Visa 2008 Annual Report Download - page 157

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
(series I) shareholders with unrelated third parties. The sales prices in the other recent transactions reflected a discount from the closing price of the
Company's class A common stock on the date of these transactions reflecting the conversion and transfer restrictions on class C (series I) common stock,
discussed below.
These special cash and stock dividends are recorded as an increase in additional paid-in capital, net of tax, as they are the result of appreciation of the
Company's own stock.
Conversion and Transfer Restrictions
Class B Common Stock
The class B common stock is not convertible or transferable until the later of March 25, 2011 and the date on which all of the covered litigation has
been finally resolved, although the Company's board of directors may make exceptions to this transfer restriction after resolution of all covered litigation. This
transfer restriction is subject to limited exceptions, including transfers to other class B stockholders. After termination of the restrictions, the class B common
stock will be convertible into class A common stock if transferred to a person that was not a Visa member or similar person or affiliate of a Visa member or
similar person, as defined in the Charter. Upon such transfer, each share of class B common stock will automatically convert into a number of shares of class
A common stock based upon the applicable conversion rate in effect at the time of such transfer.
Immediately following the IPO, the conversion rate applicable to class B common stock was reduced to approximately 0.71 shares of class A common
stock for each share of class B common stock. The conversion rate was adjusted to reflect the initial deposit of $3.0 billion, as determined by the litigation
committee, into the litigation escrow account. Settlements of, or judgments in, the covered litigation will be paid using the litigation escrow account. Further
adjustment of the conversion rate applicable to class B shares will occur upon: (i) the completion of any follow-on offering of class A common stock
completed in order to increase the size of the litigation escrow account; or (ii) the final resolution of the covered litigation and the release of funds remaining
on deposit in the litigation escrow account to the Company. No conversion of class B common stock will be effected until all applicable restrictions on the
transfer of class B common stock have expired. See Note 5—Retrospective Responsibility Plan.
Class C Common Stock
The class C common stock, other than class C (series II) common stock and class C (series III) redemption shares, is not convertible into class A
common stock or transferable until March 25, 2011. This transfer restriction is subject to limited exceptions, including transfers to other class C stockholders.
The Company's board of directors may make additional exceptions to this transfer restriction. After termination of the restrictions, the class C common stock
will be convertible into class A common stock if transferred to a person that was not, immediately after the reorganization, a Visa member. Upon such
transfer, each share of class C common stock will automatically convert into a number of shares of class A common stock based upon the applicable
conversion rate in effect at the time of such transfer.
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