Salesforce.com 2004 Annual Report Download - page 17

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Table of Contents
ITEM 2. PROPERTIES
Our executive offices and principal office for domestic marketing, sales, professional services and development occupy in excess of 100,000 square feet
in San Francisco, California under leases that expire at various times through 2013. 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 requirements for the foreseeable future. See Note 8, "Commitments and
Contingencies," 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
On July 26, 2004, a purported class action complaint was filed in the United States District Court for the Northern District of California, entitled
Morrison v. salesforce.com, et al., against the Company, its Chief Executive Officer and its Chief Financial Officer. The complaint alleges violations of
Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), purportedly on behalf of all persons who purchased
salesforce.com common stock between June 21, 2004 and July 21, 2004, inclusive. The claims are based on allegations that the Company failed to disclose an
allegedly declining trend in its revenues and earnings. Subsequently, four other substantially similar class action complaints were filed in the same district
based on the same facts and allegations, asserting claims under Section 10(b) and Section 20(a) of the 1934 Act and Section 11 and Section 15 of the
Securities Act of 1933, as amended. The actions have been consolidated under the caption In re salesforce.com, inc. Securities Litigation, Case No.
C-04-3009 JSW (N.D. Cal.). On December 22, 2004, the Court appointed Chuo Zhu as lead plaintiff. On February 22, 2005, lead plaintiff filed a Consolidated
and Amended Class Action Complaint (the "CAC"). The CAC alleges violations of Section 10(b) and Section 20(a) of the 1934 Act, purportedly on behalf of
all persons who purchased salesforce.com common stock between June 23, 2004 and July 21, 2004, inclusive. As in the original complaints, the claims in the
CAC are based on allegations that the Company failed to disclose an allegedly declining trend in its revenues and earnings. The deadline for defendants to
respond to the CAC is April 25, 2005. The lawsuit is still in the preliminary stages, and it is not possible for the Company to quantify the extent of potential
liability, if any. The Company does not believe that the lawsuit has any merit and intends to defend the action vigorously.
On August 6, 2004, 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, abuse of 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 allegations, entitled Johnson v. Benioff, et al. The two actions have been consolidated under
the caption Borrelli v. Benioff, Case No. CGC-04-433615 (Cal. Super. Ct., S.F. Cty.). On October 5, 2004, plaintiffs filed a consolidated complaint, which is
based upon the same facts and circumstances as alleged in the shareholder class action discussed above, and asserts that the defendants breached their
fiduciary duties by making or failing to prevent salesforce.com, inc. and its management from making statements or omissions that potentially subject the
Company to liability and injury to its reputation. The action seeks damages on behalf of salesforce.com in an unspecified amount, among other forms of legal
and equitable relief. Salesforce.com is named solely as a nominal defendant against which no recovery is sought. The plaintiff shareholders made no demand
upon the Board of Directors prior to filing these actions. The deadline for defendants to respond to the consolidated complaint is June 16, 2005. The derivative
action is still in the preliminary stages, and it is not possible for the Company to quantify the extent of potential liability to the individual defendants, if any.
Management does not believe that the lawsuits have any merit and intends to defend the actions vigorously.
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