VMware 2009 Annual Report Download - page 37

Table of Contents
Until such time as EMC or its successor-in-interest ceases to beneficially own 20% or more of the outstanding shares of our common
stock, the affirmative vote or written consent of the holders of a majority of the outstanding shares of the Class B common stock will be required
to:
In addition, we have elected to apply the provisions of Section 203 of the Delaware General Corporation Law. These provisions may
prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us. These
provisions in our certificate of incorporation and bylaws and under Delaware law could discourage potential takeover attempts and could reduce
the price that investors might be willing to pay for shares of our common stock.
Intel
’s and Cisco’s ownership relationship with us and the membership on our board of individuals proposed by Intel and Cisco may create
actual or potential conflicts of interest.
As a result of an investment by Intel Capital in our Class A common stock in August 2007, Intel has an ownership interest in us and had a
one-time right to designate a director acceptable to our board of directors for an initial term of service. Pursuant to that right, we appointed an
Intel executive to our board of directors. Cisco, pursuant to its purchase of our Class A common stock from EMC, also has an ownership
relationship with us, and we appointed an executive officer of Cisco (since retired from that position) proposed by Cisco as one of our directors.
Neither Intel nor Cisco have an ongoing right to designate a director for our board. However, each of the directors initially proposed by them
continues to serve on our board. These relationships may create actual or potential conflicts of interest and the best interests of Intel or Cisco
may not reflect the best interests of other holders of our Class A common stock.
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•
following a 355 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;
• the ability of the board of directors to issue, without stockholder approval, up to 100,000,000 shares of preferred stock with terms set
by the board of directors, which rights could be senior to those of common stock; and
•
in the event that EMC or its successor
-
in
-
interest no longer owns shares of our common stock representing at least a majority of the
votes entitled to be cast in the election of directors, stockholders may not act by written consent and may not call special meetings of
the stockholders.
•
amend certain provisions of our bylaws or certificate of incorporation;
•
make certain acquisitions or dispositions;
•
declare dividends, or undertake a recapitalization or liquidation;
•
adopt any stockholder rights plan,
“
poison pill
”
or other similar arrangement;
•
approve any transactions that would involve a merger, consolidation, restructuring, sale of substantially all of our assets or any of our
subsidiaries or otherwise result in any person or entity obtaining control of us or any of our subsidiaries; or
•
undertake certain other actions.