EMC 2008 Annual Report Download - page 96

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
We have agreements with certain vendors, financial institutions, lessors and service providers pursuant to which we have agreed to indemnify the other
party for specified matters, such as acts and omissions of EMC, its employees, agents or representatives.
We have procurement or license agreements with respect to technology that is used in our products and agreements in which we obtain rights to a
product from an OEM. Under some of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party
with respect to our acts or omissions relating to the supplied products or technologies.
We have agreed to indemnify the directors, executive officers and certain other officers of EMC and our 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 officer.
In connection with certain acquisitions, we have agreed to indemnify the current and former directors, officers and employees 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. In a substantial majority of instances, we have maintained the acquired company's
directors' and officers' insurance, which should enable us to recover a portion of any future amounts paid. These indemnities vary in length of time.
Based upon our historical experience and information known as of December 31, 2008, we believe our liability on the above guarantees and indemnities
at December 31, 2008 is immaterial.
Litigation
We are a party to various litigation matters which we consider routine and incidental to our business. Management does not expect the results of any of
these actions to have a material adverse effect on our business, results of operations or financial condition.
We have learned that the Civil Division of the United States Department of Justice (the "DoJ") is investigating allegations concerning (i) EMC's fee
arrangements with systems integrators and other partners in federal government transactions, and (ii) EMC's compliance with the terms and conditions of
certain agreements pursuant to which we sold products and services to the federal government, including potential violations of the False Claims Act. The
subject matter of this investigation also overlaps with that of a previous audit by the U.S. General Services Administration ("GSA") concerning our
recordkeeping and pricing practices under a schedule agreement we entered into with GSA in November 1999 which, following several extensions, expired in
June 2007. We have cooperated with both the audit and the DoJ investigation, voluntarily providing documents and information, and have engaged in
discussions aimed at resolving this matter without any admission or finding of liability on the part of EMC. We believe that we have meritorious factual and
legal defenses to the allegations raised and, if the matter is not resolved and proceeds to litigation, we intend to defend vigorously. If the matter proceeds to
litigation, possible sanctions include an award of damages, including treble damages, fines, penalties and other sanctions, including suspension or debarment
from sales to the federal government.
In accordance with Statement of Financial Accounting Standards No. 5, we have estimated the loss that may result from this matter, and such amount is
reflected in our consolidated financial statements. It is not possible to predict the outcome of this matter with certainty, and the actual amount of loss may
prove to be larger or smaller than the amount reflected in our consolidated financial statements.
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