Visa 2007 Annual Report Download - page 52

Table of Contents
Under the interchange judgment sharing agreement, in the event that a final judgment in the interchange litigation is enforced against a signatory or
there is a global settlement involving all signatories, each signatory other than Visa U.S.A. and Visa International will pay its membership proportion (as
defined in the Visa U.S.A. certificate of incorporation) of the amount of any such final judgment that is not allocated to the conduct of MasterCard under the
terms of the agreement. Visa U.S.A. will pay the amount of such final judgment that is not allocated to the conduct of MasterCard and that is not accounted
for by the other signatories, although it will obtain reimbursement for such payments out of the escrow account. Visa International has no obligation under the
interchange judgment sharing agreement to share in a judgment enforced against another signatory or in a global settlement. The agreement provides that Visa
U.S.A. and Visa International will be reimbursed by the bank signatories for the full amount of any final judgment allocated to the conduct of MasterCard, but
the bank signatories have no obligation to the other signatories with respect to the MasterCard portion of a final judgment.
If we are named as a defendant in a case in the interchange litigation, we have the right to join the judgment sharing agreement on the terms applicable
to Visa International unless a claim relates to our conduct after the reorganization (other than the reorganization or our proposed initial public offering) or our
conduct that is not the mere continuation of conduct being challenged in the interchange litigation at the closing of the reorganization.
Loss Sharing Agreement
We have entered into a loss sharing agreement with Visa U.S.A., Visa International and Visa U.S.A. members representing 61% of the Visa U.S.A.
aggregate membership proportion. The loss sharing agreement provides for the indemnification of Visa U.S.A., Visa International and, in certain
circumstances, Visa Inc. 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 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.
Visa U.S.A. will be responsible for the remainder of any amounts under (i) and (ii) above after taking into account the total amounts owed by the Visa
U.S.A. members that are parties to the loss sharing agreement and any funds it recovers pursuant to a judgment sharing agreement. Such remainder amounts
are subject to indemnification by Visa U.S.A. members that are not parties to the loss sharing agreement, as described below.
We contemplate that payments due under any covered litigation that are subject to the loss sharing agreement will be paid out of the escrow account,
including any additional proceeds from the sale of loss shares. If funds in the escrow account are insufficient to satisfy such obligations, then each Visa
U.S.A. member that is a party to the loss sharing agreement is required to contribute an amount equal to the unsatisfied obligation multiplied by such party's
then current membership proportion.
In order to avoid a double payment as a result of the dilutive adjustment in the conversion rate of the class B common stock upon the establishment of
the escrow account, we will reimburse Visa U.S.A. members from the escrow account for payments made: (i) pursuant to the interchange judgment sharing
agreement in respect of covered litigation to a claimant or another party to the loss sharing agreement (other than payments allocated in a final judgment or
approved settlement to MasterCard's conduct); or (ii) pursuant to the interchange judgment sharing agreement or the loss sharing agreement for certain
payments made prior to our proposed initial public offering relating to the items described in the immediately preceding paragraph. In the event that the
escrow account contains insufficient funds to make such reimbursements, all reimbursements will be made pro rata.
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