HP 2009 Annual Report Download - page 37

relating to the impairment of those assets. In order to complete an acquisition, we may issue common
stock, potentially creating dilution for existing stockholders. In addition, we may borrow to finance an
acquisition, and the amount and terms of any potential future acquisition-related borrowings, as well as
other factors, could affect our liquidity and financial condition and potentially our credit ratings. Any
potential future downgrades in our credit rating associated with an acquisition could adversely affect
our ability to borrow and cost of borrowing and result in more restrictive borrowing terms. In addition,
HP’s effective tax rate on an ongoing basis is uncertain, and business combination and investment
transactions could impact our effective tax rate. We also may experience risks relating to the challenges
and costs of closing a business combination and investment transaction and the risk that an announced
business combination and investment transaction may not close. As a result, any completed, pending or
future transactions may contribute to financial results that differ from the investment community’s
expectations in a given quarter.
Unforeseen environmental costs could impact our future net earnings.
We are subject to various federal, state, local and foreign laws and regulations concerning
environmental protection, including laws addressing the discharge of pollutants into the air and water,
the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites,
the content of our products and the recycling, treatment and disposal of our products including
batteries. In particular, we face increasing complexity in our product design and procurement
operations as we adjust to new and future requirements relating to the chemical and materials
composition of our products, their safe use, the energy consumption associated with those products and
product take-back legislation. We could incur substantial costs, our products could be restricted from
entering certain jurisdictions, and we could face other sanctions, if we were to violate or become liable
under environmental laws or if our products become non-compliant with environmental laws. Our
potential exposure includes fines and civil or criminal sanctions, third-party property damage or
personal injury claims and clean up costs. Further, liability under some environmental laws relating to
contaminated sites can be imposed retroactively, on a joint and several basis, and without any finding
of noncompliance or fault. The amount and timing of costs under environmental laws are difficult to
predict.
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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