Visa 2009 Annual Report Download - page 28

Table of Contents
Risks Related to our Structure and Organization
We have a limited ability to control Visa Europe's operations and limited recourse in the event of a breach of its obligations to us.
Our relationship with Visa Europe is governed by a Framework Agreement, which gives Visa Europe very broad rights to operate the Visa business in
its region. Since our reorganization, Visa Europe has not been subject to the same global operating rules as our subsidiaries and customers. If we want to
change a global rule or require Visa Europe to implement certain changes that would not have a positive return for Visa Europe and its members, then Visa
Europe is not required to implement that rule or change unless we agree to pay for the implementation costs and expenses that Visa Europe and its members
will incur as a consequence of the implementation. Our remedies under this agreement, if Visa Europe fails to meet its obligations, are limited. We cannot
terminate the Framework Agreement even upon Visa Europe's material uncured breach, and we can exercise our call right to purchase Visa Europe under only
extremely limited circumstances.
These and other features of the licenses granted under the Framework Agreement may also raise issues concerning the characterization of the licenses
for purposes of tax treatment of entry into the licenses and payments received thereunder. Any inconsistency in the payment processing services and products
that we are able to provide could negatively affect cardholders from Visa Europe using cards in our regions or our cardholders using cards in Visa Europe's
region.
If Visa Europe makes us acquire all of its outstanding stock, we will incur substantial costs and may suffer a material and adverse effect on our
operations and net income.
We have granted Visa Europe a put option, which, if exercised, will require us to purchase all of Visa Europe's outstanding capital stock from its
members. We will incur a substantial financial obligation if Visa Europe exercises the put option, which it may do at any time. We cannot estimate the amount
of this obligation due to the nature and number of factors involved and the range of important assumptions that would be required, but it could be several
billion dollars or more. We may need to obtain third-party financing, either by borrowing funds or by undertaking a subsequent equity offering, in order to
meet our obligation. Sufficient financing may not be available to us, on reasonable terms, within the 285 days we would have to pay the exercise price. An
equity offering or the payment of part of the exercise price in our stock would dilute the ownership interests of our stockholders. See Note 3—Visa Europe to
our consolidated financial statements include in Item 8 of this report.
If Visa Europe exercises the put option, we may encounter difficulties in integrating Visa Europe's business and systems into our existing operations. If
we cannot do so quickly and cost-effectively, the integration could divert the time and attention of senior management, disrupt our current operations and
adversely affect our results of operations.
We are required to record quarterly any change in the fair value of the put option. These adjustments will be recorded through our consolidated
statements of operations, which will therefore affect our reported net income and earnings per share. These quarterly adjustments and their resulting impact on
our reported statements of operations could be significant. The existence of these charges could adversely affect our ability to raise capital or the price at
which we can raise it. See Note 3—Visa Europe to our consolidated financial statements include in Item 8 of this report.
We depend on key employees and may be unable to retain them.
Our employees are vital to our success, and our key management and other employees are difficult to replace. We may not be able to retain highly
qualified employees in the future, which could adversely affect our business.
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