EMC 2002 Annual Report Download - page 74

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Lines of Credit
EMC has available for use credit lines of $50.0 million in the United States and $50.0 million in Brazil. As of December 31, 2002, EMC had $11.0
million outstanding on its line of credit in Brazil and none outstanding on its line of credit in the United States. The U.S. credit line bears interest at the bank's
base rate and requires EMC, upon utilization of the credit line, to meet certain financial covenants with respect to limitations on losses. The Brazilian credit
line bears interest at the rate quoted by the lender (28.6% at December 31, 2002) and requires EMC to meet certain financial covenants with respect to
limitations on losses and maintaining minimum levels of cash and investments. In the event the covenants are not met, the lender may require EMC to provide
collateral to secure the outstanding balance. At December 31, 2002, EMC was in compliance with the covenants. The Brazilian credit line is denominated in
local currency and as such, bears an interest rate commensurate with local currency short-term interest rates.
Guarantees and Indemnification Obligations
EMC's subsidiaries have entered into arrangements with financial institutions to provide guarantees for rent, taxes, insurance, leases, performance
bonds, bid bonds and customs duties aggregating $38.0 million as of December 31, 2002. The guarantees vary in length of time. In connection with these
arrangements, EMC has agreed to guarantee substantially all of the guarantees provided by these financial institutions. EMC has also agreed to guarantee its
Brazilian subsidiary's $50.0 million line of credit.
EMC enters into agreements in the ordinary course of business with, among others, customers, resellers, OEMs, systems integrators and distributors.
Most of these agreements require it to indemnify the other party against third party claims alleging that an EMC product infringes a patent or copyright.
Certain of these agreements require EMC to indemnify the other party against certain claims relating to property damage, personal injury or acts or omissions
of EMC, its employees, agents or representatives. In addition, from time to time EMC has made certain guarantees regarding the performance of its systems to
its customers.
EMC has agreements with certain vendors, financial institutions, lessors and service providers pursuant to which it has agreed to indemnify the other
party for certain matters, such as acts and omissions of EMC, its employees, agents or representatives.
EMC has procurement or license agreements with respect to technology that is used in EMC products and agreements in which it obtains rights to a
product from an OEM. Under certain of these agreements, EMC has agreed to indemnify the supplier for certain claims that may be brought against such
party with respect to EMC's acts or omissions relating to the supplied products or technologies.
EMC has agreements with each of its directors and executive officers to indemnify such director or executive officer, 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 of EMC.
In connection with certain acquisitions, EMC has 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. In a substantial majority of instances, EMC has
maintained the acquired company's directors' and officers' insurance, which should enable it to recover a portion of any future amounts paid. In connection
with certain dispositions, EMC has agreed to indemnify the buyer for certain matters, such as breaches of representations and warranties. These indemnities
vary in length of time.
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