Visa 2007 Annual Report Download - page 33

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the escrow account to satisfy the settlement obligations of Visa U.S.A. in the American Express litigation and, as described below, to make payments relating
to obligations of Visa U.S.A., Visa International and, in certain instances, Visa Inc., in connection with future settlement of, or judgments in, covered
litigation. The settlement agreement for the American Express litigation requires that we make an initial payment of $945 million on or before March 31,
2008 and that, beginning March 31, 2008, we pay American Express an additional amount of up to $70 million each quarter for 16 quarters, for a maximum
total of $1.12 billion. It may be difficult for us to fund settlement of any of the covered litigation prior to the completion of our proposed initial public offering
because we plan to use the escrow account as our primary source of funds for the payment of any potential losses arising from the covered litigation.
Further, Visa U.S.A., Visa International and Visa Inc. have entered into a loss sharing agreement and a judgment sharing agreement in the interchange
litigation, which became effective on July 1, 2007, with certain of their members, which provide that these members will be responsible for their proportionate
share of the liabilities associated with the covered litigation. However, the loss sharing agreement provides that if we do not timely pursue and consummate an
initial public offering, including having completed an initial public offering before May 28, 2008, the date that is 240 days after completion of the
reorganization, the members' obligations under the loss sharing agreement may be suspended until we have completed an initial public offering, at which
point such obligations will be reinstated in full as if they had never been suspended. The 240-day period may be extended under certain circumstances. In
addition, this agreement provides that the signing banks are responsible only for a proportionate amount of the liability in respect of the covered litigation
equal to their membership proportion, as calculated in accordance with Visa U.S.A.'s certificate of incorporation. Because not all of Visa U.S.A.'s members
have signed the loss sharing agreement, until the funding of the escrow account pursuant to the retrospective responsibility plan, we would also need to rely
upon those members' indemnification obligations contained in Visa U.S.A.'s certificate of incorporation and bylaws and as agreed in their membership
agreements to recover the remaining portion of any liability from Visa U.S.A.'s members.
In addition, if there were a final judgment against us in connection with the covered litigation or if we were to incur a judgment sharing obligation in a
covered litigation before our proposed initial public offering, we would have to rely upon the loss sharing agreement, which only indemnifies us for a portion
of the liability with respect to the covered litigation that is equal to the aggregate membership proportion of the Visa U.S.A. members that sign the loss
sharing agreement, as calculated in accordance with Visa U.S.A.'s certificate of incorporation, and we would have to seek indemnification from Visa U.S.A.'s
remaining members pursuant to Visa U.S.A.'s certificate of incorporation and bylaws and as agreed in their membership agreements. To the extent we are
unable to secure indemnification from our members, any portion of such a judgment not covered by our judgment sharing agreements would have to be paid
by us and could have a material adverse effect on our financial condition.
If the settlements of Visa U.S.A.'s and Visa International's currency conversion cases are not ultimately approved and we are unsuccessful in any of
the various lawsuits relating to Visa U.S.A.'s and Visa International's currency conversion practices, our business may be materially and adversely
affected.
Visa U.S.A. and Visa International are defendants in several state and federal lawsuits alleging that their currency conversion practices are or were
deceptive, anti-competitive or otherwise unlawful. In particular, a trial judge in California found that the former currency conversion practices of Visa U.S.A.
and Visa International were deceptive under California state law, and ordered Visa U.S.A. and Visa International to require their members to disclose the
currency conversion process to cardholders in cardholder agreements, applications, solicitations and monthly billing statements. The judge also ordered
unspecified restitution to credit card holders. The decision was reversed on appeal on the ground that the plaintiff lacked standing to pursue his claims. After
the trial court's decision, several putative class actions were filed in California state courts challenging Visa U.S.A.'s and Visa International's currency
conversion practices for credit and debit cards. A number of putative class actions relating to Visa U.S.A.'s and Visa International's former currency
conversion practices were also
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