HP 2005 Annual Report Download - page 31

governing chemical substances in products, including laws regulating the manufacture and distribution
of chemical substances and laws restricting the presence of certain substances in electronics products.
We could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, third-
party property damage or personal injury claims, or our products could be enjoined from entering
certain jurisdictions, if we were to violate or become liable under environmental laws or if our products
become non-compliant with environmental laws. We also face increasing complexity in our product
design and procurement operations as we adjust to new and future requirements relating to the
materials composition of our products, including the restrictions on lead, cadmium and certain other
substances that will apply to specified electronics products put on the market in the European Union as
of July 1, 2006 (Restriction of Hazardous Substances Directive) and similar legislation currently
proposed in China. The ultimate costs under environmental laws and the timing of these costs are
difficult to predict, and liability under some environmental laws relating to contaminated sites can be
imposed retroactively and on a joint and several basis. It is our policy to apply strict standards for
environmental protection to sites inside and outside the United States, even when we are not subject to
local government regulations.
We also could face significant costs and liabilities in connection with product take-back legislation.
We record a liability for environmental remediation and other environmental costs when we consider
the costs to be probable and the amount of the costs can be reasonably estimated. The EU has enacted
the Waste Electrical and Electronic Equipment Directive, which makes producers of electrical goods,
including computers and printers, financially responsible for specified collection, recycling, treatment
and disposal of past and future covered products. The deadline for the individual member states of the
EU to enact the directive in their respective countries was August 13, 2004 (such legislation, together
with the directive, the ‘‘WEEE Legislation’’). Producers participating in the market became financially
responsible for implementing these responsibilities beginning in August 2005. Implementation in certain
EU member states may be delayed into 2006. HP’s potential liability resulting from the WEEE
Legislation may be substantial. Similar legislation has been or may be enacted in other jurisdictions,
including in the United States, Canada, Mexico, China and Japan, the cumulative impact of which
could be significant.
Some anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions
of Delaware law, could impair a takeover attempt.
We have provisions in our certificate of incorporation and bylaws, each of which could have the
effect of rendering more difficult or discouraging an acquisition of HP deemed undesirable by our
Board of Directors. These include provisions:
• authorizing blank check preferred stock, which HP could issue with voting, liquidation, dividend
and other rights superior to our common stock;
• limiting the liability of, and providing indemnification to, HP’s directors and officers;
• specifying that HP stockholders may take action only at a duly called annual or special meeting
of stockholders and otherwise in accordance with our bylaws and limiting the ability of our
stockholders to call special meetings;
• requiring advance notice of proposals by HP stockholders for business to be conducted at
stockholder meetings and for nominations of candidates for election to our Board of Directors;
• requiring a vote by the holders of two-thirds of HP’s outstanding shares to amend certain bylaws
relating to HP stockholder meetings, the Board of Directors and indemnification; and
• controlling the procedures for conduct of HP Board and stockholder meetings and election,
appointment and removal of HP directors.
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