Visa 2014 Annual Report Download - page 102

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2014
Interchange judgment sharing agreement. Visa U.S.A. and Visa International have entered into an
interchange judgment sharing agreement with certain Visa U.S.A. members that have been named as
defendants in the interchange multidistrict litigation, which is described in Note 20—Legal Matters.
Under this judgment sharing agreement, Visa U.S.A. members that are signatories will pay their
membership proportion of the amount of a final judgment not allocated to the conduct of MasterCard.
Loss sharing agreement. Visa has entered into a loss sharing agreement with Visa U.S.A., Visa
International and certain Visa U.S.A. members. The loss sharing agreement provides for the
indemnification of Visa U.S.A., Visa International and, in certain circumstances, Visa with respect to:
(i) the amount of a final judgment paid by Visa U.S.A. or Visa International in the covered litigation after
the operation of the interchange judgment sharing agreement, plus any amounts reimbursable to the
interchange judgment sharing agreement signatories; or (ii) the damages portion of a settlement of a
covered litigation that is approved as required under Visa U.S.A.‘s certificate of incorporation by the
vote of Visa U.S.A.‘s specified voting members. The several obligation of each bank that is a party to
the loss sharing agreement will equal the amount of any final judgment enforceable against Visa
U.S.A., Visa International or any other signatory to the interchange judgment sharing agreement, or the
amount of any approved settlement of a covered litigation, multiplied by such bank’s then-current
membership proportion as calculated in accordance with Visa U.S.A.‘s certificate of incorporation.
Omnibus agreement. Visa entered into an omnibus agreement with MasterCard and certain Visa
U.S.A. members that confirmed and memorialized the signatories’ intentions with respect to the loss
sharing agreement, the interchange judgment sharing agreement and other agreements relating to the
interchange multidistrict litigation, see Note 20—Legal Matters. Under the omnibus agreement, the
monetary portion of any settlement of the interchange multidistrict litigation covered by the omnibus
agreement would be divided into a MasterCard portion at 33.3333% and a Visa portion at 66.6667%. In
addition, the monetary portion of any judgment assigned to Visa-related claims in accordance with the
omnibus agreement would be treated as a Visa portion. Visa would have no liability for the monetary
portion of any judgment assigned to MasterCard-related claims in accordance with the omnibus
agreement, and if a judgment is not assigned to Visa-related claims or MasterCard-related claims in
accordance with the omnibus agreement, then any monetary liability would be divided into a
MasterCard portion at 33.3333% and a Visa portion at 66.6667%. The Visa portion of a settlement or
judgment covered by the omnibus agreement would be allocated in accordance with specified
provisions of the Company’s retrospective responsibility plan. The litigation provision on the
consolidated statements of operations is not impacted by the execution of the omnibus agreement.
On August 26, 2014, Visa entered into an amendment to the omnibus agreement. The omnibus
amendment makes applicable to certain settlements in opt-out cases in the interchange multidistrict
litigation the settlement-sharing provisions of the omnibus agreement, pursuant to which the monetary
portion of any settlement of the interchange multidistrict litigation covered by the omnibus agreement
would be divided into a MasterCard portion at 33.3333% and a Visa portion at 66.6667%. The omnibus
amendment also provides that in the event of termination of the class Settlement Agreement, Visa and
MasterCard would make mutually acceptable arrangements so that Visa shall have received two-thirds
and MasterCard shall have received one-third of the total of (i) the sums paid to defendants as a result
of the termination of the Settlement Agreement and (ii) the takedown payments previously made to
defendants.
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