VMware 2007 Annual Report Download - page 31

Table of Contents
Any inability to resolve favorably any disputes that arise between us and EMC with respect to our past and ongoing relationships may result
in a significant reduction of our revenue and earnings.
Disputes may arise between EMC and us in a number of areas relating to our ongoing relationships, including:
We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with
an unaffiliated party.
The agreements we entered into with EMC in connection with our IPO may be amended upon agreement between the parties. While we are
controlled by EMC, we may not have the leverage to negotiate amendments to these agreements if required on terms as favorable to us as those
we would negotiate with an unaffiliated third party.
Some of our directors and executive officers own EMC common stock, restricted shares of EMC common stock or options to acquire EMC
common stock and hold management positions with EMC, which could cause conflicts of interests that result in our not acting on
opportunities we otherwise may have.
Some of our directors and executive officers own EMC common stock and options to purchase EMC common stock. In addition, some of
our directors are executive officers and/or directors of EMC. Ownership of EMC common stock, restricted shares of EMC common stock and
options to purchase EMC common stock by our directors and officers and the presence of executive officers or directors of EMC on our board of
directors could create, or appear to create, conflicts of interest with respect to matters involving both us and EMC that could have different
implications for EMC than they do for us. Provisions of our certificate of incorporation and the master transaction agreement between EMC and
us address corporate opportunities that are presented to our directors or officers that are also directors or officers of EMC. There can be no
assurance that the provisions in our certificate of incorporation or the master transaction agreement will adequately address potential conflicts of
interest or that potential conflicts of interest will be resolved in our favor or that we will be able to take advantage of corporate opportunities
presented to individuals who are officers or directors of both us and EMC. As a result, we may be precluded from pursuing certain growth
initiatives.
EMC
’s ability to control our board of directors may make it difficult for us to recruit independent directors.
So long as EMC beneficially owns shares of our common stock representing at least a majority of the votes entitled to be cast by the
holders of outstanding voting stock, EMC can effectively control and direct our board of directors. Further, the interests of EMC and our other
stockholders may diverge. Under these circumstances, persons who might otherwise accept our invitation to join our board of directors may
decline.
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labor, tax, employee benefit, indemnification and other matters arising from our separation from EMC;
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employee retention and recruiting;
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business combinations involving us;
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our ability to engage in activities with certain channel, technology or other marketing partners;
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sales or dispositions by EMC of all or any portion of its ownership interest in us;
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the nature, quality and pricing of services EMC has agreed to provide us;
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arrangements with third parties that are exclusionary to EMC;
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business opportunities that may be attractive to both EMC and us; and
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product or technology development or marketing activities or customer agreements which may require the consent of EMC.