Honeywell 2013 Annual Report Download - page 99

letters of credit. The Credit Agreement is maintained for general corporate purposes and amends and
restates the previous $3 billion five year credit agreement dated April 2, 2012 (“Prior Agreement”).
There have been no borrowings under the Credit Agreement or the Prior Agreement.
The Credit Agreement does not restrict our ability to pay dividends and contains no financial
covenants. The failure to comply with customary conditions or the occurrence of customary events of
default contained in the Credit Agreement would prevent any further borrowings and would generally
require the repayment of any outstanding borrowings under the Credit Agreement. Such events of
default include: (a) non-payment of Credit Agreement debt, interest or fees; (b) non-compliance with
the terms of the Credit Agreement covenants; (c) cross-default with other debt in certain
circumstances; (d) bankruptcy or insolvency; and (e) defaults upon obligations under the Employee
Retirement Income Security Act. Additionally, each of the banks has the right to terminate its
commitment to lend additional funds or issue letters of credit under the Credit Agreement if any person
or group acquires beneficial ownership of 30 percent or more of our voting stock, or, during any 12-
month period, individuals who were directors of Honeywell at the beginning of the period cease to
constitute a majority of the Board of Directors.
The Credit Agreement has substantially the same material terms and conditions as the Prior
Agreement with an improvement in pricing and an extension of maturity. Loans under the Credit
Agreement are required to be repaid no later than December 10, 2018, unless such date is extended
pursuant to the terms of the Credit Agreement.
Revolving credit borrowings under the Credit Agreement would bear interest, at Honeywell’s
option, (A) (1) at a rate equal to the highest of (a) the floating base rate publicly announced by
Citibank, N.A., (b) 0.5 percent above the Federal funds rate or (c) LIBOR plus 1.00 percent, plus (2) a
margin based on Honeywell’s credit default swap mid-rate spread and subject to a floor and a cap as
set forth in the Credit Agreement (the “Applicable Margin”) minus 1.00 percent, provided such margin
shall not be less than zero; or (B) at a rate equal to LIBOR plus the Applicable Margin; or (C) by a
competitive bidding procedure.
We have agreed to pay a commitment fee for the aggregate unused commitment for the Credit
Agreement, which is subject to change, based upon a grid determined by our long term debt ratings.
The Credit Agreement is not subject to termination based upon a decrease in our debt ratings or a
material adverse change as defined by the Credit Agreement.
As a source of liquidity, we sell interests in designated pools of trade accounts receivables to third
parties. As of December 31, 2013 and December 31, 2012, none of the receivables in the designated
pools had been sold to third parties. When we sell receivables, they are over-collateralized and we
retain a subordinated interest in the pool of receivables representing that over-collateralization as well
as an undivided interest in the balance of the receivables pools. The terms of the trade accounts
receivable program permit the repurchase of receivables from the third parties at our discretion,
providing us with an additional source of revolving credit. As a result, program receivables remain on
the Company’s balance sheet with a corresponding amount recorded as Short-term borrowings.
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HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)