Salesforce.com 2009 Annual Report Download - page 30

Table of Contents
activity involving our common stock that we expect to develop as a result of the issuance of the Notes. The hedging or arbitrage activity could, in turn, affect
the trading prices of the Notes.
We also cannot predict whether interest rates will rise or fall. During the term of the Notes, interest rates will be influenced by a number of factors, most
of which are beyond our control. However, if interest rates increase, the option value of the Notes' convertibility feature will increase, but the yield of the
Notes will decrease, and if interest rates decrease, the option value of the Notes' convertibility feature will decrease, but the yield of the notes will increase.
In addition, our credit quality may vary substantially during the term of the Notes and will be influenced by a number of factors, including variations in
our cash flows and the amount of indebtedness we have outstanding. Any decrease in our credit quality could negatively impact the trading price of the Notes.
We may issue additional shares of our common stock or instruments convertible into shares of our common stock, including in connection with the
conversion of the Notes, and thereby materially and adversely affect the market price of our common stock and the trading price of the Notes.
We are not restricted from issuing additional shares of our common stock or other instruments convertible into, or exchangeable or exercisable for,
shares of our common stock during the life of the Notes. If we issue additional shares of our common stock or instruments convertible into shares of our
common stock, it may materially and adversely affect the market price of our common stock and, in turn, the trading price of the Notes. In addition, the
conversion of some or all of the Notes may dilute the ownership interests of existing holders of our common stock, and any sales in the public market of any
shares of our common stock issuable upon such conversion of the notes could adversely affect prevailing market price of our common stock. In addition, the
anticipated conversion of the Notes could depress the market price of our common stock.
The Notes and the indenture that will govern the Notes contain limited protections against certain types of important corporate events and may not
protect your investment upon the occurrence of such corporate events and will not protect your investment upon the occurrence of other corporate events.
The indenture for the Notes does not:
• require us to maintain any financial ratios or specific levels of net worth, revenues, income, cash flows or liquidity;
• protect holders of the Notes in the event that we experience significant adverse changes in our financial condition or results of operations;
• limit our subsidiaries' ability to incur indebtedness that would effectively rank senior to the Notes to the extent of the value of the assets securing
the indebtedness;
• limit our ability to incur indebtedness that is equal in right of payment to the Notes;
• limit our ability to incur indebtedness with a maturity date earlier than the maturity date of the Notes;
• restrict our subsidiaries' ability to issue securities or incur liability that would be structurally senior to our indebtedness;
• restrict our ability to purchase or prepay our securities; or
• restrict our ability to make investments or to purchase or pay dividends or make other payments in respect of our common stock or other
securities ranking junior to the Notes.
Furthermore, the indenture for the Notes contains only limited protections in the event of a change in control. We could engage in many types of
transactions, such as certain acquisitions, refinancings or recapitalizations, that could substantially affect our capital structure and the value of the Notes and
our common
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