Salesforce.com 2005 Annual Report Download - page 105

SALESFORCE.COM, INC.
TERMS OF STOCK OPTION AGREEMENT
The Company has granted to the Optionee, pursuant to a Stock Option Grant Agreement (the "Grant Agreement") and the Company's 1999 Stock
Option Plan (the "Plan"), an Option to purchase certain shares of Stock, upon the terms and conditions set forth in this Agreement ("the Agreement"). The
Option shall in all respects be subject to the terms and conditions of the Grant Agreement and the Plan, the provisions of which are incorporated herein by
reference.
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Agreement or the
Plan.
1.2 Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any
provision of this Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.
Use of the term "or" is not intended to be exclusive, unless the context clearly requires otherwise.
2. TAX CONSEQUENCES.
2.1 Tax Status of Option. As indicated in the Grant Agreement, this Option is intended to be either an Incentive Stock Option ("ISO") within the
meaning of Section 422(b) of the Code or a nonstatutory stock option, which is not intended to qualify as an ISO. The Optionee should consult with the
Optionee's own tax advisor regarding the tax effects of this Option (and any requirements necessary to obtain favorable income tax treatment under
Section 422 of the Code, including, but not limited to, holding period requirements).
2.2 ISO Fair Market Value Limitation. If this Option is designated an ISO in the Grant Agreement, to the extent that the Option (together with
all Incentive Stock Options granted to the Optionee under all stock option plans of the Participating Company Group, including the Plan) becomes exercisable
for the first time during any calendar year for shares having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such
options which exceeds such amount will be treated as Nonstatutory Stock Options. For purposes of this Section 2.2, options designated as Incentive Stock
Options are taken into account in the order in which they were granted, and the Fair Market Value of stock is determined as of the time the option with respect
to such stock is granted. If the Code is amended to provide for a different limitation from that set forth in this Section 2.2, such different limitation shall be
deemed incorporated herein effective as of the date required or permitted by such amendment to the Code. If the Option is treated as an Incentive Stock
Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 2.2, the Optionee may designate which portion of
such Option the Optionee is exercising. In the absence of such designation, the Optionee shall be deemed to have exercised the Incentive Stock Option portion
of the Option first. Separate certificates representing each such portion shall be issued