Salesforce.com 2012 Annual Report Download - page 30

In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a
change in control of our company. Section 203 imposes certain restrictions on merger, business combinations
and other transactions between us and holders of 15 percent or more of our common stock.
In addition, the fundamental change purchase rights applicable to our convertible notes, which will allow
note holders to require us to purchase all or a portion of their notes upon the occurrence of a fundamental change,
and the provisions requiring an increase to the conversion rate for conversions in connection with a make-whole
fundamental change may in certain circumstances delay or prevent a takeover of us and the removal of
incumbent management that might otherwise be beneficial to investors.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
As of January 31, 2012, our executive offices and principal office for domestic marketing, sales,
professional services and development occupy over 650,000 square feet in the San Francisco Bay Area under
leases that expire at various times through April 2021. We also lease space in various locations throughout the
United States for local sales and professional services personnel. Our foreign subsidiaries lease office space for
their operations including local sales and professional services personnel.
We believe that our existing facilities and offices are adequate to meet our current requirements. See Note 7,
“Commitments,” in the Notes to the Consolidated Financial Statements for more information about our lease
commitments. If we require additional space, we believe that we will be able to obtain such space on acceptable,
commercially reasonable terms.
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, we are involved in various legal proceedings and claims related to
alleged infringement of third-party patents and other intellectual property rights, commercial, employment, wage
and hour, and other claims.
We have been, and may in the future be, put on notice and/or sued by third parties for alleged infringement
of their proprietary rights, including patent infringement. We evaluate these claims and lawsuits with respect to
their potential merits, our potential defenses and counter claims, and the expected effect on us. Our technologies
may be subject to injunction if they are found to infringe the rights of a third party. In addition, many of our
subscription agreements require us to indemnify our customers for third-party intellectual property infringement
claims, which could increase the cost to us of an adverse ruling on such a claim.
The outcome of any litigation, regardless of its merits, is inherently uncertain. Any intellectual property
claims and other lawsuits, and the disposition of such claims and lawsuits, could be time-consuming and
expensive to resolve, divert our attention from executing our business plan, lead to attempts on the part of other
parties to seek similar claims and, in the case of intellectual property claims, require us to change our technology,
change our business practices and/or pay monetary damages or enter into short- or long-term royalty or licensing
agreements.
In general, the resolution of a legal matter could prevent us from offering our service to others, could be
material to our financial condition or cash flows, or both, or could otherwise adversely affect our operating
results.
We make a provision for a liability relating to legal matters when it is both probable that a liability has been
incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly
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