Icahn Capital LP
767 Fifth Avenue, 47th Floor
New York, New York 10153
May 14, 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
Soliciting Material filed pursuant to Rule 14a-12 on May 4 and 7,
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 May 4 and 7, 2018 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 May 10, 2018. Our responses to the Staff's
comments are indicated below,
directly following a restatement of the comments in bold, italicized type.
Soliciting Material Filed Pursuant to Rule 14a-12 on May 4, 2018
Exhibit 2
1. You must avoid making statements that directly or indirectly impugn
the character, integrity or personal
reputation of other persons or make charges of illegal, improper or
immoral conduct without factual
foundation. Refer to Rule 14a-9. Provide us supplementally, or
disclose, the factual foundation for the
statements listed below. In this regard, note that the factual
foundation for each such assertion must be
reasonable.
Xerox Board commits additional intentional breaches of
fiduciary duties.
Xerox Board is pursuing their own brazen self-interest.
In connection with a potential settlement of the litigation
involving Mr. Deason, Xerox and the Board of
Directors of Xerox (the "Board") titled 650675/2018 Darwin Deason v.
Fujifilm Holdings Corp. et al (the
"Deason Litigation"), the defendants, including Xerox and the Board,
executed and announced a
settlement agreement on May 1, 2018. Xerox's press release
announcing such settlement agreement is
attached hereto as Exhibit A. In that press release, the Board
included the following statement (emphasis
added):
"...the Xerox Board of Directors [has] determined that an immediate
resolution of the pending litigation
and proxy contest is in the best interest of our company and all
stakeholders..."
However, just two days later, the Board allowed the settlement
agreement to expire without taking effect
solely because the presiding judge in the Deason Litigation did not
execute stipulations discontinuing the
Deason Litigation, despite Mr. Deason and Mr. Icahn offering to waive
that condition to effectiveness of
the settlement agreement. By law, such stipulations are not required
for a private settlement -- in fact, no
court order or approval is needed under the law. This was confirmed by
the presiding judge in the Deason
Litigation in an order attached hereto as Exhibit B. The condition in
the settlement agreement relating to
obtaining executed stipulations was added by the Board solely to
provide the directors with additional
assurance that any exposure to personal liability was effectively
mitigated by virtue of procuring judicial
sign-off on the terms of the settlement, even though such sign-off is
not required by law. The Participants
believe that the record clearly establishes that the directors were
acting only in their own self-interest by
allowing the settlement agreement to expire solely because the court
did not provide them with such
extraordinary additional approval, especially since just two days
prior the directors publicly stated that the
settlement was in the best interest of the Company and its
stakeholders.
2. Disclosure states that "[o]ver the next few months, we intend to see
that "massively conflicted" Jeff
Jacobson..." Similar disclosure can be found in your soliciting
material filed pursuant to Rule 14a-12
on May 7, 2018. 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. In future filings, statements
such as this should be characterized as a belief, supported by facts,
or avoided.
The Participants believe the statement above is supported by facts and
does not need to be characterized as
a belief or avoided.
The Participants use of the phrase "massively conflicted" is a direct
quote from the April 27, 2018 decision
and order of the presiding judge in the Deason Litigation (the
"Order"), which is attached hereto as
Exhibit C. In the Order, the presiding judge details Mr. Jacobson's
transgressions, which include but are
not limited to: (i) not informing the full board of Fuji's willingness
to do an all-cash bid; (ii) continuing to
negotiate the transaction with Fuji after being told by the Chairman
of the Board to cease all
communications with Fuji about a transaction; and (iii) negotiating a
position for himself at the combined
company resulting from the transaction with Fuji. The Order states (on
page 15) that the transaction "was
largely negotiated by a massively conflicted CEO [Mr. Jacobson] 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" (emphasis added). The Participants believe the
Order, including the excerpted quote
above, provides the requisite factual basis for the underlying
statement.
Soliciting Material Filed Pursuant to Rule 14a-12 on May 7, 2018
Exhibit 1
3. See comment 1 above. Provide us supplementally, or disclose, the
factual foundation for the following
assertion: When referring to the Xerox Board, you state that it
entered into the deal with Fuji to further
their own personal interests.
Please note the Participants response to question 2 above. The Order
states that the transaction "was largely
negotiated by a massively conflicted CEO [Mr. Jacobson] in breach of
his fiduciary duties to
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further his self-interest and approved by a Board, more than half of whom
were perpetuating themselves
in office for five years" (emphasis added). Additionally, the Order states
that the plaintiffs in the Deason
Litigation "demonstrated a likelihood of success on the merits of [their]
claims that defendants breached
their fiduciary duties as directors in approving the proposed
transaction..." (emphasis added). The
Participants assertion is based both on conclusions in the Order and the
expansive evidentiary record
established in the Deason Litigation.
4. See comment 2 above. In future filings, the following statement or types
of statements should be
characterized as a belief, supported by facts, or avoided: "This means
that the lame duck board may no
longer deny shareholders...".
The Participants believe the statement above is supported by facts and
does not need to be characterized as
belief or avoided.
As set forth above, the Board publicly announced on May 1, 2018 that a
majority of the directors (7 of 10)
were resigning, but then two days later the Board revoked such
resignations. The resignations and
subsequent revocations caused investors and members of the media, as is
reasonable under the
circumstances, to question the Board's ability to lead Xerox forward after
the events that have come to light
in the Deason Litigation. Some relevant third-party commentary was
consolidated and included in
Mr. Deason and Mr. Icahn's public statement on May 7, 2018 and is copied
below. The Participants believe
that the overwhelmingly negative reaction of the market, the media and
investors to the resignations and
subsequent revocations of a majority of the directors provides a strong
factual basis to refer to the Board as
being a "lame duck board."
"Now it's just more uncertainty.....We don't know if the deal is
back on. There's something
happening behind the scenes, which does not raise confidence in
the deal or the company." --
Scott Deveau, Xerox CEO to Stay in Surprise U-Turn, Setting Up
Icahn Proxy War (Bloomberg,
May 4, 2018).
"Xerox's directors have snatched defeat for the company from the
jaws of a partial victory.
Tuesday's settlement with activist investors Carl Icahn and
Darwin Deason has foundered over
extra legal protection for board members who were set to leave.
They and discredited Chief
Executive Jeff Jacobson will stay for now, leaving Xerox and its
investors in limbo.....The
settlement would have brought a new CEO and a revamped board. But
in addition to a
contractual indemnification and release from liability, the
departing directors -- a group
including Chuck Prince, who led Citigroup into the financial
crisis and outstayed his welcome
there, too -- wanted additional reassurance from [Judge]
Ostrager, who declined to give it right
away.....It's hard to see other potential buyers or partners
working with the current directors and
a CEO the board already decided once to replace last year and who
just escaped a second near-
departure. And as recently as Tuesday, they said the changes
agreed with Icahn and Deason were
in the best interest of Xerox and it shareholders.....Jacobson,
Prince and the other directors
involved are jamming the company's future for the sake of their
own." -- Richard Beales, Xerox
Directors Jam Company's Future for Their Own (Reuters
Breakingviews, May 4, 2018).
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"Over the recent decades this American icon of industry has
failed to adapt to changes in the
world and inflicted a series of injuries on itself. It should
not have been a surprise that the
company would turn ever more inward-looking as it headed
towards its inevitable demise. What is
painful to watch is its loss of dignity on the way to its
corporate death. The flip-flops in control
over this week are not good and will leave everyone confused
and angry, accelerating and
deepening the pain." -- George Bradt, Lessons From Xerox's
Undignified Death Throes (Forbes,
May 4, 2018).
"This leaves the future of XRX cloaked in uncertainty and as
we see it, it puts a lid on the
stock.....About all we're comfortable predicting at this
point is Jacobson and the six directors that
agreed to step down will be gone at some point. Whether that
is through a new settlement, a proxy
loss, or a sale to Fuji, Jacobson will not be CEO." --
Research Report, Xerox throws a nasty
changeup (Gordon Haskett, May 4, 2018).
"While shareholders twist in the wind, the board and CEO get
to hide behind corporate indemnity
while waiting for a "Hail Mary" according to the CEO, and
competitors are already targeting the
company's customers and employees.....In appointing Jeff
Jacobson, a long time Rochester Xerox
and Kodak executive who came equipped with a law degree and
an Ivy League education, the
board failed to recognize that nimble corporate governance is
now part of the core skillset of the
CEO. Shareholder lawsuits reveal that inside Xerox has a
culture of poor corporate governance,
tone-deaf ear to shareholder activists (who owned 15% of the
company) and a board hopelessly
broken by divided loyalties.....The ending to the Xerox
roller coaster is not far off, and it will
begin with the phrase "you can't make this stuff up."" --
Jeff Cunningham, Inside the Xerox
Boardroom Saga (Chief Executive, May 7, 2018).
*****
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.
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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
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