3Ware 2002 Annual Report Download - page 30

Any litigation relating to the intellectual property rights of third parties, whether or not determined in our
favor or settled by us, would at a minimum be costly and could divert the efforts and attention of our
management and technical personnel. In the event of any adverse ruling in any such litigation, we could be
required to pay substantial damages, cease the manufacturing, use and sale of infringing products, discontinue the
use of certain processes or obtain a license under the intellectual property rights of the third party claiming
infringement. A license might not be available on reasonable terms, or at all.
Our stock price is volatile.
The market price of our common stock has fluctuated significantly. In the future, the market price of our
common stock could be subject to significant fluctuations due to general economic and market conditions and in
response to quarter-to-quarter variations in:
• our anticipated or actual operating results;
• announcements or introductions of new products;
• technological innovations or setbacks by us or our competitors;
• conditions in the semiconductor, telecommunications, data communications or high-speed computing
markets;
• the commencement or outcome of litigation;
• changes in estimates of our performance by securities analysts;
• announcements of merger or acquisition transactions; and
• other events or factors.
In addition, the stock market in recent years has experienced extreme price and volume fluctuations that
have affected the market prices of many high technology companies, particularly semiconductor companies, and
that have often been unrelated or disproportionate to the operating performance of those companies. These
fluctuations may harm the market price of our common stock.
The anti-takeover provisions of our certificate of incorporation and of the Delaware general corporation
law may delay, defer or prevent a change of control.
Our board of directors has the authority to issue up to 2,000,000 shares of preferred stock and to determine
the price, rights, preferences and privileges and restrictions, including voting rights, of those shares without any
further vote or action by our stockholders. The rights of the holders of common stock will be subject to, and may
be harmed by, the rights of the holders of any shares of preferred stock that may be issued in the future. The
issuance of preferred stock may delay, defer or prevent a change in control, as the terms of the preferred stock
that might be issued could potentially prohibit our consummation of any merger, reorganization, sale of
substantially all of our ssets, liquidation or other extraordinary corporate transaction without the approval of the
holders of the outstanding shares of preferred stock. The issuance of preferred stock could have a dilutive effect
on our stockholders.
If we issue additional shares of stock in the future, it may have a dilutive effect on our stockholders.
We have a significant number of authorized and unissued shares of our common stock available. These
shares will provide us with the flexibility to issue our common stock for proper corporate purposes, which may
include making acquisitions through the use of stock, adopting additional equity incentive plans and raising
equity capital. Any subsequent issuance of our common stock may result in immediate dilution of our then
current stockholders.
25