Exhibit 10.8(b)
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement ("this Agreement") is made as
of August 30, 2001 between Sapient Corporation, a Delaware corporation (the
"Borrower") and Fleet National Bank (the "Bank"). For good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged, the
Borrower and the Bank act and agree as follows:
1. Reference is made to: (i) that certain letter agreement dated June
30, 2000 between the Borrower and the Bank, as amended by the below-described
First Modification (as so amended, the "Letter Agreement"); (ii) that certain
$5,000,000 face principal amount promissory note dated June 30, 2000, as amended
by the First Modification (as so amended, the "Revolving Note") made by the
Borrower and payable to the order of the Bank; (iii) that certain Pledge
Agreement dated as of June 29, 2001 (the "Pledge Agreement") given by the
Borrower to the Bank; and (iv) that certain representation letter dated June 29,
2001 (the "Securities Corp. Letter") from the Borrower to the Bank. The Letter
Agreement, the Revolving Note, the Pledge Agreement and the Securities Corp.
Letter are hereinafter referred to, collectively, as the "Financing Documents".
As used herein, the "First Modification" means that certain Loan Modification
Agreement and Waiver dated as of June 29, 2001 between the Bank and the
Borrower.
2. The Letter Agreement is hereby amended, effective as of the date
hereof:
a. By deleting the period appearing at the end of the penultimate
sentence of Section 1.1 of the Letter Agreement and by substituting in its stead
the following:
"; provided, however, that after the occurrence and during the
continuance of an Event of Default, payments will be applied
to obligations of the Borrower to the Bank as the Bank
determines in its sole discretion."
b. By inserting into clause (a) of the second grammatical paragraph of
Section 1.5 of the Letter Agreement, immediately after the words "made in this
letter agreement" the following:
"(other than any such representations or warranties which
expressly refer to a specific prior date)"
c. By inserting into the last sentence of Subsection 2.1(g) of the
Letter Agreement, immediately prior to the word "deficiencies", the following:
"material"
d. By deleting the third sentence of Section 3.1 of the Letter
Agreement and by substituting in its stead the following:
"The Borrower will qualify to do business and will remain
qualified and in good standing (and the Borrower will cause
each Subsidiary of the Borrower to qualify and remain
qualified and in good standing) in each other jurisdiction in
which the failure so to qualify would (singly or in the
aggregate with all other such failures then existing) be
reasonably likely to have a material adverse effect on the
financial condition, business or prospects of the Borrower or
any such Subsidiary."
e. By deleting the period appearing at the end of the first sentence of
Section 3.3 of the Letter Agreement and by substituting in its stead the
following:
"; provided that the provisions of this sentence will not be
deemed to require the payment of any such tax, assessment,
charge or levy so long as both of the following conditions are
being met: (1) no action is being taken by the relevant
governmental agency to foreclose any lien or otherwise enforce
any rights with respect to such tax, assessment, charge or
levy against any property of the Borrower and/or any of its
Subsidiaries and (2) the failure by the Borrower and/or any of
its Subsidiaries to pay any such tax, assessment, charge or
levy (taken together with all other such failures then
existing) would not be reasonably likely to have a material
adverse effect on the financial condition, business or
prospects of the Borrower or any such Subsidiary."
f. By deleting the period appearing at the end of clause (vii) of
Section 3.6 of the Letter Agreement and by substituting in its stead the
following:
"; provided that to the extent that any Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Annual Report to
Shareholders or annual proxy statement is readily available
through public websites, the Borrower will not be required by
this clause (vii) to furnish a copy of same to the Bank."
g. By deleting clause (v) of Section 4.1 of the Letter Agreement and by
substituting in its stead the following:
"(v) operating leases of equipment and/or realty listed on
item 4.1 of the attached Disclosure Schedule (as amended by
Second Loan Modification Agreement dated as of August 30,
2001) plus leases entered into after August 30, 2001; provided
that the aggregate annual rental payable under all such leases
entered into after August 30, 2001 will not exceed $4,000,000
per fiscal year of the Borrower;"
h. By deleting from Section 4.3 of the Letter Agreement the number
"$3,000,000" and by substituting in its stead the following:
"$5,000,000"
i. By deleting the period at the end of Section 4.12 of the Letter
Agreement and by substituting in its stead the following:
", as defined in Regulation U of the Board of Governors of the
Federal Reserve System."
-2-
j. By deleting in its entirety Section 6.1 of the Letter Agreement and
by substituting in its stead the following:
"6.1. Costs and Expenses. The Borrower agrees to pay, on
demand, all costs and expenses (including, without limitation,
reasonable legal fees) of the Bank in connection with the
preparation, execution and delivery of this letter agreement,
the Revolving Note and all other instruments and documents to
be delivered in connection with any Revolving Loan and any
amendments or modifications of any of the foregoing, as well
as the costs and expenses incurred by the Bank in connection
with the administration, default, collection, waiver or
amendment of any terms of the Loan Documents, or in connection
with the Bank's exercise, preservation or enforcement of any
of its rights, remedies or options thereunder, including,
without limitation, reasonable fees of outside legal counsel
or the reasonable allocated costs of in-house legal counsel,
accounting, consulting, brokerage or other similar
professional fees or expenses, and any reasonable fees or
expenses associated with travel or other costs relating to any
appraisals or examinations conducted in connection with any
Revolving Loan or any collateral therefor, all whether or not
legal action is instituted. In addition, the Borrower shall be
obligated to pay any and all stamp and other taxes payable or
determined to be payable in connection with the execution and
delivery of this letter agreement, the Revolving Note and all
other instruments and documents to be delivered in connection
with any Obligation. Any fees, expenses or other charges which
the Bank is entitled to receive from the Borrower under this
Section shall bear interest from that date which is 30 days
after the date of any demand therefor until the date when paid
at a rate per annum equal to the sum of (i) four (4%) percent
plus (ii) the per annum rate otherwise payable under the
Revolving Note (but in no event in excess of the maximum rate
permitted by then applicable law)."
k. By inserting into Section 6.3 of the Letter Agreement, immediately
following the first two sentences of such Section, the following:
"Notwithstanding the provisions of the immediately preceding
two sentences, the requirement for a quarterly facility fee
payable in arrears will be deemed effective only through and
including August 30, 2001. Thereafter, the following
provisions will apply: The Borrower will pay to the Bank with
respect to the within arrangements for Revolving Loans, on the
last day of each calendar quarter (commencing on September 30,
2001) as long as the within-described revolving credit
arrangements are in effect and on the Expiration Date or date
of earlier termination of such revolving credit arrangements,
commitment fees (`Commitment Fees') computed in arrears on the
daily average unused
-3-
portion of the Bank's commitment during the calendar quarter
(or shorter period, in the case of the first such payment and
in the case of early termination) then ending. Such Commitment
Fees will be payable, based on such daily average unused
portion of the Bank's commitment, at a rate of 0.375% per
annum, appropriately prorated for any period of less than a
calendar quarter. As used herein, the `unused portion of the
Bank's commitment', as determined at any time, means that
amount by which (x) $5,000,000 exceeds (y) the sum of (i) then
outstanding aggregate principal amount of the Revolving Loans
plus (ii) the then aggregate outstanding stated amounts of
letters of credit issued hereunder, whether such excess
results from the fact that the Bank has for any reason not
made Revolving Loans and/or issued letters of credit up to
said $5,000,000 amount or from the fact that Revolving Loans
have been repaid or due to any other reason. In addition, and
without limitation of the foregoing, if the within-described
revolving credit facility is terminated for any reason prior
to the Expiration Date by either the Bank or the Borrower,
then at the date of such early termination the Borrower will
pay to the Bank, as an additional fee, a sum equal to those
Commitment Fees which (absent such termination) would have
accrued from the date of such termination through the
Expiration Date, assuming for this purpose that no Revolving
Loans were outstanding and no such letters of credit were
outstanding during any of this period."
l. By deleting the period at the end of Section 6.5 of the Letter
Agreement and by substituting in its stead the following:
"(without giving effect to conflict of laws principles)."
m. By deleting in its entirety Section 6.12 of the Letter Agreement and
by substituting in its stead the following:
"6.12. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY MUTUALLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LETTER
AGREEMENT, THE REVOLVING NOTE OR ANY OTHER LOAN DOCUMENTS OR
OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE BANK RELATING TO
THE ADMINISTRATION OF THE REVOLVING LOANS OR ENFORCEMENT OF
THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS
PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE
BANK HAS
-4-
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE
BANK TO ENTER INTO THIS LETTER AGREEMENT AND TO MAKE REVOLVING
LOANS AS CONTEMPLATED HEREIN.
6.13. Integration; Amendments. This letter agreement, the
Revolving Note and the other Loan Documents delivered herewith
are intended by the parties as the final, complete and
exclusive statement of the transactions evidenced by the Loan
Documents. All prior or contemporaneous promises, agreements
and understandings, whether oral or written, with respect to
the within-described loan facilities are deemed to be
superseded by this letter agreement and the other Loan
Documents. This letter agreement may not be amended or
modified except by a written instrument setting forth such
amendment or modification executed by the Borrower and the
Bank."
n. By deleting in its entirety the definition of "Expiration Date"
appearing in Section 7.1 of the Letter Agreement and by substituting in its
stead the following:
"`Expiration Date' - August 30, 2002, unless extended by the
Bank, which extension may be given or withheld by the Bank in
its sole discretion."
As a result, for the purposes of both the Letter Agreement and the
Revolving Note, the Expiration Date will be deemed to be August 30, 2002.
o. By deleting item 4.1 of the Disclosure Schedule attached to the
Letter Agreement and by substituting in its stead the disclosure attached to
this Agreement and labeled "Item 4.1".
3. The Revolving Note is hereby amended by deleting the period
appearing at the end of the first sentence of the second grammatical paragraph
of the text of the Revolving Note and by substituting in its stead the
following:
", immediately and without notice or demand of any kind."
4. Wherever in any Financing Document, or in any certificate or opinion
to be delivered in connection therewith, reference is made to a "letter
agreement", to the "Letter Agreement" or to the "Loan Agreement", from and after
the date hereof same will be deemed to refer to the Letter Agreement, as amended
hereby. Wherever in any Financing Document or in any certificate or opinion to
be delivered in connection therewith, reference is made to the "Revolving Note",
from and after the date hereof same will be deemed to refer to the Revolving
Note, as amended hereby.
5. In order to induce the Bank to enter into this Agreement, the
Borrower agrees to pay, at the time of execution and delivery of this Agreement
a renewal fee of $7,500. Said renewal fee is in addition to, and is not to be
applied against or reduced by, any other payments
-5-
(whether in respect of principal, interest, fees and/or expenses) now or
hereafter paid or payable by the Borrower in connection with the Letter
Agreement and/or any loans made thereunder or letter of credit issued as
described therein.
6. In order to induce the Bank to enter into this Agreement, the
Borrower also agrees to pay, promptly upon receipt of an invoice for same, all
costs and expenses of the Bank (including, without limitation, reasonable
attorneys' fees) incurred or to be incurred in connection with this Agreement or
any of the transactions contemplated hereby.
7. Further, in order to induce the Bank to enter into this Agreement,
the Borrower further represents and warrants as follows:
a. The execution, delivery and performance of this Agreement have been
duly authorized by the Borrower by all necessary corporate and other action,
will not require the consent of any third party and will not conflict with,
violate the provisions of, or cause a default or constitute an event which, with
the passage of time or the giving of notice or both, could cause a default on
the part of the Borrower under its charter documents or by-laws or under any
contract, agreement, law, rule, order, ordinance, franchise, instrument or other
document, or result in the imposition of any lien or encumbrance (except in
favor of the Bank) on any property or assets of the Borrower.
b. The Borrower has duly executed and delivered this Agreement.
c. This Agreement is the legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms.
d. The statements, representations and warranties made in each of the
Financing Documents continue to be correct as of the date hereof; except as
amended, updated and/or supplemented by the attached Supplemental Disclosure
Schedule.
e. The covenants and agreements of the Borrower contained in any of the
Financing Documents have been complied with on and as of the date hereof.
f. No event which constitutes or which, with notice or lapse of time,
or both, could constitute, an Event of Default (as defined in the Letter
Agreement) has occurred and is continuing.
g. No material adverse change has occurred in the financial condition
of the Borrower from that disclosed in the financial statements of the Borrower
heretofore most recently furnished to the Bank.
8. Except as expressly affected hereby, the Letter Agreement and each
of the other Financing Documents remains in full force and effect as heretofore.
Nothing contained herein will be deemed to constitute a waiver nor a release of
any provision of any of the Financing Documents. Nothing contained herein will
in any event be deemed to constitute an agreement to give a waiver or release or
to agree to any amendment or modification of any provision of any of the
Financing Documents on any other or future occasion.
-6-
Executed, as an instrument under seal, as of the day and year first
above written.
SAPIENT CORPORATION
By:
_____________________________________
Name:
Title:
Accepted and agreed:
FLEET NATIONAL BANK
By:_____________________________
Name:
Title:
-7-
Exhibit 10.8(b)
SUPPLEMENTAL DISCLOSURE SCHEDULE
Sapient Corporation
Revolving Loan Agreement
Disclosure Schedule 2.1(a)
Jurisdictions in which Borrower is Qualified and List of Subsidiaries:
SAPIENT CORPORATION (A DELAWARE CORPORATION)
California
Colorado
Georgia
Illinois
Massachusetts
New Jersey
New York
Texas
Virginia
SAPIENT SERVICES CORPORATION (A DELAWARE CORPORATION)
HUMAN CODE, INC. (A DELAWARE CORPORATION)
HWT, INC. (A DELAWARE CORPORATION, APPROXIMATELY 56% OWNED BY BORROWER)
SAPIENT AUSTRALIA PTY. LTD. (AN AUSTRALIAN COMPANY)
SAPIENT CANADA INC. (AN ONTARIO CORPORATION)
SAPIENT CORPORATION PRIVATE LIMITED (AN INDIA CORPORATION)
SAPIENT GMBH (A GERMAN CORPORATION)
SAPIENT K.K. (A JAPAN CORPORATION, 88% OWNED BY BORROWER)
SAPIENT LIMITED (A UK LIMITED LIABILITY COMPANY)
SAPIENT SECURITIES CORPORATION (A MASSACHUSETTS CORPORATION)
SCE SAPIENT AND CUNEO LUXEMBOURG S.A. (A LUXEMBOURG COMPANY, 50% OWNED BY
BORROWER, OWNS 100% OF SAPIENT S.P.A., A JOINT VENTURE IN MILAN, ITALY)
THE LAUNCH GROUP AG (A GERMAN CORPORATION)
All companies are wholly-owned, first-tier subsidiaries, unless otherwise noted.
Sapient Corporation
Revolving Loan Agreement
Disclosure Schedule 4.1, 4.2, 4.3, and 4.5
Item 4.1 - Existing Indebtedness
Sapient Corporation and Subsidiaries have only ongoing trade payables and
accrued expenses payable related to ongoing business operations. There is not
formal debt in existence, which related to funding activities or obtaining
working capital.
Sapient does have obligations related to real and tangible personal property,
represented by real estate and equipment leases which exceed one year. These
leases are associated directly with business operations, with the schedule of
payment due dates disclosed in our annual report. A listing of these obligations
is attached.
See also the guarantees referenced in Item 4.3 below.
Item 4.2 - Existing Liens
Sapient is not aware of any existing liens.
Item 4.3 - Existing Guaranties
Sapient has issued standing letters of credit related to leased real estate in
the amount of approximately $3.6 million, which have been issued by the Bank.
Further, Sapient has, in a limited number of circumstances, guaranteed the debts
of certain non-officer employees, related to certain debts. These guarantees are
not material to the business operations of the company, and are further
guaranteed by future employee bonus payments and stock options exercises.
The company has also entered into certain guarantees in the form of performance
bonds related to HWT, Inc. which relate to services contracts entered into
between HWT and certain state government entities. These performance bonds can
be executed by these state agencies in the case of non performance of duties,
which would ultimately result in a financial settlement with Sapient
Corporation. The maximum amount represented by these performance bonds is $1.3
million.
Sapient has also guaranteed certain customer contracts and leases of its
subsidiaries in the ordinary course of business, the amounts of which are not
material individually or in the aggregate.
Item 4.5 - Existing Loans to Officers
There are no outstanding loans to SEC Section 16 officers or members of the
Board of Directors. Loans to other employees typically involve approximately one
hundred employees at any given point in time, with amounts increasing typically
during tax filing deadlines.
