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SALESFORCE COM INC (CRM)
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 03/09/2009
Filed Period 01/31/2009

Table of contents

  • Page 1
    SALESFORCE COM INC (CRM) 10-K Annual report pursuant to section 13 and 15(d) Filed on 03/09/2009 Filed Period 01/31/2009

  • Page 2
    ... @ 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 Common Stock, par value $0.001 per...

  • Page 3
    ... 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 Matters...

  • Page 4
    ... of enterprise cloud computing applications that are integrated with our CRM service and in many cases were developed on our platform by third parties. Our principal executive offices are located in San Francisco, California and our principal website address is www.salesforce.com. Our office address...

  • Page 5
    ... the level of access and economies of scale of a multi-tenant solution, which allows all users and applications to share a single, common hardware infrastructure and software code base that is centrally maintained. As such, hosted client/server applications remain limited in their ability to address...

  • Page 6
    .... SaaS contrasts with the traditional enterprise software model, which requires each customer to install, configure, manage and maintain the hardware, software and network services to implement a software application in-house. Moreover, traditional enterprise software vendors must maintain support...

  • Page 7
    ... enterprise software deployments. We also offer consulting, training services, and online resources to assist customers in rapidly deploying and optimizing their use of our service. Ease of integration and development. Our platform is designed to enable IT professionals to integrate our service...

  • Page 8
    ...idea for a new application can log onto our platform, develop, host and support their system on Force.com and make the application accessible for a fee to our 55,400 customers. High levels of user adoption. We have designed our service to be easy to use and intuitive. Since our service contains many...

  • Page 9
    ...workflow, reports, and other characteristics without the use of significant IT resources or consultants. Our services mainly focus on the following functional areas within CRM: • Sales force automation, which is marketed under our brand Salesforce CRM SFA, enables salespeople to be more productive...

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

  • Page 11
    ...a development environment for building and testing integrations and internally built applications. Additionally, customers may use Force.com Sandbox as an exact replica of their production Salesforce CRM systems for employee-training purposes. Customers of Professional Edition and Enterprise Edition...

  • Page 12
    ... for building business 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 Force.com...

  • Page 13
    ... service offerings as well as developing new proprietary services such as Force.com. In addition, from time to time we supplement our internal research and development activities with outside development resources and acquired technology. Because of our common, multi-tenant application architecture...

  • Page 14
    ...network includes consulting firms, other technology vendors, systems integrators and partners in markets where we do not have a large direct sales presence. In return, we typically pay these partners a fee based on the first-year subscription revenue generated by the customers they refer. We expense...

  • Page 15
    ... Web site development to engage 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 use...

  • Page 16
    ... and products that allow customers to build new applications that run on the customers' current infrastructure or as hosted services. Our current principal competitors include: • • enterprise software application vendors including Microsoft Corporation, Oracle Corporation, and SAP AG; packaged...

  • Page 17
    ...we can to new technologies and changes in customer needs. Additionally, our competitors may offer or develop products or services that are superior to ours or that achieve greater market acceptance. Our professional services organization may compete with some systems integrators, including Accenture...

  • Page 18
    ...from our Web site at http://www.salesforce.com/company/investor/sec-filings/ 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 our office address listed above. ITEM...

  • Page 19
    ... to purchase our enterprise cloud computing application service, delay prospective customers' purchasing decisions, reduce the value or duration of their subscription contracts, or affect renewal rates, all of which could adversely affect our operating results. Companies that have competing products...

  • Page 20
    ... our stock price may decline without advance notice. Due to our evolving business model, the unpredictability of new markets that we enter and deteriorating general economic and financial market conditions, we may not be able to accurately forecast our rate of growth. We plan our expense levels and...

  • Page 21
    ... expenditures related to the operations and expansion of our business; changes in our pricing policies whether initiated by us or as a result of intense competition; the cost, timing and management effort for the introduction of new features to our service; the rate of expansion and productivity of...

  • Page 22
    ... software 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 at reasonable prices or on commercially reasonable terms, or at all. Any loss of the right to use any of this hardware...

  • Page 23
    ... and products that allow customers to build new applications that run on the customers' current infrastructure or as hosted services. Our current principal competitors include: • • enterprise software application vendors including Microsoft Corporation, Oracle Corporation, and SAP AG; packaged...

  • Page 24
    ... our future growth. Factors that may affect market acceptance of our service include reluctance by enterprises to migrate to an enterprise cloud computing application service; a limited number of service offerings and risks associated with developing new service offerings; the price and performance...

  • Page 25
    ... 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 26
    ... their use. Any intellectual property claims, with or without merit, could be time-consuming and expensive to resolve, could divert management attention from executing our business plan and could require us to pay monetary damages or enter into royalty or licensing agreements. In addition, many...

  • Page 27
    ... and develop sufficient numbers of productive direct sales personnel, sales of our service will suffer and our growth will be impeded. In addition, we plan to develop and expand our indirect sales channel by engaging third-party resellers. Because of our enterprise cloud computing service model, the...

  • Page 28
    ... and/or use demographic and personal information from their customers, which could reduce demand for our service. Many if not most other jurisdictions, including Asia countries, have similar stringent privacy laws and regulations. In addition to government activity, privacy advocacy groups and the...

  • Page 29
    ...and technologies. 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...

  • Page 30
    ... traded. Our efforts to comply with new and changing regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. We are required...

  • Page 31
    ... our customers; and trading activity by a limited number of stockholders who together beneficially own a majority of our outstanding common stock. In addition, if the market for technology stocks or the stock market in general experiences uneven investor confidence, the trading price of our common...

  • Page 32
    ... Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock. Our amended and restated certificate of incorporation and bylaws contain provisions that could depress the trading price of...

  • Page 33
    ...PROPERTIES Our executive offices and principal office for domestic marketing, sales, professional services and development occupy approximately 408,000 square feet in San Francisco, California under leases that expire at various times through November 2017. We also lease space in various locations...

  • Page 34
    .... Graham Smith has served as our Executive Vice President and Chief Financial Officer since March 2008. Prior to that, Mr. Smith served as our Executive Vice President and Chief Financial Officer Designate from December 2007 to March 2008. Prior to salesforce.com, Mr. Smith was at Advent Software...

  • Page 35
    ... EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER 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 sales prices of our...

  • Page 36
    ...our common stock commenced trading on the New York Stock Exchange) ...stock. Comparison of Cumulative Total Return of salesforce.com, inc. 1/31/2005 1/31/2006 1/31/2007 1/31/2008 1/30/2009 salesforce.com S&P 500 Index Nasdaq Computer & Data Processing Index Recent Sales of Unregistered Securities...

  • Page 37
    ...: Revenues: Subscription 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...

  • Page 38
    Table of Contents (1) Cost of revenues and operating expenses include stock-based expenses, consisting of: Fiscal Year Ended January 31, 2009 2008 2007 2006 2005 Cost of revenues Research and development Marketing and sales General and administrative Total stock-based expenses $ $ 11,051 $ 9,...

  • Page 39
    ... numbers of paying subscriptions, upgrade our customers to fully featured versions such as our Unlimited Edition, provide high quality technical support to our customers and encourage the development of third-party applications on our Force.com platform. We also plan to invest for future growth...

  • Page 40
    ... 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. We recognize revenue in accordance with the provisions of SEC Staff Accounting...

  • Page 41
    ...Revenues. Cost of subscription and support revenues primarily consists of expenses related to hosting our service and providing support, the costs of data center capacity, depreciation or operating lease expense associated with computer equipment, costs associated with website development activities...

  • Page 42
    ... offerings and develop new technologies. Marketing and Sales. Marketing and sales expenses are our largest cost and consist primarily of salaries and related expenses, including stock-based expenses, for our sales and marketing staff, including commissions, payments to partners, marketing programs...

  • Page 43
    ... contract. Support revenues from customers who purchase our premium support offerings are recognized similarly over the term of the support contract. As part of their subscription agreements, customers generally benefit from new features and functionality with each release at no additional cost. In...

  • Page 44
    ... 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 model to determine the fair value of stock...

  • Page 45
    ... 2007 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 Total...

  • Page 46
    ... of Contents Cost of revenues and operating expenses include the following amounts related to stock-based awards. Fiscal Year Ended January 31, 2009 2008 2007 Stock-based expenses: Cost of revenues Research and development Marketing and sales General and administrative Total stock-based expenses...

  • Page 47
    ..., during the same period a year ago. The increase in subscription and support revenues was due primarily to an increased number of new customers, additional paying subscriptions from existing customers, and customers who have upgraded. Professional services and other revenues were $92.2 million, or...

  • Page 48
    ... intend to continue to invest additional resources in our enterprise cloud computing application service. The timing of these additional expenses, as well as the costs related to our new data center in Singapore, will affect our cost of revenues, both in terms of absolute dollars and as a percentage...

  • Page 49
    ... in employee-related costs, stock-based expenses, infrastructure-related costs, and professional and outside service costs. Our general and administrative headcount increased by 30 percent since January 31, 2008 as we added personnel to support our growth. Operating Income. Fiscal Year Ended...

  • Page 50
    ..., compared to $451.7 million, or 91 percent of total revenues, during fiscal 2007. The increase in subscription and support revenues was due primarily to an increased number of new customers, additional paying subscriptions from existing customers, and customers who have upgraded. Professional 47

  • Page 51
    ... was primarily due to an increase of $16.6 million in employee-related costs, an increase of $2.4 million in stock-based expenses, an increase of $14.0 million in service delivery costs, primarily due to our efforts in increasing data center capacity, an increase of $4.3 million in depreciation and...

  • Page 52
    ... in employee-related costs, stock-based expenses, infrastructure-related costs, professional and outside service costs and a legal settlement. Our general and administrative headcount increased by 33 percent between January 31, 2007 and January 31, 2008 as we added personnel to support our growth...

  • Page 53
    ...income; sales of subscriptions, support and professional services; changes in working capital accounts, particularly increases and seasonality in accounts receivable and deferred revenue as described above; the timing of commission and bonus payments; collections from large enterprise customers; add...

  • Page 54
    ... of credit outstanding in favor of our landlords for office space in San Francisco, California, New York City, Singapore, Sweden and Switzerland. To date, no amounts have been drawn against the letters of credit, which renew annually and mature at various dates through December 2016. We do not...

  • Page 55
    ... 12 months. During fiscal 2010, we may enter into arrangements to acquire or invest in other businesses, services or technologies. While we believe we have sufficient financial resources, we may be required to seek additional equity or debt financing. Additional funds may not be available on terms...

  • Page 56
    ... in a parent's controlling ownership interest. Should we increase our ownership interest in Salesforce Japan, the cost would be recorded as a reduction of our stockholders' equity as opposed to accounting for the purchase as a step acquisition which requires an allocation of the purchase price. SFAS...

  • Page 57
    Table of Contents that measures market value changes when changes in interest rates occur. Fluctuations in the value of our investment securities caused by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive income, and are realized only if we sell...

  • Page 58
    ... 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 January 31, 2009 and 2008 Consolidated Statements of Operations for each of the three years in the period ended January...

  • Page 59
    ... with the standards of the Public Company Accounting Oversight Board (United States), salesforce.com, inc.'s internal control over financial reporting as of January 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations...

  • Page 60
    ... INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of salesforce.com, inc. We have audited salesforce.com, inc.'s internal control over financial reporting as of January 31, 2009, based on criteria established in Internal Control -Integrated Framework issued by...

  • Page 61
    ...current liabilities Income taxes payable, noncurrent Long-term lease liabilities and other Deferred revenue, noncurrent Minority interest Total liabilities Commitments and contingencies (Note 8) Stockholders' equity: Preferred stock, $0.001 par value; 5,000,000 shares authorized and none outstanding...

  • Page 62
    ... 2007 Revenues: Subscription 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...

  • Page 63
    ... members for board services Vested restricted stock units converted to shares Tax benefits from employee stock plans Stock-based expenses Components of comprehensive income, net of tax: Foreign currency translation adjustment and other Unrealized loss on marketable securities and cash equivalents...

  • Page 64
    ... of marketable securities Maturities of marketable securities Capital expenditures Proceeds from sale of investment Net cash used in investing activities Financing activities Proceeds from the exercise of stock options and warrants Excess tax benefits from employee stock plans Principal payments on...

  • Page 65
    ...Accounting Policies Description of Business Salesforce.com, inc. (the "Company") is the leading provider, based on revenue and market share, of software on demand, according to a July 2008 report by International Data Corporation. The Company provides a comprehensive customer relationship management...

  • Page 66
    ...all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are at fair value. Marketable Securities Management determines the appropriate classification of investments in marketable securities at the time of purchase in...

  • Page 67
    ... in the marketplace. Unobservable inputs which are supported by little or no market activity. The Company conducted its fair value assessment of The Reserve Fund using Level 3 inputs. Management has reviewed the Reserve's underlying securities portfolio which is substantially comprised of discount...

  • Page 68
    ... of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) certificates of deposit and commercial paper issued by highly-rated institutions. Management also evaluated the fair value of its ownership in The Reserve Fund, considering risk of extended timing and other...

  • Page 69
    ... are not designated as hedging instruments under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS 133, are used to reduce the exchange rate risk associated primarily with intercompany receivables and payables. Forward contracts are marked-to-market at the...

  • Page 70
    ... 2008. Capitalized Software Costs For website development costs and the development costs related to the Company's enterprise cloud computing application service, the Company follows the guidance of Emerging Issues Task Force ("EITF") Issue No. 00-2, Accounting for Web Site Development Costs ("EITF...

  • Page 71
    ...(in thousands). The dilutive securities are excluded when, for example, their exercise prices are greater than the average fair values of the Company's common stock. Fiscal Year Ended January 31, 2009 2008 2007 Stock awards Income Taxes 3,797 3,175 4,019 The Company uses the liability method of...

  • Page 72
    ... accessing its enterprise cloud computing application service, and from customers purchasing additional support beyond the standard support that is included in the basic subscription fee; and (2) related professional services and other revenue. Other revenues consist primarily of training fees...

  • Page 73
    ...total contract value of annual or multi-year, non-cancelable subscription agreements. Deferred revenue also includes certain deferred professional services fees which are recognized as revenue ratably over the subscription contract term. The Company defers the professional service fees in situations...

  • Page 74
    ... the 4 year weighted-average expected life of its option grants. During fiscal 2009 and 2008, the Company capitalized $1.9 million and $2.1 million, respectively, of stock-based expenses related to capitalized internal-use software development and deferred professional services costs. During fiscal...

  • Page 75
    ... their agreements in the event that the Company fails to meet those levels. As of January 31, 2009 and January 31, 2008, the reserve balance was approximately $0.4 million. The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses...

  • Page 76
    ... ownership interest in Salesforce Japan, the cost would be recorded as a reduction of the Company's stockholders' equity as opposed to accounting for the purchase as a step acquisition which requires an allocation of the purchase price. SFAS 160 is effective for fiscal years beginning after December...

  • Page 77
    ... salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) At January 31, 2008, marketable securities consisted of the following (in thousands): Amortized Cost Unrealized Gains Unrealized Losses Fair Value Corporate notes and obligations U.S. treasury securities U.S. agency...

  • Page 78
    ... and amortization expense. Capitalized Software Capitalized software consisted of the following (in thousands): As of January 31, 2009 2008 Capitalized internal-use software development costs, net of accumulated amortization of $11,540 and $4,898, respectively Acquired developed technology, net of...

  • Page 79
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) Other Assets Other assets consisted of the following (in thousands): As of January 31, 2009 2008 Deferred professional services costs, noncurrent portion Long-term deposits Purchased intangible assets, ...

  • Page 80
    ..., options issued under 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...

  • Page 81
    Table of Contents 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 (in thousands) Balance as of January ...

  • Page 82
    ... of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) The following table summarizes information about stock options outstanding as of January 31, 2009: Options Outstanding WeightedAverage Remaining Contractual Life (Years) WeightedAverage Exercise Price Options...

  • Page 83
    ... at January 31, 2009: Options outstanding Restricted stock units outstanding Stock available for future grant: 1999 Stock Option Plan 2004 Equity Incentive Plan 2006 Inducement Equity Incentive Plan 2004 Employee Stock Purchase Plan 2004 Outside Directors Stock Plan 14,917,520 2,499,151 - 3,382,937...

  • Page 84
    ... offers a knowledge management application for business to consumer call centers. The Company acquired InStranet for its developed technology in order to expand its CRM customer service and support offerings in the customer service and support market. The Company accounted for this acquisition using...

  • Page 85
    ...277 $ Customer relationships and developed technologies have a useful life of 3 years. The goodwill balance is not deductible for tax purposes. This asset is attributed to the premium paid for an established knowledge management application. In performing the purchase price allocation, the Company...

  • Page 86
    ... income taxes Deferred revenue Total purchase price consideration $ 447 5,710 690 6,705 2,650 (700) 15,502 $ Customer relationships and developed technology have a useful life of 3 years. The goodwill balance is not deductible for tax purposes. This asset is attributed to the premium paid for an...

  • Page 87
    Table of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) The expected future amortization expense for these intangible assets for each of the fiscal years ended thereafter is as follows (in thousands): Fiscal Period: Fiscal 2010 Fiscal 2011 Fiscal 2012 Fiscal ...

  • Page 88
    ...): As of January 31, 2009 2008 Deferred tax assets: Net operating loss carryforwards Deferred stock compensation Tax credits Deferred rent expense Accrued liabilities Deferred revenue Other Total deferred tax assets Less valuation allowance Total deferred tax assets Deferred tax liabilities...

  • Page 89
    ... operates, including Canada, United Kingdom, and Australia generally remain open to examination for all tax years, while for Japan, the statute of limitations currently remains open for tax years after fiscal year 2003. During fiscal year 2009, the Internal Revenue Service completed its examination...

  • Page 90
    ... of its landlords for office space in San Francisco, California, New York City, Singapore, Sweden and Switzerland. These letters of credit renew annually and mature at various dates through December 2016. Leases The Company leases office space and equipment under noncancelable operating and capital...

  • Page 91
    ..., the Foundation held 191,500 shares of salesforce.com common stock. Additionally, the Company has donated subscriptions to the Company's service to other qualified non-profit organizations. The fair value of these donated subscriptions is in excess of $5.1 million per month. The Company plans to...

  • Page 92
    ... of Contents salesforce.com, inc. Notes to Consolidated Financial Statements-(Continued) 12. Selected Quarterly Financial Data (Unaudited) Selected summarized quarterly financial information for fiscal 2009 and 2008 is as follows: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal Year (in...

  • Page 93
    ... audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report which is included in Item 8 of this Annual Report on Form 10-K. (c) Changes in internal control over financial reporting There was no change in our internal control over financial reporting that...

  • Page 94
    ... any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective...

  • Page 95
    ..., Graham Smith, and all other executive officers. The Code of Conduct is available on our Web site at http://www.salesforce.com/company/ investor/governance/. A copy may also be obtained without charge by contacting Investor Relations, salesforce.com, inc., The Landmark @ One Market, Suite 300, San...

  • Page 96
    ...exhibits listed below in the accompanying "Index to Exhibits" are filed or incorporated by reference as part of this Annual Report on Form 10-K. (c) Financial Statement Schedules. salesforce.com, inc. Schedule II Valuation and Qualifying Accounts Balance at Beginning of Year Description Additions...

  • Page 97
    ... requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: March 9, 2009 salesforce.com, inc. /s/ GRAHAM SMITH Graham Smith Chief Financial Officer (Principal...

  • Page 98
    ..., Graham Smith, Jim Steele, Polly Sumner and Frank van Veenendaal Change of Control and Retention Agreement as entered into with David Schellhase List of Subsidiaries Consent of Independent Registered Public Accounting Firm Power of Attorney (See page 94) Certification of Chief Executive Officer...

  • Page 99
    Table of Contents (3) (4) (5) (6) (7) Incorporated by reference from the Company's Form 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 the Company's Form 10-Q for the quarterly period ended ...

  • Page 100
    ... and its employees, are the primary contributor to the Foundation. SFDC provides certain office space, furniture, equipment, facilities, services and other resources (collectively, the "Resources") to the Foundation. SFDC is the primary contributor to the Enterprise through the Reseller Agreement of...

  • Page 101
    ... for use of basic office productivity software (including Microsoft Office and Microsoft Outlook) licensed to SFDC. However, for tax and accounting purposes, the fair share of expenses related to the use of such software by the Foundation and the Enterprise shall be calculated, from time to time and...

  • Page 102
    ..., including networking equipment, software, bandwidth, ISP and hosting services, and the like. However, for tax and accounting purposes, the fair share of expenses relating to the use of such equipment and facilities by the Foundation and the Enterprise shall be calculated, from time to time and at...

  • Page 103
    ... agreements with the Receiving Party containing protections no less stringent than those herein. (c) Protection of Customer and Employee Data. Without limiting the above, each party shall maintain appropriate administrative, physical, and technical safeguards for protection of the security...

  • Page 104
    ..., the parties have executed this Agreement as of the Effective Date. SALESFORCE.COM, INC. By: /s/ David Schellhase Name: David Schellhase Title: SVP, General Counsel and Secretary SALESFORCE.COM/FOUNDATION By: /s/ Suzanne DiBianca Name: Suzanne DiBianca Title: Executive Director SALESFORCE.ORG By...

  • Page 105
    ... LETTER SALESFORCE.COM [DATE] [NAME] [ADDRESS] Dear [NAME]: I am pleased to offer you a position with Salesforce.com, Inc. (the "Company") as its [ ] commencing on [ ]. If you decide to join us, you will receive an annual salary of [ ], less applicable withholding, which will be paid semi-monthly...

  • Page 106
    ... stock option grant or (ii) monthly vesting through her termination date, plus 6 months of COBRA. This schedule sets forth the material terms of the offer letters and compensation packages with certain executive officers of salesforce.com, inc. The form is filed herewith. Current annual salary...

  • Page 107
    ... 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.

  • Page 108
    ... due in accordance with the terms and conditions of the applicable insurance policy or administrative services agreement. Notwithstanding the foregoing, if providing the Company-Paid Coverage would violate the nondiscrimination rules of Section 105(h) of the Internal Revenue Code of 1986, as amended...

  • Page 109
    ... at law, tort or contract, in equity, or under this Agreement. The Executive shall be entitled to no benefits, compensation or other payments or rights upon termination of employment following a Change in Control other than those benefits expressly set forth in this Section 3. (f) Code Section...

  • Page 110
    ... calendar year, or such later time as required by 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" within the meaning of Code Section...

  • Page 111
    ... willful and deliberate on the Executive's part. (b) Change 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...

  • 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
    ... to the subject matter hereof. (e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California. The Superior Court of San Francisco County and/or the United States District Court for the Northern District of...

  • Page 114
    IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the last date signed below. COMPANY SALESFORCE.COM, INC. By: /s/ David Schellhase Title: General Counsel Date: December 4, 2008 By: /s/ Marc Benioff Date: December 4,...

  • Page 115
    ... Employee Inventions and Proprietary Rights Assignment Agreement between Executive and the Company. Executive shall return all the Company property and confidential and proprietary information in his possession to the Company on the Effective Date of this Agreement. 3. Payment of Salary. Executive...

  • Page 116
    ... 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 fraud under any state or...

  • Page 117
    ...costs for doing so, unless specifically authorized by federal law. Any revocation should be in writing and delivered to the VicePresident of Human Resources at the Company by close of business on the seventh day from the date that Executive signs this Agreement. 6. Civil Code Section 1542. Executive...

  • Page 118
    ... shall continue in full force and effect without said provision. 15. Entire Agreement. This Agreement, along with the Change of Control Agreement, the Employee Inventions and Proprietary Rights Assignment Agreement, and Executive's written equity compensation agreements with the Company, represents...

  • Page 119
    ...had the opportunity of being represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel; (c) They understand the terms and consequences of this Agreement and of the releases it contains...

  • Page 120
    ... 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.

  • Page 121
    ... shall receive a lump-sum severance payment (less applicable withholding taxes) equal to one hundred and fifty percent (150%) of the Executive's annual base salary (as in effect immediately prior to (A) the Change of Control, or (B) the Executive's termination, whichever is greater) plus one...

  • Page 122
    ... at law, tort or contract, in equity, or under this Agreement. The Executive shall be entitled to no benefits, compensation or other payments or rights upon termination of employment following a Change in Control other than those benefits expressly set forth in this Section 3. (f) Code Section...

  • Page 123
    ... calendar year, or such later time as required by 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" within the meaning of Code Section...

  • Page 124
    ... willful and deliberate on the Executive's part. (b) Change 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...

  • Page 125
    ... 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 126
    ... to the subject matter hereof. (e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California. The Superior Court of San Francisco County and/or the United States District Court for the Northern District of...

  • Page 127
    IN WITNESS WHEREOF, each of the parties has executed this amended and restated Agreement, in the case of the Company by its duly authorized officer, as of the last date signed below. COMPANY SALESFORCE.COM, INC. By: Title: Date: _____, 2008 By: Date: _____, 2008 -8- EXECUTIVE

  • Page 128
    ... Employee Inventions and Proprietary Rights Assignment Agreement between Executive and the Company. Executive shall return all the Company property and confidential and proprietary information in his possession to the Company on the Effective Date of this Agreement. 3. Payment of Salary. Executive...

  • Page 129
    ... 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 fraud under any state or...

  • Page 130
    ...costs for doing so, unless specifically authorized by federal law. Any revocation should be in writing and delivered to the VicePresident of Human Resources at the Company by close of business on the seventh day from the date that Executive signs this Agreement. 6. Civil Code Section 1542. Executive...

  • Page 131
    ... shall continue in full force and effect without said provision. 15. Entire Agreement. This Agreement, along with the Change of Control Agreement, the Employee Inventions and Proprietary Rights Assignment Agreement, and Executive's written equity compensation agreements with the Company, represents...

  • Page 132
    ...had the opportunity of being represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel; (c) They understand the terms and consequences of this Agreement and of the releases it contains...

  • Page 133
    ... 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.

  • Page 134
    ...: (i) Severance Payment. The Executive shall receive a lump-sum severance payment (less applicable withholding taxes) equal to one hundred percent (100%) of the Executive's annual base salary (as in effect immediately prior to (A) the Change of Control, or (B) the Executive's termination, whichever...

  • Page 135
    ... at law, tort or contract, in equity, or under this Agreement. The Executive shall be entitled to no benefits, compensation or other payments or rights upon termination of employment following a Change in Control other than those benefits expressly set forth in this Section 3. (f) Code Section...

  • Page 136
    ... calendar year, or such later time as required by 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" within the meaning of Code Section...

  • Page 137
    ... willful and deliberate on the Executive's part. (b) Change 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...

  • Page 138
    ... 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 139
    ... to the subject matter hereof. (e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California. The Superior Court of San Francisco County and/or the United States District Court for the Northern District of...

  • Page 140
    IN WITNESS WHEREOF, each of the parties has executed this amended and restated Agreement, in the case of the Company by its duly authorized officer, as of the last date signed below. COMPANY SALESFORCE.COM, INC. By: /s/ Kenneth Juster Title: Executive Vice President Date: November 25, 2008 By: /s/ ...

  • Page 141
    ... Employee Inventions and Proprietary Rights Assignment Agreement between Executive and the Company. Executive shall return all the Company property and confidential and proprietary information in his possession to the Company on the Effective Date of this Agreement. 3. Payment of Salary. Executive...

  • Page 142
    ... 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 fraud under any state or...

  • Page 143
    ...costs for doing so, unless specifically authorized by federal law. Any revocation should be in writing and delivered to the VicePresident of Human Resources at the Company by close of business on the seventh day from the date that Executive signs this Agreement. 6. Civil Code Section 1542. Executive...

  • Page 144
    ... shall continue in full force and effect without said provision. 15. Entire Agreement. This Agreement, along with the Change of Control Agreement, the Employee Inventions and Proprietary Rights Assignment Agreement and Executive's written equity compensation agreements with the Company, represents...

  • Page 145
    ...had the opportunity of being represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel; (c) They understand the terms and consequences of this Agreement and of the releases it contains...

  • Page 146
    ... Jurisdiction 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...

  • Page 147
    ... consolidated financial statements and schedule of salesforce.com, inc., and the effectiveness of internal control over financial reporting of salesforce.com inc., included in this Annual Report (Form 10-K) for the year ended January 31, 2009. /s/ ERNST & YOUNG LLP San Jose, California March 6, 2009

  • Page 148
    ...; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: March 9, 2009 /S/ MARC BENIOFF Marc Benioff Chairman of the Board of Directors and Chief Executive Officer

  • Page 149
    Exhibit 31.2 CERTIFICATION I, Graham Smith, certify that: 1. 2. 3. 4. I have reviewed this annual report on Form 10-K of salesforce.com, inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements...

  • Page 150
    ... Sarbanes-Oxley Act of 2002, that the Annual Report of salesforce.com, inc. on Form 10-K for the fiscal year ended January 31, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-K fairly presents...