VMware 2007 Annual Report Download - page 28

Table of Contents
If EMC does not provide any requisite consent allowing us to conduct such activities when requested, we will not be able to conduct such
activities and, as a result, our business and our operating results may be harmed.
EMC’s voting control and its additional rights described above may discourage transactions involving a change 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 or have the
additional rights described above.
In the event EMC is acquired or otherwise undergoes a change of control, any acquiror 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 that of EMC.
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 will provide 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.
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•
establish the aggregate annual amount of shares we may issue in equity awards;
•
dissolve, liquidate or wind us up;
•
declare dividends on our stock;
• enter into any exclusive or exclusionary arrangement with a third party involving, in whole or in part, products or services that are
similar to EMC
’
s; and
•
amend, terminate or adopt any provision inconsistent with certain provisions of our certificate of incorporation or bylaws.