VMware 2010 Annual Report Download - page 100

Table of Contents
VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
payable in foreign currencies, the operating lease payments may fluctuate in response to changes in the exchange rate between the U.S. Dollar
and the foreign currencies in which the commitments are payable.
Outstanding Obligations
At December 31, 2010, VMware had various contractual commitments aggregating $65.7 million, primarily relating to VMware’s
Washington data center facility.
Guarantees and Indemnification Obligations
VMware enters into agreements in the ordinary course of business with, among others, customers, distributors, resellers, system vendors
and systems integrators. Most of these agreements require VMware to indemnify the other party against third-party claims alleging that a
VMware product infringes or misappropriates a patent, copyright, trademark, trade secret, and/or other intellectual property right. Certain of
these agreements require VMware to indemnify the other party against certain claims relating to property damage, personal injury, or the acts or
omissions of VMware, its employees, agents, or representatives.
VMware has agreements with certain vendors, financial institutions, lessors and service providers pursuant to which VMware has agreed to
indemnify the other party for specified matters, such as acts and omissions of VMware, its employees, agents, or representatives.
VMware has procurement or license agreements with respect to technology that it has obtained the right to use in VMware’s products and
agreements. Under some of these agreements, VMware has agreed to indemnify the supplier for certain claims that may be brought against such
party with respect to VMware’s acts or omissions relating to the supplied products or technologies.
VMware has agreed to indemnify the directors and executive officers of VMware, to the extent legally permissible, against all liabilities
reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a
director or executive officer. VMware’s by-laws and charter also provide for indemnification of directors and officers of VMware and VMware
subsidiaries to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual
may be involved by reason of such individual being or having been a director or executive officer. VMware also indemnifies certain employees
who provide service with respect to employee benefits plans, including the members of the Administrative Committee of the VMware 401(k)
Plan.
In connection with certain acquisitions, VMware has agreed to indemnify the former directors and officers of the acquired company in
accordance with the acquired company’s by-
laws and charter in effect immediately prior to the acquisition or in accordance with indemnification
or similar agreements entered into by the acquired company and such persons. VMware typically purchases a “tail” directors’ and officers’
insurance policy, which should enable VMware to recover a portion of any future indemnification obligations related to the former officers and
directors of an acquired company.
It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited
history with prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments
made by the Company under these agreements have not had a material effect on the Company’s consolidated results of operations, financial
position, or cash flows.
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