VMware 2010 Annual Report Download - page 34

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Table of Contents
of control of us, including transactions in which holders of our Class A common stock might otherwise receive a premium for their shares over
the then-current market price. EMC is not prohibited from selling a controlling interest in us to a third party and may do so without the approval
of the holders of our Class A common stock and without providing for a purchase of any shares of Class A common stock held by persons other
than EMC. Accordingly, shares of Class A common stock may be worth less than they would be if EMC did not maintain voting control over us
nor have the additional rights described above.
In the event EMC is acquired or otherwise undergoes a change of control, any acquirer or successor will be entitled to exercise the voting
control and contractual rights of EMC, and may do so in a manner that could vary significantly from EMC’s historic practice.
By becoming a stockholder in our company, holders of our Class A common stock are deemed to have notice of and have consented to the
provisions of our certificate of incorporation and the master transaction agreement with respect to the limitations that are described above.
Our business and that of EMC overlap, and EMC may compete with us, which could reduce our market share.
EMC and we are both IT infrastructure companies providing products related to storage management, back-up, disaster recovery, security,
system management and automation, provisioning and resource management. There can be no assurance that EMC will not engage in increased
competition with us in the future. In addition, the intellectual property agreement that we have entered into with EMC provides EMC the ability
to use our source code and intellectual property, which, subject to limitations, it may use to produce certain products that compete with ours.
EMC’s rights in this regard extend to its majority-owned subsidiaries, which could include joint ventures where EMC holds a majority position
and one or more of our competitors hold minority positions.
EMC could assert control over us in a manner which could impede our growth or our ability to enter new markets or otherwise adversely
affect our business. Further, EMC could utilize its control over us to cause us to take or refrain from taking certain actions, including entering
into relationships with channel, technology and other marketing partners, enforcing our intellectual property rights or pursuing corporate
opportunities or product development initiatives that could adversely affect our competitive position, including our competitive position relative
to that of EMC in markets where we compete with them. In addition, EMC maintains significant partnerships with certain of our competitors,
including Microsoft.
EMC
’s competition in certain markets may affect our ability to build and maintain partnerships.
Our existing and potential partner relationships may be affected by our relationship with EMC. We partner with a number of companies
that compete with EMC in certain markets in which EMC participates. EMC’s majority ownership in us might affect our ability to effectively
partner with these companies. These companies may favor our competitors because of our relationship with EMC.
EMC competes with certain of our significant channel, technology and other marketing partners, including IBM and Hewlett-Packard.
Pursuant to our certificate of incorporation and other agreements that we have with EMC, EMC may have the ability to impact our relationship
with those of our partners that compete with EMC, which could have a material adverse effect on our results of operations or our ability to
pursue opportunities which may otherwise be available to us.
In order to preserve the ability for EMC to distribute its shares of our Class B common stock on a tax
-free basis, we may be prevented from
pursuing opportunities to raise capital, to effectuate acquisitions or to provide equity incentives to our employees, which could hurt our
ability to grow.
Beneficial ownership of at least 80% of the total voting power is required in order for EMC to affect a tax-free spin-off of VMware or
certain other tax-free transactions. We have agreed that for so long as EMC or its
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