Salesforce.com 2005 Annual Report Download - page 120

unissued or reacquired shares of Stock or any combination thereof. If an outstanding Award for any reason expires or is terminated or canceled without having
been exercised or settled in full, or if shares of Stock acquired pursuant to an Award subject to forfeiture or repurchase are forfeited or repurchased by the
Company at the Participant's purchase price, the shares of Stock allocable to the terminated portion of such Award or such forfeited or repurchased shares of
Stock shall again be available for issuance under the Plan. Shares of Stock shall not be deemed to have been issued pursuant to the Plan (a) with respect to any
portion of an Award that is settled in cash or (b) to the extent such shares are withheld in satisfaction of tax withholding obligations pursuant to Section 15.2.
Upon payment in shares of Stock pursuant to the exercise of an SAR, the number of shares available for issuance under the Plan shall be reduced only by the
number of shares actually issued in such payment. If the exercise price of an Option is paid by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant, the number of shares available for issuance under the Plan shall be reduced by the net number of shares for which
the Option is exercised.
4.2 Annual Increase in Maximum Number of Shares Issuable. The maximum aggregate number of shares of Stock that may be issued under
the Plan as set forth in Section 4.1 shall be cumulatively increased as follows:
(a) on February 1, 2005 and February 1, 2006 by a number of shares equal to the smallest of (i) five percent (5%) of the number of shares
of Stock issued and outstanding on the immediately preceding January 31, (ii) five million (5,000,000) shares or (iii) an amount determined by the Board;
(b) on February 1, 2007 and February 1, 2008 by a number of shares equal to the smallest of (i) four percent (4%) of the number of shares
of Stock issued and outstanding on the immediately preceding January 31, (ii) four million (4,000,000) shares or (iii) an amount determined by the Board; and
(c) on February 1, 2009 and each February 1 thereafter, through and including February 1, 2013, by a number of shares equal to the
smallest of (i) three and one half percent (3.5%) of the number of shares of Stock issued and outstanding on the immediately preceding January 31, (ii) three
million five hundred thousand (3,500,000) shares or (iii) an amount determined by the Board.
4.3 Adjustments for Changes in Capital Structure. Subject to any required action by the stockholders of the Company, in the event of any
change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation,
recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or
similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form
other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate adjustments shall be
made in the number and class of shares subject to the Plan and to any outstanding Awards, and in the exercise or purchase price per share under any
outstanding Award in order to prevent dilution or enlargement of Participants' rights under the Plan. For purposes of the foregoing, conversion of any
convertible securities of the Company shall not be