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SALESFORCE COM INC (CRM)
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 03/09/2007
Filed Period 01/31/2007

Table of contents

  • Page 1
    SALESFORCE COM INC (CRM) 10-K Annual report pursuant to section 13 and 15(d) Filed on 03/09/2007 Filed Period 01/31/2007

  • Page 2
    ... No.) The Landmark @ One Market, Suite 300 San Francisco, California 94105 (Address of principal executive offices) Telephone Number (415) 901-7000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each...

  • Page 3
    ... and Financial Disclosure Controls and Procedures Other Information PART III Item 10. Directors, Executive Officers of the Registrant and Corporate Governance Matters Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder...

  • Page 4
    ... Our principal executive offices are located in San Francisco, California and our website address is www.salesforce.com. Our office address is The Landmark @ One Market, Suite 300, San Francisco, California 94105. We are the leading provider, based on market share, of application services that allow...

  • Page 5
    ... number and complexity of applications, operating systems, networks and computer systems have made it difficult and time consuming for businesses to implement and use enterprise software applications. High cost of ownership. Enterprise software applications carry a high total cost of ownership...

  • Page 6
    ... deploy traditional CRM applications as well as add-on applications developed by third-party developers because of the complexity involved in implementing, customizing and integrating them and because end users have not been willing to invest the considerable time and effort required to learn to use...

  • Page 7
    ...,000 paying subscriptions. We provide our service to organizations through our proprietary, scalable, and secure on-demand, multi-tenant application architecture, which allows us to serve large numbers of customers cost-effectively by leveraging a single application code base. By subscribing to our...

  • Page 8
    ... popular websites such as those of Amazon.com, eBay, and Yahoo!, it has a more familiar interface than typical CRM enterprise applications. As a result, our users do not require substantial training on how to use and benefit from our service. We conduct extensive surveys of our users to gauge their...

  • Page 9
    ... find more uses for our service and therefore purchase additional subscriptions, continue to renew their existing subscriptions, and upgrade to more fully featured versions such as our Unlimited Edition. Encourage the development of third-party applications on our Apex platform. Our Apex platform...

  • Page 10
    ..., opportunities, and reports. It does not include the more advanced customer service and support or marketing automation features such as: campaigns, forecasts, leads, solutions, online case capture, self-service portal, notes and attachments, Offline Edition, and mass email capabilities. Using the...

  • Page 11
    ... revenue by products. Products and schedules is included in all Enterprise Edition and Unlimited Edition service subscriptions. Customers of Professional Edition can choose to subscribe as an add-on service. Salesforce Sandbox enables customers to test new customizations or features before deploying...

  • Page 12
    ... applications, including data models and objects to manage data, a workflow engine for managing collaboration of data between users, a user interface model to handle forms and other interactions, and a Web services API for programmatic access and integration. The Apex platform provides the tools...

  • Page 13
    ... extensive reporting and analytics functionality in our service that operates on the online transaction processing, or OLTP, database system to provide real-time analysis of the user's data. While users can customize any report or dashboard in the service, we dynamically tune the database based...

  • Page 14
    ... and enhancing our existing service offerings as well as developing new proprietary services. In addition, from time to time we supplement our internal research and development activities with outside development resources. Because of our common, multi-tenant application architecture, we are able to...

  • Page 15
    ... and educate prospects and generate interest through product information and demonstrations, free trials, case studies, white papers, and marketing collateral email, direct mail, and phone campaigns to capture leads that can be funneled into our sales organization sales tools and field marketing...

  • Page 16
    ... of use and rates of user adoption; low total cost of ownership and demonstrable cost-effective benefits for customers; product functionality; performance, security, scalability, flexibility and reliability of the service; ease of integration with existing applications; quality of customer support...

  • Page 17
    ... patent applications concern database, application platform and application exchange infrastructures. The following are some of our registered trademarks in the U.S. and elsewhere: salesforce salesforce.com "No Software" logo The End of Software Success. Not Software Success. On Demand Team Edition...

  • Page 18
    ... filings, free of charge from our Web site at http://www.salesforce.com/company/sec-filings.jsp as soon as reasonably practicable following our filing of any of these reports with the SEC. You can also obtain copies free of charge by contacting our Investor Relations department at the office address...

  • Page 19
    ... licensed from third parties in order to offer our service, including database software from Oracle Corporation. This hardware and software may not continue to be available on commercially reasonable terms, or at all. Any loss of the right to use any of this hardware or software could result in...

  • Page 20
    ... as from enterprise software vendors and online service providers who may develop and/or bundle CRM products with their products in the future. For small business customers, we also face competition from companies whose offering is based on Microsoft Outlook and Excel for limited contact management...

  • Page 21
    ... stock options, which is now required of us effective February 1, 2006; our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers' requirements; the renewal rates for our service; changes in our pricing policies; the introduction of new features...

  • Page 22
    ... additional sales in any period, as revenue from new customers must be recognized over the applicable subscription term. The market for our technology delivery model and on-demand application services is immature and volatile, and if it does not develop or develops more slowly than we expect, our...

  • Page 23
    ... may renew for a lower priced edition of our service or for fewer subscriptions. We have limited historical data with respect to rates of customer subscription renewals, particularly for our enterprise customers who purchase a large number of subscriptions under multi-year contracts, so we cannot...

  • Page 24
    ... the timely completion, introduction and market acceptance of the feature or edition. Failure in this regard may significantly impair our revenue growth. In addition, because our service is designed to operate on a variety of network hardware and software platforms using a standard browser, we...

  • Page 25
    Table of Contents willingness of enterprises, large and small, to purchase and deploy these applications. If third-party technology providers or enterprises do not perceive the benefits of our on-line application marketplace, then the market for this initiative may not develop at all, or it may ...

  • Page 26
    ... States include localization of our service, including translation into foreign languages and associated expenses; laws and business practices favoring local competitors; compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, privacy and...

  • Page 27
    ... by federal, state or foreign agencies becomes more likely. For example, we believe increased regulation is likely in the area of data privacy, and laws and regulations applying to the solicitation, collection, processing or use of personal or consumer information could affect our customers' ability...

  • Page 28
    ... of management time and attention from revenue-generating activities to compliance activities. We are required to comply on an on-going basis with the Sarbanes-Oxley Act, or SOX, requirements involving the assessment of our internal controls over financial reporting and our independent public...

  • Page 29
    .... We do not have employment agreements with any of our executive officers, key management, development or operations personnel and, therefore, they could terminate their employment with us at any time. We do not maintain key person life insurance policies on any of our employees. The loss of one or...

  • Page 30
    ... expenses arising from the new requirement to expense stock options and the valuation of deferred tax assets and liabilities. Increases in our effective tax rate could materially affect our net results. Risks Related to Ownership of Our Common Stock The trading price of our common stock is likely to...

  • Page 31
    ... these analysts cease coverage of our company, we could lose visibility in the market, which in turn could cause our stock price to decline. The concentration of our capital stock ownership with insiders will likely limit your ability to influence corporate matters. Our executive officers, directors...

  • Page 32
    ... office for domestic marketing, sales, professional services and development occupy approximately 240,000 square feet in San Francisco, California under leases that expire at various times through June 2013. We also lease space in various locations throughout the United States for local sales...

  • Page 33
    .... Freeland was a partner at Accenture, a management consulting firm, and served as Managing Director from June 2001. Mr. Freeland received a B.A. and an M.B.A. from Columbia University. Parker Harris co-founded salesforce.com in February 1999 and served in senior technical positions since inception...

  • Page 34
    ...Software, a Java consulting firm he co-founded. Mr. Harris received a B.A. from Middlebury College. George Hu has served as our Chief Marketing Officer since October 2006. Previously, Mr. Hu served as our Senior Vice President and General Manager, Applications from January to October 2006 and as our...

  • Page 35
    ... PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock has been quoted on the New York Stock Exchange under the symbol "CRM." The following table sets forth for the indicated periods the high and low closing sales prices of our common stock as reported by the New York...

  • Page 36
    ...in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. Comparison of Cumulative Total Returns of salesforce.com, inc. 6/23/04 salesforce.com, inc. S&P 500 Index Nasdaq Computer & Data Processing Index 100.00 100...

  • Page 37
    ...and support Professional services and other Total revenues Cost of revenues (1): Subscription and support Professional services and other Total cost of revenues Gross profit Operating expenses (1): Research and development Marketing and sales General and administrative Lease recovery Total operating...

  • Page 38
    ... stock in June 2004 from our initial public offering. Paying subscriptions are defined as unique user accounts, purchased by customers for use by their employees and other customer-authorized users that have not been suspended for non-payment and for which we are recognizing subscription revenue...

  • Page 39
    ... primarily of training fees. Subscription and support revenues accounted for approximately 90 percent of our total revenues during fiscal 2007, 2006 and 2005. Subscription revenues are driven primarily by the number of paying subscribers of our service and the subscription price of our service. None...

  • Page 40
    ... are typically billed on a time and materials basis. We also offer a number of classes on implementing, using and administering our service that are billed on a per person, per class basis. Our typical payment terms provide that our customers pay us within 30 days of invoice. Cost of Revenues and...

  • Page 41
    ... largest cost. General and Administrative. General and administrative expenses consist of salaries and related expenses, including stock-based expenses, for finance and accounting, human resources and management information systems personnel, legal costs, professional fees, other corporate expenses...

  • Page 42
    ... service contracts are on a time and material basis. Training revenues are recognized after the services are performed. For revenue arrangements with multiple deliverables, such as an arrangement that includes subscription, premium support, consulting or training services, we allocate the total...

  • Page 43
    ... number of stock awards granted, the fair value of the stock awards at the time of grant, changes in estimated forfeiture assumption rates and the tax benefit that we may or may not receive from stock-based expenses. Additionally, the application of SFAS 123R requires the use of an option-pricing...

  • Page 44
    ...Revenues: Subscription and support Professional services and other Total revenues Cost of revenues: Subscription and support Professional services and other Total cost of revenues Gross profit Operating expenses: Research and development Marketing and sales General and administrative Lease recovery...

  • Page 45
    ...Revenues: Subscription and support Professional services and other Total revenues Cost of revenues: Subscription and support Professional services and other Total cost of revenues Gross profit Operating expenses: Research and development Marketing and sales General and administrative Lease recovery...

  • Page 46
    ... 31, 2006 also included $3.4 million of stock-based expense. Additionally, during fiscal 2007, we re-invested our revenue growth in an effort to expand our business. We incurred costs related to our data center capacity and upgrading our development and test data center. Additionally, we added sales...

  • Page 47
    ...in the cost of professional services and other revenues to be in excess of the related revenue during fiscal 2007 by $12.0 million. We increased the professional services headcount in order to meet the current and anticipated demand for our consulting and training services as our subscriber base has...

  • Page 48
    ... the stock-based expenses and foreign losses. See Note 6 "Income Taxes" to the Notes to the Consolidated Financial Statements for our reconciliation of income taxes at the statutory federal rate to the provision for income taxes. Fiscal Years Ended January 31, 2006 and 2005 Revenues. Total revenues...

  • Page 49
    ... 2006 by $5.5 million. We increased the professional services headcount in order to meet the anticipated demand for our consulting and training services as our subscriber base has expanded. Research and Development. Research and development expenses were $23.3 million, or 8 percent of total revenues...

  • Page 50
    ... professional services, changes in working capital accounts, particularly increases in accounts receivable and deferred revenue and the timing of commission and bonus payments, and add-backs of non-cash expense items such as depreciation and amortization and the expense associated with stock-based...

  • Page 51
    ... capital requirements will depend on many factors, including our rate of revenue growth, the expansion of our marketing and sales activities, the timing and extent of spending to support product development efforts and expansion into new territories, the timing of introductions of new services and...

  • Page 52
    ... enter into any hedging contracts for trading or speculative purposes. Interest rate sensitivity We had cash, cash equivalents and marketable securities totaling $412.5 million at January 31, 2007. These amounts were invested primarily in money market funds and instruments, corporate notes and bonds...

  • Page 53
    Table of Contents ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS The following financial statements are filed as part of this Report: Page No. Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of ...

  • Page 54
    ..., in fiscal 2007, salesforce.com, inc. changed its method of accounting for stock-based compensation in accordance with guidance provided in Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment." /s/ San Jose, California March 9, 2007 51 ERNST & YOUNG LLP

  • Page 55
    Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of salesforce.com, inc. We have audited management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that salesforce.com, inc....

  • Page 56
    Table of Contents salesforce.com, inc. Consolidated Balance Sheets (in thousands, except share and per share data) January 31, January 31, 2006 2007 Assets Current assets: Cash and cash equivalents Short-term marketable securities Accounts receivable, net of allowance for doubtful accounts of $1,...

  • Page 57
    ...and support Professional services and other Total revenues Cost of revenues (1): Subscription and support Professional services and other Total cost of revenues Gross profit Operating expenses (1): Research and development Marketing and sales General and administrative Lease recovery Total operating...

  • Page 58
    ...and subsidiary deferred - - - stock-based compensation Exercise of stock options, warrants and stock grants to board members for - - 4,126,845 board services Tax benefits from employee - - - stock plans Repurchase of unvested - - (191,000) shares Fair value of stock awards issued to nonemployees for...

  • Page 59
    ... deferred stock-based - compensation Exercise of stock options, warrants and stock grants to board members for 5,547,883 board services Tax benefits from employee stock plans - Repurchase of unvested shares (25,123) Fair value of stock awards issued to - nonemployees for services Collection of...

  • Page 60
    ... SFAS 123R Exercise of stock options, warrants and stock grants 4,032,132 to board members for board services Tax benefits from employee stock plans - Stock-based expenses - Repurchase of unvested shares (8,148) Foreign currency translation adjustment - Unrealized gain on marketable securities - Net...

  • Page 61
    ...expenditures Net cash used in investing activities Financing activities Net proceeds from the issuance of common stock Proceeds from the exercise of stock options and warrants Excess tax benefits from employee stock plans Collection of notes receivable from stockholders Principal payments on capital...

  • Page 62
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements 1. Summary of Business and Significant Accounting Policies Description of Business Salesforce.com, inc. (the "Company") is the leading provider, based on market share, of application services that allow organizations ...

  • Page 63
    ... 1, 2006. The weighted-average risk free interest rate is based on the rate for a 4 year U.S. government security at the time of the option grant. During the three months ended July 31, 2005, the Company reevaluated the assumptions used to estimate the future volatility of its stock price. The...

  • Page 64
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) and 2005 would have been decreased to the pro forma amounts indicated below (in thousands, except per share data): Fiscal Year Ended January 31, 2006 2005 Net income, as reported Add: Total stock-based ...

  • Page 65
    ... primarily of cash and cash equivalents, marketable securities and trade accounts receivable. Although the Company deposits its cash with multiple financial institutions, its deposits, at times, may exceed federally insured limits. Collateral is not required for accounts receivable. The Company...

  • Page 66
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) Securities, which are classified as available for sale at January 31, 2007 and 2006, are carried at fair value, with the unrealized gains and losses, net of tax, reported as a separate component of ...

  • Page 67
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) Software and Website Development Costs The Company follows the guidance of Emerging Issues Task Force ("EITF") Issue No. 00-2, Accounting for Web Site Development Costs ("EITF 00-2"), and EITF Issue No. 00...

  • Page 68
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) A reconciliation of the denominator used in the calculation of basic and diluted net income per share is as follows (in thousands): Fiscal Year Ended January 31, 2007 2006 2005 Numerator: Net income $ 481...

  • Page 69
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) Revenue Recognition The Company derives its revenues from two sources: (1) subscription revenues, which are comprised of subscription fees from customers accessing its on-demand application service, and ...

  • Page 70
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) Deferred Revenue Deferred revenue primarily consists of billings or payments received in advance of revenue recognition from the Company's subscription service described above and is recognized as the ...

  • Page 71
    ...to purchase shares in Salesforce Japan. The option plans are in accordance with the rules and regulations of the Commercial Code of Japan. One of the option plans includes antidilution provisions such that the option holders are allowed additional options if the joint venture issues additional stock...

  • Page 72
    ... salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) In fiscal 2007, 2006 and 2005, the joint venture granted options to purchase 8,400, 23,600 and 10,000 shares, respectively, to its employees to purchase shares of common stock in the joint venture. The stock options...

  • Page 73
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) Management's allocation of the purchase price consideration, based on a valuation of the acquired assets and liabilities performed in part by an unrelated third-party appraiser, is as follows (in thousands...

  • Page 74
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) 4. Balance Sheet Accounts Marketable Securities At January 31, 2007, marketable securities consisted of the following (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value Corporate...

  • Page 75
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): As of January 31, 2007 2006 Deferred professional services costs Prepaid ...

  • Page 76
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) During fiscal 2007, the Company capitalized $808,000 of stock-based expenses related to internal-use software development and deferred professional services costs. Amortization expense of capitalized ...

  • Page 77
    ...of January 31, 2007 2006 Deferred tax assets: Net operating loss carryforwards Deferred stock compensation Tax credits Unrealized losses on marketable securities Other Total deferred tax assets Less valuation allowance Total deferred tax assets Deferred tax liabilities-deferred commissions, prepaid...

  • Page 78
    ... Plan, 2004 Employee Stock Purchase Plan and the 2004 Outside Directors Stock Plan. These plans, other than the 2004 Outside Directors Plan, provide for annual automatic increases on February 1 to the shares reserved for issuance based on the lesser of (i) a specific percentage of the total number...

  • Page 79
    ...the Company's stock option plans were generally for periods not to exceed 10 years and were issued at fair value of the shares of common stock on the date of grant as determined by the trading price of such stock on the New York Stock Exchange. After February 1, 2006, options issued to employees are...

  • Page 80
    ... salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) Stock option activity is as follows: Options Outstanding Shares Available for Grant Outstanding Stock Options WeightedAverage Exercise Price Aggregate Intrinsic Value Balance as of January 31, 2004 Increase in options...

  • Page 81
    ...-Scholes pricing model using similar assumptions as those for valuing stock option awards to employees. Warrants for Common Stock In August 2002, the Board of Directors authorized the issuance of four warrants, each to purchase 125,000 shares of common stock at $1.10 per share to the salesforce.com...

  • Page 82
    ... of 15,000 shares of common stock for board services pursuant to the terms described in the 2004 Outside Directors Stock Plan. The expense associated with these share issuances was expensed immediately at the time of the issuances. 9. Commitments and Contingencies Letters of Credit As of January 31...

  • Page 83
    ..., a shareholder derivative action was filed in the Superior Court of the State of California, San Francisco County, entitled Borrelli v. Benioff, et al., against the Company's Chief Executive Officer, its Chief Financial Officer and members of its Board of Directors alleging breach of fiduciary duty...

  • Page 84
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) control, gross mismanagement, waste of corporate assets and unjust enrichment under state common law. Subsequently, a substantially similar complaint was filed in the same court based on the same facts and...

  • Page 85
    ... is in excess of $1.0 million per month. The Company plans to continue providing free subscriptions to qualified non-profit organizations. 12. Selected Quarterly Financial Data (Unaudited) Selected summarized quarterly financial information for fiscal 2007 and 2006 is as follows: 1st Quarter 2nd...

  • Page 86
    ... Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. (b) Management's Report on Internal Control over Financial...

  • Page 87
    ... can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about...

  • Page 88
    ... without charge by contacting Investor Relations, salesforce.com, inc., The Landmark @ One Market, Suite 300, San Francisco, California 94105 or by calling (415) 901-7000. We plan to post on our Web site at the address described above any future amendments or waivers of our Code of Conduct. ITEM 11...

  • Page 89
    Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as a part of this Report: 1. Financial Statements: The information concerning our financial statements, and Report of Independent Registered Public Accounting Firm required by this ...

  • Page 90
    ... this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: March 9, 2007 salesforce.com, inc. /s/ STEVE CAKEBREAD Steve Cakebread Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) POWER OF ATTORNEY AND SIGNATURES KNOW ALL PERSONS BY...

  • Page 91
    ....com, inc and its officers and directors 1999 Stock Option Plan, as amended 2004 Equity Incentive Plan, as amended 2004 Employee Stock Purchase Plan 2004 Outside Directors Stock Plan, as amended 2006 Inducement Equity Incentive Plan Master Service Agreement dated May 17, 2005 between salesforce.com...

  • Page 92
    Table of Contents * ** (1) (2) (3) (4) (5) (6) (7) Denotes a management contract or compensatory plan or arrangement. Confidential treatment has... 10-K for the annual period ended January 31, 2006 as filed with the Securities and Exchange Commission on March 15, 2006. Incorporated by reference from...

  • Page 93
    ... of the Company's trade secrets or proprietary information. To indicate your acceptance of the Company's offer, please sign and date this letter in the space provided below and return it to me. A duplicate original is enclosed for your records. You will be required to sign a Employee Inventions and...

  • Page 94
    We look forward to working with you at Salesforce.com. Welcome aboard! Sincerely, /s/ MARC BENIOFF Marc Benioff Chairman of the Board AGREED TO AND ACCEPTED [NAME]

  • Page 95
    ...terminated within 1st year of employment, he will receive 6 months base compensation and 6 months acceleration of vesting. This provision has expired. This schedule sets forth the material terms of the offer letters with certain executive officers of salesforce.com, inc. The form is filed herewith.

  • Page 96
    ...to a Change of Control, the Executive shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement or under his or her Employment Agreement, or as may otherwise be available in accordance with the Company's established employee plans. (the...

  • Page 97
    ... the Internal Revenue Code of 1986, as amended (the "Code"), then Executive shall receive, in lieu of the Company-Paid Coverage, an additional lump-sum payment equal to $60,000, less applicable withholding. (b) Timing of Severance Payments. The severance payments to which Executive is entitled shall...

  • Page 98
    ... months following the date of the Executive's separation from service as required by Code Section 409A. 4. Golden Parachute Excise Tax Best Results. In the event that the severance and other benefits provided for in this agreement or otherwise payable to Executive (a) constitute "parachute payments...

  • Page 99
    ... of Control. "Change of Control" means the occurrence of any of the following, in one or a series of related transactions: (i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner" (as defined in Rule 13d...

  • Page 100
    ... of Executive's base salary, potential bonus and/or employee benefits; or (iii) the relocation of the Company's offices such that Executive is regularly required to commute to a location more than thirty-five (35) miles from the city of San Francisco in order to perform Executive's job duties...

  • Page 101
    ...of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (g) Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes. (h) Counterparts. This...

  • Page 102
    COMPANY EMPLOYEE SALESFORCE.COM, INC. By: Title: By:

  • Page 103
    ... and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, and assigns, from, and agrees not to sue or otherwise institute...

  • Page 104
    ... any and all claims relating to, or arising from, Executive's right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities...

  • Page 105
    ... on his own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein. 8. Application for Employment. Executive understands and agrees that, as a condition of this Agreement, he shall not be entitled to any employment with the Company, its...

  • Page 106
    ... Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so. 10. No Admission of Liability. No action taken by the Company, either previously or in connection with this Agreement shall be deemed...

  • Page 107
    ... They understand the terms and consequences of this Agreement and of the releases it contains; (d) They are fully aware of the legal and binding effect of this Agreement. IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below. salesforce.com, inc. Dated...

  • Page 108
    ...to a Change of Control, the Executive shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement or under his or her Employment Agreement, or as may otherwise be available in accordance with the Company's established employee plans. (the...

  • Page 109
    ... the Internal Revenue Code of 1986, as amended (the "Code"), then Executive shall receive, in lieu of the Company-Paid Coverage, an additional lump-sum payment equal to $60,000, less applicable withholding. (b) Timing of Severance Payments. The severance payments to which Executive is entitled shall...

  • Page 110
    ... months following the date of the Executive's separation from service as required by Code Section 409A. 4. Golden Parachute Excise Tax Best Results. In the event that the severance and other benefits provided for in this agreement or otherwise payable to Executive (a) constitute "parachute payments...

  • Page 111
    ... of Control. "Change of Control" means the occurrence of any of the following, in one or a series of related transactions: (i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the "beneficial owner" (as defined in Rule 13d...

  • Page 112
    ... of Executive's base salary, potential bonus and/or employee benefits; or (iii) the relocation of the Company's offices such that Executive is regularly required to commute to a location more than thirty-five (35) miles from the city of San Francisco in order to perform Executive's job duties...

  • Page 113
    ...of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (g) Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes. (h) Counterparts. This...

  • Page 114
    COMPANY EMPLOYEE SALESFORCE.COM, INC. By: Title: By:

  • Page 115
    ... and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, and assigns, from, and agrees not to sue or otherwise institute...

  • Page 116
    ... any and all claims relating to, or arising from, Executive's right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities...

  • Page 117
    ... on his own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein. 8. Application for Employment. Executive understands and agrees that, as a condition of this Agreement, he shall not be entitled to any employment with the Company, its...

  • Page 118
    ... Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so. 10. No Admission of Liability. No action taken by the Company, either previously or in connection with this Agreement shall be deemed...

  • Page 119
    ... They understand the terms and consequences of this Agreement and of the releases it contains; (d) They are fully aware of the legal and binding effect of this Agreement. IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below. salesforce.com, inc. Dated...

  • Page 120
    ...SFDC Australia Pty. Ltd. Salesforce.com Canada Corporation Salesforce.com Information Technology (Shanghai) Co., Ltd. Salesforce.com France SAS Salesforce.com Germany GmbH Salesforce.com Hong Kong Ltd. Salesforce.com India Private Limited SFDC (EMEA) Limited SFDC International Ltd. SFDC Ireland Ltd...

  • Page 121
    ...the 2004 Employee Stock Purchase Plan of salesforce.com, inc., of our reports dated March 9, 2007, with respect to the consolidated financial statements and schedule of salesforce.com, inc., salesforce.com management's assessment of the effectiveness of internal control over financial reporting, and...

  • Page 122
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who...

  • Page 123
    ... in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who...

  • Page 124
    ...of 1934 and that information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of salesforce.com, inc. /s/ MARC BENIOFF Marc Benioff Chairman of the Board of Directors and Chief Executive Officer Based on my knowledge, I, Steve...