vested shares to more than the number of shares of Common Stock as equals that number of Units which have been awarded hereunder.
(e)	Notwithstanding Section 3(b), in the event that the Director has completed the full term of service as a Director for which he or she was elected at an Annual Meeting of Stockholders of the Company, but is not standing for re-election to a subsequent term as a Director at the Annual Meeting of Stockholders of the Company at which he or she would otherwise have been re-elected (the “Retirement Meeting”), all Award shares which are scheduled to vest subsequent to the Retirement Meeting but within the same fiscal quarter in which the Retirement Meeting is held shall become Vested shares as of the date immediately preceding such Retirement Meeting; provided, however, that in no event shall such deemed time extension serve to increase the number of Vested Shares to more than the number of shares of Common Stock as equals that number of Units which have been awarded hereunder.
(f)	In the event that the Director’s tenure as a member of the Company’s Board of Directors terminates prior to a Vesting Date for any reason other than as set forth in this Section 3, including without limitation termination by the Company or the Company Group, any portion of the Award that has not then become Vested will be forfeited automatically.

4. Adjustments Based on Certain Changes in the Common Stock. In the event of any stock split, reverse stock split, stock dividend, recapitalization or similar change affecting the Common Stock, the Award shall be equitably adjusted.

5. No Voting Rights/Dividends. The Award shall not be interpreted to bestow upon the Director any equity interest or ownership in the Company Group prior to the Payment Date. The Director is not entitled to vote any Common Stock by reason of the granting of this Award or to receive or be credited with any dividends declared and payable on any Common Stock underlying any Award prior to any Payment Date

6. Payment of Award. On the Payment Date, the Company shall issue to the Director that number of shares of Common Stock as equals that number of Units which have become Vested.

7. Unfunded Status. The obligations of the Company Group hereunder shall be contractual only. The Director shall rely solely on the unsecured promise of the Company and nothing herein shall be construed to give the Director or any other person or persons any

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	right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company Group.
8.	No Assignment. No right or benefit or payment under the Plan shall be subject to assignment or other transfer nor shall it be liable or subject in any manner to attachment, garnishment or execution.
9.	Amendment or Termination. This Agreement may be amended by mutual written agreement of the parties.
10.	Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts.

        IN WITNESS WHEREOF, Sapient Corporation and _______________ have executed this Restricted Stock Units Agreement effective as of the ___day of __________, _____.

Sapient Corporation	Director
By:
Title:

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EX-10.4 5 b67178scexv10w4.htm EX-10.4 - FORM OF RESTRICTED STOCK UNITS AGREEMENT FOR EMPLOYEES

Exhibit 10.4

SAPIENT CORPORATION
RESTRICTED STOCK UNITS
AGREEMENT

     In recognition of the important contributions that the employee whose name appears on the Notice attached to this Agreement and incorporated herein by this reference (the “Employee”) makes to the success of Sapient Corporation (the “Company” or “Sapient”) and its Affiliates (together with the Company, the “Company Group”), pursuant to the Sapient Corporation 1998 Stock Incentive Plan (the “Plan”), the Company hereby grants to the Employee the Restricted Stock Units Award described below.

1. The Restricted Stock Unit Award. The Company hereby grants to the Employee the number of restricted stock units (the “Units”) set forth on the Notice, subject to the terms and conditions of this Agreement and the Plan. An Award shall be paid hereunder, only to the extent that such Award is Vested, as provided in this Agreement. The Employee’s rights to the Units are subject to the restrictions described in this Agreement and the Plan in addition to such other restrictions, if any, as may be imposed by law.

2. Definitions. The following definitions will apply for purposes of this Agreement. Capitalized terms not defined in this Agreement are used as defined in the Plan and the Notice.

(a)	“Agreement” means this Restricted Stock Units Agreement granted by the Company and agreed to by the Employee.
(b)	“Award” means the grant of Units in accordance with this Agreement.
(c)	“Common Stock” means common stock of the Company, $.01 par value.
(d)	“Fair Market Value” means the per share closing price of a share of Sapient Common Stock on the Nasdaq trading day immediately preceding the applicable Vesting Date.
(e)	“Grant Date” means the date designated as the Date of Grant on the Notice.
(f)	“NASDAQ” means the Nasdaq Stock Market.
(g)	“Notice” means the Notice of Restricted Stock Units Award attached to this Agreement and incorporated herein by reference.
(h)	“Payment Date” means, as to Vested Units, within 30 days of the date on which the Units become Vested.

(i)	“Unit” means a notional unit which is equivalent to a single share of Common Stock on the Grant Date, subject to Section 4.
(j)	“Vested” means that portion of the Award to which the Employee has a nonforfeitable right.
(k)	“Vesting Dates” means the dates listed in the Vesting Schedule on the attached Notice.

3. Vesting.

(a)	An Award shall become Vested only upon the Vesting Dates as set forth in the Vesting Schedule, except as otherwise provided herein or determined by the Company in its sole discretion. No portion of any Award shall become Vested on the Vesting Date unless the Employee is then, and since the Grant Date has continuously been, employed by a member of the Company Group.
(b)	In the event that the Employee’s employment terminates prior to a Vesting Date for any reason, including without limitation (1) death, (2) disability, or (3) termination by the Company or the Company Group, or (4) other termination of employment, any portion of the Award that has not then become Vested will be forfeited automatically.
(c)	In the event of a merger or acquisition of the Company in which the Company is not the surviving entity, or a sale of substantially all of the Company’s assets, the Company may, in its sole discretion, accelerate the Vesting of all or any portion of any Award, unless the surviving entity agrees to assume or provide substituted awards in respect of the portion of the Awards that have not yet become Vested.

4. Adjustments Based on Certain Changes in the Common Stock. In the event of any stock split, reverse stock split, stock dividend, recapitalization or similar change affecting the Common Stock, the Award shall be equitably adjusted.

5. No Voting Rights/Dividends. The Award shall not be interpreted to bestow upon the Employee any equity interest or ownership in the Company Group prior to the Payment Date. The Employee is not entitled to vote any Common Stock by reason of the granting of this Award or to receive or be credited with any dividends declared and payable on any Common Stock underlying any Award prior to any Payment Date

6. Payment of Award. On the Payment Date, the Company shall issue to the Employee that number of shares of Common Stock as equals that number of Units which have become Vested.

7. Employment Rights. This Agreement shall not create any right of the Employee to continued employment with the Company or the Company Group or limit the right of the Company Group to terminate the Employee’s employment at any time and shall not create any right of the Employee to employment with the Company Group. The Employee acknowledges and represents to the Company that the Employee has not been

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induced to receive any Award by expectation of employment or continued employment. Except to the extent required by applicable law that cannot be waived, the loss of the Award shall not constitute an element of damages or indemnity in the event of termination of the Employee’s employment even if the termination is determined to be in violation of an obligation of the Company Group to the Employee by contract or otherwise.

8. Unfunded Status. The obligations of the Company Group hereunder shall be contractual only. The Employee shall rely solely on the unsecured promise of the Company and nothing herein shall be construed to give the Employee or any other person or persons any right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company Group.

9. No Assignment. No right or benefit or payment under the Plan shall be subject to assignment or other transfer nor shall it be liable or subject in any manner to attachment, garnishment or execution.

10. Withholding. The Company’s obligation to deliver to the Employee shares of Common Stock under an Award shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements as determined by the Company Group (“Withholding Taxes”). To satisfy any Withholding Taxes due upon vesting of the Employee’s Units, the Employee agrees to pay to the Company, or make provision satisfactory to the Company for payment of, any Withholding Taxes, no later than the Payment Date. The Company and any Affiliate may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind due to the Employee. Such withheld amounts shall include shares retained from the Award creating the tax obligation, valued at their Fair Market Value on the date of retention.

Further, as a condition of receiving any Vested Award, the Employee hereby agrees to the terms of the Irrevocable Standing Order to Sell Shares (the “Standing Order”), attached as Exhibit A. Pursuant to the Standing Order, and in lieu of taking the actions described in the immediately preceding paragraph of this Section 10, the Company, in its sole discretion, may require, and, in such event the Employee agrees, to the following:

(a) The Employee authorizes the Company’s agent to sell, at the market price and on each Vesting Date (or the first NASDAQ trading day thereafter if a Vesting Date is a day in which NASDAQ is closed), the number of Vested shares that, per the Company’s instructions to its agent, is necessary to obtain proceeds sufficient to satisfy the Withholding Taxes. The Employee understands and agrees that the number of shares that such agent will sell will be based on the closing price of the Common Stock on the NASDAQ trading day immediately preceding the Vesting Date.

(b) The Employee agrees that the proceeds received from the sale of Vested shares pursuant to this Section 10 will be used to satisfy the Withholding Taxes and, accordingly, the Employee hereby authorizes the Company’s agent to pay such proceeds to the Company for such purpose. The Employee understands that to the

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extent that the proceeds obtained by such sale exceed the amount necessary to satisfy the Withholding Taxes, such excess proceeds shall be deposited into the Employee’s stock brokerage account with E*TRADE Financial or such other third party brokerage under which the Employee maintains a brokerage account (the “Account”). The Employee further understands that any remaining Vested shares shall be deposited into the Account.

(c) The Employee acknowledges and agrees that, in the event that a market in the Common Stock does not exist, the Employee shall pay to the Company amounts sufficient to pay the Withholding Taxes and, to the extent that such payment is not made, the Company shall have the right to make other arrangements to satisfy the Withholding Taxes due upon the vesting of the Employee’s Shares.

11. Amendment or Termination. This Agreement may be amended by mutual written agreement of the parties.

12. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts.

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     IN WITNESS WHEREOF, Sapient Corporation has executed this Restricted Stock Units Agreement as of the ___day of ___, 200_.

SAPIENT CORPORATION
By:
	Alan J. Herrick
	Chief Executive Officer

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Exhibit A

IRREVOCABLE STANDING ORDER TO SELL SHARES

I have received from the Company on a voluntary basis the right to acquire shares of Sapient common stock (the “Shares”) pursuant to the attached Restricted Stock Units Agreement between Sapient and me.

I understand that I must maintain a securities brokerage account with E*TRADE Financial or such other third party brokerage (each of E*TRADE Financial or such other third party brokerage is herein defined as the “Broker”) to participate in the stock unit plan described in detail in the Restricted Stock Units Agreement, and Sapient has informed me about this requirement as well as the requirements for the opening of such a securities brokerage account so that the vested Shares can be deposited into account. Furthermore, I understand that on each vesting date, the vested Shares will be deposited into my stock brokerage account with the broker and that I will incur taxable ordinary employment income (“Taxable Income”) upon my receipt of the vested Shares. Per the terms of the Agreement, and if so directed by Sapient, I understand and agree to do the following as a condition of my receipt of vested Shares:

Upon each vesting date, I must sell a number of Shares that is sufficient to satisfy all withholding taxes, as determined by Sapient or my Sapient-affiliated employer, which are applicable to my Taxable Income (the “Withholding Taxes”). Accordingly, I HEREBY DIRECT THE BROKER TO SELL, ON EACH VESTING DATE LISTED ABOVE (OR THE FIRST NASDAQ TRADING DAY THEREAFTER IF A VESTING DATE IS A DAY ON WHICH NASDAQ IS CLOSED), THAT NUMBER OF SHARES THAT, PER SAPIENT’S INSTRUCTIONS TO THE AGENT, IS SUFFICIENT TO OBTAIN SALE PROCEEDS SUFFICIENT TO SATISFY THE WITHHOLDING TAXES. THE PER SHARE SALES PRICE SHALL BE CALCULATED BASED ON THE CLOSING PRICE OF A SHARE OF SAPIENT COMMON STOCK ON THE NASDAQ TRADING DAY IMMEDIATELY PRECEDING THE APPLICABLE VESTING DATE.

I understand that the Broker will remit the proceeds of the foregoing sale promptly to Sapient for payment by Sapient or my Sapient-affiliated employer of the Withholding Taxes, and I authorize and direct the Broker to pay such proceeds to Sapient for this purpose.

I acknowledge that I have not been induced to participate in any trade in return for or as an expectation of employment or continued employment. I understand and agree that by signing below, I am making an Irrevocable Standing Order to Sell Shares that will remain in effect until such time as I have received all Shares to which I am entitled under this Agreement. I also agree that this Irrevocable Standing Order to Sell Shares is in addition and subject to the terms and conditions of any existing Account Agreement that I have with the Broker.

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EX-10.5 6 b67178scexv10w5.htm EX-10.5 - AMENDMENT TO SAPIENT CORPORATION 1998 STOCK INCENTIVE PLAN

Exhibit 10.5

[Amendment Approved by Stockholders
on August 16, 2007]

AMENDMENT
TO
SAPIENT CORPORATION
1998 STOCK INCENTIVE PLAN

     WHEREAS, Sapient Corporation (the “Company”) established the 1998 Stock Incentive Plan effective March 24, 1998 and authorized the issuance of options to acquire common stock, $.01 par value, of the Company thereunder up to a limit specified in the Plan;

     WHEREAS, on May 8, 1998 the shareholders of the Company voted to approve the Plan;

     WHEREAS, the Board of Directors of the Company delegated the administration of the Plan and issuance of the options thereunder to the Compensation Committee of the Board of Directors (the “Committee”);

     WHEREAS, the terms of the Plan provide that, after March 24, 2008, no further options will be permitted to be issued under the Plan;

     WHEREAS, the Committee has not granted awards for all of the shares of common stock authorized under the Plan;

     WHEREAS, upon recommendation of the Committee, the Board desires to amend the Plan to extend the time during which awards can be made under the Plan for a period of up to 5 years, so that the Committee may grant awards for shares remaining under the Plan that were authorized previously but remain available for awards;

     WHEREAS, upon recommendation of the Committee, the Board desires to add a Plan provision that authorizes the payment of performance-based cash bonuses to eligible employees, subject to the limitations set forth herein; and

     WHEREAS, Section 11(d) of the Plan reserves to the Company the right to amend the Plan, provided that no such amendment shall be effective unless and until approved by stockholders of the Company as required by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

     NOW, THEREFORE, the Plan is hereby amended as follows, effective as of date on which such amendment is approved by stockholders of the Company:

1.     Section 4(b) is amended in its entirety to read as follows:

"(b) Per Participant Limit. Subject to adjustment under Section 8, the maximum number of shares of Common Stock for which Options may be granted to any person in any calendar year and the maximum number of shares of Restricted Stock granted to any person in any calendar year will each be 1,000,000. The maximum number of shares subject to other stock-based Awards granted to any person in any calendar year will be one million (1,000,000) shares. The maximum dollar amount of any cash bonus payable to any single Participant under Section 6A of the Plan in any calendar year shall be two million dollars (U.S. $2,000,000). The per-Participant limits described in this Section 4(b) shall be construed and applied consistently with Section 162(m) of the Code.

2.     A new Section 6A is hereby added to read in its entirety as follows:

“6A. BONUSES. The Board may grant cash bonus awards (“Bonus Awards”) to Participants on the terms and conditions set forth herein. The Board shall select those Participants (each a “Bonus Participant”) under the Plan who shall be eligible to receive a Bonus Award, which may be a Performance Award, and the terms and conditions of each such Award, including, without limitation, with respect to Performance Criteria.

3.     Section 11(c) of the Plan shall be amended to read in its entirety as follows:

“The Plan became effective on May 8, 1998, the date on which it was originally adopted by stockholders, and provided that no Awards could be granted after March 24, 2008. On March 29, 2007, the Plan was amended, subject to stockholder approval, so that no Awards could be granted after the first to occur of March 29, 2012, and the time at which no Common Stock is available for Awards. Accordingly, no Awards may be made after that date, but Awards previously granted may extend beyond that date in accordance with their terms. No Incentive Stock Option may be granted under the Plan after March 24, 2008.

4.     A new Section 12 is added to read in its entirety as follows:

“12. PERFORMANCE AWARDS.

(a) GENERALLY. A Performance Award is an Award that is subject to Performance Criteria. The Committee, in its discretion, may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) of the Code and Performance Awards that are not intended so to qualify.

(b) PERFORMANCE CRITERIA. Performance criteria (“Performance Criteria”) are specified criteria, other than the mere continuation of Employment

or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) of the Code, a Performance Criterion will mean an objectively determinable measure of performance relating to any or any combination of the following (measured either absolutely or by reference to an index or indices and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products or services; customer satisfaction scores ; acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; or recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings. A Performance Criterion and any targets with respect thereto determined by the Board need not be based upon an increase, a positive or improved result or avoidance of loss. To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m) of the Code, the Board may provide, in the case of any Award intended to qualify for such exception, that one or more of the Performance Criteria applicable to such Award will be adjusted in an objectively determinable manner to reflect events (for example, but without limitation, acquisitions or dispositions) occurring during the performance period that affect the applicable Performance Criterion or Criteria. The Board shall have the authority to exercise subjective discretion to reduce (but not increase) awards payouts below the levels indicated by the strict application of the Performance Criteria, based on factors it deems appropriate in its sole discretion.”

Executed this 29^th day of March, 2007.

SAPIENT CORPORATION
By:	/s/ Jane E. Owens
	Title: Secretary

EX-31.1 7 b67178scexv31w1.htm EX-31.1 SECTION 302 CERTIFICATION OF ALAN J. HERRICK

EXHIBIT 31.1

I, Alan J. Herrick, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Sapient Corporation;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d.	Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signature	Title	Date
/s/ Alan J. Herrick	Chief Executive Officer	November 8, 2007
Alan J. Herrick	(Principal Executive Officer)

EX-31.2 8 b67178scexv31w2.htm EX-31.2 SECTION 302 CERTIFICATION OF JOSEPH S. TIBBETTS

EXHIBIT 31.2

I, Joseph S. Tibbetts, Jr., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Sapient Corporation;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d.	Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signature	Title	Date
/s/ Joseph S. Tibbetts, Jr.	Chief Financial Officer	November 8, 2007
Joseph S. Tibbetts, Jr.	(Principal Financial Officer)

 

EX-32.1 9 b67178scexv32w1.htm EX-32.1 SECTION 906 CERTIFICATION OF ALAN J. HERRICK

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sapient Corporation (the “Corporation”) on Form 10-Q for the fiscal quarter ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan J. Herrick, the Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Alan J. Herrick

Alan J. Herrick

Chief Executive Officer

Dated: November 8, 2007

EX-32.2 10 b67178scexv32w2.htm EX-32.2 SECTION 906 CERTIFICATION OF JOSEPH S. TIBBETTS

EXHIBIT 32.2

CERTIFICATION PURSUANT TO SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sapient Corporation (the “Corporation”) on Form 10-Q for the fiscal quarter ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph S. Tibbetts, Jr., the Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Joseph S. Tibbetts, Jr.

Joseph S. Tibbetts, Jr.

Chief Financial Officer

Dated: November 8, 2007

-----END PRIVACY-ENHANCED MESSAGE-----

EX-10.4

Exhibit 10.4

SAPIENT CORPORATION
RESTRICTED STOCK UNITS
AGREEMENT

     In recognition of the important contributions that the employee whose name appears on the Notice attached to this Agreement and incorporated herein by this reference (the “Employee”) makes to the success of Sapient Corporation (the “Company” or “Sapient”) and its Affiliates (together with the Company, the “Company Group”), pursuant to the Sapient Corporation 1998 Stock Incentive Plan (the “Plan”), the Company hereby grants to the Employee the Restricted Stock Units Award described below.

1. The Restricted Stock Unit Award. The Company hereby grants to the Employee the number of restricted stock units (the “Units”) set forth on the Notice, subject to the terms and conditions of this Agreement and the Plan. An Award shall be paid hereunder, only to the extent that such Award is Vested, as provided in this Agreement. The Employee’s rights to the Units are subject to the restrictions described in this Agreement and the Plan in addition to such other restrictions, if any, as may be imposed by law.

2. Definitions. The following definitions will apply for purposes of this Agreement. Capitalized terms not defined in this Agreement are used as defined in the Plan and the Notice.

(a)	“Agreement” means this Restricted Stock Units Agreement granted by the Company and agreed to by the Employee.
(b)	“Award” means the grant of Units in accordance with this Agreement.
(c)	“Common Stock” means common stock of the Company, $.01 par value.
(d)	“Fair Market Value” means the per share closing price of a share of Sapient Common Stock on the Nasdaq trading day immediately preceding the applicable Vesting Date.
(e)	“Grant Date” means the date designated as the Date of Grant on the Notice.
(f)	“NASDAQ” means the Nasdaq Stock Market.
(g)	“Notice” means the Notice of Restricted Stock Units Award attached to this Agreement and incorporated herein by reference.
(h)	“Payment Date” means, as to Vested Units, within 30 days of the date on which the Units become Vested.

(i)	“Unit” means a notional unit which is equivalent to a single share of Common Stock on the Grant Date, subject to Section 4.
(j)	“Vested” means that portion of the Award to which the Employee has a nonforfeitable right.
(k)	“Vesting Dates” means the dates listed in the Vesting Schedule on the attached Notice.

3. Vesting.

(a)	An Award shall become Vested only upon the Vesting Dates as set forth in the Vesting Schedule, except as otherwise provided herein or determined by the Company in its sole discretion. No portion of any Award shall become Vested on the Vesting Date unless the Employee is then, and since the Grant Date has continuously been, employed by a member of the Company Group.
(b)	In the event that the Employee’s employment terminates prior to a Vesting Date for any reason, including without limitation (1) death, (2) disability, or (3) termination by the Company or the Company Group, or (4) other termination of employment, any portion of the Award that has not then become Vested will be forfeited automatically.
(c)	In the event of a merger or acquisition of the Company in which the Company is not the surviving entity, or a sale of substantially all of the Company’s assets, the Company may, in its sole discretion, accelerate the Vesting of all or any portion of any Award, unless the surviving entity agrees to assume or provide substituted awards in respect of the portion of the Awards that have not yet become Vested.

4. Adjustments Based on Certain Changes in the Common Stock. In the event of any stock split, reverse stock split, stock dividend, recapitalization or similar change affecting the Common Stock, the Award shall be equitably adjusted.

5. No Voting Rights/Dividends. The Award shall not be interpreted to bestow upon the Employee any equity interest or ownership in the Company Group prior to the Payment Date. The Employee is not entitled to vote any Common Stock by reason of the granting of this Award or to receive or be credited with any dividends declared and payable on any Common Stock underlying any Award prior to any Payment Date

6. Payment of Award. On the Payment Date, the Company shall issue to the Employee that number of shares of Common Stock as equals that number of Units which have become Vested.

7. Employment Rights. This Agreement shall not create any right of the Employee to continued employment with the Company or the Company Group or limit the right of the Company Group to terminate the Employee’s employment at any time and shall not create any right of the Employee to employment with the Company Group. The Employee acknowledges and represents to the Company that the Employee has not been

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induced to receive any Award by expectation of employment or continued employment. Except to the extent required by applicable law that cannot be waived, the loss of the Award shall not constitute an element of damages or indemnity in the event of termination of the Employee’s employment even if the termination is determined to be in violation of an obligation of the Company Group to the Employee by contract or otherwise.

8. Unfunded Status. The obligations of the Company Group hereunder shall be contractual only. The Employee shall rely solely on the unsecured promise of the Company and nothing herein shall be construed to give the Employee or any other person or persons any right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company Group.

9. No Assignment. No right or benefit or payment under the Plan shall be subject to assignment or other transfer nor shall it be liable or subject in any manner to attachment, garnishment or execution.

10. Withholding. The Company’s obligation to deliver to the Employee shares of Common Stock under an Award shall be subject to the satisfaction of all applicable federal, state and local income and employment tax withholding requirements as determined by the Company Group (“Withholding Taxes”). To satisfy any Withholding Taxes due upon vesting of the Employee’s Units, the Employee agrees to pay to the Company, or make provision satisfactory to the Company for payment of, any Withholding Taxes, no later than the Payment Date. The Company and any Affiliate may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind due to the Employee. Such withheld amounts shall include shares retained from the Award creating the tax obligation, valued at their Fair Market Value on the date of retention.

Further, as a condition of receiving any Vested Award, the Employee hereby agrees to the terms of the Irrevocable Standing Order to Sell Shares (the “Standing Order”), attached as Exhibit A. Pursuant to the Standing Order, and in lieu of taking the actions described in the immediately preceding paragraph of this Section 10, the Company, in its sole discretion, may require, and, in such event the Employee agrees, to the following:

(a) The Employee authorizes the Company’s agent to sell, at the market price and on each Vesting Date (or the first NASDAQ trading day thereafter if a Vesting Date is a day in which NASDAQ is closed), the number of Vested shares that, per the Company’s instructions to its agent, is necessary to obtain proceeds sufficient to satisfy the Withholding Taxes. The Employee understands and agrees that the number of shares that such agent will sell will be based on the closing price of the Common Stock on the NASDAQ trading day immediately preceding the Vesting Date.

(b) The Employee agrees that the proceeds received from the sale of Vested shares pursuant to this Section 10 will be used to satisfy the Withholding Taxes and, accordingly, the Employee hereby authorizes the Company’s agent to pay such proceeds to the Company for such purpose. The Employee understands that to the

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extent that the proceeds obtained by such sale exceed the amount necessary to satisfy the Withholding Taxes, such excess proceeds shall be deposited into the Employee’s stock brokerage account with E*TRADE Financial or such other third party brokerage under which the Employee maintains a brokerage account (the “Account”). The Employee further understands that any remaining Vested shares shall be deposited into the Account.

(c) The Employee acknowledges and agrees that, in the event that a market in the Common Stock does not exist, the Employee shall pay to the Company amounts sufficient to pay the Withholding Taxes and, to the extent that such payment is not made, the Company shall have the right to make other arrangements to satisfy the Withholding Taxes due upon the vesting of the Employee’s Shares.

11. Amendment or Termination. This Agreement may be amended by mutual written agreement of the parties.

12. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts.

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     IN WITNESS WHEREOF, Sapient Corporation has executed this Restricted Stock Units Agreement as of the ___day of ___, 200_.

SAPIENT CORPORATION
By:
	Alan J. Herrick
	Chief Executive Officer

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Exhibit A

IRREVOCABLE STANDING ORDER TO SELL SHARES

I have received from the Company on a voluntary basis the right to acquire shares of Sapient common stock (the “Shares”) pursuant to the attached Restricted Stock Units Agreement between Sapient and me.

I understand that I must maintain a securities brokerage account with E*TRADE Financial or such other third party brokerage (each of E*TRADE Financial or such other third party brokerage is herein defined as the “Broker”) to participate in the stock unit plan described in detail in the Restricted Stock Units Agreement, and Sapient has informed me about this requirement as well as the requirements for the opening of such a securities brokerage account so that the vested Shares can be deposited into account. Furthermore, I understand that on each vesting date, the vested Shares will be deposited into my stock brokerage account with the broker and that I will incur taxable ordinary employment income (“Taxable Income”) upon my receipt of the vested Shares. Per the terms of the Agreement, and if so directed by Sapient, I understand and agree to do the following as a condition of my receipt of vested Shares:

Upon each vesting date, I must sell a number of Shares that is sufficient to satisfy all withholding taxes, as determined by Sapient or my Sapient-affiliated employer, which are applicable to my Taxable Income (the “Withholding Taxes”). Accordingly, I HEREBY DIRECT THE BROKER TO SELL, ON EACH VESTING DATE LISTED ABOVE (OR THE FIRST NASDAQ TRADING DAY THEREAFTER IF A VESTING DATE IS A DAY ON WHICH NASDAQ IS CLOSED), THAT NUMBER OF SHARES THAT, PER SAPIENT’S INSTRUCTIONS TO THE AGENT, IS SUFFICIENT TO OBTAIN SALE PROCEEDS SUFFICIENT TO SATISFY THE WITHHOLDING TAXES. THE PER SHARE SALES PRICE SHALL BE CALCULATED BASED ON THE CLOSING PRICE OF A SHARE OF SAPIENT COMMON STOCK ON THE NASDAQ TRADING DAY IMMEDIATELY PRECEDING THE APPLICABLE VESTING DATE.

I understand that the Broker will remit the proceeds of the foregoing sale promptly to Sapient for payment by Sapient or my Sapient-affiliated employer of the Withholding Taxes, and I authorize and direct the Broker to pay such proceeds to Sapient for this purpose.

I acknowledge that I have not been induced to participate in any trade in return for or as an expectation of employment or continued employment. I understand and agree that by signing below, I am making an Irrevocable Standing Order to Sell Shares that will remain in effect until such time as I have received all Shares to which I am entitled under this Agreement. I also agree that this Irrevocable Standing Order to Sell Shares is in addition and subject to the terms and conditions of any existing Account Agreement that I have with the Broker.

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EX-10.5

Exhibit 10.5

[Amendment Approved by Stockholders
on August 16, 2007]

AMENDMENT
TO
SAPIENT CORPORATION
1998 STOCK INCENTIVE PLAN

     WHEREAS, Sapient Corporation (the “Company”) established the 1998 Stock Incentive Plan effective March 24, 1998 and authorized the issuance of options to acquire common stock, $.01 par value, of the Company thereunder up to a limit specified in the Plan;

     WHEREAS, on May 8, 1998 the shareholders of the Company voted to approve the Plan;

     WHEREAS, the Board of Directors of the Company delegated the administration of the Plan and issuance of the options thereunder to the Compensation Committee of the Board of Directors (the “Committee”);

     WHEREAS, the terms of the Plan provide that, after March 24, 2008, no further options will be permitted to be issued under the Plan;

     WHEREAS, the Committee has not granted awards for all of the shares of common stock authorized under the Plan;

     WHEREAS, upon recommendation of the Committee, the Board desires to amend the Plan to extend the time during which awards can be made under the Plan for a period of up to 5 years, so that the Committee may grant awards for shares remaining under the Plan that were authorized previously but remain available for awards;

     WHEREAS, upon recommendation of the Committee, the Board desires to add a Plan provision that authorizes the payment of performance-based cash bonuses to eligible employees, subject to the limitations set forth herein; and

     WHEREAS, Section 11(d) of the Plan reserves to the Company the right to amend the Plan, provided that no such amendment shall be effective unless and until approved by stockholders of the Company as required by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

     NOW, THEREFORE, the Plan is hereby amended as follows, effective as of date on which such amendment is approved by stockholders of the Company:

1.     Section 4(b) is amended in its entirety to read as follows:

"(b) Per Participant Limit. Subject to adjustment under Section 8, the maximum number of shares of Common Stock for which Options may be granted to any person in any calendar year and the maximum number of shares of Restricted Stock granted to any person in any calendar year will each be 1,000,000. The maximum number of shares subject to other stock-based Awards granted to any person in any calendar year will be one million (1,000,000) shares. The maximum dollar amount of any cash bonus payable to any single Participant under Section 6A of the Plan in any calendar year shall be two million dollars (U.S. $2,000,000). The per-Participant limits described in this Section 4(b) shall be construed and applied consistently with Section 162(m) of the Code.

2.     A new Section 6A is hereby added to read in its entirety as follows:

“6A. BONUSES. The Board may grant cash bonus awards (“Bonus Awards”) to Participants on the terms and conditions set forth herein. The Board shall select those Participants (each a “Bonus Participant”) under the Plan who shall be eligible to receive a Bonus Award, which may be a Performance Award, and the terms and conditions of each such Award, including, without limitation, with respect to Performance Criteria.

3.     Section 11(c) of the Plan shall be amended to read in its entirety as follows:

“The Plan became effective on May 8, 1998, the date on which it was originally adopted by stockholders, and provided that no Awards could be granted after March 24, 2008. On March 29, 2007, the Plan was amended, subject to stockholder approval, so that no Awards could be granted after the first to occur of March 29, 2012, and the time at which no Common Stock is available for Awards. Accordingly, no Awards may be made after that date, but Awards previously granted may extend beyond that date in accordance with their terms. No Incentive Stock Option may be granted under the Plan after March 24, 2008.

4.     A new Section 12 is added to read in its entirety as follows:

“12. PERFORMANCE AWARDS.

(a) GENERALLY. A Performance Award is an Award that is subject to Performance Criteria. The Committee, in its discretion, may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) of the Code and Performance Awards that are not intended so to qualify.

(b) PERFORMANCE CRITERIA. Performance criteria (“Performance Criteria”) are specified criteria, other than the mere continuation of Employment

or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of an Award. For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m) of the Code, a Performance Criterion will mean an objectively determinable measure of performance relating to any or any combination of the following (measured either absolutely or by reference to an index or indices and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products or services; customer satisfaction scores ; acquisitions and divestitures (in whole or in part); joint ventures and strategic alliances; spin-offs, split-ups and the like; reorganizations; or recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings. A Performance Criterion and any targets with respect thereto determined by the Board need not be based upon an increase, a positive or improved result or avoidance of loss. To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m) of the Code, the Board may provide, in the case of any Award intended to qualify for such exception, that one or more of the Performance Criteria applicable to such Award will be adjusted in an objectively determinable manner to reflect events (for example, but without limitation, acquisitions or dispositions) occurring during the performance period that affect the applicable Performance Criterion or Criteria. The Board shall have the authority to exercise subjective discretion to reduce (but not increase) awards payouts below the levels indicated by the strict application of the Performance Criteria, based on factors it deems appropriate in its sole discretion.”

Executed this 29^th day of March, 2007.

SAPIENT CORPORATION
By:	/s/ Jane E. Owens
	Title: Secretary

EX-31.1

EXHIBIT 31.1

I, Alan J. Herrick, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Sapient Corporation;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d.	Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signature	Title	Date
/s/ Alan J. Herrick	Chief Executive Officer	November 8, 2007
Alan J. Herrick	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

I, Joseph S. Tibbetts, Jr., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Sapient Corporation;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and
d.	Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Signature	Title	Date
/s/ Joseph S. Tibbetts, Jr.	Chief Financial Officer	November 8, 2007
Joseph S. Tibbetts, Jr.	(Principal Financial Officer)

 

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sapient Corporation (the “Corporation”) on Form 10-Q for the fiscal quarter ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan J. Herrick, the Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Alan J. Herrick

Alan J. Herrick

Chief Executive Officer

Dated: November 8, 2007

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Sapient Corporation (the “Corporation”) on Form 10-Q for the fiscal quarter ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph S. Tibbetts, Jr., the Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Joseph S. Tibbetts, Jr.

Joseph S. Tibbetts, Jr.

Chief Financial Officer

Dated: November 8, 2007