Document:

exv10w17

 

Exhibit 10.17

THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”),
OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR
TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR
SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS
AVAILABLE WITH RESPECT THERETO.

PREFERRED STOCK PURCHASE WARRANT

	 	 	 	 	 
	Warrant No.                     

	 	 
	 	Number of Shares: a maximum of 499,535

Series E Preferred Stock

Subject to determination as set for the below

SUCCESS ACQUISITION CORPORATION

Effective as of June 7, 2006

Void after June 7, 2013

     1. Issuance. This Preferred Stock Purchase Warrant (the “Warrant”) is issued to
Lighthouse Capital Partners V, L.P. by Success Acquisition Corporation, a
Delaware corporation (hereinafter with its successors called the “Company”).

     2. Purchase Price; Number of Shares.

          (a) The registered holder of this Warrant (the “Holder”), is entitled upon surrender of this
Warrant with the subscription form annexed hereto duly executed, at the principal office of the
Company, to purchase from the Company, at a price per share of $4.80446 (the “Purchase Price”), up
to a maximum of 499,535 fully paid and nonassessable shares of the Company’s Series E Preferred
Stock, $0.001 par value (the “Preferred Stock”). Commencing on the date hereof, 333,023 (the
“Exercise Quantity”) of shares of Preferred Stock are immediately available for purchase hereunder.

          (b) On the Funding Date, the Exercise Quantity shall automatically be increased by such
additional number of shares as is equal to (A) 4.0% of the amount of Aggregate Advances funded
under the Loan Agreement, if any, divided by (B) the Purchase Price.

In addition to other terms which may be defined herein, the following terms, as used in this
Warrant, shall have the following meanings:

 

 

	 	(i)	 	“Aggregate Advances” means the aggregate original dollar amount
of Advances made under the Loan Agreement, whether such Advances are
outstanding or prepaid, at the time of any scheduled adjustment to the Exercise
Quantity.
	 
	 	(ii)	 	“Loan Agreement” means that certain Loan and Security Agreement
No. 5271 dated June 7, 2006 between the Company and Lighthouse Capital
Partners V, L.P.

Any term not defined herein shall have the meaning as set forth in the Loan Agreement.

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the
securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter
provided. The person or persons in whose name or names any certificate representing shares of
Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the
shares represented thereby as at the close of business on the date this Warrant is exercised with
respect to such shares, whether or not the transfer books of the Company shall be closed.

     3. Payment of Purchase Price. The Purchase Price may be paid (i) in cash or by check, (ii) by
the surrender by the Holder to the Company of any promissory notes or other obligations issued by
the Company, with all such notes and obligations so surrendered being credited against the Purchase
Price in an amount equal to the principal amount thereof plus accrued interest to the date of
surrender, or (iii) by any combination of the foregoing.

     4. Net Issue Election. The Holder may elect to receive, without the payment by the Holder of
any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue
election notice annexed hereto duly executed, at the principal office of the Company. Thereupon,
the Company shall issue to the Holder such number of fully paid and nonassessable shares of
Preferred Stock as is computed using the following formula:

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Y(A-B)
	 	 
	 

	 	X
	 	=
	 	———
	 	 
	 

	 	 	 	 	 	A
	 	 

	 	 	 	 	 	 	 
	 

	 	where: X
	 	=
	 	the number of shares of Preferred Stock to be issued to the Holder pursuant to
this Section 4.
	 
	 	 	 	 	 	 
	 

	 	Y
	 	=
	 	the number of shares of Preferred Stock covered by this
Warrant in respect of which the net issue election is made pursuant to this
Section 4.
	 
	 	 	 	 	 	 
	 

	 	A
	 	=
	 	the Fair Market Value (defined below) of one share of
Preferred Stock, as determined at the time the net issue election is made
pursuant to this Section 4.
	 
	 	 	 	 	 	 
	 

	 	B
	 	=
	 	the Purchase Price in effect under this Warrant at the time
the net issue election is made pursuant to this Section 4.

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          “Fair Market Value” of a share of Preferred Stock (or fully paid and nonassessable shares of
the Company’s common stock, $0.001 par value (the “Common Stock”) if the Preferred Stock has been
automatically converted into Common Stock) as of the date that the net issue election is made (the
“Determination Date”) shall mean:

          (i) If the net issue election is made in connection with and contingent upon the closing of
the sale of the Company’s Common Stock to the public in a public offering pursuant to a
Registration Statement under the 1933 Act (a “Public Offering”), and if the Company’s Registration
Statement relating to such Public Offering (“Registration Statement”) has been declared effective
by the Securities and Exchange Commission, then the initial “Price to Public” specified in the
final prospectus with respect to such offering multiplied by the number of shares of Common Stock
into which each share of Preferred Stock is then convertible.

          (ii) If the net issue election is not made in connection with and contingent upon a Public
Offering, then as follows:

               (a) If traded on a securities exchange or the Nasdaq National Market, the fair market value of
the Common Stock shall be deemed to be the average of the closing or last reported sale prices of
the Common Stock on such exchange or market over the five day period ending five trading days prior
to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be
such fair market value of the Common Stock multiplied by the number of shares of Common Stock into
which each share of Preferred Stock is then convertible;

               (b) If otherwise traded in an over-the-counter market, the fair market value of the Common
Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five
day period ending five trading days prior to the Determination Date, and the fair market value of
the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by
the number of shares of Common Stock into which each share of Preferred Stock is then convertible;
and

               (c) If there is no public market for the Common Stock, then fair market value shall be
determined in good faith by the Company’s Board of Directors.

     5. Partial Exercise. This Warrant may be exercised in part, and the Holder shall be entitled
to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number
of shares in respect of which this Warrant shall not have been exercised.

     6. Fractional Shares. In no event shall any fractional share of Preferred Stock be issued
upon any exercise of this Warrant. If, upon exercise of this Warrant in its entirety, the Holder
would, except as provided in this Section 6, be entitled to receive a fractional share of Preferred
Stock, then the Company shall issue the next higher number of full shares of Preferred Stock,
issuing a full share with respect to such fractional share.

     7. Expiration Date; Automatic Exercise. This Warrant shall expire at the close of business on
June 7, 2013, and shall be void thereafter (the “Expiration Date”). Notwithstanding the foregoing,
this Warrant shall automatically be deemed to be exercised in full pursuant to the

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provisions of Section 4 hereof, without any further action on behalf of the Holder,
immediately prior to the time this Warrant would otherwise expire pursuant to the preceding
sentence.

     8. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and
after the date hereof reserve and keep available such number of its authorized shares of Preferred
Stock and Common Stock free from all preemptive or similar rights therein, as will be sufficient to
permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common
Stock of all shares of Preferred Stock receivable upon such exercise. The Company further
covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon
issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issuance thereof.

     9. Stock Splits and Dividends. If after the date hereof the Company shall subdivide the
Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional
shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of
shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be
proportionately increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately
decreased in the case of a subdivision or stock dividend, or proportionately increased in the case
of a combination.

     10. Adjustments for Diluting Issuances. The other antidilution rights applicable to the
Preferred Stock and the Common Stock of the Company are set forth in the Sixth Amended and Restated
Certificate of Incorporation, as amended from time to time (the “Certificate”), a true and complete
copy in its current form which is attached hereto as Exhibit A. Such rights shall not be restated,
amended or modified in any manner which affects the Holder differently than the holders of Series E
Preferred without such Holder’s prior written consent. The Company shall promptly provide the
Holder hereof with any restatement, amendment or modification to the Certificate promptly after the
same has been made.

     11. Mergers and Reclassifications. If after the date hereof the Company shall enter into any
Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful
provisions shall be made, and duly executed documents evidencing the same from the Company or its
successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to
purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full,
the kind and amount of shares of stock and other securities and property receivable upon such
Reorganization by a holder of the number of shares of Preferred Stock which might have been
purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate
provisions shall be made with respect to the rights and interest of the Holder to the end that the
provisions hereof (including without limitation, provisions for the adjustment of the Purchase
Price and the number of shares issuable hereunder and the provisions relating to the net issue
election) shall thereafter be applicable in relation to any shares of stock or other securities and
property thereafter deliverable upon exercise hereof. For the purposes of this Section 11, the
term “Reorganization” shall include without limitation any reclassification, capital reorganization
or change of the Preferred Stock (other than as a result of a subdivision, combination or stock
dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of
the Company into, another corporation or other business

4

 

organization (other than a merger in which the Company is the surviving corporation and which
does not result in any reclassification or change of the outstanding Preferred Stock), or any sale
or conveyance to another corporation or other business organization of all or substantially all of
the assets of the Company.

     12. Certificate of Adjustment. Whenever the Purchase Price is adjusted, as herein provided,
the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial
officer setting forth the Purchase Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment.

     13. Notices of Record Date, Etc. In the event of:

          (a) any taking by the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any
shares of stock of any class or any other securities or property, or to receive any other right;

          (b) any reclassification of the capital stock of the Company, capital reorganization of the
Company, consolidation or merger involving the Company, or sale or conveyance of all or
substantially all of its assets; or

          (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be provided to the Holder a written
notice thereof. Such notice shall be provided at least twenty (20) business days prior to the date
specified in such notice on which any such action is to be taken.

     14. Representations, Warranties and Covenants. This Warrant is issued and delivered by the
Company and accepted by each Holder on the basis of the following representations, warranties and
covenants made by the Company:

          (a) The Company has all necessary authority to issue, execute and deliver this Warrant and to
perform its obligations hereunder. This Warrant has been duly authorized, issued, executed and
delivered by the Company and is the valid and binding obligation of the Company, enforceable in
accordance with its terms.

          (b) The shares of Preferred Stock issuable upon the exercise of this Warrant have been duly
authorized and reserved for issuance by the Company and, when issued in accordance with the terms
hereof, will be validly issued, fully paid and nonassessable.

          (c) The issuance, execution and delivery of this Warrant do not, and the issuance of the
shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof
will not, (i) violate or contravene the Company’s Certificate or by-laws, or any law, statute,
regulation, rule, judgment or order applicable to the Company, (ii) violate, contravene or result
in a breach or default under any contract, agreement or instrument to which
 

5

 

the Company is a party or by which the Company or any of its assets are bound or (iii) require
the consent or approval of or the filing of any notice or registration with any person or entity.

          (d) As long as this Warrant is, or any shares of Preferred Stock issued upon exercise of this
Warrant or any shares of Common Stock issued upon conversion of such shares of Preferred Stock are,
issued and outstanding, the Company will provide to the Holder the financial and other information
described in that certain Loan and Security Agreement No. 5271 between the Company and Lighthouse
Capital Partners V, L.P. dated as of June 7, 2006.

          (e) So long as this Warrant has not terminated, Holder shall be entitled to receive such
financial and other information as the Holder would be entitled to receive under the Stock Purchase
Agreement applicable to the Preferred Stock if Holder were a holder of that number of shares
issuable upon full exercise of this Warrant.

          (f) As of the date hereof, the authorized capital stock of the Company consists of (i)
50,400,000 shares of Common Stock, of which 5,353,660 shares are issued and outstanding and 499,535
shares are reserved for issuance upon the exercise of this Warrant with respect to Common Stock and
the conversion of the Preferred Stock into Common Stock if this Warrant is exercised with respect
to Preferred Stock, (ii) 10,650,000 shares of Series A Preferred Stock, all of which are issued and
outstanding shares, (iii) 7,751,935 shares of Series B Preferred Stock, all of which are issued and
outstanding shares, (iv) 4,416,961 shares of Series C Preferred Stock, all of which are issued and
outstanding shares, (v) 4,523,683 shares of Series D Preferred Stock, all of which are issued and
outstanding shares and (vi) 5,800,000 shares of Series E Preferred Stock, of which 5,203,500 are
issued and outstanding shares. Attached hereto as Exhibit B is a capitalization table summarizing
the capitalization of the Company. Upon request, but in no event more often than once per calendar
quarter, the Company will provide Holder with a current capitalization table indicating changes, if
any, to the number of outstanding shares of common stock and preferred stock.

     15. Registration Rights. The Company grants to the Holder all the rights of a “Holder” and an
“Investor” under the Company’s Fourth Amended and Restated Investor Rights Agreement dated as of
May 19, 2006 (the “Rights Agreement”), including, without limitation, the registration rights
contained therein, and agrees to amend the Rights Agreement so that (i) the shares of Common Stock
issuable upon conversion of the shares of Preferred Stock issuable upon exercise of this Warrant
shall be “Registrable Securities,” and (ii) the Holder shall be a “Holder” and an “Investor” for
all purposes of such Rights Agreement.

     16. Amendment. The terms of this Warrant may be amended, modified or waived only with the
written consent of the Holder.

     17. Representations and Covenants of the Holder. This Warrant has been entered into by the
Company in reliance upon the following representations and covenants of the Holder, which by its
execution hereof the Holder hereby confirms:

          (a) Investment Purpose. The right to acquire Preferred Stock or the Preferred Stock issuable
upon exercise of the Holder’s rights contained herein will be acquired for investment and not with
a view to the sale or distribution of any part thereof, and the Holder

6

 

has no present intention of selling or engaging in any public distribution of the same except
pursuant to a registration or exemption.

          (b) Accredited Investor. Holder is an “accredited investor” within the meaning of the
Securities and Exchange Rule 501 of Regulation D, as presently in effect.

          (c) Private Issue. The Holder understands (i) that the Preferred Stock issuable upon exercise
of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under
applicable state securities laws on the ground that the issuance contemplated by this Warrant will
be exempt from the registration and qualifications requirements thereof, and (ii) that the
Company’s reliance on such exemption is predicated on the representations set forth in this Section
17.

          (d) Financial Risk. The Holder has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its investment and has the ability
to bear the economic risks of its investment.

     18. Notices, Transfers, Etc.

          (a) Any notice or written communication required or permitted to be given to the Holder may be
given by certified mail or delivered to the Holder at the address most recently provided by the
Holder to the Company.

          (b) Subject to compliance with applicable federal and state securities laws, this Warrant may
be transferred by the Holder with respect to any or all of the shares purchasable hereunder. Upon
surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly
executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new
warrant of the same denomination to the assignee. Upon surrender of this Warrant to the Company,
together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a
portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new
warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall
issue to such Holder a new warrant covering the number of shares in respect of which this Warrant
shall not have been transferred.

          (c) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall
issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and
substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of
any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence
reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant.

     19. No Impairment. The Company will not, by amendment of its Certificate or through any
reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets,
dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek
to avoid the observance of performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Holder.

7

 

     20. Governing Law. The provisions and terms of this Warrant shall be governed by and
construed in accordance with the internal laws of the State of California without giving effect to
its principles regarding conflicts of laws.

     21. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and
assigns and shall inure to the benefit of the Holder’s successors, legal representatives and
permitted assigns.

     22. Business Days. If the last or appointed day for the taking of any action required or the
expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in
California, then such action may be taken or right may be exercised on the next succeeding day
which is not a Saturday or Sunday or such a legal holiday.

     23. Qualifying Public Offering. If the Company shall effect a firm commitment underwritten
public offering of shares of Common Stock which results in the conversion of the Preferred Stock
into Common Stock pursuant to the Company’s Certificate in effect immediately prior to such
offering, then, effective upon such conversion, this Warrant shall change from the right to
purchase shares of Preferred Stock to the right to purchase shares of Common Stock, and the Holder
shall thereupon have the right to purchase, at a total price equal to that payable upon the
exercise of this Warrant in full, the number of shares of Common Stock which would have been
receivable by the Holder upon the exercise of this Warrant for shares of Preferred Stock
immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock,
and in such event appropriate provisions shall be made with respect to the rights and interest of
the Holder to the end that the provisions hereof (including, without limitation, the provisions for
the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this
Warrant and the provisions relating to the net issue election) shall thereafter be applicable to
any shares of Common Stock deliverable upon the exercise hereof.

     24. Value. The Company and Holder agree that the value of this Warrant on the date of grant
is $100.

	 	 	 	 	 
	 	Success Acquisition Corporation

 	 
	 	By:  	/s/ Randall Stevens
 	 
	 	 	Name:  	Randall Stevens 	 
	 	 	Title:  	Assistant Secretary 	 

8

 

	 	 	 	 	 

Subscription

To:                                         

Date:                                         

The undersigned hereby subscribes for                                          shares of Preferred Stock covered by this
Warrant. The undersigned hereby represents and warrants that the representations set forth in
Section 17 of this Warrant are true and correct as of the date of this Subscription. The
certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise
indicated below:

         
                  
                  
                  
                 

Signature

          
                   
                   
                   
             

Name for Registration

          
                    
                    
                     
         

Mailing Address

 

 

Net Issue Election Notice

	 	 	 	 	 
	To:                                         

	 	 	 	Date:                                         

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of
Preferred Stock pursuant to this Warrant. The undersigned hereby represents and warrants that the
representations set forth in Section 17 of this Warrant are true and correct as of the date of this
Subscription. The certificate(s) for such shares issuable upon such net issue election shall be
issued in the name of the undersigned or as otherwise indicated below:

           
                  
                   
                   
             

Signature

         
                  
                  
                  
                 

Name for Registration

           
                    
                    
                    
         

Mailing Address

 

 

Assignment

For value received
                       
                    
                    
                 
hereby sells, assigns and transfers unto              
                  

 

 

[Please print or typewrite name and address of Assignee]

 

the within Warrant, and does hereby irrevocably constitute and appoint                                          its
attorney to transfer the within Warrant on the books of the within named Company with full power of
substitution on the premises.

Dated:           
                   
                   
                    
 

          
                   
                   
                   
             

Signature

           
                    
                    
                    
         

Name for Registration

In the Presence of:exv10w18

 

Exhibit 10.18

July 19, 2007

Lars Dalgaard

President and Chief Executive Officer

SuccessFactors, Inc.

1500 Fashion Island Blvd, Suite 300

San Mateo, CA 94404

Dear Lars:

     On behalf of SuccessFactors, Inc. (the “Company”), this letter agreement (the “Agreement”)
sets forth the terms and conditions of your employment with the Company, effective as of July 19,
2007 (the “Employment Date”), and supersedes all prior agreements and understandings concerning the
terms of your employment.

          1. Position. You will continue to be employed by the Company full time as its
President and Chief Executive Officer (“CEO”) reporting to the Company’s Board of Directors (the
“Board”). You will also be elected as a member of the Board during your employment as the
Company’s CEO. You will be expected to devote your full working time and attention to the business
of the Company, and you will not render services to any other business without the prior approval
of the Board or, directly or indirectly, engage or participate in any business that is competitive
in any manner with the business of the Company. You will also be expected to comply with and be
bound by the Company’s operating policies, procedures and practices that are from time to time in
effect during the term of your employment.

          2. Compensation and Benefits. Your annual base salary for 2007 will be Four Hundred
Thousand dollars ($400,000), payable in accordance with the Company’s normal payroll practices,
less any payroll deductions and withholdings as are required by law. You will be eligible for a
target bonus applicable to the Company’s fiscal year commencing on January 1, 2007 and continuing
through December 31, 2007 (“Annual Bonus”) equal to 100% of your annual base salary based upon
achievement of such performance goals and conditions as are established by the Board with your
input, and you will have the opportunity to earn up to a total bonus of 150% of your annual base
salary for performance exceeding those goals in accordance with the plan established by the Board.
Your bonus will be paid after completion of the audited financial results for the year ended
December 31, 2007, and the Company reserves the right to defer payment of up to one-third of your
bonus for one year consistent with any such deferral established for the executive team of the
Company generally. For subsequent years, your base salary and bonus will be reviewed annually by
the Compensation Committee and you will be eligible to receive a bonus in such amount and upon such
terms as shall be recommended by the Compensation Committee and approved by the Board. You will
also be eligible for vacation/paid time off, health insurance, 401(k) and other benefits offered to
Company employees. .

          3. Stock Options. You have already been awarded options to purchase shares of the
Company’s common stock as set forth on Exhibit A to this Agreement. Subject to approval of the
Board, the Company will grant you an additional option (the “Option”) under the Company’s 2001
Stock Option Plan (the “Plan”) to purchase an additional 800,000 shares of the Company’s common
stock. The Option will have an exercise price equal to the fair market value of the Company’s
common stock on the date of grant as determined by the Board and will vest over four years,
conditioned upon your continued employment with the Company, in equal monthly installments the date
of grant. The Board or Compensation Committee may, in its sole discretion, provide you with option
grants and other equity awards in the future.

 

 

          4. Employment and Termination. Your employment with the Company will be at-will and
may be terminated by you or by the Company at any time for any reason as follows:

               (a) You may terminate your employment upon written notice to the Board for “Good Reason,” as
defined below within 90 days following the occurrence of Good Reason (an “Involuntary
Termination”);

               (b) You may terminate your employment upon written notice to the Board at any time in your
discretion without Good Reason (a “Voluntary Termination”);

               (c) The Company may terminate your employment upon written notice to you at any time following
a determination that there is “Cause,” as defined below, for such termination (a “Termination for
Cause”);

               (d) The Company may terminate your employment upon written notice to you at any time without
Cause for such termination (a “Termination without Cause”);

               (e) Your employment will automatically terminate upon your death or upon your disability as
determined by the Board (a “Termination for Death or Disability”); provided that “disability” as
defined under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

          5. Definitions. As used in this Agreement, the following terms have the following
meanings:

               (a) “Good Reason” means any of the following taken without your written consent with 60 days
notice to the Company and 30 days opportunity to cure (i) a change in your title of Chief Executive
Officer of the Company or a material reduction in your duties or responsibilities that is
inconsistent with your position as chief executive officer of the Company or a comparable business
unit of a successor; (ii) a requirement by the Company that you relocate your principal office to a
facility more than 50 miles from the Company’s current headquarters without your consent; (iii) a
reduction in your annual base salary by more than 10% (other than in connection with a general
decrease in the salary of all executive officers of the Company) or (iv) a material breach by the
Company of this Agreement.

               (b) “Cause” means your (i) failure to substantially perform, or gross negligence in the
performance of, your duties after there has been delivered to you a written demand for performance
which describes the specific deficiencies in your performance and the specific manner in which your
performance must be improved, and which provides you 30 days from the date of notice to remedy such
performance deficiencies; (ii) commission of any act of fraud, gross misconduct or dishonesty with
respect to the Company; (iii) conviction of, or plea of guilty or “no contest” to, a felony or a
crime involving moral turpitude; (iv) material breach of this Agreement or any proprietary
information and inventions or confidentiality agreement with the Company; or (v) failure to follow
the lawful directions of the Board.

               (c) “Change in Control” means (i) a sale, conveyance, exchange or transfer in which any person
or entity, either directly or indirectly, becomes the beneficial owner, directly or indirectly, of
securities of the Company representing a majority of the total voting power of all its then
outstanding voting securities; (ii) a merger or consolidation of the Company in which its voting
securities immediately prior to the merger or consolidation do not represent, or are not converted
into securities that represent, a majority of the voting power of all voting securities of the
surviving entity immediately after the merger or consolidation; or (iii) a sale of substantially
all of the assets of the Company or a liquidation or dissolution of the Company.

          6. Separation Benefits. Upon termination of your employment with the Company for any
reason, you will receive payment for all unpaid salary and vacation accrued as of the date of your
termination

2

 

of employment, and your benefits will be continued under the Company’s then existing benefit
plans and policies for so long as provided under the terms of such plans and policies and as
required by applicable law. Under certain circumstances and conditioned upon your execution of a
release and waiver of all claims, in a form acceptable to the Company, against the Company and its
officers, directors and affiliates, the return of any Company property you may then hold you will
also be entitled to receive severance benefits as set forth below.

               (a) In the event of your Voluntary Termination, Termination for Cause, or Termination for
Death or Disability, you will not be entitled to any cash severance benefits or additional vesting
of the Option or any other Company equity awards you then hold.

               (b) In the event of your Involuntary Termination or Termination without Cause, you will be
entitled to total severance payments equal to the sum of (i) 12 months of your annual base salary
plus (ii) an amount equal to your pro-rated target annual bonus, if any, for the Company’s fiscal
year in which your termination occurs, based on deemed achievement of target goals and conditions
applicable to the Company’s fiscal year in which your termination occurs, prorated based on the
number of days you have worked during such fiscal year. Half of the total severance payments to be
made pursuant to this Section 9(b) shall be paid in a lump sum within thirty (30) days following
the date of your termination or at a later date if so required pursuant to Section 409A(2)(B) of
the Code unless such payment would result in a tax under Section 409A of the Code in which case the
Company will endeavor to make the payment on a different date that would not result in such a tax.
The remaining half of the total severance payments will be made in equal monthly installments over
the 12 months following your termination and will not be subject to reduction for income you
receive from subsequent employment by a third party during the 12 months following your
termination. In addition, the Company will reimburse you for any COBRA payments made by you in the
12 months following your termination. In consideration of the severance payments to you pursuant
to this paragraph (b), you agree that during the 12 months following your termination you will make
yourself available to the Company as a consultant as reasonably requested by the Company for up to
10 hours per month and will not, directly or indirectly, render any services to or on behalf of any
company or business unit that is engaged primarily in the provision of human capital management
software or services.

               (c) In the event of your Involuntary Termination more than 6 months following and within 12
months following a Change in Control, or Termination without Cause within 12 months following a
Change in Control, you will be entitled (in addition to the severance payments provided in
paragraph (b) above) to full acceleration of all unvested portions of the Option and all options
and restricted stock listed on Exhibit A to this Agreement.

          7. Excise Tax. In the event that the benefits provided for in this Agreement or
otherwise payable to you (i) constitute “parachute payments” within the meaning of Section 280G of
the Code and (ii) but for this Section, would be subject to the excise tax imposed by Section 4999
of the Code, then your benefits under this Agreement or otherwise shall be payable either (a) in
full, or (b) as to such lesser amount which would result in no portion of such benefits being
subject to an excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking
into account the applicable federal, state and local income taxes and the excise tax imposed by
Section 4999, results in your receipt on an after-tax basis, of the greatest amount of benefits
under this Agreement or otherwise, notwithstanding that all or some portion of such benefits may be
taxable under Section 4999 of the Code. Unless you and the Company otherwise agree in writing, any
determination required under this Section shall be made in writing by the Company’s independent
public accountants (the “Accountants”), whose determination shall be conclusive and binding upon
you and the Company for all purposes. For purposes of making the calculations required by this
Section, the Accountants may make reasonable assumptions and approximations concerning applicable
taxes and may rely on reasonable, good faith interpretations concerning the application of Sections
280G and 4999 of the Code. You and the Company shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a determination under this
Section. The Company

3

 

shall bear all costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section.

          8. Confidential Information and Invention Assignment Agreement. You have signed the
Company’s standard form of proprietary information and inventions agreement (the “Proprietary
Information and Inventions Agreement”), a copy of which is attached to this letter as Exhibit
B. Nothing in this Agreement alters the terms and conditions of the Proprietary Information
and Inventions Agreement.

          9. Indemnification. The Company shall indemnify you with respect to activities in
connection with your employment hereunder to the fullest extent provided in the Company’s bylaws.
You will be named as an insured on the director and officer liability insurance policy currently
maintained, or as may be maintained by the Company from time to time, and, in addition, you will
enter into the form of indemnification agreement provided to other executive officers and directors
of the Company.

          10. Arbitration. Any claim, dispute or controversy arising out of this Agreement, the
interpretation, validity or enforceability of this Agreement or the alleged breach thereof shall be
submitted by the parties to binding arbitration by a sole arbitrator under the rules of the
American Arbitration Association; provided, however, that (i) the arbitrator shall have no
authority to make any ruling or judgment that would confer any rights with respect to the trade
secrets, confidential and proprietary information or other intellectual property of the Company
upon you or any third party; and (ii) this arbitration provision shall not preclude the Company
from seeking legal and equitable relief from any court having jurisdiction with respect to any
disputes or claims relating to or arising out of the misuse or misappropriation of the Company’s
intellectual property. Judgment may be entered on the award of the arbitrator in any court having
jurisdiction. The site of the arbitration proceeding shall be in San Mateo County, California.

          11. Miscellaneous.

               (a) Absence of Conflicts. You represent that your performance of your duties under
this Agreement will not breach any other agreement as to which you are a party.

               (b) Successors. This Agreement is binding on and may be enforced by the Company and
its successors and assigns and is binding on and may be enforced by you and your heirs and legal
representatives. Any successor to the Company or substantially all of its business (whether by
purchase, merger, consolidation or otherwise) will in advance assume in writing and be bound by all
of the Company’s obligations under this Agreement.

               (c) Notices. Notices under this Agreement must be in writing and will be deemed to
have been given when personally delivered or two days after mailed by U.S. registered or certified
mail, return receipt requested and postage prepaid. Mailed notices to you will be addressed to you
at the home address which you have most recently communicated to the Company in writing. Notices
to the Company will be addressed to the Chairman of the Board at the Company’s corporate
headquarters.

               (d) Waiver. No provision of this Agreement will be modified or waived except in
writing signed by you and an officer of the Company duly authorized by its Board. No waiver by
either party of any breach of this Agreement by the other party will be considered a waiver of any
other breach of this Agreement.

               (e) Severability. In the event that any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue
in full force and effect without said provision.

4

 

               (f) Entire Agreement. This Agreement, including the Proprietary Information and
Inventions Agreement, the options listed in the attached Exhibit A and your indemnification
agreement, represents the entire agreement between the parties concerning the subject matter of
your employment by the Company.

               (g) Governing Law. This Agreement will be governed by the laws of the State of
California without reference to conflict of laws provisions.

     Please sign and date this Agreement, and return it to me if you wish to continue employment at
the Company under the terms described above.

	 	 	 	 	 
	 	Best regards,

 	 
	 	/s/ David N. Strohm
 	 
	 	David N. Strohm 	 
	 	Chairman of the Board of Directors

SuccessFactors, Inc. 	 
	 

     I, the undersigned, hereby accept and agree to the terms and conditions of my employment with
the Company as set forth in this Agreement.

Accepted
and agreed to this 19 day of July 2007:

/s/ Lars Dalgaard                    

          Lars Dalgaard

5

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