Visa 2007 Annual Report Download - page 32

Table of Contents
American Express filed a suit similar to the Discover litigation against Visa U.S.A., Visa International and certain Visa U.S.A. member financial
institutions. The American Express lawsuit is part of the covered litigation, which our retrospective responsibility plan is intended to address. We, Visa U.S.A.
and Visa International entered into a settlement agreement with American Express that became effective on November 9, 2007. The settlement agreement in
the American Express litigation will be funded through our retrospective responsibility plan.
The Discover lawsuit is also part of the covered litigation. The retrospective responsibility plan may not adequately insulate us from the impacts of
settlements of, or judgments in, the Discover lawsuit. Failure to successfully defend against or settle these lawsuits would result in liability that to the extent
not covered by our retrospective responsibility plan could have a material adverse effect on our results of operations, financial condition and cash flows, or, in
certain circumstances, even cause us to become insolvent. See Item 3—"Legal Proceedings—Retrospective Responsibility Plan—Covered Litigation."
Our retrospective responsibility plan may not adequately insulate us from the impact of settlements and judgments in the covered litigation and will
not insulate us from other pending or future litigation.
Our retrospective responsibility plan is intended to address monetary liabilities from settlements of, or final judgments in, the litigation described under
Item 3—"Legal Proceedings—Retrospective Responsibility Plan—Covered Litigation." The retrospective responsibility plan consists of several related
mechanisms to fund settlements of, or judgments in, the covered litigation, including an escrow account funded with a portion of the net proceeds of our
proposed initial public offering and potential follow-on offerings of our common stock, a loss sharing agreement, a judgment sharing agreement and the
indemnification obligation of Visa U.S.A. members pursuant to Visa U.S.A.'s certificate of incorporation and bylaws and in accordance with their
membership agreements. These mechanisms are unique and complex. If we are prevented from using one or more of these mechanisms under our
retrospective responsibility plan, we could have difficulty funding the payment of a settlement or final judgment against us in a covered litigation, which
could have a material adverse effect on our results of operations, financial condition and cash flows, or, in certain circumstances, even cause us to become
insolvent.
The retrospective responsibility plan does not address litigation other than the covered litigation that we currently face, including state court litigation
relating to interchange, and will not cover litigation that we may face in the future, except for cases that include claims for damages relating to the period prior
to our proposed initial public offering that are transferred for pre-trial proceedings or otherwise included in the interchange litigation. In addition, our
retrospective responsibility plan is designed to cover only the potential monetary liability from settlements of, or judgments in, the covered litigation.
Settlements and judgments in covered litigation may require us to modify the way we do business in the future, which could adversely affect our revenues,
increase our expenses and/or limit our prospects for growth. Therefore, even if our retrospective responsibility plan adequately safeguards us from the
monetary impact of settlements of, or judgments in, the covered litigation, it may not be sufficient to insulate us from all potential adverse consequences of
settlements of, and judgments in, the covered litigation.
The retrospective responsibility plan depends, in part, on the timely completion of our proposed initial public offering, and if we are unable to close
our proposed initial public offering in a timely manner, we may have insufficient funds to pay settlements of, or judgments in, such litigation, which
could materially adversely affect our results of operations, cash flow and financial condition.
Visa U.S.A. and Visa International are currently involved in the litigation described under Item 3 "—Legal and Regulatory Proceedings—Retrospective
Responsibility Plan." Plaintiffs in these litigation matters have alleged substantial damages. Upon the closing of our proposed initial public offering, we intend
to deposit a portion of the net proceeds from such offering, as determined by the litigation committee, in an escrow account from which settlements of, or
judgments in, the covered litigation will be payable. We intend to use the funds in
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