VMware 2007 Annual Report Download - page 33

Table of Contents
will expire for the shares held by Cisco and Intel in August 2008. Shares of Class A common stock held by EMC (including shares of Class A
common stock that might be issued upon the conversion of Class B common stock) are eligible for sale subject to the volume, manner of sale
and other restrictions of Rule 144 of the Securities Exchange Act of 1933 which allow the holder to sell up to the greater of 1% of our
outstanding Class A common stock or our average weekly trading volume during any three-month period and following the expiration of their
contractual restrictions, shares held by Cisco and Intel will be subject to such requirements to the extent Cisco and Intel are deemed to be our
“affiliates” as that term is defined in Rule 144. Additionally, EMC, Cisco and Intel possess registration rights with respect to the shares of our
common stock that they hold. If they choose to exercise such rights, their sale of the shares that are registered would not be subject to the Rule
144 limitations. If a significant amount of the shares that become eligible for resale enter the public trading markets in a short period of time, the
market price of our Class A common stock may decline.
Additionally, broad market and industry factors may decrease the market price of our Class A common stock, regardless of our actual
operating performance. The stock market in general, and technology companies in particular, also have often experienced extreme price and
volume fluctuations. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities,
securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in
substantial costs and a diversion of our management’s attention and resources.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they
change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts may
publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding
our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any
analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the
financial markets, which in turn could cause our stock price or trading volume to decline.
Delaware law and our certificate of incorporation and bylaws contain anti
-takeover provisions that could delay or discourage takeover
attempts that stockholders may consider favorable.
Provisions in our certificate of incorporation and bylaws will have the effect of delaying or preventing a change of control or changes in
our management. These provisions include the following:
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•
the division of our board of directors into three classes, with each class serving for a staggered three
-
year term, which would prevent
stockholders from electing an entirely new board of directors at any annual meeting;
•
the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors;
•
following a distribution of Class B common stock by EMC to its stockholders, the restriction that a beneficial owner of 10% or more
of our Class B common stock may not vote in any election of directors unless such person or group also owns at least an equivalent
percentage of Class A common stock or obtains approval of our board of directors prior to acquiring beneficial ownership of at least
5% of Class B common stock;
•
the prohibition of cumulative voting in the election of directors or any other matters, which would otherwise allow less than a
majority of stockholders to elect director candidates;
• the requirement for advance notice for nominations for election to the board of directors or for proposing matters that can be acted
upon at a stockholders
’
meeting;