EMC 2009 Annual Report Download - page 35

Table of Contents
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, 2009, we believe our liability on the above guarantees and
indemnities at December 31, 2009 is not material.
Litigation
We are involved in a variety of claims, demands, suits, investigations, and proceedings, including those identified below, that arise from time to time
relating to matters incidental to the ordinary course of our business, including actions with respect to contracts, intellectual property, product liability,
employment, benefits and securities matters. As required by authoritative guidance, we have estimated the amount of probable losses that may result from any
such pending matters, and such amounts are reflected in our consolidated financial statements. We have disclosed the specific amount recorded for a
particular matter where required by authoritative guidance. Because litigation is inherently unpredictable, however, the actual amounts of loss may prove to be
larger or smaller than the amounts reflected in our consolidated financial statements, and we could incur judgments or enter into settlements of claims that
could adversely affect our operating results or cash flows in a particular period.
United States ex rel. Rille and Roberts v. EMC Corporation. On February 27, 2009, the U.S. District Court for the Eastern District of Arkansas entered
an order unsealing a civil False Claims Act "qui tam" action by two individuals (the "relators") that named EMC as a defendant in December 2006. This
action relates to the previously disclosed investigation conducted by the Civil Division of the United States Department of Justice (the "DoJ") regarding
(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, primarily a schedule agreement we entered into
with the United States General Services Administration in November 1999 which, following several extensions, expired in June 2007. The DoJ filed a
complaint in intervention in this matter in June 2008. The DoJ and relators assert claims under the Anti-Kickback Act and False Claims Act in addition to
breach of contract and other claims, and seek various remedies, including treble damages and statutory penalties. By order dated June 3, 2009, the Arkansas
Court granted a motion by EMC to transfer the action to the U.S. District Court for the Eastern District of Virginia, where it is now pending. We continue to
believe that we have meritorious factual and legal defenses to the allegations raised.
EMC has been in ongoing settlement discussions with the DoJ to resolve the claims alleged in this matter. As a result of such discussions, we have
recorded an $87.5 accrual for this contingency, which represents our assessment of the amount of probable loss that may result from this matter.
Derivative Demand Letters. We have received derivative demand letters sent on behalf of purported EMC shareholders. The letters contain allegations
to the effect that the existence of the matter captioned United States ex rel. Rille and Roberts v. EMC Corporation serves as evidence that certain Company
officers and directors failed to exercise due care and/or failed to oversee compliance with the laws identified in the Roberts matter. The matters relating to the
demand letters were referred to a Special Committee of independent directors of the Board of Directors, which investigated and made a determination
regarding such allegations. At the conclusion of their investigation, the Special Committee determined in good faith that commencing or maintaining
derivative proceedings based on the allegations would not be in the best interests of EMC. In October 2009, one of the purported shareholders filed a
complaint in the Superior Court for Middlesex County in Massachusetts alleging claims for breach of fiduciary duty against EMC directors and certain
officers based on the same allegations set forth in the demand letter. We are defending this matter vigorously.
Pension
We have a noncontributory defined benefit pension plan that was assumed as part of the Data General acquisition, which covers substantially all former
Data General employees located in the United States. Certain of the former Data General foreign subsidiaries also have foreign retirement plans covering
substantially all of their employees. All of these plans have been frozen resulting in employees no longer accruing pension benefits for future services. The
assets for these defined benefit plans are invested in common stocks and bonds. The market related value of the plans' assets is based upon the assets' fair
value. The
34