Icahn Capital LP
767 Fifth Avenue, 47th Floor
New York, New York 10153
May 7, 2018
VIA E-MAIL AND EDGAR
United States Securities and Exchange Commission
Division of Corporation Finance
100 F Street, N.E.
Washington, D.C. 20549
Attention: Christina Chalk, Esq.
Re: Xerox Corporation
PREC14A Filed on April 18, 2018
Soliciting Material filed pursuant to Rule 14a-12 on April 16 and
17, 2018
Filed by Carl C. Icahn, et al.
File No. 001-04471
Dear Ms. Chalk:
We express our appreciation for your review of the Additional Soliciting
Materials filed on Schedule 14A pursuant
to Rule 14a-12 on April 16, 2018 and April 17, 2018 and the Preliminary Proxy
Statement filed on Schedule 14A on
April 18, 2018, in each case by Icahn Capital LP, et al. ("Icahn") with respect
to Xerox Corporation ("Xerox" or the
"Company"), including filings by Darwin Deason, et. al. ("Deason").
We are responding to the comments provided by the staff (the "Staff") of the
Securities and Exchange Commission
(the "Commission") by letter dated April 26, 2018. Our responses to the Staff's
comments are indicated below,
directly following a restatement of the comments in bold, italicized type.
Please note that as a result of the preliminary injunctions granted in the
Decision and Order of the Supreme Court,
New York County (Ostrager, J.) (the "Court"), dated April 27, 2018 (Decision
and Order, In re Xerox Consol.
S'holder Litig., No. 650766/2018) (the "Order"), the number of persons, and the
identities of such persons, to be
nominated by the Participants for election to the Board of Directors of Xerox
(the "Board") at the 2018 Annual
Meeting of Shareholders of Xerox may change.
Soliciting Material Filed Pursuant to Rule 14a-12 on April 16, 2018
Exhibit 1
Exhibit 99.3
1. Each statement or assertion of opinion or belief must be clearly
characterized as such, and a reasonable
factual basis must exist for each such opinion or belief. Support
for opinions or beliefs should be self-
evident, disclosed in the proxy statement or provided to the staff
on a supplemental basis. Please provide
support for the following statement supplementally:
On page 1 of the slide presentation entitled "Darwin Deason
Amended Complaints
(Redacted)*" you state "[s]cores of documents remain
improperly withheld..."
In the litigation involving Mr. Deason, Xerox, the Board and FUJIFILM
Holdings Corp. ("Fuji"), titled
650675/2018 Darwin Deason v. Fujifilm Holdings Corp. et al (the
"Deason Litigation"), the defendants,
including Xerox and the Board, produced tens of thousands of documents
through an expedited discovery
process. The vast majority of these documents were marked
"Confidential" or "Highly Confidential" by
Xerox, meaning the general public (and even Mr. Deason in certain
cases) could not view these documents
or any documents developed with information derived therefrom,
including Mr. Deason's complaints.
Under a court order that governed the discovery process in the Deason
Litigation, the designations of
"Confidential" and "Highly Confidential" were intended to be used only
for documents containing trade
secrets or similar information that would place the defendants at a
competitive disadvantage if such
documents or information were to be publicly disclosed.
Mr. Deason's claim that "[s]cores of documents remain improperly
withheld..." was based on Xerox's over
designation of documents as "Confidential" or "Highly Confidential",
and its refusal to remove these
designations. This claim was subsequently supported by the Judge
presiding over the Deason Litigation, in
a court order on April 25, 2018 attached hereto as Exhibit A. In this
order, the Judge required the entire
docket to be unsealed, which included all of Mr. Deason's complaints,
motions, affidavits and over 340
additional documents, most of which were previously either redacted or
held under seal due to Xerox's use
of the "Confidential" and "Highly Confidential" designations. As such,
we believe that there is ample
evidence in the record to support our statement that "scores of
documents remain improperly withheld" at
the time such statement was made
Soliciting Material Filed Pursuant to Rule 14a-12 on April 17, 2018
Exhibits 1 and 2
Exhibit 99.3
2. See our last comment above. In future filings, the following
statements or types of statements should be
characterized as a belief, supported by facts, or avoided:
On page 1 of the letter to shareholders, you state "[b]oth
the substance of the proposed value-
destroying transaction and the conflict-tainted process..."
On slide 3, you state "...fight publicly against the
self-interested, value-destroying
entrenchment tactics..." and on slide 12 you state "never
wanted to pursue for their own selfish
reasons."
On slides 6 and 15, you state "...conflicted Xerox CEO, who
betrayed shareholders by `serving
as a loyal agent of the acquirer'..."
The Participants believe each of the statements above are supported by
facts and do not need to be
characterized as belief or avoided.
As to the statement on page 1 of the letter to shareholders that was
filed as Exhibit 1 (the "Letter"), there is
ample factual support throughout the presentation filed as Exhibit 2
(the "Presentation") that the proposed
transaction will destroy value. As a starting point, the closing price
of Xerox stock on
April 13, 2018 (the last trading day prior to the Participants completion
of the Presentation) was $28.17,
which is approximately 14% lower than the closing price of Xerox stock on
the day prior to announcement
of the proposed transaction ($32.68). That stock price decrease represents
an aggregate loss of value of
approximately $1.15 billion for Xerox shareholders based on the
254,673,473 shares of Xerox stock stated
to be outstanding as of January 31, 2018. Further, as explained in the
Presentation, the proposed transaction
will destroy value for Xerox shareholders because it will (in all
reasonable likelihood) (1) forever foreclose
the opportunity for Xerox shareholders to receive a control premium for
their shares and (2) result in Xerox
stock trading at a minority discount. Finally, the Participants believe
that combining Xerox with Fuji
Xerox, which is still reeling from an ongoing accounting scandal that
appears to grow in size and scope
nearly every fiscal quarter, will almost certainly lead to further value
destruction. Similarly, there is also
ample factual support for characterizing as "conflict-tainted" the process
that led to the proposed
transaction. In fact, in the Order the Court determined that the proposed
transaction was "largely negotiated
by a massively conflicted CEO in breach of his fiduciary duties to further
his self-interest and approved by
a Board, more than half of whom were perpetuating themselves in office for
five years."
As to the statements on slide 3 and slide 12 of the Presentation, the
Participants believe such statements are
supported by the valuation analysis included in the Presentation, the
Court's findings in the Order and the
expansive evidentiary record that is now publicly available online in the
docket of the Court. As explained
above, there is ample factual support throughout the Presentation that the
proposed transaction will destroy
value, and in the Order the Court found that the proposed transaction was
an entrenchment tactic designed
to "perpetuate [the directors] in office for five years." Given the
Court's finding that the Xerox directors
"acted in bad faith in structuring and negotiating the proposed
transaction [with Fuji]", the Participants
believe it is self-evident that the directors were motivated by "selfish
reasons" when they did not (1) pursue
any renegotiation or other recourse against Fuji for the massive ongoing
accounting scandal at Fuji Xerox
or (2) direct management to prepare for initiating termination of the
Technology Agreement in 2020.
As to the statements on slide 6 and slide 15 of the Presentation, the
Participants note that in the Order the
Court found Mr. Jacobson to be "massively conflicted" and that John C.
Coffee Jr., the Adolf A. Berle
Professor of Law at Columbia Law School and director of the Center on
Corporate Governance at
Columbia University Law School, who is one of the foremost American legal
scholars in the areas of
securities law and corporate law, reviewed the evidentiary record and
concluded that Mr. Jacobson was
"serving as a loyal agent of the acquirer" during the negotiations with
Fuji. Professor Coffee's expert report
from the Deason Litigation is attached hereto as Exhibit B. The
Participants believe there is no greater
factual support for stating that Mr. Jacobson "betrayed shareholders" than
the following finding of the
Court: "[Fuji's] Kawamura and [Xerox's] Jacobson...were aligned in
combating Icahn and the Board so
that Fuji could consummate a deal entirely in its favor and so that
Jacobson could maintain his position as
CEO."
3. Disclosure on slide 11 states that "[t]his intentional deceit prevented
shareholders..." You must avoid
issuing statements that directly or indirectly impugn the character,
integrity or personal reputation or
make charges of illegal, improper or immoral conduct without factual
foundation. Please provide us
with or disclose the factual foundation for this statement. In this
regard, note that the factual foundation
for such assertion must be reasonable. Refer to Rule 14a-9.
The Participants do not believe that the above statements directly or
indirectly impugn the character,
integrity or personal reputation or make charges of illegal, improper or
immoral conduct without reasonable
factual foundation. The Participants believe there is more than reasonable
factual foundation
for characterizing as an "intentional deceit" Xerox's failure to disclose the
Joint Enterprise Contract
governing the Fuji Xerox joint venture. We believe the record unambiguously
establishes that the Company
(1) knew that the terms of the Joint Enterprise Contract were both (A) material
and (B) not publicly
disclosed and (2) intentionally chose not to disclose or discuss the terms of
the Joint Enterprise Contract,
specifically with respect to the change in control provisions, publicly.
As established in the Deason Litigation, in April 2017, the Company's head of
investor relations, Jennifer
Horsley, prepared an investor Q&A for Xerox CEO Jeff Jacobson (the "Q&A"). In
the Q&A, Ms. Horsley
noted that Mr. Jacobson was likely to receive questions about whether there was
a "change of control"
provision in any of the agreements with Fuji or Fuji Xerox, which would include
the Joint Enterprise
Contract, which, among other things, establishes the relative governance rights
of Xerox and Fuji with
respect to Fuji Xerox. Ms. Horsley noted that the Joint Enterprise Contract was
not a public document and
suggested the Company respond vaguely ("with any relationship of this size and
scope there are change of
control protections that would result in a need to re-evaluate existing
agreements upon a change of
control"). In the Q&A, Ms. Horsley is alerting the Company's CEO (who is also a
member of the Board)
that the Joint Enterprise Contract (1) was not public and (2) was important
enough that he was likely to get
questions from investors about it (i.e. there was a substantial likelihood that
a reasonable investor would
attach importance to the Joint Enterprise Contract). Additionally, during Mr.
Jacobson's testimony in the
Deason Litigation, he admitted that he knew the Joint Enterprise Contract was
not public and had not been
public for 17 years. Please see the transcript excerpts from the Deason
Litigation attached hereto as
Exhibit C.
Additionally, on May 22, 2017 and January 17, 2018, Mr. Deason sent the Board
open letters stating that he
believed the market had little clarity about, among other things, the
relationship between Xerox and Fuji
and the agreements governing Fuji Xerox and requesting Xerox to disclose those
agreements, including the
Joint Enterprise Contract, in accordance with U.S. securities laws. Please see
the letters attached as
Exhibit D. The Participants believe these letters constitute additional
evidence to support the claims that
the Company and the Board were aware the Joint Enterprise Contract was never
previously disclosed and
that its terms were material.
Further, in the Company's April 19, 2018 legal brief filed with the Court in
the Deason Litigation (attached
as Exhibit E), the Company argued that it did not have any obligation to
disclose the joint venture
agreements, including the Joint Enterprise Contract, because the Commission
never responded to or asked
for any additional information or disclosures following the Company's response
to a comment letter from
the Staff of the Commission in December 2002. As the Staff is aware, it is
inappropriate for an issuer to use
Staff comments, or any Staff action or inaction following an issuer's response
to a Staff comment letter, to
justify and defend such issuer's disclosure or lack thereof.
Finally, as further established in the Deason Litigation, on January 31, 2018,
after the announcement of the
proposed transaction between Fuji and Xerox, and the disclosure of the joint
venture agreements, including
the Joint Enterprise Contract, Charles Prince, a member of the Board, sent an
email to a friend stating his
understanding of the joint venture agreements, particularly the Joint
Enterprise Contract and its change of
control provisions. The text of that email is copied below (emphasis added):
In some ways, sad: a (formerly iconic) US company selling control to a
Japanese company...But
there is a Joint Venture agreement, entered into 55 years ago (!).
which made it practically
impossible for Xerox to sell to anyone else. It's pretty amazing: when
the JV was entered into,
no one ever imagined that Xerox would ever need to sell itself and no
one ever
imagined that Asia (which Xerox is locked out of by the JV)
would be the fastest growing
region. A really amazing problem.
In sum, the Participants believe that these statements, actions and
inactions provide ample evidence to
support their claims.
Preliminary Proxy Statement Filed on April 18, 2018
Participants in the Solicitation of Proxies, page 6
4. To the extent not provided, please provide the information required by
Item 5(b)(1)(i), Item
5(b)(1)(ii), Item 5(b)(1)(ix), Item 5(b)(1)(x) and Item 5(b)(1)(xi) of
Schedule 14A for each participant
and, where applicable, each participant's associates.
The Participants hereby undertake to provide any previously omitted
information that is required by Item
5(b)(1)(i), Item 5(b)(1)(ii), Item 5(b)(1)(ix), Item 5(b)(1)(x) or
Item 5(b)(1)(xi) of Schedule 14A for each
participant and, where applicable, each participant's associates, in
the revised preliminary proxy statement
the Participants intend to file with the Commission.
Background to the Solicitation, page 10
5. We note the disclosure in the Schedule 13D which states that "[t]he
Reporting Persons intend to have
discussions with representatives of the Issuer's management and board
of directors relating to improving
operational performance and pursuing strategic alternatives, as well
as the possibility of board
representation." Please expand your disclosure to include any other
material contacts you had with
Xerox, both before and after the filing of the Schedule 13D, to
provide all necessary context for your
interactions with Xerox. As an example only, we note from Icahn's open
letter to Xerox shareholders
dated December 12, 2017 and filed as soliciting material on the same
date Mr. Icahn's assertion that:
"the primary reason Xerox stock is up 30% year-to-date is the Conduent
spin-off that I spent over a year
fighting for." However, there is no disclosure detailing the
discussions between Icahn and Xerox which
prompted the announcement of the spin-off on January 29, 2016.
The Participants hereby undertake to expand the disclosure in the
revised preliminary proxy statement the
Participants intend to file with the Commission to include a
description of Icahn's efforts to push for
completion of the Conduent spin-off between filing of Icahn's initial
Schedule 13D on November 23, 2015
and the completion of the Conduent spin-off on December 31, 2016.
6. Disclosure on page 11 states that in late November 2017 Icahn learned
that certain members of the
Board were advocating that the Company abruptly and dramatically
change course on a number of
significant issues, which issues you later discussed with Mr. Keegan
and appear to have been a major
factor in Mr. Christodoro's resignation from the Board. Please expand
your disclosure to describe what
these abrupt and dramatic changes were.
The Participants hereby undertake to expand the disclosure in the
revised preliminary proxy statement the
Participants intend to file with the Commission to include a more
detailed description of the abrupt and
dramatic change of course being advocated by certain members of the
Board in November 2017.
Proposal 1 -- Election of Directors, page 13
7. Please elaborate upon the Nominees' intent to effect "positive change"
at the Company to discuss
specific plans or intentions, to the extent known. To the extent you
do not have current plans or
intentions, so state.
The Participants hereby undertake to expand the disclosure in the
revised preliminary proxy statement the
Participants intend to file with the Commission to state that the
Nominees plan to meet promptly following
their election to the Board to evaluate all strategic alternatives to
maximize shareholder value, including
terminating or restructuring Xerox's relationship with Fuji and the
proposed transaction with Fuji.
8. Please disclose Mr. Christodoro's principal occupation or employment
following his departure from
Icahn Capital LP in February 2017. Refer to Item 7(b) of Schedule 14A
and Item 401(e)(1) of
Regulation S-K.
The Participants hereby undertake to include Mr. Christodoro's
principal occupation or employment
following his departure from Icahn Capital LP in February 2017 in the
revised preliminary proxy statement
the Participants intend to file with the Commission.
Cost and Method of Solicitation, page 22
9. Disclosure on page 22 states that the solicitation of proxies will be
made by, among other people, certain
employees of Icahn Enterprises and Deason. Please describe the class
or classes of employees to be so
employed, and the manner and nature of their employment for such
purpose. Refer to Item 4(b)(2) of
Schedule 14A.
The Participants hereby undertake to include the class or classes of
employees of Icahn and Deason by
whom solicitation of proxies will be made, and the manner and nature
of their employment for such
purpose, in the revised preliminary proxy statement the Participants
intend to file with the Commission.
Additional Information, page 23
10. When referring security holders to information you have omitted in
reliance on Rule 14a-5(c), please
either provide a general reference that certain omitted information can
be found in Xerox's proxy
statement, or specifically state what information you have omitted. For
instance, we note that certain
information regarding the compensation that Mr. Christodoro received
from Xerox as a director of the
company has been omitted from your proxy statement, but you have not
referred security holders to this
information in Xerox's proxy statement.
The Participants hereby undertake to include in the revised
preliminary proxy statement the Participants
intend to file with the Commission a general reference that certain
omitted information can be found in
Xerox's proxy statement.
11. Disclosure on page 23 states that "[t]his information is expected to be
contained in Xerox's public
filings." Please revise this statement to remove the implication that
you may omit information from your
proxy statement as long as you refer security holders to such omitted
information in any of Xerox's
public filings. Please note that Rule 14a-5(c) only allows information
contained in any other proxy
soliciting material which has been furnished to each person solicited
in connection with the same
meeting or subject matter to be omitted from your proxy statement.
The Participants hereby undertake to include in the revised
preliminary proxy statement the Participants
intend to file with the Commission a general reference that certain
omitted information can be found in
Xerox's proxy statement.
Form of Proxy
12. Please clearly mark your form of proxy as preliminary. See Rule
14a-6(e)(1).
The Participants hereby undertake to mark their form of proxy as
preliminary in the revised preliminary
proxy statement the Participants intend to file with the Commission.
*****
Each Participant hereby acknowledges that:
the Participant is responsible for the adequacy and accuracy of the
disclosure in the filing;
Staff comments or changes to disclosure in response to Staff comments
do not foreclose the Commission
from taking any action with respect to the filing; and
the Participant may not assert Staff comments as a defense in any
proceeding initiated by the Commission
or any person under the federal securities laws of the United States.
If you have any questions regarding these responses, please do not hesitate to
contact Louis Pastor, Deputy General
Counsel of Icahn Capital LP, at (212) 702-4361.
Sincerely,
Icahn Capital LP
By: /s/ Louis
Pastor
Louis Pastor
Deputy General
Counsel
cc: Bryan Hough, Esq., Securities & Exchange Commission
Robert Leclerc, Esq., King & Spalding LLP