Exhibit 10.2

Opening Transaction

 

To:   

Cornerstone OnDemand, Inc.

1601 Cloverfield Blvd.

Suite 620 South

Santa Monica, CA 90404

(310) 752-0200

A/C:    [Insert Account Number] From:    [Dealer] Re:    [Base]1 [Additional]2
Convertible Bond Hedge Transaction Ref. No:    [Insert Reference Number] Date:
   June [—], 2013

Dear Ladies and Gentlemen:

The purpose of this communication (this “Confirmation”) is to set forth the
terms and conditions of the above-referenced transaction entered into on the
Trade Date specified below (the “Transaction”) between [Dealer] (“Dealer”) and
Cornerstone OnDemand, Inc. (“Counterparty”). This communication constitutes a
“Confirmation” as referred to in the ISDA Master Agreement specified below.

1. This Confirmation is subject to, and incorporates, the definitions and
provisions of the 2006 ISDA Definitions (the “2006 Definitions”) and the
definitions and provisions of the 2002 ISDA Equity Derivatives Definitions (the
“Equity Definitions”, and together with the 2006 Definitions, the
“Definitions”), in each case as published by the International Swaps and
Derivatives Association, Inc. (“ISDA”). In the event of any inconsistency
between the 2006 Definitions and the Equity Definitions, the Equity Definitions
will govern. Certain defined terms used herein have the meanings assigned to
them in the Indenture to be dated as of June 17, 2013 between Counterparty and
U.S. Bank National Association, as trustee (the “Indenture”), relating to the
USD220,000,000 principal amount of 1.50% Convertible Senior Notes due 2018 (the
“Convertible Securities”, and each USD1,000 principal amount of Convertible
Securities, a “Convertible Security”) [(as increased by up to an aggregate
principal amount of USD33,000,000 if and to the extent that the Initial
Purchasers (as defined herein) exercise their option to purchase additional
Convertible Securities pursuant to the Purchase Agreement (as defined herein)]3.
In the event of any inconsistency between the terms defined in the Indenture and
this Confirmation, this Confirmation shall govern. For the avoidance of doubt,
references

 

 

1  Insert for the Base Convertible Bond Hedge Confirmation.

2  Insert for the Additional Convertible Bond Hedge Confirmation.

3  Delete for the Additional Convertible Bond Hedge Transaction.

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herein to sections of the Indenture are based on the draft of the Indenture most
recently reviewed by the parties at the time of execution of this Confirmation.
If any relevant sections of the Indenture are changed, added or renumbered
following the execution of this Confirmation but prior to the execution of the
Indenture, the parties will amend this Confirmation in good faith to preserve
the economic intent of the parties, based on the draft of the Indenture. The
parties further acknowledge that references to the Indenture herein are
references to the Indenture as in effect on the date of its execution and if the
Indenture is amended, modified or supplemented following its execution, any such
amendment, modification or supplement will be disregarded for purposes of this
Confirmation (other than Section 8(b)(ii) below) unless the parties agree
otherwise in writing. The Transaction is subject to early unwind if the closing
of the Convertible Securities is not consummated for any reason, as set forth
below in Section 8(k).

Each party is hereby advised, and each such party acknowledges, that the other
party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties’
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.

This Confirmation evidences a complete and binding agreement between Dealer and
Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall be subject to an agreement (the “Agreement”) in
the form of the 2002 ISDA Master Agreement as if Dealer and Counterparty had
executed an agreement in such form on the date hereof (but without any Schedule
except for (i) the election of US Dollars (“USD”) as the Termination Currency
and (ii) the election that the “Cross Default” provisions of Section 5(a)(vi) of
the Agreement shall apply to Counterparty and to Dealer (a) with a “Threshold
Amount” of USD35 million applicable to Counterparty and 2% of the Dealer’s
ultimate parent’s shareholders equity applicable to Dealer, (b) the phrase “or
becoming capable at such time of being declared” shall be deleted from clause
(1) of such Section 5(a)(vi)), and (c) the following language shall be added to
the end thereof: “Notwithstanding the foregoing, a default under subsection
(2) hereof shall not constitute an Event of Default if (x) the default was
caused solely by error or omission of an administrative or operational nature;
(y) funds were available to enable the party to make the payment when due; and
(z) the payment is made within two Local Business Days of such party’s receipt
of written notice of its failure to pay.”

All provisions contained in, or incorporated by reference to, the Agreement will
govern this Confirmation except as expressly modified herein. In the event of
any inconsistency between this Confirmation and either the Definitions or the
Agreement, this Confirmation shall govern.

The Transaction hereunder shall be the sole Transaction under the Agreement. If
there exists any ISDA Master Agreement between Dealer and Counterparty or any
confirmation or other agreement between Dealer and Counterparty pursuant to
which an ISDA Master Agreement is deemed to exist between Dealer and
Counterparty, then notwithstanding anything to the contrary in such ISDA Master
Agreement, such confirmation or agreement or any other agreement to which Dealer
and Counterparty are parties, the Transaction shall not be considered a
Transaction under, or otherwise governed by, such existing or deemed ISDA Master
Agreement. [Contemporaneously with the execution of this Confirmation, [Dealer
Parent], a Delaware Corporation and parent of Dealer, will provide a guarantee
in favor of the Issuer in a form reasonably satisfactory to Issuer.]4

 

 

4  To be applicable to Dealers that use non-rated booking entities and are
supported by a parent guarantee.

 

2

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2. The Transaction constitutes a Share Option Transaction for purposes of the
Equity Definitions. The terms of the particular Transaction to which this
Confirmation relates are as follows:

General Terms:

 

Trade Date:    June 11, 2013 Effective Date:    The closing date of the
[initial]5 issuance of the Convertible Securities [issued pursuant to the option
to purchase additional Convertible Securities exercised on the date hereof]6.
Option Style:    Modified American, as described under “Procedures for Exercise”
below. Option Type:    Call Seller:    Dealer Buyer:    Counterparty Shares:   
The Common Stock of Counterparty, par value USD0.0001 (Ticker Symbol: “CSOD”).
Number of Options:    [            ]. For the avoidance of doubt, the Number of
Options outstanding shall be reduced by each exercise of Options hereunder. In
no event will the Number of Options be less than zero. Applicable Percentage:   
[    ]% Option Entitlement:    As of any date, a number of Shares per Option
equal to (i) the “Conversion Rate” (as defined in the Indenture, but without
regard to any adjustments to the Conversion Rate pursuant to a Fundamental
Change Adjustment or a Discretionary Adjustment) multiplied by (ii) the
Applicable Percentage.

 

 

5 

Insert for the Base Convertible Bond Hedge Confirmation only.

6 

Insert for the Additional Convertible Bond Hedge Confirmation only.

 

3

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Fundamental Change Adjustment:    Any adjustment to the Conversion Rate pursuant
to Section 10.07 of the Indenture. Discretionary Adjustment:    Any adjustment
to the Conversion Rate pursuant to Section 10.05(l) of the Indenture. Strike
Price:    As of any date, an amount in USD equal to USD1,000 divided by the
“Conversion Rate” (as defined in the Indenture, but without regard to any
adjustments to the Conversion Rate pursuant to a Fundamental Change Adjustment
or a Discretionary Adjustment). The Strike Price shall be rounded by the
Calculation Agent in accordance with the applicable provisions of the Indenture.
Number of Shares:    As of any date, a number of Shares equal to the product of
(i) the Number of Options and (ii) the Option Entitlement. Premium:   
USD[            ] Premium Payment Date:    The Effective Date Exchange:    The
NASDAQ Global Select Market Related Exchange:    All Exchanges; provided that
Section 1.26 of the Equity Definitions shall be amended to add the words “United
States” before the word “exchange” in the tenth line of such Section.

Procedures for Exercise:

Conversion Date:    With respect to any conversion of a Convertible Security,
the date on which the Holder (as such term is defined in the Indenture) of such
Convertible Security satisfies all of the requirements for conversion thereof as
set forth in Section 10.02(a) of the Indenture. Free Convertibility Date:   
April 1, 2018 Expiration Time:    The Valuation Time Expiration Date:    July 1,
2018, subject to earlier exercise. Multiple Exercise:    Applicable, as
described under “Automatic Exercise” below. Automatic Exercise:   
Notwithstanding Section 3.4 of the Equity Definitions, on each Conversion Date
in respect of which a “Notice of Conversion” (as defined in the Indenture) that
is effective

 

4

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   as to Counterparty has been delivered by the relevant converting Holder, a
number of Options equal to [(i)] the number of Convertible Securities in
denominations of USD 1,000 as to which such Conversion Date has occurred [minus
(ii) the number of Options that are or are deemed to be deemed to be
automatically exercised on such Conversion Date under the Base Convertible Bond
Hedge Transaction Confirmation letter agreement dated June [    ], 2013 between
Dealer and Counterparty (the “Base Convertible Bond Hedge Confirmation”)]7 ;
provided that such Options shall be exercised or deemed exercised only to the
extent Counterparty has provided a Notice of Exercise to Dealer in accordance
with “Notice of Exercise” below. Notwithstanding the foregoing, in no event
shall the number of Options that are exercised or deemed exercised hereunder
exceed the Number of Options. Notice of Exercise:    Notwithstanding anything to
the contrary in the Equity Definitions or under “Automatic Exercise” above, in
order to exercise any Options, Counterparty, or the trustee on behalf of the
Counterparty, must notify Dealer in writing before 12:00 p.m. (New York City
time) on the second Scheduled Valid Day immediately preceding the scheduled
first day of the Settlement Averaging Period for the Options being exercised of
(i) the number of such Options, (ii) the scheduled first day of the Settlement
Averaging Period and the scheduled Settlement Date, (iii) the Relevant
Settlement Method for such Options, and (iv) if the settlement method for the
related Convertible Securities is not Settlement in Cash (each as defined
below), the fixed amount of cash per Convertible Security that Counterparty has
elected to deliver to Holders (as such term is defined in the Indenture) of the
related Convertible Securities (the “Specified Cash Amount”); provided that in
respect of any Options relating to Convertible Securities with a Conversion Date
occurring on or after the Free Convertibility Date, (A) such notice may be given
on or prior to the second Scheduled Valid Day immediately preceding the
Expiration Date and need only specify the information required in clause (i)
above, and (B) if the Relevant Settlement Method for such Options is (x) Cash
Settlement or (y) Combination Settlement, Dealer shall

 

 

7 

Insert for the Additional Convertible Bond Hedge Confirmation only.

 

5

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   have received a separate notice (the “Notice of Final Settlement Method”) in
respect of all such Convertible Securities before 12:00 p.m. (New York City
time) on the Free Convertibility Date specifying the information required in
clauses (iii) and (iv) above[; provided, further, that any “Notice of Exercise”
or “Notice of Final Settlement Method” delivered to Dealer pursuant to the Base
Convertible Bond Hedge Confirmation shall be deemed to be a Notice of Exercise
or Notice of Final Settlement Method, as the case may be, pursuant to this
Confirmation and the terms of such Notice of Exercise or Notice of Final
Settlement Method shall apply, mutatis mutandis, to this Confirmation]8 .
Counterparty acknowledges its responsibilities under applicable securities laws,
and in particular Section 9 and Section 10(b) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) and the rules and regulations thereunder,
in respect of any election of a settlement method with respect to the
Convertible Securities.    For the avoidance of doubt, if Counterparty fails to
give notice as required above when due in respect of any exercise of Options
hereunder, Dealer’s obligation to make any payment or delivery in respect of
such exercise (but not in respect of any subsequent exercise) shall be
permanently extinguished, and late notice shall not cure such failure; provided
that notwithstanding the foregoing, such notice (and the related exercise of
Options) shall be effective if given after the Exercise Notice Deadline, but
prior to 4:00 P.M. New York City time, on the fifth Exchange Business Day
following the Exercise Notice Deadline, in which event Dealer’s Delivery
Obligation shall not be extinguished but may instead be adjusted by the
Calculation Agent to reflect the additional costs (including, but not limited
to, hedging mismatches and market losses) and expenses incurred by Dealer in
connection with its hedging activities (including the unwinding of any hedge
position) as a result of Dealer not having received such notice on or prior to
the Exercise Notice Deadline. Valuation Time:    At the close of trading of the
regular trading session on the Exchange; provided that if the principal trading
session is extended, the Calculation Agent shall determine the Valuation Time in
its reasonable discretion.

 

 

8 

Include for Additional Convertible Bond Hedge Confirmation only.

 

6

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Market Disruption Event:    Section 6.3(a) of the Equity Definitions is hereby
replaced in its entirety by the following:    “‘Market Disruption Event’ means,
in respect of a Share, (i) a failure by the Relevant Stock Exchange to open for
trading during its regular trading session or (ii) the occurrence or existence
prior to 1:00 p.m. (New York City time) on any Scheduled Valid Day for the
Shares for more than one half-hour period in the aggregate during regular
trading hours of any suspension or limitation imposed on trading (by reason of
movements in price exceeding limits permitted by the Relevant Stock Exchange or
otherwise) in the Shares or in any options contracts or future contracts
relating to the Shares.” Relevant Stock Exchange:    The NASDAQ Global Select
Market or, if the Shares are not then listed on the NASDAQ Global Select Market,
the principal other U.S. national or regional securities exchange on which the
Shares are then listed or, if the Shares are not then listed on a U.S. national
or regional securities exchange, the over-the-counter market, as reported by the
National Quotation Bureau or similar organization or, if the Shares are not then
quoted by the National Quotation Bureau or similar organization, the principal
other market on which the Shares are then traded. Dealer’s Telephone Number and
Telex and/or Facsimile Number and Contact Details for purpose of Giving Notice:
   As specified in Section 6(b) below.

Settlement Terms:

Settlement Method:    For any Option, Net Share Settlement; provided that if the
Relevant Settlement Method set forth below for such Option is not Net Share
Settlement, then the Settlement Method for such Option shall be such Relevant
Settlement Method, but only if (x) Counterparty shall have notified Dealer of
the Relevant Settlement Method in the Notice of Exercise or Notice of Final
Settlement Method, as applicable, for such Option and (y) the Notice of Exercise
or Notice of Final Settlement Method, as the case may be, contains in writing
the following representations and warranties from Counterparty to Dealer as of
such notice delivery date:

 

7

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(i)      none of Counterparty and its officers or directors, or any person that
controls, potentially controls, or otherwise exercises influence over,
Counterparty’s decision to elect the settlement method for the relevant
Convertible Securities is aware of any material nonpublic information regarding
Counterparty or the Shares;

  

(ii)     Counterparty is electing the settlement method for the relevant
Convertible Securities in good faith and not as part of a plan or scheme to
evade compliance with the U.S. federal securities laws; Counterparty is not
electing the settlement method for the relevant Convertible Securities or the
Relevant Settlement Method to create actual or apparent trading activity in the
Shares (or any security convertible into or exchangeable for Shares) or to raise
or depress or otherwise manipulate the price of the Shares (or any security
convertible into or exchangeable for Shares) or otherwise in violation of the
Exchange Act; and Counterparty has not entered into or altered any hedging
transaction relating to the Shares corresponding to or offsetting the
Transaction;

  

(iii)   Counterparty has the power to make such election and to execute and
deliver any documentation relating to such election that it is required by this
Confirmation to deliver and to perform its obligations under this Confirmation
and has taken all necessary action to authorize such election, execution,
delivery and performance;

  

(iv)    such election and performance of its obligations under this Confirmation
do not violate or conflict with any law applicable to it, any provision of its
constitutional documents, any order or judgment of any court or other agency of
government applicable to it or any of its assets or any contractual restriction
binding on or affecting it or any of its assets; and

  

(v)     any transaction that Dealer makes with respect to the Shares during the
period beginning at the time that Counterparty delivers such notice and ending
at the close of business on the final day of the Settlement Averaging Period
shall be made by Dealer at Dealer’s sole discretion for Dealer’s own account and
Counterparty shall not have, and shall not attempt to

 

8

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exercise, any influence over how, when, whether or at what price Dealer effects
such transactions, including, without limitation, the prices paid or received by
Dealer per Share pursuant to such transactions, or whether such transactions are
made on any securities exchange or privately.

Relevant Settlement Method:    In respect of any Option:   

(i)      if Counterparty has elected to settle its conversion obligations in
respect of the related Convertible Security in a combination of cash and Shares
pursuant to Section 10.03(a) of the Indenture with a Specified Cash Amount equal
to USD1,000, then the Relevant Settlement Method for such Option shall be Net
Share Settlement; and

  

(ii)     if Counterparty has elected to settle its conversion obligations in
respect of the related Convertible Security in a combination of cash and Shares
pursuant to Section 10.03(b) of the Indenture with a Specified Cash Amount
greater than USD1,000, then the Relevant Settlement Method for such Option shall
be Combination Settlement; and

  

(iii)   if Counterparty has elected to settle its conversion obligations in
respect of the related Convertible Security entirely in cash pursuant to Section
10.03(b) of the Indenture (such settlement method, “Settlement in Cash”), then
the Relevant Settlement Method for such Option shall be Cash Settlement.

Net Share Settlement:    If Net Share Settlement is applicable to any Option
exercised or deemed exercised hereunder, Dealer will deliver to Counterparty, on
the relevant Settlement Date for each such Option, a number of Shares (the “Net
Share Settlement Amount”) equal to the sum, for each Valid Day during the
Settlement Averaging Period for each such Option, of (i) (a) the Daily Option
Value for such Valid Day, divided by (b) the Relevant Price on such Valid Day,
divided by (ii) the number of Valid Days in the Settlement Averaging Period;
provided that if such exercise relates to the conversion of Convertible
Securities in connection with which Holders thereof are entitled to receive
additional Shares pursuant to a Fundamental Change Adjustment, then the Net
Share Settlement Amount shall be a number of Shares equal to the lesser of (i)
the Net Share Settlement

 

9

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   Amount determined as if the Option Entitlement referenced in “Daily Option
Value” were adjusted pursuant to such Fundamental Change Adjustment and (ii) a
number of Shares with a value equal to the Relevant Termination Amount for such
Option, as determined by the Calculation Agent (and the value of any such Shares
determined by the Calculation Agent using the open trading price on the last day
of the relevant Settlement Averaging Period); provided further that
notwithstanding the immediately preceding proviso, in no event shall the Net
Share Settlement Amount for any Option exceed a number of Shares equal to the
Applicable Limit for such Option divided by the Applicable Limit Price on the
Settlement Date for such Option.    Dealer will deliver cash in lieu of any
fractional Shares to be delivered with respect to any Net Share Settlement Share
Amount valued at the Relevant Price for the last Valid Day of the Settlement
Averaging Period. Combination Settlement:    If Combination Settlement is
applicable to any Option exercised or deemed exercised hereunder, Dealer will
deliver to Counterparty, on the relevant Settlement Date for each such Option:
  

(i)      cash (the “Combination Settlement Cash Amount”) equal to the sum, for
each Valid Day during the Settlement Averaging Period for such Option, of (A) an
amount (the “Daily Combination Settlement Cash Amount”) equal to the lesser of
(1) the product of (x) the Applicable Percentage and (y) the Specified Cash
Amount minus USD1,000 and (2) the Daily Option Value, divided by (B) the number
of Valid Days in the Settlement Averaging Period; provided that if the
calculation in clause (A) above results in zero or a negative number for any
Valid Day, the Daily Combination Settlement Cash Amount for such Valid Day shall
be deemed to be zero; and

  

(ii)     Shares (the “Combination Settlement Share Amount”) equal to the sum,
for each Valid Day during the Settlement Averaging Period for such Option, of a
number of Shares for such Valid Day (the “Daily Combination Settlement Share
Amount”) equal to (A) (1) the Daily Option Value on such Valid Day minus the
Daily Combination Settlement Cash Amount for such Valid Day, divided by (2) the
Relevant Price on such Valid Day, divided by (B) the number of Valid

 

10

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          Days in the Settlement Averaging Period; provided that if the
calculation in sub-clause (A)(1) above results in zero or a negative number for
any Valid Day, the Daily Combination Settlement Share Amount for such Valid Day
shall be deemed to be zero;

   provided that, if such exercise relates to the conversion of Convertible
Securities in connection with which Holders thereof are entitled to receive
additional Shares pursuant to a Fundamental Change Adjustment, then the
aggregate value of the sum of the Combination Settlement Cash Amount and the
Combination Settlement Share Amount shall be equal to the lesser of (i) the
aggregate value of the sum of the Combination Settlement Cash Amount and the
Combination Settlement Share Amount determined as if the Option Entitlement
referenced in “Daily Option Value” were adjusted pursuant to such Fundamental
Change Adjustment and (ii) cash and Shares with an aggregate value equal to the
Relevant Termination Amount for such Option, as determined by the Calculation
Agent (and the value of any such Shares determined by the Calculation Agent
using the open trading price on the last day of the relevant Settlement
Averaging Period); provided further that notwithstanding the immediately
preceding proviso, in no event shall the sum of (x) the Combination Settlement
Cash Amount for any Option and (y) the Combination Settlement Share Amount for
such Option multiplied by the Applicable Limit Price on the Settlement Date for
such Option, exceed the Applicable Limit for such Option.    Dealer will deliver
cash in lieu of any fractional Shares to be delivered with respect to any
Combination Settlement Share Amount valued at the Relevant Price for the last
Valid Day of the Settlement Averaging Period. Cash Settlement:    If Cash
Settlement is applicable to any Option exercised or deemed exercised hereunder,
in lieu of Section 8.1 of the Equity Definitions, Dealer will pay to
Counterparty, on the relevant Settlement Date for each such Option, an amount of
cash (the “Cash Settlement Amount”) equal to the sum, for each Valid Day during
the Settlement Averaging Period for such Option, of (i) the Daily Option Value
for such Valid Day, divided by (ii) the number of Valid Days in the Settlement
Averaging Period; provided that, if such exercise relates to the conversion of
Convertible Securities in connection with which Holders thereof are entitled to
receive additional Shares pursuant to a Fundamental

 

11

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   Change Adjustment, then the Cash Settlement Amount shall be equal to the
lesser of (i) the Cash Settlement Amount determined as if the Option Entitlement
referenced in “Daily Option Value” were adjusted pursuant to such Fundamental
Change Adjustment and (ii) the Relevant Termination Amount for such Option, as
determined by the Calculation Agent (and the value of any such Shares determined
by the Calculation Agent using the open trading price on the last day of the
relevant Settlement Averaging Period). Delivery Obligation:    For any
Settlement Date, the Net Share Settlement Amount, the Cash Settlement Amount,
the Combination Settlement Cash Amount or the Combination Settlement Share
Amount payable or deliverable on such Settlement Date. Daily Option Value:   
For any Valid Day, an amount equal to (i) the Option Entitlement on such Valid
Day, multiplied by (ii) the Relevant Price on such Valid Day less the Strike
Price on such Valid Day; provided that if the calculation contained in clause
(ii) above results in a negative number, the Daily Option Value for such Valid
Day shall be deemed to be zero. In no event will the Daily Option Value be less
than zero. Relevant Termination Amount:    For any Option, the amount determined
by the Calculation Agent that would be payable by Dealer pursuant to Section 6
of the Agreement if the relevant Conversion Date were an Early Termination Date
resulting from an Additional Termination Event with respect to which the
Transaction was the sole Affected Transaction and Counterparty was the sole
Affected Party (determined without regard to Section 8(c) of this Confirmation),
provided that such amount will be determined as if the Fundamental Change
Adjustment provisions were deleted from the Indenture. Applicable Limit:    For
any Option, an amount of cash equal to the Applicable Percentage multiplied by
the excess of (i) the aggregate of (A) the amount of cash delivered to the
Holder of the related Convertible Security upon conversion of such Convertible
Security and (B) the number of Shares, if any, delivered to the Holder of the
related Convertible Security upon conversion of such Convertible Security
multiplied by the Applicable Limit Price on the Settlement Date for such Option,
over (ii) USD1,000.

 

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Applicable Limit Price:    On any day, the opening price as displayed under the
heading “Op” on Bloomberg page CSOD <equity> (or any successor thereto). Valid
Day:    A day on which (i) there is no Market Disruption Event and (ii) trading
in the Shares generally occurs on the Relevant Stock Exchange. If the Shares are
not listed, quoted or traded on any U.S. securities exchange or any other
market, “Valid Day” means a Business Day. Scheduled Valid Day:    A day that is
scheduled to be a Valid Day on the Relevant Stock Exchange. If the Shares are
not listed, quoted or traded on any U.S. securities exchange or any other
market, “Scheduled Valid Day” means a Business Day. Business Day:    Any day
other than a Saturday, a Sunday or other day on which banking institutions are
authorized or required by law, regulation or executive order to close or be
closed in the State of New York. Relevant Price:    On any Valid Day, the per
Share volume-weighted average price as displayed under the heading “Bloomberg
VWAP” on Bloomberg page “CSOD.Q <equity> AQR” (or its equivalent successor if
such page is not available) (the “Nasdaq VWAP”) in respect of the period from
the scheduled open of trading until the scheduled close of trading of the
primary trading session on such Valid Day (or if such volume-weighted average
price is unavailable at such time, the market value of one Share on such Valid
Day, as determined by the Calculation Agent using, if practicable, a
volume-weighted average method substantially similar to the method for
determining the Nasdaq VWAP). The Relevant Price will be determined without
regard to after-hours trading or any other trading outside of the regular
trading session trading hours. Settlement Averaging Period:    For any Option
and regardless of the Settlement Method applicable to such Option:   

(i)      if the related Conversion Date occurs prior to the Free Convertibility
Date, the 40 consecutive Valid Days commencing on, and including, the third
Valid Day following such Conversion Date; or

  

(ii)     if the related Conversion Date occurs on or following the Free
Convertibility Date, the 40 consecutive Valid Days commencing on, and including,
the 42nd Scheduled Valid Day immediately prior to the Expiration Date.

 

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Settlement Date:    For any Option, the third Business Day immediately following
the final Valid Day of the Settlement Averaging Period for such Option.
Settlement Currency:    USD Other Applicable Provisions:    The provisions of
Sections 9.1(c), 9.8, 9.9, 9.11 and 9.12 of the Equity Definitions will be
applicable, except that all references in such provisions to
“Physically-settled” shall be read as references to “Share Settled”. “Share
Settled” in relation to any Option means that Net Share Settlement or
Combination Settlement is applicable to that Option. The last sentence of
Section 9.12 of the Equity Definitions is hereby amended and restated to read
“Notwithstanding the foregoing, a party shall not be responsible for any
special, indirect or consequential damages (including, without limitation,
delayed or lost ‘earnings per share’ benefits and delayed or loss tax benefits),
even if informed of the possibility thereof.” Representation and Agreement:   
Notwithstanding anything to the contrary in Equity Definitions (including, but
not limited to, Section 9.11 thereof), the parties acknowledge that (i) any
Shares delivered to Counterparty shall be, upon delivery, subject to
restrictions and limitations arising from Counterparty’s status as issuer of the
Shares under applicable securities laws, (ii) Dealer may deliver any Shares
required to be delivered hereunder in certificated form in lieu of delivery
through the Clearance System and (iii) any Shares delivered to Counterparty may
be “restricted securities” (as defined in Rule 144 under the Securities Act of
1933, as amended (the “Securities Act”)). With respect to any such certificated
Shares (as described in clause (ii) above), the Representation and Agreement
contained in Section 9.11 of the Equity Definitions shall be modified by
deleting the remainder of the provision after the word “encumbrance” in the
fourth line thereof.

Adjustments:

Method of Adjustment:    Notwithstanding Section 11.2 of the Equity Definitions,
upon the occurrence of any event or condition set forth in Section 10.05(a),
10.05(b), 10.05(c), 10.05(d), 10.05(e) and 10.05(j) of the Indenture (each, a
“Potential Adjustment

 

14

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   Event”), the Calculation Agent shall make a corresponding adjustment in
respect of any one or more of the Strike Price, the Number of Options, the
Option Entitlement and any other term relevant to the exercise, settlement or
payment of the Transaction; provided that, notwithstanding the foregoing, if the
Calculation Agent acting in good faith and a commercially reasonable manner
disagrees with any adjustment to the Convertible Securities that involves an
exercise of discretion by Counterparty or its board of directors (including,
without limitation, pursuant to Section 10.05(l) of the Indenture or in
connection with any proportional adjustment or the determination of the fair
value of any securities, property, rights or other assets) and determines that
such adjustment was materially inaccurate or based on materially inaccurate
inputs, then in each such case, the Calculation Agent will determine the
adjustment to be made to any one or more of the Strike Price, Number of Options,
Option Entitlement and any other variable relevant to the exercise, settlement
or payment for the Transaction in a commercially reasonable manner; provided,
further, that, notwithstanding the foregoing, if any Potential Adjustment Event
occurs during the Settlement Averaging Period but no adjustment was made to any
Convertible Security under the Indenture because the relevant Holder (as such
term is defined in the Indenture) was deemed to be a record owner of the
underlying Shares on the related Conversion Date, then the Calculation Agent
shall make an adjustment, as reasonably determined by it, to the terms hereof in
order to account for such Potential Adjustment Event.    Promptly upon the
occurrence of any Potential Adjustment Event, Counterparty shall notify the
Calculation Agent of such Potential Adjustment Event.    For the avoidance of
doubt, Dealer shall not have any delivery obligation hereunder in respect of any
“Distributed Property” (as defined in the Indenture) delivered by Counterparty
pursuant to Section 10.05(c) of the Indenture or any payment obligation in
respect of any cash paid by Counterparty pursuant to Section 10.05(d) of the
Indenture (collectively, the “Conversion Rate Adjustment Fallback Provisions”),
and no adjustment shall be made to the terms of the Transaction on account of
any event or condition described in the Conversion Rate Adjustment Fallback
Provisions.

 

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Extraordinary Events:

Merger Events:    Applicable; provided that notwithstanding Section 12.1(b) of
the Equity Definitions, a “Merger Event” means the occurrence of any event or
condition set forth in the definition of “Merger Event” in Section 10.06 of the
Indenture. Tender Offer:    Applicable Consequences of Merger Events /    Tender
Offers:    Notwithstanding Section 12.2 and 12.3 of the Equity Definitions, upon
the occurrence of a Merger Event that results in an adjustment under the
Indenture, the Calculation Agent shall make a corresponding adjustment in
respect of any one or more of the Strike Price, the Number of Options, the
Option Entitlement and any other term relevant to the exercise, settlement or
payment of the Transaction; provided that such adjustment shall be made without
regard to any adjustment to the Conversion Rate pursuant to a Fundamental Change
Adjustment or a Discretionary Adjustment; and provided further that the
Calculation Agent may limit or alter any such adjustment referenced in this
paragraph so that the fair value of the Transaction is not reduced as a result
of such adjustment; and provided further that if, with respect to a Merger
Event, the consideration for the Shares includes (or, at the option of a holder
of Shares, may include) shares of an entity or person not organized under the
laws of the United States, any state thereof or the District of Columbia,
Cancellation and Payment (Calculation Agent Determination) shall apply. Notice
of Merger Consideration    and Consequences:    Upon the occurrence of a Merger
Event that causes the Shares to be converted into the right to receive more than
a single type of consideration (determined based in part upon any form of
stockholder election), Counterparty shall reasonably promptly (but in any event
prior to the relevant merger date) notify the Calculation Agent of (i) the type
and amount of consideration that a holder of Shares would have been entitled to
in the case of reclassifications, consolidations, mergers, sales or transfers of
assets or other transactions that cause Shares to be converted into the right to
receive more than a single type of consideration, (ii) the weighted average of
the types and amounts of consideration

 

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   to be received by the holders of Shares that affirmatively make such an
election, and (iii) the details of the adjustment to be made under the Indenture
in respect of such Merger Event. Nationalization, Insolvency or    Delisting:   
Cancellation and Payment (Calculation Agent Determination); provided that in
addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it
will also constitute a Delisting if the Shares are not immediately re-listed,
re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global
Select Market or The NASDAQ Global Market (or their respective successors); if
the Shares are immediately re-listed, re-traded or re-quoted on any such
exchange or quotation system, such exchange or quotation system shall thereafter
be deemed to be the Exchange. Additional Disruption Events:   

(a)     Change in Law:

   Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is
hereby amended by (i) replacing the phrase “the interpretation” in the third
line thereof with the phrase “, or public announcement of, the formal or
informal interpretation”, (ii) by adding the phrase “and/or Hedge Position”
after the word “Shares” in clause (X) thereof and (iii) by immediately following
the word “Transaction” in clause (X) thereof, adding the phrase “in the manner
contemplated by the Hedging Party on the Trade Date”; provided, further that any
determination as to whether (A) the adoption of or any change in any applicable
law or regulation (including, for the avoidance of doubt and without limitation,
(x) any tax law or (y) adoption or promulgation of new regulations authorized or
mandated by existing statute) or (B) the promulgation of or any change in the
interpretation by any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law or regulation (including any action taken by
a taxing authority), in each case, constitutes a “Change in Law” shall be made
without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 or any similar legal certainty provision in any
legislation enacted, or rule or regulation promulgated, on or after the Trade
Date.

(b)     Failure to Deliver:

   Applicable

 

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(c)     Insolvency Filing:

   Applicable

(d)     Hedging Disruption:

   Applicable; provided that Section 12.9(a)(v) of the Equity Definitions is
hereby modified by inserting the following two phrases at the end of such
Section:    “For the avoidance of doubt, the term “equity price risk” shall be
deemed to include, but shall not be limited to, stock price and volatility risk.
And, for the further avoidance of doubt, the transactions or assets referred to
in phrases (A) or (B) above must be available on commercially reasonable pricing
and other terms.”

(e)     Increased Cost of

          Hedging:

   Not Applicable Hedging Party:    Dealer Determining Party:    Dealer
Non-Reliance:    Applicable Agreements and Acknowledgments Regarding Hedging
Activities:    Applicable Additional Acknowledgments:    Applicable

3. Calculation Agent: Dealer; provided that all determinations made by the
Calculation Agent shall be made in good faith and in a commercially reasonable
manner; provided further that, upon receipt of written request from
Counterparty, the Calculation Agent shall promptly provide Counterparty with a
written explanation describing in reasonable detail any calculation, adjustment
or determination made by it (including any quotations, market data or
information from internal or external sources used in making such calculation,
adjustment or determination, as the case may be, but without disclosing Dealer’s
proprietary models or other information that may be proprietary or subject to
contractual, legal or regulatory obligations to not disclose such information),
and shall use commercially reasonable efforts to provide such written
explanation within five (5) Exchange Business Days from the receipt of such
request.

4. Account Details:

Dealer Payment Instructions:

To be provided by Dealer.

Counterparty Payment Instructions:

To be provided by Counterparty.

 

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5. Offices:

The Office of Dealer for the Transaction is:

[                    ]

The Office of Counterparty for the Transaction is:

Not Applicable.

6. Notices: For purposes of this Confirmation:

 

  (a) Address for notices or communications to Counterparty:

 

To:    Cornerstone OnDemand, Inc.    1601 Cloverfield Blvd.    Suite 620 South
   Santa Monica, CA 90404    (310) 752-0200 Attn:    Perry Wallack    Chief
Financial Officer Telephone:    (310) 752-0200 Facsimile:    (310) 453-7113
With a copy to: Attn:    Adam Weiss    General Counsel Telephone:    (310)
752-0113 Facsimile:    (310) 496-1654 And email notification to the following
addresses: pwallack@csod.com; aweiss@csod.com

 

  (b) Address for notices or communications to Dealer:

 

To:    [                    ] Attn:    [                    ]   
[                    ] Telephone:    [                    ] Facsimile:   
[                    ] With a copy to: Attn:    [                    ]   
[                    ]

 

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Telephone:    [                    ] Facsimile:    [                    ] And
email notification to the following address: [                    ]   

7. Representations, Warranties and Agreements:

(a) In addition to the representations and warranties in the Agreement and those
contained elsewhere herein, Counterparty represents and warrants to and for the
benefit of, and agrees with, Dealer as follows:

(i) On the Trade Date and as of the date of any election by Counterparty of the
Share Termination Alternative under (and as defined in) Section 8(c) below,
(A) none of Counterparty and its officers and directors is aware of any material
nonpublic information regarding Counterparty or the Shares and (B) all reports
and other documents filed by Counterparty with the Securities and Exchange
Commission pursuant to the Exchange Act when considered as a whole (with the
more recent such reports and documents deemed to amend inconsistent statements
contained in any earlier such reports and documents), do not contain any untrue
statement of a material fact or any omission of a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading.

(ii) (A) On the Trade Date, the Shares or securities that are convertible into
Shares are not, and shall not be, subject to a “restricted period,” as such term
is defined in Regulation M under the Exchange Act (“Regulation M”) and
(B) Counterparty shall not engage in any “distribution,” as such term is defined
in Regulation M, other than a distribution meeting the requirements of the
exceptions set forth in sections 101(b)(10) and 102(b)(7) of Regulation M until
the second Exchange Business Day immediately following the Trade Date.

(iii) Without limiting the generality of Section 13.1 of the Equity Definitions,
Counterparty acknowledges that neither Dealer nor any of its affiliates is
making any representations or warranties or taking any position or expressing
any view with respect to the treatment of the Transaction under any accounting
standards including ASC Topic 260, Earnings Per Share, ASC Topic 815,
Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from
Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own
Equity (or any successor issue statements).

(iv) Without limiting the generality of Section 3(a)(iii) of the Agreement, the
Transaction will not violate Rule 13e-1 or Rule 13e-4 under the Exchange Act.

(v) Prior to the Trade Date, Counterparty shall deliver to Dealer a resolution
of Counterparty’s board of directors authorizing the Transaction and such other
certificate or certificates as Dealer shall reasonably request.

(vi) Counterparty is not entering into this Confirmation to create actual or
apparent trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for
Shares) or otherwise in violation of the Exchange Act.

 

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(vii) Counterparty is not, and after giving effect to the transactions
contemplated hereby will not be, required to register as, an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.

(viii) On each of the Trade Date and the Premium Payment Date, Counterparty is
not “insolvent” (as such term is defined under Section 101(32) of the U.S.
Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”))
and Counterparty would be able to purchase the Number of Shares in compliance
with the laws of the jurisdiction of Counterparty’s incorporation.

(ix) The representations and warranties of Counterparty set forth in Section 3
of the Agreement and Section 1 of the Purchase Agreement, dated as of June 11,
2013, among Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC as the
Initial Purchasers (as defined in the Purchase Agreement) and Counterparty (the
“Purchase Agreement”) are true and correct as of the Trade Date and the
Effective Date and are hereby deemed to be repeated to Dealer as if set forth
herein.

(x) No state or local law, rule, regulation or regulatory order in the State of
Delaware, California, or any other jurisdiction in which Counterparty engages in
material business activities, applicable to the Shares would give rise to any
reporting, consent, registration or other requirement (including without
limitation a requirement to obtain prior approval from any person or entity) as
a result of Dealer or its affiliates owning or holding (however defined) Shares.

(xi) Counterparty (i) is an “institutional account” as defined in FINRA Rule
4512(c), (ii) is capable of evaluating investment risks independently, both in
general and with regard to all transactions and investment strategies involving
a security or securities, and will exercise independent judgment in evaluating
the recommendations of Dealer or its associated persons, and (iii) will notify
Dealer if any of the statements contained in clause (i) or (ii) of this
Section 7(a)(xi) ceases to be true.

(b) Each of Dealer and Counterparty agrees and represents that it is an
“eligible contract participant” as defined in Section 1a(18) of the U.S.
Commodity Exchange Act, as amended, and is entering into the Transaction as
principal (and not as agent or in any other capacity, fiduciary or otherwise)
and not for the benefit of any third party.

(c) Each of Dealer and Counterparty acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the
Securities Act of 1933, as amended (the “Securities Act”), by virtue of
Section 4(a)(2) thereof. Accordingly, Counterparty represents and warrants to
Dealer that (i) it has the financial ability to bear the economic risk of its
investment in the Transaction and is able to bear a total loss of its investment
and its investments in and liabilities in respect of the Transaction, which it
understands are not readily marketable, are not disproportionate to its net
worth, and it is able to bear any loss in connection

 

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with the Transaction, including the loss of its entire investment in the
Transaction, (ii) it is an “accredited investor” as that term is defined in
Regulation D as promulgated under the Securities Act, (iii) it is entering into
the Transaction for its own account and without a view to the distribution or
resale thereof, (iv) the assignment, transfer or other disposition of the
Transaction has not been and will not be registered under the Securities Act and
is restricted under this Confirmation, the Securities Act and state securities
laws, and (v) its financial condition is such that it has no need for liquidity
with respect to its investment in the Transaction and no need to dispose of any
portion thereof to satisfy any existing or contemplated undertaking or
indebtedness and is capable of assessing the merits of and understanding (on its
own behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of the Transaction.

(d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a
“financial institution,” “swap participant” and “financial participant” within
the meaning of Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code.
The parties hereto further agree and acknowledge (A) that this Confirmation is
(i) a “securities contract,” as such term is defined in Section 741(7) of the
Bankruptcy Code, with respect to which each payment and delivery hereunder or in
connection herewith is a “termination value,” “payment amount” or “other
transfer obligation” within the meaning of Section 362 of the Bankruptcy Code
and a “settlement payment” within the meaning of Section 546 of the Bankruptcy
Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B)
of the Bankruptcy Code, with respect to which each payment and delivery
hereunder or in connection herewith is a “termination value,” “payment amount”
or “other transfer obligation” within the meaning of Section 362 of the
Bankruptcy Code and a “transfer” within the meaning of Section 546 of the
Bankruptcy Code, and (B) that Dealer is entitled to the protections afforded by,
among other sections, Sections 362(b)(6), 362(b)(17), 362(b)(27), 362(o),
546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.

(e) As a condition to the effectiveness of the Transaction, Counterparty shall
deliver to Dealer (i) an incumbency certificate, dated as of the Trade Date, of
Counterparty in customary form and (ii) an opinion of counsel, dated as of the
Trade Date and reasonably acceptable to Dealer in form and substance, with
respect to the due incorporation, existence and good standing of Issuer in
Delaware, its qualifications as a foreign corporation and good standing in
California, the due authorization, execution and delivery of this Confirmation,
and the absence of conflict of the execution, delivery and performance of this
Confirmation with any material agreement required to be filed as an exhibit to
Issuer’s Annual Report on Form 10-K and Issuer’s charter documents.

(f) Counterparty understands that notwithstanding any other relationship between
Counterparty and Dealer and its affiliates, in connection with this Transaction
and any other over-the-counter derivative transactions between Counterparty and
Dealer or its affiliates, Dealer or its affiliates is acting as principal and is
not a fiduciary or advisor in respect of any such transaction, including any
entry, exercise, amendment, unwind or termination thereof.

(g) Counterparty represents and warrants that it has received, read and
understands the OTC Options Risk Disclosure Statement and a copy of the most
recent disclosure pamphlet prepared by The Options Clearing Corporation entitled
“Characteristics and Risks of Standardized Options”.

 

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(h) Each party acknowledges and agrees to be bound by the Conduct Rules of the
Financial Industry Regulatory Authority, Inc. applicable to transactions in
options, and further agrees not to violate the position and exercise limits set
forth therein.

8. Other Provisions:

(a) Right to Extend. Dealer may postpone any Exercise Date or Settlement Date or
any other date of valuation or delivery by Dealer, with respect to some or all
of the relevant Options (in which event the Calculation Agent shall make
appropriate adjustments to the Delivery Obligation), if Dealer determines, in
its reasonable discretion, that such extension is reasonably necessary or
appropriate to preserve Dealer’s hedging or hedge unwind activity hereunder in
light of existing liquidity conditions in the cash market, the stock borrow
market or other relevant market or to enable Dealer to effect purchases of
Shares or Share Termination Delivery Units in connection with its hedging, hedge
unwind or settlement activity hereunder in a manner that would, if Dealer were
Counterparty or an affiliated purchaser of Counterparty, be in compliance with
applicable legal, regulatory or self-regulatory requirements, or with related
policies and procedures applicable to Dealer; provided that any such extension
pursuant to this clause shall not exceed 80 Exchange Business Days.

(b) Additional Termination Events. The occurrence of (i) an event of default
with respect to Counterparty under the terms of the Convertible Securities as
set forth in Section 6.01(a) of the Indenture, or (ii) an Amendment Event, in
each case, shall constitute an Additional Termination Event with respect to
which the Transaction is the sole Affected Transaction and Counterparty is the
sole Affected Party, and Dealer shall be the party entitled to designate an
Early Termination Date pursuant to Section 6(b) of the Agreement and to
determine the amount payable pursuant to Section 6(e) of the Agreement.

“Amendment Event” means that Counterparty amends, modifies, supplements, waives
or obtains a waiver in respect of any term of the Indenture or the Convertible
Securities governing the principal amount, coupon, maturity, repurchase
obligation of Counterparty, any term relating to conversion of the Convertible
Securities (including changes to the conversion price, conversion settlement
dates or conversion conditions), or any term that would require consent of the
holders of not less than 100% of the principal amount of the Convertible
Securities to amend, in each case without the prior consent of Dealer.

(c) Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If at any time an Early Termination Date occurs and Dealer
would be required to make a payment pursuant to Section 6 of the Agreement or an
Extraordinary Event occurs and Dealer would be required to make a payment
pursuant to Article 12 of the Equity Definitions (a “Payment Obligation”),
Counterparty shall have the right, in its sole discretion, to require Dealer to
satisfy any such Payment Obligation by the Share Termination Alternative (as
defined below) by giving irrevocable telephonic notice to Dealer, confirmed in
writing within two Scheduled Trading Days, no later than 9:30 a.m. New York City
time on the relevant merger date, Announcement Date, Early Termination Date or
date of cancellation or termination in

 

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respect of an Extraordinary Event, as applicable (“Notice of Share
Termination”); provided that if Counterparty does not elect to require Dealer to
satisfy its Payment Obligation by the Share Termination Alternative, Dealer
shall have the right, in its reasonable discretion, to elect to satisfy its
Payment Obligation by the Share Termination Alternative, notwithstanding
Counterparty’s failure to elect or election to the contrary; and provided
further that Counterparty shall not have the right to so elect (but, for the
avoidance of doubt, Dealer shall have the right to so elect) in the event of
(i) an Insolvency, a Nationalization or a Merger Event, in each case, in which
the consideration or proceeds to be paid to holders of Shares consists solely of
cash or (ii) an Event of Default in which Counterparty is the Defaulting Party
or a Termination Event in which Counterparty is the Affected Party, which Event
of Default or Termination Event resulted from an event or events within
Counterparty’s control. Upon such Notice of Share Termination, the following
provisions shall apply on the Scheduled Trading Day immediately following the
relevant merger date, Announcement Date, Early Termination Date or date of
cancellation or termination in respect of an Extraordinary Event, as applicable:

 

Share Termination Alternative:    Applicable and means that Dealer shall deliver
to Counterparty the Share Termination Delivery Property on the date on which the
Payment Obligation would otherwise be due pursuant to “Consequences of Merger
Events” above or Section 12.2, 12.6, 12.7 or 12.9 of the Equity Definitions or
Section 6(d)(ii) of the Agreement, as applicable, or such later date as the
Calculation Agent may reasonably determine (the “Share Termination Payment
Date”), in satisfaction of the Payment Obligation. Share Termination Delivery   
Property:    A number of Share Termination Delivery Units, as calculated by the
Calculation Agent, equal to the Payment Obligation divided by the Share
Termination Unit Price. The Calculation Agent shall adjust the Share Termination
Delivery Property by replacing any fractional portion of the aggregate amount of
a security therein with an amount of cash equal to the value of such fractional
security based on the values used to calculate the Share Termination Unit Price.
Share Termination Unit Price:    The value of property contained in one Share
Termination Delivery Unit on the date such Share Termination Delivery Units are
to be delivered as Share Termination Delivery Property, as determined by the
Calculation Agent in its discretion by commercially reasonable means and
notified by the Calculation Agent to Dealer at the time of notification of the
Payment Obligation. Share Termination Delivery    Unit:    In the case of a
Termination Event, Event of Default, Delisting or Additional Disruption Event,
one Share or, in the case of an Insolvency, Nationalization or Merger Event,

 

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   one Share or a unit consisting of the number or amount of each type of
property received by a holder of one Share (without consideration of any
requirement to pay cash or other consideration in lieu of fractional amounts of
any securities) in such Insolvency, Nationalization or Merger Event, as
applicable. If such Insolvency, Nationalization or Merger Event involves a
choice of consideration to be received by holders, such holder shall be deemed
to have elected to receive the maximum possible amount of cash. Failure to
Deliver:    Applicable Other Applicable Provisions:    If Share Termination
Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.10 and 9.11 of
the Equity Definitions will be applicable as if “Physical Settlement” applied to
the Transaction, except that all references to “Shares” shall be read as
references to “Share Termination Delivery Units”; provided that the
Representation and Agreement contained in Section 9.11 of the Equity Definitions
shall be modified by excluding any representations therein relating to
restrictions, obligations, limitations or requirements under applicable
securities laws as a result of the fact that Counterparty is the issuer of any
Share Termination Delivery Units (or any part thereof).

(d) Disposition of Hedge Shares. Counterparty hereby agrees that if, in the good
faith reasonable judgment of Dealer, based on the advice of counsel, the Shares
(the “Hedge Shares”) acquired by Dealer for the purpose of hedging its
obligations pursuant to the Transaction cannot be sold in the U.S. public market
by Dealer without registration under the Securities Act, Counterparty shall, at
its election: (i) in order to allow Dealer to sell the Hedge Shares in a
registered offering, make available to Dealer an effective registration
statement under the Securities Act to cover the resale of such Hedge Shares and
(A) enter into an agreement, in form and substance satisfactory to Dealer,
substantially in the form of an underwriting agreement for a registered offering
of equity securities of companies of comparable size, maturity and lines of
business, (B) provide accountant’s “comfort” letters in customary form for
registered offerings of equity securities, (C) provide disclosure opinions of
nationally recognized outside counsel to Counterparty as are customarily
requested in connection with underwritten follow-on offers of equity securities
of companies of comparable size, maturity and lines of business, (D) provide
other customary opinions, certificates and closing documents customary in form
for registered offerings of equity securities of companies of comparable size,
maturity and lines of business and (E) afford Dealer a reasonable opportunity to
conduct a “due diligence” investigation with respect to Counterparty customary
in scope for underwritten offerings of equity securities of companies of
comparable size, maturity and lines of business; provided, however, that if
Counterparty elects clause (i) above but the items referred to therein are not
completed in a timely manner, or if Dealer, in its sole commercially reasonable
discretion, is not satisfied with access to due diligence materials, the results
of its due diligence investigation, or the procedures and documentation for the
registered offering referred to above, then clause (ii) or clause (iii) of

 

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this Section 8(d) shall apply at the election of Counterparty; (ii) in order to
allow Dealer to sell the Hedge Shares in a private placement, enter into a
private placement agreement substantially similar to private placement purchase
agreements customary for private placements of equity securities of companies of
comparable size, maturity and lines of business, in form and substance
reasonably satisfactory to Dealer, including customary representations,
covenants, blue sky and other governmental filings and/or registrations,
indemnities to Dealer, due diligence rights (for Dealer or any designated buyer
of the Hedge Shares from Dealer), opinions and certificates and such other
documentation as is customary for private placements agreements of companies of
comparable size, maturity and lines of business, all reasonably acceptable to
Dealer (in which case, the Calculation Agent shall make any adjustments to the
terms of the Transaction that are necessary, in its reasonable judgment, to
compensate Dealer for any discount from the public market price of the Shares
incurred on the sale of Hedge Shares in a private placement); or (iii) purchase
the Hedge Shares from Dealer at the Relevant Price on such Exchange Business
Days, and in the amounts, requested by Dealer. This Section 8(d) shall survive
the termination, expiration or early unwind of the Transaction.

(e) Repurchase and Conversion Rate Adjustment Notices. Counterparty shall, at
least five Scheduled Trading Days prior to any day on which Counterparty intends
to effect any repurchase of Shares or consummates or otherwise engages in any
transaction or event (a “Conversion Rate Adjustment Event”) that could
reasonably be expected to lead to an increase in the Conversion Rate, give
Dealer a written notice of such repurchase or Conversion Rate Adjustment Event
(a “Repurchase Notice”) on such day if, following such repurchase or Conversion
Rate Adjustment Event, the Notice Percentage would reasonably be expected to be
(i) greater than 7.0% and (ii) greater by 0.5% than the Notice Percentage
included in the immediately preceding Repurchase Notice (or, in the case of the
first such Repurchase Notice, greater than the Notice Percentage as of the date
hereof). The “Notice Percentage” as of any day is the fraction, expressed as a
percentage, the numerator of which is the Number of Shares and the denominator
of which is the number of Shares outstanding on such day. In the event that
Counterparty fails to provide Dealer with a Repurchase Notice on the day and in
the manner specified in this Section 8(e) then Counterparty agrees to indemnify
and hold harmless Dealer, its affiliates and their respective directors,
officers, employees, agents and controlling persons (Dealer and each such person
being an “Indemnified Party”) from and against any and all losses (including
losses relating to the Dealer’s hedging activities as a consequence of becoming,
or of the risk of becoming, a Section 16 “insider”, including without
limitation, any forbearance from hedging activities or cessation of hedging
activities and any losses in connection therewith with respect to this
Transaction), claims, damages and liabilities (or actions in respect thereof),
joint or several, to which such Indemnified Party may become subject under
applicable securities laws, including without limitation, Section 16 of the
Exchange Act or under any U.S. state or federal law, regulation or regulatory
order, relating to or arising out of such failure. If for any reason the
foregoing indemnification is unavailable to any Indemnified Party or
insufficient to hold harmless any Indemnified Party, then Counterparty shall
contribute, to the maximum extent permitted by law, to the amount paid or
payable by the Indemnified Party as a result of such loss, claim, damage or
liability. In addition, Counterparty will reimburse any Indemnified Party for
all reasonable expenses (including reasonable counsel fees and expenses) as they
are incurred (after notice to Counterparty) in connection with the investigation
of, preparation for or defense or settlement of any pending or threatened claim
or any action, suit or proceeding arising therefrom, whether or not such
Indemnified Party is a party thereto and whether or not such

 

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claim, action, suit or proceeding is initiated or brought by or on behalf of
Counterparty. This indemnity shall survive the completion of the Transaction
contemplated by this Confirmation and any assignment and delegation of the
Transaction made pursuant to this Confirmation or the Agreement shall inure to
the benefit of any permitted assignee of Dealer.

(f) Transfer and Assignment. Either party may transfer or assign any of its
rights or obligations under the Transaction with the prior written consent of
the non-transferring party, such consent not to be unreasonably withheld or
delayed; provided that Dealer may transfer or assign without any consent of
Counterparty its rights and obligations hereunder, in whole or in part, to
(A) any affiliate of Dealer (1) whose obligation would be guaranteed by Dealer
or by [Name of Dealer Parent]9, (2) or whose credit quality would be equivalent
to Dealer’s, or (B) any person (including any affiliate of Dealer whose
obligations are not guaranteed in the manner described in clause (A)) or any
person whose obligations would be guaranteed by a person (a “Designated
Transferee”), in either case, of credit quality equivalent to Dealer’s (or its
guarantor’s), provided however that in no event shall the credit rating of the
Designated Transferee or of its guarantor (whichever is higher) be lower than
[—]10 from Moody’s Investor Service, Inc. or its successor or [—]11 from
Standard and Poor’s Rating Group, Inc. or its successor; provided further that
Dealer will notify Counterparty prior to any proposed transfer or assignment to
a Designated Transferee. If at any time at which (1) the Equity Percentage
exceeds 8.0% or (2) Dealer, Dealer Group (as defined below) or any person whose
ownership position would be aggregated with that of Dealer or Dealer Group
(Dealer, Dealer Group or any such person, a “Dealer Person”) under Section 203
of the Delaware General Corporation Law or other federal, state or local law,
rule, regulation or regulatory order or organizational documents or contracts of
Counterparty applicable to ownership of Shares (“Applicable Restrictions”),
owns, beneficially owns, constructively owns, controls, holds the power to vote
or otherwise meets a relevant definition of ownership in excess of a number of
Shares equal to (x) the number of Shares that would give rise to reporting,
registration, filing or notification obligations or other requirements
(including obtaining prior approval by a state or federal regulator) of a Dealer
Person under Applicable Restrictions and with respect to which such requirements
have not been met or the relevant approval has not been received minus (y) 1% of
the number of Shares outstanding on the date of determination (either such
condition described in clause (1) or (2), an “Excess Ownership Position”),
Dealer, in its reasonable discretion, is unable to effect a transfer or
assignment to a third party in accordance with the requirements set forth above
after its commercially reasonable efforts on pricing and terms and within a time
period reasonably acceptable to Dealer such that an Excess Ownership Position no
longer exists, Dealer may designate any Scheduled Trading Day as an Early
Termination Date with respect to a portion (the “Terminated Portion”) of the
Transaction, such that an Excess Ownership Position no longer exists following
such partial termination. In the event that Dealer so designates an Early
Termination Date with respect to a portion of the Transaction, a payment or
delivery shall be made pursuant to Section 6 of the Agreement and Section 8(c)
of this Confirmation as if (i) an Early Termination Date had been designated in
respect of a Transaction having terms identical to

 

 

9  To be provided by Dealer.

10  To be referenced to a credit rating of a relevant dealer.

11 

To be referenced to a credit rating of a relevant dealer.

 

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the Terminated Portion of the Transaction, (ii) Counterparty were the sole
Affected Party with respect to such partial termination, (iii) such portion of
the Transaction were the only Terminated Transaction and (iv) Dealer were the
party entitled to designate an Early Termination Date pursuant to Section 6(b)
of the Agreement and to determine the amount payable pursuant to Section 6(e) of
the Agreement. The “Equity Percentage” as of any day is the fraction, expressed
as a percentage, (A) the numerator of which is the number of Shares that Dealer
and any of its affiliates subject to aggregation with Dealer for purposes of the
“beneficial ownership” test under Section 13 of the Exchange Act and all persons
who may form a “group” (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act) with Dealer (collectively, “Dealer Group”) “beneficially own”
(within the meaning of Section 13 of the Exchange Act) without duplication on
such day and (B) the denominator of which is the number of Shares outstanding on
such day. In the case of a transfer or assignment by Counterparty of its rights
and obligations hereunder and under the Agreement, in whole or in part (any such
Options so transferred or assigned, the “Transfer Options”), to any party,
withholding of such consent by Dealer shall not be considered unreasonable if
such transfer or assignment does not meet the reasonable conditions that Dealer
may impose including, but not limited, to the following conditions:

(A) With respect to any Transfer Options, Counterparty shall not be released
from its notice and indemnification obligations pursuant to Section 8(e) or any
obligations under Section 2 (regarding Extraordinary Events) or 8(d) of this
Confirmation;

(B) Any Transfer Options shall only be transferred or assigned to a third party
that is a U.S. person (as defined in the Internal Revenue Code of 1986, as
amended);

(C) Such transfer or assignment shall be effected on terms, including any
reasonable undertakings by such third party (including, but not limited to,
undertakings with respect to compliance with applicable securities laws in a
manner that, in the reasonable judgment of Dealer, will not expose Dealer to
material risks under applicable securities laws) and execution of any
documentation and delivery of customary legal opinions with respect to
securities laws and other matters by such third party and Counterparty as are
reasonably requested and reasonably satisfactory to Dealer;

(D) Dealer will not, as a result of such transfer and assignment, be required to
pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the
Agreement greater than an amount that Dealer would have been required to pay to
Counterparty in the absence of such transfer and assignment;

(E) An Event of Default, Potential Event of Default or Termination Event will
not occur as a result of such transfer and assignment;

(F) Without limiting the generality of clause (B), Counterparty shall have
caused the transferee to make such Payee Tax Representations and to provide such
tax documentation as may be reasonably requested by Dealer to permit Dealer to
determine that results described in clauses (D) and (E) will not occur upon or
after such transfer and assignment; and

 

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(G) Counterparty shall be responsible for all reasonable costs and expenses,
including reasonable counsel fees, incurred by Dealer in connection with such
transfer or assignment.

(g) Staggered Settlement. Dealer may, by notice to Counterparty prior to any
Settlement Date (a “Nominal Settlement Date”), elect to deliver any Shares due
to be delivered on one or more dates (each, a “Staggered Settlement Date”) or at
two or more times on the Nominal Settlement Date as follows:

(i) in such notice, Dealer will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to the 50th Exchange
Business Day after such Nominal Settlement Date, but not prior to the earlier of
the relevant Conversion Date and the first day of the relevant Settlement
Averaging Period) or delivery times and how it will allocate the Shares it is
required to deliver under “Delivery Obligation” (above) among the Staggered
Settlement Dates or delivery times; and

(ii) the aggregate number of Shares that Dealer will deliver to Counterparty
hereunder on all such Staggered Settlement Dates and delivery times will equal
the number of Shares that Dealer would otherwise be required to deliver on such
Nominal Settlement Date.

(h) Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Counterparty and each of its employees,
representatives, or other agents may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the Transaction
and all materials of any kind (including opinions or other tax analyses) that
are provided to Counterparty relating to such tax treatment and tax structure.

(i) No Netting and Set-off. The provisions of Section 2(c) of the Agreement
shall not apply to the Transaction. Each party waives any and all rights it may
have to set-off delivery or payment obligations it owes to the other party under
the Transaction against any delivery or payment obligations owed to it by the
other party, whether arising under the Agreement, under any other agreement
between parties hereto, by operation of law or otherwise.

(j) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not
intended to convey to it rights with respect to the Transaction that are senior
to the claims of common stockholders in the event of Counterparty’s bankruptcy.
For the avoidance of doubt, the parties agree that the preceding sentence shall
not apply at any time other than during Counterparty’s bankruptcy to any claim
arising as a result of a breach by Counterparty of any of its obligations under
this Confirmation or the Agreement. For the avoidance of doubt, the parties
acknowledge that the obligations of Counterparty under this Confirmation are not
secured by any collateral that would otherwise secure the obligations of
Counterparty herein under or pursuant to any other agreement.

(k) Early Unwind. In the event the sale by Counterparty of the Convertible
Securities is not consummated pursuant to the Purchase Agreement for any reason
by the close of business in New York on June 17, 2013 (or such later date as
agreed upon by the parties, which in no event shall be later than June 24, 2013)
(June 17, 2013 or such later date being the “Early

 

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Unwind Date”), the Transaction shall automatically terminate (the “Early
Unwind”) on the Early Unwind Date and the Transaction and all of the respective
rights and obligations of Dealer and Counterparty hereunder shall be cancelled
and terminated and Counterparty shall pay to Dealer, other than in cases
involving a breach of the Purchase Agreement by Dealer as Initial Purchaser (as
defined in the Purchase Agreement), an amount in cash equal to the aggregate
amount of costs and expenses relating to the unwinding of Dealer’s hedging
activities in respect of the Transaction (including market losses incurred in
reselling any Shares purchased by Dealer or its affiliates in connection with
such hedging activities, unless Counterparty agrees to purchase any such Shares
at the cost at which Dealer purchased such Shares) or, at the election of
Counterparty, deliver to Dealer Shares with a value equal to such amount, as
determined by the Calculation Agent, in which event the parties shall enter into
customary and commercially reasonable documentation relating to the registered
or exempt resale of such Shares. Following such termination, cancellation and
payment or delivery, each party shall be released and discharged by the other
party from, and agrees not to make any claim against the other party with
respect to, any obligations or liabilities of either party arising out of, and
to be performed in connection with, the Transaction either prior to or after the
Early Unwind Date. Dealer and Counterparty represent and acknowledge to the
other that upon an Early Unwind and following the payment referred to above, all
obligations with respect to the Transaction shall be deemed fully and finally
discharged.

(l) Illegality. The parties agree that, for the avoidance of doubt, for purposes
of Section 5(b)(i) of the Agreement, “any applicable law” shall include the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any rules and
regulations promulgated thereunder and any similar law or regulation, without
regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 or any similar legal certainty provision in any
legislation enacted, or rule or regulation promulgated, on or after the Trade
Date, and the consequences specified in the Agreement, including without
limitation, the consequences specified in Section 6 of the Agreement, shall
apply to any Illegality arising from any such act, rule or regulation.

(m) Payments by Counterparty upon Early Termination. The parties hereby agree
that, notwithstanding anything to the contrary herein, in the Definitions or in
the Agreement, following the payment of the Premium, in the event that an Early
Termination Date (whether as a result of an Event of Default or a Termination
Event) occurs or is designated with respect to the Transaction or the
Transaction is terminated or cancelled pursuant to Article 12 of the Equity
Definitions and, as a result, Counterparty would owe to Dealer an amount
calculated under Section 6(e) of the Agreement or Article 12 of the Equity
Definitions, such amount shall be deemed to be zero.

 

  (l) [Reserved] / [Role of Agent].

(n) Governing Law. THE AGREEMENT, THIS CONFIRMATION AND ALL MATTERS ARISING IN
CONNECTION WITH THE AGREEMENT AND THIS CONFIRMATION SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REFERENCE TO ITS CHOICE OF LAW DOCTRINE, OTHER THAN TITLE 14 OF THE NEW
YORK GENERAL OBLIGATIONS LAW). THE PARTIES HERETO

 

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IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS
LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN ANY SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THE AGREEMENT, THIS CONFIRMATION OR ANY
TRANSACTIONS CONTEMPLATED HEREBY.

(o) Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE AGREEMENT, THIS CONFIRMATION OR ANY TRANSACTIONS CONTEMPLATED
HEREBY.

(p) Amendment. This Confirmation and the Agreement may not be modified, amended
or supplemented, except in a written instrument signed by Counterparty and
Dealer.

(q) Counterparts. This Confirmation may be executed in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

[Rest of the page intentionally left blank – Signatures on following pages]

 

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[Counterparty hereby agrees (a) to check this Confirmation carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Dealer) correctly sets forth the terms of the agreement between
Dealer and Counterparty with respect to the Transaction, by manually signing
this Confirmation or this page hereof as evidence of agreement to such terms and
providing the other information requested herein and immediately returning an
executed copy to [                    ], Facsimile No. [                    
]]12.

 

Yours faithfully, [DEALER] By:  

 

Name:   Title:  

 

Agreed and Accepted By: CORNERSTONE ONDEMAND, INC. By:  

 

Name:   Title:  

 

 

12 

To be adapted for each Dealer.

 

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