First Data 2008 Annual Report Download - page 25

• 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 Company depends, in part, on its merchant relationships and alliances to grow the Company's Merchant Services business. If the Company is unable
to maintain these relationships and alliances, the Company's business may be adversely affected.
Growth in the Company's Merchant Services business is derived primarily from acquiring new merchant relationships, new and enhanced product and
service offerings, cross selling products and services into existing relationships, the shift of consumer spending to increased usage of electronic forms of
payment and the strength of the Company's alliance partnerships with banks and financial institutions and other third parties. A substantial portion of the
Company's business is conducted through "alliances" with banks and other institutions. The Company's alliance structures take on different forms, including
consolidated subsidiaries, equity method investments and revenue sharing arrangements. Under the alliance program, the Company and a bank or other
institution form a joint venture, either contractually or through a separate legal entity. Merchant contracts may be contributed to the venture by the Company
and/or the bank or institution. The banks and other institutions generally provide card association sponsorship, clearing and settlement services. These
institutions typically act as a merchant referral source when the institution has an existing banking or other relationship. The Company provides transaction
processing and related functions. Both alliance partners may provide management, sales, marketing, and other administrative services. The alliance structure
allows the Company to be the processor for multiple financial institutions, any one of which may be selected by the merchant as their bank partner. The
Company relies on the continuing growth of its merchant relationships, alliances and other distribution channels. There can be no guarantee that this growth
will continue. The loss of merchant relationships or alliance and financial institution partners could negatively impact the Company's business and result in a
reduction of the Company's revenue and profit.
The Company relies on various financial institutions to provide clearing services in connection with its settlement activities. If the Company is unable to
maintain clearing services with these financial institutions and is unable to find a replacement, the Company's business may be adversely affected.
The Company relies on various financial institutions to provide clearing services in connection with the settlement activities of the Company. If such
financial institutions should stop providing clearing services the Company must find other financial institutions to provide those services. If the Company is
unable to find a replacement financial institution the Company may no longer be able to provide processing services to certain customers which could
negatively impact the revenue and earnings of the Company.
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