Visa 2007 Annual Report Download - page 51

Table of Contents
Our class B and class C common stock will be issued pursuant to the conversion of our outstanding regional classes of common stock prior to our
proposed initial public offering. These different classes of common stock (and the series into which they are divided) reflect the different rights and
obligations of Visa financial institution members and Visa Europe based on the geographic region in which they are located. The class B common stock that is
retained by Visa U.S.A. members and that is not redeemed out of the proceeds of our proposed initial public offering will be subject to dilution to the extent of
the initial amount of the escrow account. This dilution of the class B common stock will be accomplished through an initial adjustment to the conversion rate
applicable to each share of class B common stock. The class B common stock will not, subject to limited exceptions, be convertible into class A common
stock or be transferable until the later of the third anniversary of our proposed initial public offering or the final resolution of the covered litigation, although
our board of directors may make exceptions to this transfer restriction after resolution of all covered litigation. The class C common stock will not be subject
to this dilutive adjustment.
After the completion of our proposed initial public offering and if the litigation committee so requests in order to increase the escrow account, we will
conduct follow-on offerings of our class A common stock, which we refer to as loss shares. The proceeds from the sale of loss shares would then be deposited
in the escrow account, and the class B common stock would be subject to additional dilution to the extent of the loss shares through a concurrent adjustment
to the conversion rate of the class B common stock. Unless we or our affiliates have actually incurred a liability in respect of the covered litigation and there
are insufficient funds on deposit in the escrow account at such time to fund such liability, the litigation committee may not request that we sell loss shares in
an underwritten offering more than twice in any 12-month period, and the proceeds from the requested offering must reasonably be expected to be at least
$100,000,000. We will not offer loss shares in an amount that exceeds the number of shares of our class A common stock into which our issued and
outstanding class B common stock is then convertible immediately prior to our proposed initial public offering.
Any amounts remaining in the escrow account on the date on which all of the covered litigation has been resolved will be released back to us, and the
conversion rate of the class B common stock then outstanding will be adjusted in the holders' favor through a formula based on the released escrow amount
and the market price of our class A common stock to be issued in our proposed initial public offering.
The litigation committee has been established pursuant to a litigation management agreement among Visa Inc., Visa International, Visa U.S.A. and
Robert R. Hackney, Bruce L. Hammonds, Peter E. Raskind, Charles W. Scharf and John G. Stumpf, all of whom are affiliated with, or acting for, certain Visa
U.S.A. members. The litigation committee: (i) will determine the amount of the proceeds of our proposed initial public offering to be deposited in the escrow
account; (ii) may request the sale of loss shares as described above, subject to our right to delay the filing or effectiveness of a registration statement under
certain circumstances; and (iii) may recommend or refer the cash payment portion of a proposed settlement of any covered litigation to the Visa U.S.A. board
of directors.
The board of directors of Visa U.S.A. will not be permitted to authorize any portion of a settlement of any of the covered litigation that would or might
require payments out of the escrow account, the sale of loss shares, or the payment of cash by principal, acquirer, administrative, cheque issuer,
administrative, group, or associate members of Visa U.S.A., which we refer to collectively as specified settlement members, unless such settlement has been
approved by or is subject to the approval of specified settlement members. We refer to such settlements as specified settlements. Approval of a specified
settlement requires the approval of two-thirds of the votes of the specified settlement members.
Interchange Judgment Sharing Agreement
On July 1, 2007, we entered into an interchange judgment sharing agreement with Visa U.S.A., Visa International and certain member financial
institutions of Visa U.S.A. in connection with the interchange litigation.
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