First Data 2013 Annual Report Download - page 45

 All obligations under the senior secured revolving credit facility and senior secured term loan facility are unconditionally
guaranteed by substantially all existing and future, direct and indirect, wholly owned, material domestic subsidiaries of FDC other than IPS. The senior
secured facilities contain a number of covenants that, among other things, restrict FDC’s ability to incur additional indebtedness; create liens; enter into sale-
leaseback transactions; engage in mergers or consolidations; sell or transfer assets; pay dividends and distributions or repurchase the Company’s or its parent
company’s capital stock; make investments, loans or advances; prepay certain indebtedness; make certain acquisitions; engage in certain transactions with
affiliates; amend material agreements governing certain indebtedness; and change its lines of business. The senior secured facilities also require FDC to not
exceed a maximum senior secured leverage ratio and contain certain customary affirmative covenants and events of default, including a change of control. The
senior secured term loan facility also requires mandatory prepayments based on a percentage of excess cash flow generated by FDC.
All obligations under the senior secured notes, senior second lien notes, PIK toggle senior second lien notes, senior notes and senior subordinated notes
are similarly guaranteed in accordance with their terms by each of FDC’s domestic subsidiaries that guarantee obligations under FDC’s senior secured term
loan facility described above. These notes and facilities also contain a number of covenants similar to those described for the senior secured obligations noted
above. The Company is in compliance with all applicable covenants as of December 31, 2013 and anticipates it will remain in compliance in future periods.
Although all of the above described indebtedness contain restrictions on the Company’s ability to incur additional indebtedness, these restrictions are
subject to numerous qualifications and exceptions, including the ability to incur indebtedness in connection with the Company’s settlement operations. The
Company believes that the indebtedness that can be incurred under these exceptions as well as additional credit under the existing senior secured revolving
credit facility are sufficient to satisfy the Company’s intermediate and long-term needs.
Under the senior secured revolving credit and term loan facilities, certain limitations, restrictions and defaults could occur if
FDC is not able to satisfy and remain in compliance with specified financial ratios. FDC has agreed that it will not permit the Consolidated Senior Secured
Debt to Consolidated EBITDA (both as defined in the agreement) Ratio for any 12 month period (last four fiscal quarters) to be greater than 6.00 to 1.00.
The breach of this covenant could result in a default under the senior secured revolving credit facility and the senior secured term loan credit facility and
the lenders could elect to declare all amounts borrowed due and payable. Any such acceleration could also result in a default under the indentures for the senior
secured notes, senior second lien notes, PIK toggle senior second lien notes, senior notes and senior subordinated notes. As of December 31, 2013, FDC is in
compliance with this covenant with Consolidated Senior Secured Debt of $12,226.8 million, Consolidated EBITDA of $2,967.4 million and a Ratio of 4.12
to 1.00.
In determining Consolidated EBITDA, EBITDA is calculated by reference to net income (loss) from continuing operations plus interest and other
financing costs, net, provision for income taxes, and depreciation and amortization. Consolidated EBITDA as defined in the agreements (also referred to as
debt covenant EBITDA) is calculated by adjusting EBITDA to exclude unusual items and other adjustments permitted in calculating covenant compliance
under the indentures and the credit facilities. The Company believes that the inclusion of supplementary adjustments to EBITDA applied in presenting
Consolidated EBITDA are appropriate to provide additional information to investors to demonstrate FDC’s ability to comply with its financing covenants.
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