Salesforce.com 2005 Annual Report Download - page 121

treated as "effected without receipt of consideration by the Company." Any fractional share resulting from an adjustment pursuant to this Section 4.3 shall be
rounded down to the nearest whole number, and in no event may the exercise or purchase price under any Award be decreased to an amount less than the par
value, if any, of the stock subject to such Award. The adjustments determined by the Committee pursuant to this Section 4.3 shall be final, binding and
conclusive.
5. ELIGIBILITY AND AWARD LIMITATIONS.
5.1 Persons Eligible for Awards. Awards may be granted only to Employees, Consultants and Directors. For purposes of the foregoing
sentence, "Employees," "Consultants"and "Directors" shall include prospective Employees, prospective Consultants and prospective Directors to whom
Awards are granted in connection with written offers of an employment or other service relationship with the Participating Company Group; provided,
however, that no Stock subject to any such Award shall vest, become exercisable or be issued prior to the date on which such person commences Service.
5.2 Participation. Awards are granted solely at the discretion of the Committee. Eligible persons may be granted more than one (1) Award.
However, eligibility in accordance with this Section shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an
additional Award.
5.3 Incentive Stock Option Limitations.
(a) Persons Eligible. An Incentive Stock Option may be granted only to a person who, on the effective date of grant, is an Employee of
the Company, a Parent Corporation or a Subsidiary Corporation (each being an "ISO-Qualifying Corporation"). Any person who is not an Employee of an
ISO-Qualifying Corporation on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option. An Incentive
Stock Option granted to a prospective Employee upon the condition that such person become an Employee of an ISO-Qualifying Corporation shall be deemed
granted effective on the date such person commences Service with an ISO-Qualifying Corporation, with an exercise price determined as of such date in
accordance with Section 6.1.
(b) Fair Market Value Limitation. To the extent that options designated as Incentive Stock Options (granted under all stock option plans
of the Participating Company Group, including the Plan) become exercisable by a Participant for the first time during any calendar year for stock having a
Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portion of such options which exceeds such amount shall be treated as
Nonstatutory Stock Options. For purposes of this Section, options designated as Incentive Stock Options shall be taken into account in the order in which they
were granted, and the Fair Market Value of stock shall be 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, such different limitation shall be deemed incorporated herein effective as of the date and
with respect to such Options as required or permitted by such amendment to the Code. If an 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, the Participant may designate which