| Item 1.01. | Entry Into a Material Definitive Agreement. |
On November 5, 2019, Xerox Holdings Corporation (the “
”) announced that it had restructured its relationship with FUJIFILM Holdings Corporation (“
”) through a series of agreements intended to simplify and set a new course for the companies’ strategic sourcing relationship going forward. As further described below, the Company entered into definitive agreements relating, among other things, to: sales to indirect subsidiaries of FH of the Company’s indirect 25% equity interest in Fuji Xerox Co., Ltd., a Japanese company (“
”), and of the Company’s indirect 51% partnership interest in Xerox International Partners (“
”); modified sourcing terms for future product programs; the grant of a trademark license to enable FX to transition to a new brand while compensating the Company for continued use of its name; the grant of an IP license to allow FX to provide certain OEM products to certain named parties on a worldwide basis in exchange for a fixed royalty; and dismissal of a pending lawsuit FH filed against Xerox Corporation (“
”).
Pursuant to the Stock Purchase Agreement, dated as of November 5, 2019 (the “
”), among XC, Xerox Limited (“
”), FH, FUJIFILM Asia Pacific Pte. Ltd. (“
”) and FX, among other things, FX will conduct a buyback of its shares from both FH and XL on a pro rata basis, pursuant to which XL will receive $769,890,000 (the “
”). Following the Share Buyback, FFAP will purchase all of the outstanding equity interests of FX owned by XL (the “
” and, together with the Share Buyback, the “
”), for a purchase price of $1,430,110,000 (the “
”), which amount shall be increased by the amount of the dividends attributable to the period from October 1, 2019 to the date on which the FFAP Purchase occurs, calculated in accordance with the terms of the Stock Purchase Agreement.
Subject to the satisfaction or waiver of the conditions set forth in the Stock Purchase Agreement and on the terms set forth therein, the closing of the FX Sale Transaction will occur on November 8, 2019; provided, however, that if FH has not received early termination of the waiting period of the
pre-transaction
notification (
) required under the Foreign Exchange and Foreign Trade Act of Japan (the “
”) on or before November 5, 2019, then the Share Buyback will occur on November 8, 2019 and the FFAP Purchase will occur within three (3) business days following receipt of the FEFTA Approval. If the FEFTA Approval has not been received by March 24, 2020, then FH will consummate the FFAP Purchase on March 30, 2020, by either (i) replacing FFAP with another entity as the purchaser in the FFAP Purchase so the FEFTA Approval is no longer required in connection with the FFAP Purchase or (ii) implementing another transaction structure that allows XL to sell all of its remaining equity interest in FX and receive the FFAP Purchase Price.
The closing of the FX Sale Transaction is conditioned upon the absence of any legal requirement or order preventing or making unlawful the transactions contemplated thereby, other than the FEFTA Approval. Moreover, each party’s obligation to consummate such closing is conditioned upon the accuracy of the other party’s representations and warranties (generally subject to a Material Adverse Effect (as defined in the Stock Purchase Agreement) qualifier). The Stock Purchase Agreement contains customary representations and warranties regarding the parties thereto, customary covenants, indemnification provisions and other provisions customary for transactions of this nature.
The foregoing description of the Stock Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Stock Purchase Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.
The Stock Purchase Agreement has been provided solely to inform investors of its terms. The representations, warranties and covenants contained in the Stock Purchase Agreement were made only for the purposes of such agreement and as of specific dates, were made solely for the benefit of the parties to the Stock Purchase Agreement and may be intended not as statements of fact, but rather as a way of allocating risk to one of the parties if those statements prove to be inaccurate. In addition, such representations, warranties and covenants may have been qualified by certain disclosures not reflected in the text of the Stock Purchase Agreement and may apply standards of materiality in a way that is different from what may be viewed as material by shareholders of, or other investors in, the Company. The Company’s shareholders and other investors are not third-party beneficiaries under the Stock Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or conditions of the Company or FH or any of their respective subsidiaries or affiliates.
Amendment No. 1 to Technology Agreement
In connection with the FX Sale Transaction and concurrently with the execution and delivery of the Stock Purchase Agreement, FX and XC entered into Amendment 1, dated as of November 5, 2019 (the “
”), to that certain Technology Agreement (the “
”), dated as of April 1, 2006, by and between FX and XC, relating to licenses granted to FX by XC for XC’s trademarks and certain
non-marking
Document Processing Activities. The TA Amendment, among other things, (i) extends to two (2) years following the expiration of the TA (the “
”) the time period by which FX is required
to transition away from the use of Xerox trademarks upon expiration of the TA, (ii) grants FX limited licenses to use Xerox trademarks for the Transition Period, subject to certain quality control standards and for a royalty in the amount of $100,000,000, payable to XC within three (3) business days from the first date of the Transition Period, and (iii) amends FX’s licenses for certain
non-marking
Document Processing Activities to become worldwide, royalty-free, and
non-exclusive
upon the expiration of the TA.
The TA Amendment will become effective concurrently with the FFAP Purchase unless the Share Buyback has occurred but the FEFTA Approval has not been received by November 24, 2019, in which case the TA Amendment will become effective as of the later of (i) November 27, 2019 or (ii) if such effectiveness is prohibited by any legal requirement or order, three (3) business days following the elimination of any such prohibition (such time, as to any Ancillary Agreement (as defined below), the “
Ancillary Agreements Effectiveness
”).
The foregoing description of the TA Amendment does not purport to be complete and is qualified in its entirety by reference to the TA Amendment, a copy of which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Amendment No. 1 to Master Program Agreement
In connection with the FX Sale Transaction and concurrently with the execution and delivery of the Stock Purchase Agreement, FX and XC entered into Amendment No. 1, dated as of November 5, 2019 (the “
”), to that certain Master Program Agreement (the “
”), dated as of September 9, 2013, relating to the supply arrangement from FX to XC for xerographic document products. The MPA Amendment removes from the MPA termination provisions that are triggered by (i) a change in the composition of the board of directors of XC, (ii) a sale of substantially all assets of XC or (iii) any other
change-in-control
type scenario related to XC, and extends the effective term of certain product specific supply agreements governing existing product programs.
In addition, the MPA Amendment provides, among other things, that if the TA expires on March 31, 2021 solely due to
non-renewal
by FX or XC, then FX will be restricted for an agreed period from selling, licensing, leasing, or distributing Graphic Communications Products in certain jurisdictions (collectively, the “
Limited Exclusive Territory
”), except through XC, (ii) XC and its subsidiaries will be restricted from manufacturing, purchasing, or procuring Graphic Communications Products that are being sold or distributed in the Limited Exclusive Territory, unless procured through FX (excluding Graphic Communications Products that are not substantially similar in terms of specifications and availability, taken as a whole, as Graphic Communications Products designed and manufactured by FX) and (iii) XC will be appointed as FX’s nonexclusive reseller and distributor of its Graphic Communications Products outside the Limited Exclusive Territory. The MPA Amendment also includes provisions governing the entry into and/or termination of certain future documents relating to the MPA.
The MPA Amendment will become effective at the time of the Ancillary Agreements Effectiveness.
The foregoing description of the MPA Amendment does not purport to be complete and is qualified in its entirety by reference to the MPA Amendment, a copy of which is filed as Exhibit 10.2 hereto and is incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure. |
Attached as Exhibit 99.2 hereto is a copy of a presentation that will be used by the Company in informational meetings.
The information contained in this Item 7.01 and in Exhibit 99.2 hereto shall not be deemed “filed” with the Commission for purposes of Section 18 of the Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
Pursuant to the Partnership Interest Purchase Agreement, dated as of November 5, 2019 (the “
”), among XC, Xerox International Joint Marketing, Inc., a subsidiary of XC that holds a 51% partnership interest in XIP (“
”), FH, FX and FX Global, Inc., a subsidiary of FX that holds a 49% partnership interest in XIP (“
”), among other things, XIJM will sell its 51% partnership interest in XIP to an affiliate of FX (the “
”) for an aggregate purchase price of $23,000,000. The XIP Sale will occur concurrently with the FFAP Purchase, subject to the satisfaction or waiver of specified conditions set forth therein and on the terms set forth therein.
The closing of the XIP Sale is conditioned upon (i) the absence of any legal requirement or order preventing or making unlawful the XIP Sale and (ii) the consummation of the FX Sale Transaction. Moreover, each party’s obligation to consummate the XIP Sale is conditioned upon the accuracy of the other party’s representations and warranties (generally subject to a Material Adverse Effect (as defined in the XIP Purchase Agreement) qualifier). The XIP Purchase Agreement contains customary representations and warranties regarding XC, XIJM and FX, customary covenants, indemnification provisions and other provisions customary for transactions of this nature.
