First Data 2007 Annual Report Download - page 21

• create liens;
• consolidate, merge, sell or otherwise dispose of all or substantially all of the Company's assets;
• enter into certain transactions with the Company's affiliates; and
• designate the Company's subsidiaries as unrestricted subsidiaries.
A breach of any of these covenants could result in a default under one or more of these agreements, including as a result of cross default provisions and, in the
case of the revolving credit facility, permit the lenders to cease making loans to the Company. Upon the occurrence of an event of default under the
Company's senior secured credit facilities, the lenders could elect to declare all amounts outstanding under the Company's senior secured credit facilities to be
immediately due and payable and terminate all commitments to extend further credit. Such actions by those lenders could cause cross defaults under the
Company's other indebtedness. If the Company was unable to repay those amounts, the lenders under the Company's senior secured credit facilities could
proceed against the collateral granted to them to secure that indebtedness. The Company has pledged a significant portion of the Company's assets as
collateral under the Company's senior secured credit facilities. If the lenders under the senior secured credit facilities accelerate the repayment of borrowings,
the Company may not have sufficient assets to repay the Company's senior secured credit facilities as well as the Company's unsecured indebtedness.
The ability to adopt technology to changing industry and customer needs or trends may affect the Company's competitiveness or demand for the
Company's products, which may adversely affect the Company's operating results.
Changes in technology may limit the competitiveness of and demand for the Company's services. The Company's businesses operate in industries that are
subject to technological advancements, developing industry standards and changing customer needs and preferences. Also, the Company's customers continue
to adopt new technology for business and personal uses. The Company must anticipate and respond to these industry and customer changes in order to remain
competitive within the Company's relative markets. For example, the ability to adopt technological advancements surrounding POS technology available to
merchants could have an impact on the Company's International and Commercial Services business. The Company's inability to respond to new competitors
and technological advancements could impact all of the Company's businesses.
Changes in credit card association or other network rules or standards could adversely affect the Company's business.
In order to provide the Company's transaction processing services, several of the Company's subsidiaries are registered with Visa and MasterCard and other
networks as members or service providers for member institutions. As such, the Company and many of its customers are subject to card association and
network rules that could subject the Company or its customers to a variety of fines or penalties that may be levied by the card associations or networks for
certain acts or omissions by the Company, acquirer customers, processing customers and merchants. Visa, MasterCard and other networks, some of which are
the Company's competitors, set the standards with respect to which the Company must comply. The termination of the Company's member registration or the
Company's status as a certified service provider, or any changes in card association or other network rules or standards, including interpretation and
implementation of the rules or standards, that increase the cost of doing business or limit the Company's ability to provide transaction processing services to
or through the Company's customers, could have an adverse effect on the Company's business, operating results and financial condition.
Changes in card association and debit network fees or products could increase costs or otherwise limit the Company's operations.
From time to time, card associations and debit networks increase the organization and/or processing fees (known as interchange fees) that they charge. It is
possible that competitive pressures will result in the Company absorbing a portion of such increases in the future, which would increase its operating costs,
reduce its profit margin and adversely affect its business, operating results and financial condition. Furthermore, the rules and regulations of the various card
associations and networks prescribe certain capital requirements. Any increase in the capital level required would further limit the Company's use of capital
for other purposes.
The Company is the subject of various legal proceedings which could have a material adverse effect on the Company's revenue and profitability.
The Company is involved in various litigation matters. The Company is also involved in or is the subject of governmental or regulatory agency inquiries or
investigations from time to time. If the Company is unsuccessful in its defense in the litigation matters, or any other legal proceeding, it may be forced to pay
damages or fines and/or change its business practices, any of which could have a material adverse effect on the Company's revenue and profitability. For more
information about the Company's legal proceedings, see "Item 3: Legal Proceedings" herein.
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