WARRANT TO PURCHASE COMMON STOCK, PAR VALUE $0.0001 PER SHARE, OF CORNERSTONE ONDEMAND, INC.
December
6, 2010
THIS
WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED OR PURSUANT TO AN EXEMPTION FROM REGISTRATION AS EVIDENCED BY
AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED.
No. ADP–1
Warrant
WARRANT
TO PURCHASE COMMON STOCK, PAR VALUE $0.0001 PER SHARE,
OF
CORNERSTONE ONDEMAND, INC.
This
Warrant (the “Warrant”) is issued
to ADP, Inc., a Delaware corporation, by Cornerstone OnDemand, Inc., a Delaware
corporation (the “Corporation”)
pursuant to the terms of that certain Warrant Agreement dated as of May 6, 2009
by and between the Corporation and ADP, Inc., a Delaware corporation (including
any of its affiliates, “ADP” or “Holder”), that
Agreement and First Amendment to Warrant Agreement, effective as of November 24,
2010, by and between the Corporation and ADP and that Second Amendment to
Warrant Agreement, effective as of December 6, 2010, by and between the
Corporation and ADP (collectively, the “Amended Warrant
Agreement”). The Holder of this Warrant is entitled upon surrender of
this Warrant in accordance with the terms of the Amended Warrant Agreement to
purchase from the Corporation 360,000 shares of Common Stock, $0.0001 par value
per share, of the Corporation (the “Shares”). The initial
Exercise Price shall be $0.01 per Share (which initial Exercise Price may be
adjusted as set forth herein) and the Warrant shall be exercisable pursuant to
the terms and conditions set forth herein
All
capitalized terms used but not defined herein have the meanings set forth in the
Amended Warrant Agreement.
Section
1. Definitions.
“Change in Control”
means either (i) a Liquidity Event as defined in the Corporation’s Certificate
of Incorporation, as may be amended from time to time, or (ii) a firm commitment
underwritten initial public offering pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended, covering the offer
and sale of the Corporation’s common stock, par value $0.0001 per share,
provided that the per share price of such public offering is not less than $6.40
and the aggregate gross proceeds to the Corporation are not less than $40
million (before deduction of any underwriters’ commissions and
expenses).
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Section
2. Exercise.
(a) This
Warrant must be exercised, in whole or in part, (i) immediately prior to the
time of the consummation of the first Change of Control (contemplated by clause
(i) of such definition) following the date hereof or (ii) any time during the
three (3) year period following the consummation of a Change of Control
(contemplated by clause (ii) of such definition), in either case, by surrender
of the Warrant to the Corporation at the address referred to in Section 9 hereof
or such other place designated by the Corporation in writing delivered to the
Holder, accompanied by a form of Warrant Exercise, in substantially the form
attached as Annex
A to this
Warrant, duly executed by the Holder and accompanied by payment, in cash
(including by wire transfer) or by certified or official bank check payable to
the order of the Corporation in the amount obtained by multiplying (a) the
number of Shares designated in such Warrant Exercise by (b) the Exercise Price
(as defined below), and the Holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully paid and nonassessable Shares
determined as provided in Section 4 hereof. The Corporation shall deliver
written notice to any Holder at least 10 business days prior to the anticipated
date of consummation of any Change of Control and any exercise thereby of this
Warrant shall be conditional upon the consummation of the transaction described
in any such notice.
(b) Each
exercise of a Warrant under Section 2(a) hereof shall be deemed to have been
effected immediately prior to the Change of Control, and at such time the party
in whose name any certificate for Shares shall be issuable shall be deemed to
have become the holder of record thereof.
(c) As
soon as practicable after each exercise of a Warrant, in whole or in part (but
no later than five (5) business days thereafter), the Corporation will cause to
be issued in the name of and delivered to the Holder, the
following:
(i) Certificates. A
certificate or certificates for the number of duly authorized, validly issued,
fully paid and nonassessable Shares to which the Holder shall be entitled upon
such exercise.
(ii)
Warrant.
In case such exercise is in part only, a new Warrant of like tenor dated the
date of the original Warrant, evidencing the right to purchase the number of
Warrant Shares equal to the number of such Warrant Shares called for on the face
of the Warrant, minus the number of
such Warrant Shares designated by the Holder upon such exercise, which new
Warrant shall in all other respects be identical to the original Warrant
(subject to any adjustments made pursuant to this Warrant after the issuance of
the Warrant).
(d) The
issuance of Warrant Shares upon the exercise of this Warrant shall be made
without charge to the Holder for any cost incurred by the Corporation in
connection with the exercise of the Warrants and the related issuance of the
Warrant Shares.
(e) Payment
of the Exercise Price may be made in cash (including by wire transfer) or by
check payable to the order of the Corporation. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Corporation shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
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(f) The
Holder of this Warrant may exercise this Warrant by surrendering the Warrant,
with the form of Warrant Exercise set forth hereto properly completed and
executed, together with payment of the Exercise Price at the office of the
Corporation.
(g) The
Corporation may deem and treat the Holder hereof as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon made
by anyone), for the purpose of any exercise hereof, and of any distribution to
the Holder hereof, and for all other purposes, and the Corporation will not be
affected by any notice to the contrary.
Section
3. Holder
Representations and Warranties.
In
connection with the issuance hereof, the undersigned represents and warrants to
the Corporation as follows:
(a) This
Warrant and the Shares issuable upon exercise thereof are being acquired for its
own account, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act of 1933, as amended (the “Act”).
(b) The
holder understands that the Warrant and the Shares have not been registered
under the Act by reason of their issuance in a transaction exempt from the
registration and prospectus delivery requirements of the Act pursuant to Section
4(2) thereof, and that they must be held by the holder indefinitely, and that
the holder must therefore bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Act or is exempted from such registration. The holder further understands that
the Warrant Shares have not been qualified under applicable state securities
laws by reason of their issuance in a transaction exempt from the qualification
requirements thereunder, which exemption depends upon, among other things, the
bona fide nature of the holder’s investment intent expressed above.
(c) The
holder has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of the purchase of this Warrant
and the Shares purchasable pursuant to the terms of this Warrant and of
protecting its interests in connection therewith.
(d) The
holder is able to bear the economic risk of the purchase of the Shares pursuant
to the terms of this Warrant.
(e) The
holder is an “accredited investor” as such term is defined in Rule 501 of
Regulation D promulgated under the Act.
The
Shares (unless registered under the Act) shall be stamped or imprinted with a
legend in substantially the following form:
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THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
Section
4. Adjustment of the
Exercise Price and Number of Shares Issuable.
(a) The
exercise price per share for Warrant Shares purchasable upon the exercise of
this Warrant (the “Exercise Price”) and
the number of Warrant Shares issuable upon the exercise of the Warrant are
subject to adjustment from time to time as set forth in this Section
4.
(b) In
the event any of the following (other than any of the following constituting a
Change in Control) shall occur, the number of and kind of securities purchasable
upon exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time as follows:
(i)
Subdivisions, Combinations
and Other Issuances. If the Corporation shall at any time subdivide the
Shares, by split-up or otherwise, or combine its Shares, or issue additional
shares of its Shares as a dividend, the number of Shares issuable on the
exercise of a Warrant shall forthwith be proportionately increased in the case
of a subdivision or stock dividend, or proportionately decreased in the case of
a combination. Appropriate adjustments shall also be made to the Exercise Price
payable per Share, but the aggregate Exercise Price payable for the total number
of Shares purchasable under any such Warrant (as adjusted) shall remain the
same. Any adjustment under this Section 4(b)(i) shall become effective at the
close of business on the date the subdivision or combination becomes effective,
or as of the record date of such dividend, or in the event that no record date
is fixed, upon the making of such dividend. The provisions of this Section
4(b)(i) shall apply to each successive transaction contemplated by this
Section.
(ii) Reclassification,
Reorganization and Consolidation. In case of any reclassification,
capital reorganization, or change in the capital stock of the Corporation (other
than as a result of a subdivision, combination, or stock dividend provided for
in Section 4(b)(ii) above), then the Corporation shall make appropriate
provision so that the Holder of a Warrant shall have the right at any time to
purchase, at a total price equal to that payable upon the exercise of a Warrant,
the kind and amount of shares of stock and other securities and property
receivable in connection with such reclassification, reorganization, or change
by a holder of the same number of Shares as would have been purchasable by the
Holder upon exercise of a Warrant immediately prior to such reclassification,
reorganization, or change. In any such case appropriate provisions shall be made
with respect to the rights and interest of the Holder of a Warrant so that the
provisions hereof shall thereafter be applicable with respect to any shares of
stock or other securities and property deliverable upon exercise hereof, and
appropriate adjustments shall be made to the Exercise Price per share payable
hereunder, provided the aggregate Exercise Price shall remain the same. The
provisions of this Section 4(b)(ii) shall apply to each successive transaction
contemplated by this Section.
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(iii) Other Issuances. In
case the Corporation shall at any time or from time to time, after the issuance
of a Warrant but prior to the exercise thereof, distribute to all holders of
Shares (including any such distribution made in connection with a merger or
consolidation in which the Corporation is the resulting or surviving person and
Shares are not changed or exchanged) cash, evidences of indebtedness of the
Corporation or another issuer, securities of the Corporation or another issuer
or other assets (excluding dividends or distributions payable in shares of
capital stock of the Corporation for which adjustment is made under Section
4(b)(i)), or rights or warrants to subscribe for or purchase any of the
foregoing, then, and in each such case, the Holder shall be entitled to
participate in any such distribution based on the number of Shares it would have
been entitled to receive had the Warrant been exercised immediately prior to the
occurrence of such distribution, as if the Holder were the owner of such Shares
at the time of such distribution.
(iv) Notice of Adjustment.
When any adjustment is required to be made in the number or kind of shares
purchasable upon exercise of a Warrant, or in the Exercise Price, the
Corporation shall, at its own cost, promptly (within ten (10) business days)
notify the holder of such event and of the number of Shares or other securities
or property thereafter purchasable upon exercise of such Warrant and deliver to
the Holder a certificate, signed by the President and the Chief Financial
Officer of the Corporation, setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was calculated
and specifying the adjusted Exercise Price and the number of Warrant Shares
issuable upon exercise of the Warrant then in effect following such
adjustment.
Section
5. Restrictions on
Transfer.
ADP
agrees that this Warrant and the Warrant Shares issuable upon exercise of this
Warrant may not be sold or transferred except (i) to an affiliate of ADP, (ii)
to a successor in interest to a Holder by way of a merger or other business
combination transaction, (iii) to any person that purchases substantially all of
ADP’s assets, and (iv) to any person that purchases substantially all of the
assets of the National Accounts Services Division of ADP, and, in any such case,
in compliance with the Securities Act of 1933, as amended (the “Act”), and the rules
and regulations of the Securities and Exchange Commission promulgated
thereunder. In addition to the sales and transfers permitted by the previous
sentence, all Warrant Shares issued upon the exercise of this Warrant may,
following the occurrence of a Change in Control contemplated by clause (ii) of
such definition (and the expiration of any restriction on sale, transfer,
distribution or other disposition agreed to in any lock-up agreement executed by
ADP), thereafter be sold, transferred, distributed or disposed of in accordance
with the Act, and the rules and regulations of the Securities and Exchange
Commission (“SEC”) promulgated
thereunder. Notwithstanding the foregoing, with respect to any disposition of
this Warrant or any Shares acquired pursuant to the exercise of this Warrant
prior to registration of such Warrant or Shares, the Holder agrees to give
written notice to the Corporation prior thereto (except, in the case of clauses
(ii)-(iv) above if prior notice is prohibited by applicable confidentiality
restrictions, in which case notice shall be made as soon as reasonably
practicable after such transaction has been made public or, if not made public,
is consummated), describing briefly the manner thereof, together with a written
opinion of such ▇▇▇▇▇▇’s counsel to the effect that such disposition may be
effected without registration or qualification (under the Act as then in effect
or any federal or state securities law then in effect) of such Warrant or the
Shares and indicating whether or not under the Act certificates for the Warrant
or the Shares to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to ensure compliance
with such laws. Each certificate representing a Warrant or the Shares
transferred in accordance with this Section 5 shall bear a legend as to the
applicable restrictions on transferability in order to ensure compliance with
such laws, unless in the aforesaid opinion of counsel for the Holder, such
legend is not required in order to ensure compliance with such laws, in which
case the Corporation shall reissue the certificates representing the Warrant or
the Shares, as the case may be, without any restrictive legends concurrent with
the transfer thereof. The Corporation may issue stop transfer instructions to
its transfer agent in connection with these restrictions.
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Section
6. Mutilated or
Missing Warrants.
In the
event that this Warrant is mutilated, lost, stolen or destroyed, the Corporation
will, at the request of the Holder thereof, issue and deliver, in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Corporation of such loss,
theft, or destruction of such Warrant and indemnity, if requested, also
reasonably satisfactory to the Corporation. Applicants for such substitute
Warrant will also comply with such other reasonable regulations and pay such
other reasonable charges as the Corporation may prescribe.
Section
7. Reservation of
Shares.
The
Corporation will at all times have authorized and reserved and shall keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares or its authorized and issued shares held in its treasury,
for the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of the Warrants, the full number of Shares deliverable upon the
exercise of the Warrants. All Warrant Shares that are issued upon the exercise
of Warrants shall, upon issuance, be duly authorized, validly issued, fully paid
and nonassessable and free of preemptive rights.
Section
8. No Voting
Rights.
Nothing
contained in this Warrant or the Amended Warrant Agreement shall entitle the
Holder to any voting rights or other rights as a stockholder of the Corporation
(until such Warrants are exercised into Warrant Shares in accordance with the
terms hereof).
Section
9. Notices.
All
notices, demands or other communications to be given or delivered under or by
reason of the provisions of this Warrant shall be in writing and shall be by
registered or certified first-class mail, return receipt requested, facsimile,
courier services or personal delivery to the following addresses, or to such
other addresses as shall be designated from time to time by a party in
accordance with this Section 9:
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(a) if
to the Corporation:
Cornerstone
OnDemand, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
Santa
Monica, CA 90404
Attention:
General Counsel
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy to:
▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
Attn:
▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
Palo
Alto, CA 94304
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
(b) if
to ADP:
ADP,
Inc.
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇
Roseland,
NJ 07068-1728
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with a
copy to:
Automatic
Data Processing, Inc.
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇
Roseland,
NJ 07068-1728
Attention:
General Counsel
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
Section
10. Amendments.
This
Warrant supersedes all prior agreements (whether written or oral) between the
parties with respect to its subject matter, and, together with the Amended
Warrant Agreement, is intended as a complete and exclusive statement of the
terms of this Warrant between the parties with respect thereto and cannot be
changed, modified, amended or terminated orally. The Corporation may at any
time, with the prior written consent of the Holders of Warrants representing a
majority of the Warrant Shares subject to the outstanding Warrants at such time,
amend or supplement this Warrant and each Holder of Warrants shall be bound by
any amendment or supplement so approved.
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Section
11. Successors.
All the
covenants and provisions of this Warrant by or for the benefit of the
Corporation will bind and inure to the benefit of its successors and assigns
hereunder. For the purposes of this Warrant, all references to the “Holder”
shall, unless the context otherwise requires, constitute references to the
Holder and to any other holder of Warrants, whether as a transferee of the
Holder or otherwise.
Section
12. Governing
Law.
This
Warrant will be deemed to be a contract made under the laws of the State of
California and for all purposes will be construed in accordance with, and
governed by, the internal laws of the State of California.
Section
13. Expiration.
This
Warrant shall expire on the ten (10) year anniversary of the date of the
issuance hereof.
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IN
WITNESS WHEREOF, the Corporation and the undersigned have caused this Warrant to
be duly executed as of the date first above written.
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CORNERSTONE
ONDEMAND, INC.
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By:
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/s/ ▇▇▇▇ ▇▇▇▇▇▇ |
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▇▇▇▇
▇▇▇▇▇▇ (Dec 6, 2010)
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Name:
▇▇▇▇ ▇▇▇▇▇▇
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Title:
CEO
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Acknowledged
and agreed:
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ADP,
INC.
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By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
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Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title:
President
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CSOD
Legal:
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/s/ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇
▇▇▇▇▇ (Dec 5, 2010)
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ANNEX A
[FORM
OF WARRANT EXERCISE]
(To
be executed upon exercise of Warrant)
The
undersigned hereby irrevocably elects to exercise the right, represented by this
Warrant, to acquire Shares
and herewith tenders in payment for such Shares cash or a check payable to the
order of Cornerstone OnDemand, Inc., in the amount of $ .
The undersigned
requests that a certificate for the Shares to be issued pursuant
to this exercise of warrant be registered in the name of
whose address is and
that such certificate be delivered to
, whose address is
.. If said number of share is less than all the Shares purchasable under the
Warrant, the undersigned requests that a new Warrant representing Warrants to
purchase the remaining balance of the Shares be registered in the name
of ,
whose address is ,
and that such certificate be delivered to whose
address is .
Dated:
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Signature:
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(Signature
must conform in all respects to name
of
▇▇▇▇▇▇ as specified on the face of the
Warrant)
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