Honeywell 2004 Annual Report Download - page 214

SCHEDULE 3.01(b)
DISCLOSED LITIGATION
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While not giving an opinion as to whether any item is "reasonably
likely to have a Material Adverse Effect," we hereby disclose the litigation
matters as stated in our Form 10-Q for the quarter ended June 30, 2004, under
the heading "Legal Proceedings," as follows.
Shareowner Litigation -- Honeywell and three of its former officers
are defendants in a class action lawsuit filed in the United States District
Court for the District of New Jersey. Plaintiffs allege, among other things,
that the defendants violated federal securities laws by purportedly making false
and misleading statements and by failing to disclose material information
concerning Honeywell's financial performance, thereby allegedly causing the
value of Honeywell's stock to be artificially inflated. The Court has certified
a class consisting of all purchasers of Honeywell stock between December 20,
1999 and June 19, 2000. On June 4, 2004 Honeywell and the lead plaintiffs agreed
to a settlement of this matter which requires a payment to the class of $100
million. Honeywell's contribution to the settlement is $15 million, which amount
had previously been fully reserved. Honeywell's insurance carriers will pay the
remainder of the settlement. The settlement is subject to court approval and
other contingencies. A court hearing on the terms of the settlement is scheduled
for August 16, 2004. Although members of the class may opt out of the
settlement, Honeywell believes that any such claims would be fully insured.
ERISA Class Action Lawsuit -- Honeywell and several of its current
and former officers and directors are defendants in a purported class action
lawsuit filed in the United States District Court for the District of New
Jersey. The complaint principally alleges that the defendants breached their
fiduciary duties to participants in the Honeywell Savings and Ownership Plan
(the "Savings Plan") by purportedly making false and misleading statements,
failing to disclose material information concerning Honeywell's financial
performance, and failing to diversify the Savings Plan's assets and monitor the
prudence of Honeywell stock as a Savings Plan investment. In September 2003,
Honeywell filed a motion to dismiss this matter.
Although it is not possible at this time to predict the outcome of
this matter, we believe that the allegations in this matter are without merit
and we expect to prevail. An adverse litigation outcome could, however, be
material to our consolidated financial position or results of operations. As a
result of the uncertainty regarding the outcome of this matter, no provision has
been made in our financial statements with respect to this contingent liability.
Environmental Matters - We are subject to various federal, state and
local government requirements relating to the protection of the environment. We
believe that, as a general matter, our policies, practices and procedures are
properly designed to prevent unreasonable risk of environmental damage and
personal injury and that our handling, manufacture, use and disposal of
hazardous or toxic substances are in accord with environmental and safety laws
and regulations. However, mainly because of past operations and operations of
predecessor companies, we, like other companies engaged in similar businesses,
have incurred remedial response and voluntary cleanup costs for site
contamination and are a party to lawsuits and claims associated with
environmental and safety matters, including past production of products