VMware 2015 Annual Report Download - page 45

TableofContents
Notes Payable to EMC
AsofDecember31,2015,$1,500millionremainedoutstandingonnotespayabletoEMC,withinterestpayablequarterlyinarrears.
InconnectionwithouracquisitionofAirWatch,weenteredintoanoteexchangeagreementwithEMConJanuary21,2014providingfortheissuanceofthree
promissorynotesintheaggregateprincipalamountof$1,500million.Thetotaldebtof$1,500millionincluded$450millionthatwasexchangedforthe$450
millionpromissorynoteissuedtoEMCinApril2007,asamendedandrestatedinJune2011.
Thethreenotesissuedhavethefollowingprincipalamountsandmaturitydates:$680milliondueMay1,2018,$550milliondueMay1,2020and$270
milliondueDecember1,2022.
Thenotesbearinterestattheannualrateof1.75%.Interestispayablequarterlyinarrears.Thenotesmaybeprepaidwithoutpenaltyorpremium.Wedrew
downonallthreenotesinlateJanuary2014.
Stock Repurchase Program
Fromtimetotime,werepurchasestockpursuanttoauthorizedstockrepurchaseprogramsinopenmarkettransactionsorprivatelynegotiatedtransactionsas
permittedbysecuritieslawsandotherlegalrequirements.Wearenotobligatedtopurchaseanysharesunderourstockrepurchaseprograms.Thetimingofany
repurchasesandtheactualnumberofsharesrepurchaseddependsonavarietyoffactors,includingourstockprice,cashrequirementsforoperationsandbusiness
combinations,corporateandregulatoryrequirementsandothermarketandeconomicconditions.Purchasescanbediscontinuedatanytimewebelieveadditional
purchasesarenotwarranted.Allsharesrepurchasedunderourstockrepurchaseprogramsareretired.OnJanuary27,2015,ourboardofdirectorsauthorizedthe
repurchaseofuptoonebilliondollarsofourClassAcommonstockthroughtheendof2017,whichwasinadditionto$960millionremainingavailableasof
December31,2014underapreviousauthorization.During2015,werepurchased13.5millionsharesforanaggregatepurchasepriceof$1,125million.Asof
December31,2015,thecumulativeauthorizedamountremainingforrepurchaseunderanauthorizedprogramwas$835million.RefertoNoteMtothe
consolidatedfinancialstatementsinPartII,Item8ofthisAnnualReportonForm10-Kforfurtherdiscussion.
Withrespecttoourstockrepurchaseprogram,wearecurrentlysubjecttoanumberoflegalandregulatoryconstraintsresultingfromDell'sproposed
acquisitionofEMC,whichimpactsthetimingandabilitytoexecuterepurchasesofourshares.
Off-Balance Sheet Arrangements, Contractual Obligations, Contingent Liabilities and Commitments
Guarantees and Indemnification Obligations
Weenterintoagreementsintheordinarycourseofbusinesswith,amongothers,customers,distributors,resellers,systemvendorsandsystemsintegrators.
Mostoftheseagreementsrequireustoindemnifytheotherpartyagainstthird-partyclaimsallegingthatoneofourproductsinfringesormisappropriatesapatent,
copyright,trademark,tradesecretorotherintellectualpropertyright.Certainoftheseagreementsrequireustoindemnifytheotherpartyagainstcertainclaims
relatingtopropertydamage,personalinjury,ortheactsoromissionsbyusandouremployees,agentsorrepresentatives.
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byusandouremployees,agents,orrepresentatives.
Wehaveprocurementorlicenseagreementswithrespecttotechnologythatwehaveobtainedtherighttouseinourproductsandagreements.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ourdirectorsandexecutiveofficers,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.Ourby-lawsandcharteralso
provideforindemnificationofourdirectorsandofficers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.Wealsoindemnifycertainemployees
whoprovideservicewithrespecttoemployeebenefitsplans,includingthemembersoftheAdministrativeCommitteeoftheVMware401(k)Plan,andemployees
whoserveasdirectorsorofficersofoursubsidiaries.
Inconnectionwithcertainacquisitions,wehave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.Wetypicallypurchasea“tail”directorsandofficersinsurancepolicy,whichshouldenableustorecoveraportionofany
futureindemnificationobligationsrelatedtotheformerdirectorsandofficersofanacquiredcompany.
44