First Data 2011 Annual Report Download - page 160

confidentiality obligation the director may have). The General Counsel must then advise the Board of any such transaction or
relationship and the Board must pre-approve any material transaction or relationship.
Under the Company's Code of Conduct, executive officers may not use their personal influence to get the Company to do
business with a company in which they, their family members or their friends have an interest. In situations where an executive officer
is in a position of influence or where a conflict of interest would arise, the prior approval of the General Counsel is required.
Certain Relationships and Related Transactions
First Data has a management agreement with affiliates of KKR (the "Management Agreement") pursuant to which KKR
provides management, consulting, financial and other advisory services to the Company. Pursuant to the Management Agreement,
KKR receives an aggregate annual management fee and reimbursement of out-of-pocket expenses incurred in connection with the
provision of services. The Management Agreement has an initial term expiring on December 31, 2019, provided that the term will be
extended annually thereafter unless the Company provides prior written notice of its desire not to automatically extend the term. The
Management Agreement provides that KKR also is entitled to receive a fee equal to a percentage of the gross transaction value in
connection with certain subsequent financing, acquisition, disposition and change of control transactions, as well as a termination fee
based on the net present value of future payment obligations under the Management Agreement in the event of an initial public
offering or under certain other circumstances. The Management Agreement terminates automatically upon the consummation of an
initial public offering and may be terminated at any time by mutual consent of the Company and KKR. The Management Agreement
also contains customary exculpation and indemnification provisions in favor of KKR and its affiliates. From January 1, 2011 through
February 17, 2012, the Company paid $30 million of management fees.
On April 12, 2011 the Company entered into an Amended and Restated Engagement Letter with, among others, KKR Capital
Markets LLC ("KCM"), an affiliate of KKR, pursuant to which KCM agreed to assist in arranging and coordinating the Company's
request for an extension of the maturity of certain commitment and loans under its senior secured lending facility. The Company paid
KCM $1.25 million in April 2011 for such services.
On April 13, 2011, the Company entered into a Purchase Agreement with, among others, KCM, in which KCM agreed to
serve as one of the initial purchasers for an offering of secured notes and receive a portion of the underwriting commission for the
offering. Under the terms of the agreement, the Company paid underwriting commissions of $0.5 million to KCM.
From January 1, 2011 through February 17, 2012, the Company paid $12.7 million of expenses with Capstone Consulting
LLC, a consulting company that works exclusively with KKR's portfolio companies, for consulting, financial and other advisory
services to the Company.
Independence of Directors
The Company is privately held and none of the members of the Board of Directors are independent under the standards of the
New York Stock Exchange. Mr. Judge is not independent as he is employed by the Company and Messrs. Fisher, Forehand, Kravis,
Nuttall, and Olson are not independent due to their affiliation with KKR.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Company retained Ernst & Young LLP to audit the accounts of the Company and its subsidiaries for 2011 and 2010.
Ernst & Young LLP has served as the independent registered public accounting firm for the Company or its predecessor entities since
1980.
Summary of Principal Accountant's Fees for 2011 and 2010
Audit Fees. Ernst & Young LLP's fees for the Company's annual audit were $6.9 million in 2011 and $6.9 million in 2010.
Audit fees primarily include fees related to the audit of the Company's annual consolidated financial statements; the review of its
quarterly consolidated financial statements; statutory audits required domestically and internationally; comfort letters, consents, and
assistance with and review of documents filed with the SEC; offering memoranda, purchase accounting and other accounting and
financial reporting consultation and research work billed as audit fees or necessary to comply with the standards of the Public
Company Accounting Oversight Board (United States).
Audit-Related Fees. Ernst & Young LLP's fees for audit-related services that are reasonably related to the performance of the
audit or review of the Company's consolidated financial statements were $1.9 million in 2011 and $1.9 million in 2010. Audit-related
fees primarily include fees related to service auditor examinations, due diligence related to mergers and acquisitions, attest services
that are not required by statute or regulation and consultation concerning financial accounting and reporting standards not classified as
audit fees.
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