FILED: NEW YORK COUNTY CLERK 12/26/2019 10:52 AM
`NYSCEF DOC. NO. 1
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`INDEX NO. 657692/2019
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`RECEIVED NYSCEF: 12/26/2019
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`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF NEW YORK
`
`STEVEN J. REYNOLDS, derivatively on behalf
`of XEROX HOLDINGS CORPORATION,
`
`SUMMONS
`
`Index No.:
`
`Date Index Number Purchased:
`December 26, 2019
`
`Plaintiff,
`
`v.
`
`CARL C. ICAHN, HIGH RIVER LIMITED
`PARTNERSHIP, ICAHN CAPITAL LP, KEITH
`COZZA, GIOVANNI VISENTIN, JONATHAN
`CHRISTODORO, JOSEPH ESCHEVARRIA,
`NICHOLAS GRAZIANO, CHERYL GORDON
`KRONGARD, and ANDREW SCOTT LETIER,
`
`Defendants,
`
`and
`
`XEROX HOLDINGS CORPORATION,
`
`Nominal Defendant.
`
`To the Defendants named above and on the attached Schedule A:
`
`PLEASE TAKE NOTICE THAT YOU ARE HEREBY SUMMONED to answer the
`Complaint in this action and to serve a copy of your answer within 20 days after the service of
`this summons, exclusive of the day of service (or within 30 days after the service is complete if
`this summons is not personally delivered to you within the State of New York); and in case of
`your failure to submit answering papers, judgment will be taken against you by default for the
`relief demanded in the Complaint.
`
`Venue in New York County is proper pursuant to CPLR § 503(a). Defendant Icahn
`resides and conducts business in this county, and Icahn Capital maintains its headquarters located
`at 767 5th Avenue 47th Floor New York, NY 10153.
`
`Dated: New York, New York
` December 26, 2019
`
`MONTEVERDE & ASSOCIATES PC
`
`By: /s/ Beth A. Keller_____
` Beth A. Keller
`350 Fifth Avenue, Suite 4405
`New York, NY 10118
`Telephone: (914) 752-3040
`Facsimile: (914) 752-3041
`Email: bkeller@monteverdelaw.com
`
`i
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`RECEIVED NYSCEF: 12/26/2019
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`PASKOWITZ LAW FIRM, PC
`Laurence D. Paskowitz
`208 East 51st Street, Suite 380
`New York, NY 10022
`Telephone: (212) 685-0969
`Email: lpaskowitz@pasklaw.com
`
`Attorneys for Plaintiff Steven J. Reynolds
`
`
`
`
`
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`RECEIVED NYSCEF: 12/26/2019
`
`
`SCHEDULE A
`
`
`
`
`CARL C. ICAHN
`c/o Icahn Capital LP
`767 Fifth Avenue, 47th Floor
`New York, NY 10153
`
`HIGH RIVER LIMITED PARTNERSHIP
`445 Hamilton Avenue, Suite 1210
`White Plains, NY 10601
`
`ICAHN CAPITAL LP
`767 5th Avenue, 47th Floor
`New York, NY 10153
`
`KEITH COZZA
`c/o Xerox Holdings Corporation
`201 Merritt 7
`P.O. Box 4505
`Norwalk, CT 06858-4505
`
`GIOVANNI VISENTIN
`c/o Xerox Holdings Corporation
`201 Merritt 7
`P.O. Box 4505
`Norwalk, CT 06858-4505
`
`JONATHAN CHRISTODORO
`c/o Xerox Holdings Corporation
`201 Merritt 7
`P.O. Box 4505
`Norwalk, CT 06858-4505
`
`JOSEPH ESCHEVARRIA
`c/o Xerox Holdings Corporation
`201 Merritt 7
`P.O. Box 4505
`Norwalk, CT 06858-4505
`
`NICHOLAS GRAZIANO
`c/o Xerox Holdings Corporation
`201 Merritt 7
`P.O. Box 4505
`Norwalk, CT 06858-4505
`
`
`
`
`
`
`
`CHERYL GORDON KRONGARD
`c/o Xerox Holdings Corporation
`201 Merritt 7
`P.O. Box 4505
`Norwalk, CT 06858-4505
`
`ANDREW SCOTT LETIER
`c/o Xerox Holdings Corporation
`201 Merritt 7
`P.O. Box 4505
`Norwalk, CT 06858-4505
`
`XEROX HOLDINGS CORPORATION
`201 Merritt 7
`P.O. Box 4505
`Norwalk, CT 06858-4505
`
`
`
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`FILED: NEW YORK COUNTY CLERK 12/26/2019 10:52 AM
`NYSCEF DOC. NO. 1
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`INDEX NO. 657692/2019
`
`RECEIVED NYSCEF: 12/26/2019
`
`SUPREME COURT OF THE STATE OF NEW YORK
`COUNTY OF NEW YORK
`
`
`STEVEN J. REYNOLDS, derivatively on behalf
`of XEROX HOLDINGS CORPORATION,
`
`
`
`
`
`VERIFIED SHAREHOLDER
`DERIVATIVE COMPLAINT
`
`
`Index No.:
`
`
`JURY TRIAL DEMANDED
`
`
`
`Plaintiff,
`
`v.
`
`CARL C. ICAHN, HIGH RIVER LIMITED
`PARTNERSHIP, ICAHN CAPITAL LP, KEITH
`COZZA, GIOVANNI VISENTIN, JONATHAN
`CHRISTODORO, JOSEPH ESCHEVARRIA,
`NICHOLAS GRAZIANO, CHERYL GORDON
`KRONGARD, and ANDREW SCOTT LETIER,
`
`Defendants,
`
`and
`
`XEROX HOLDINGS CORPORATION,
`
`Nominal Defendant.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Plaintiff Steven J. Reynolds (“Plaintiff”), by and through his undersigned attorneys, upon
`
`knowledge as to itself and its own acts, and upon information and belief as to all other matters
`
`based upon the investigation of its attorneys, alleges as follows:
`
`
`
`NATURE OF THE ACTION
`
`1.
`
`This is a shareholder derivative action, brought on behalf of Xerox Holdings
`
`Corporation (“Xerox” or the “Company”), with respect to breaches of the fiduciary duty of loyalty
`
`and usurpation of a corporate opportunity by defendants Icahn Capital LP (“Icahn Capital”) and
`
`High River Limited Partnership (“High River”), entities controlled by defendant Carl C. Icahn
`
`(“Icahn”), who is a fiduciary of Xerox through his domination and control of Xerox, and having
`
`at least two personal representatives on the Company’s board of directors (the “Board”). Icahn
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`Capital and High River purchased approximately $1.2 billion of HP Inc. (“HP”) common stock
`
`knowing that Xerox was planning to acquire, or considering acquiring, all HP common stock at a
`
`premium price, generating a substantial profit for the benefit of Icahn Capital and High River. This
`
`action is brought to recover those profits for the benefit of Xerox.
`
`THE PARTIES
`
`PLAINTIFF
`
`2.
`
`Plaintiff is, and has been continuously throughout all times relevant hereto, the
`
`owner of Xerox common stock.
`
`NOMINAL DEFENDANT
`
`3.
`
`Nominal Defendant Xerox is incorporated under the laws of the State of New York.
`
`Xerox was formed, through a corporate reorganization, as a holding company successor to Xerox
`
`Corporation, a designer, developer, and seller of document management systems and solutions.
`
`Xerox’s common stock trades on the New York Stock Exchange under the ticker symbol “XRX.”
`
`THE ICAHN DEFENDANTS
`
`4.
`
`Defendant Carl Icahn (previously defined as “Icahn”) is the founder and controlling
`
`shareholder of Icahn Enterprises L.P., a diversified conglomerate holding company based in New
`
`York, formerly known as American Real Estate Partners. Icahn began his career as a stockbroker
`
`and, in 1968, formed Icahn & Co., a securities firm focusing on risk arbitrage and options trading.
`
`In 1978, Icahn began taking controlling positions in individual companies. Icahn developed a
`
`reputation as a “corporate raider” after his hostile takeover of Trans World Airlines in 1985.
`
`5.
`
`Defendant High River Limited Partnership (“High River”) operates as a venture
`
`capital firm and maintains its headquarters at 445 Hamilton Avenue, Suite 1210, White Plains, NY
`
`10601. High River is an investment vehicle controlled by defendant Icahn. High River owns
`
`
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`2
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`RECEIVED NYSCEF: 12/26/2019
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`4,691,218 shares of Xerox common stock and purchased 12,580,592 shares of HP common stock
`
`in the third quarter of 2019, starting on July 1, 2019 and ending September 30, 2019 (“2019Q3”).
`
`6.
`
`Defendant Icahn Capital LP (“Icahn Capital”) operates as an investment advisory
`
`firm managing investment portfolios. Icahn is the Chief Executive Officer (“CEO”) of Icahn
`
`Capital, which maintains its headquarters at 767 Fifth Avenue, 47th Floor, New York, NY
`
`10153. Icahn Capital owns 18,764,869 shares of Xerox common stock and purchased 50,322,378
`
`shares of HP common stock in 2019Q3.
`
`7.
`
`Icahn, High River, and Icahn Capital are collectively referred to herein as the “Icahn
`
`Defendants.” The Icahn Defendants, together with other investment vehicles owned by Icahn,
`
`make joint filings with the SEC, operate as a group, and beneficially own 10.6% of Xerox’s
`
`outstanding common stock, making them Xerox’s largest shareholder, and 4.2% of HP common
`
`stock, making them HP’s fifth largest shareholder.
`
`THE DIRECTOR DEFENDANTS
`
`8.
`
`Defendant Keith Cozza (“Cozza”) is, and since May 2018 has been, Chairman of
`
`the Board. Cozza serves as the President and CEO of Icahn Enterprises, L.P.; the Chief Financial
`
`Officer (“CFO”) of Icahn Associates Holding LLC; the Chief Operating Officer of Icahn Capital;
`
`and, a director of wholly owned subsidiaries of Icahn Enterprises L.P., including Icahn Automotive
`
`Group LLC and PSC Metals LLC. Cozza was previously a director of several entities while they
`
`were indirectly controlled by Icahn, including Federal-Mogul Holdings LLC; Tropicana
`
`Entertainment Inc.; Herbalife Ltd.; CVR Refining, LP; and, MGM Holdings Inc.
`
`9.
`
`Defendant Giovanni Visentin (“Visentin”) is, and since May 2018 has been,
`
`Xerox’s CEO and a member of the Board. Visentin received total compensation of $23,459,003
`
`from Xerox in 2018, and his targeted annual compensation for serving as Xerox’s CEO in 2019 is
`
`
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`RECEIVED NYSCEF: 12/26/2019
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`$13,000,000. Visentin served as a consultant to Icahn Capital in connection with a proxy contest
`
`at Xerox from March 2018 to May 2018. That proxy contest, backed by Icahn, resulted in Visentin
`
`receiving his positions at Xerox.
`
`10.
`
`Defendant Jonathan Christodoro (“Christodoro”) is, and since May 2018 has been,
`
`a member of the Board. Christodoro served as Managing Director of Icahn Capital until February
`
`2017, and as a representative of Icahn on the boards of directors of: Sandridge Energy, Inc.;
`
`Cheniere Energy, Inc.; American Railcar Industries, Inc.; PayPal Holdings, Inc.; eBay, Inc.;
`
`Hologic Inc.; Lyft, Inc.; Talisman Energy Inc.; Enzon Pharmaceuticals, Inc.; and, Herbalife Ltd.
`
`Christodoro was appointed to the Board in 2016 as part of a standstill agreement, resigned in
`
`December 2017, and was reappointed by Icahn in May 2018.
`
`11.
`
`12.
`
`Defendant Joseph Eschevarria is, and since 2017 has been, a member of the Board.
`
`Defendant Nicholas Graziano (“Graziano”) is, and since May 2018 has been, a
`
`member of the Board. Defendant Graziano has served as Portfolio Manager of Icahn Capital since
`
`February 2018 and served or serves as a representative of Icahn-related entities on the boards of
`
`directors of Cloudera Inc.; Conduent Incorporated; Herc Holdings Inc.; and, Herbalife Ltd.
`
`13.
`
`Defendant Cheryl Gordon Krongard (“Krongard”) is, and since 2017 has been, a
`
`member of the Board. Krongard previously served as a director of Federal-Mogul Holdings LLC
`
`when that company was controlled by Icahn. Krongard was appointed to the Board to resolve a
`
`proxy fight that Icahn threatened in 2016.
`
`14.
`
`Defendant Andrew Scott Letier (“Letier”) is, and since May 2018 has been, a
`
`member of the Board. Letier also serves as a Managing Director of Deason Capital Services, LLC
`
`(“Deason Capital”), an entity controlled by Darwin Deason (“Deason”), which beneficially owns
`
`6.8% of Xerox’s outstanding common stock. Deason does not file Forms 13F with the SEC and,
`
`
`
`4
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`FILED: NEW YORK COUNTY CLERK 12/26/2019 10:52 AM
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`RECEIVED NYSCEF: 12/26/2019
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`therefore, has not disclosed any purchases of HP stock by himself or Deason Capital.
`
`15.
`
`Defendants Cozza, Visentin, Christodoro, Eschevarria, Graziano, Krongard, and
`
`Letier are collectively referred to herein as the “Director Defendants.”
`
`
`
`JURISDICTION AND VENUE
`
`16.
`
`This Court has personal jurisdiction over Defendants pursuant to New York Civil
`
`Practice Law and Rules (“CPLR”) §§ 301 and 302. Each of the Defendants either resides in New
`
`York or conducts continuous and systematic business in New York.
`
`17.
`
`Venue is proper in this County under CPLR § 503(a). Icahn lives and conducts
`
`business in, and Icahn Capital maintains its headquarters in, this County.
`
`SUBSTANTIVE ALLEGATIONS
`
`XEROX
`
`18.
`
`Xerox is a large operator in the global document markets, providing document
`
`equipment, such as printing and publishing systems, digital copiers, laser and solid ink printers,
`
`fax machines, and digital multi-functional devices, which can print, copy, scan and fax.
`
`Increasingly, the Company has also aimed at related service markets, including traditional
`
`supplies and printer support as well as newer areas, such as document management and business
`
`processes.
`
`19.
`
`Xerox estimates its core print technology and services market opportunity is sized
`
`at around $67 billion. Primary offerings in this space are spread over Intelligent Workplace
`
`Services, Workplace Solutions and Production Solutions. Xerox also estimates its ConnectKey
`
`software platform competes in a digital solutions and software market that is sized at around $31
`
`billion. The Company’s larger competitors include Canon, HP, Konica Minolta, and Ricoh.
`
`20.
`
`The print technology industry has been challenged by the increased digitization of
`
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`RECEIVED NYSCEF: 12/26/2019
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`workplaces, causing reduced revenues for Xerox and other printing technology companies. Icahn,
`
`on May 15, 2017, after acquiring a large stake in Xerox and gaining a more detailed understanding
`
`of the print technology business, referred to the industry in which Xerox and HP compete as a
`
`“piece of shit” according to a contemporaneous memo written by Xerox’s then CEO, as further
`
`described below in ¶23. On December 4, 2019, Icahn likened HP to the RMS Titanic and to the
`
`bankrupt Eastman Kodak, a comparison he has also made with respect to Xerox.
`
`ICAHN DOMINATES AND CONTROLS XEROX
`
`21.
`
`Icahn effectively controls Xerox based upon being its largest single shareholder and
`
`his close working relationship with Deason Capital. As The Wall Street Journal reported on
`
`October 19, 2019, Icahn and Deason “took control of [Xerox] after scuttling its planned merger
`
`with Fujifilm Holdings Corp.” Examples of Icahn’s control and domination of Xerox include:
`
`a)
`
`his having been responsible for placing at least five out of the seven Board
`
`members including:
`
`i.
`
`ii.
`
`defendants Cozza acting as his personal representatives on the Board
`and the Board’s Chairman, and;
`
`defendant Graziano acting as his personal representative on the Board;
`
`b)
`
`causing Xerox to spin-off Conduent and its then-CEO to resign in January
`
`
`
`2017, in connection with which Xerox issued a January 29, 2016, press release quoting its then-
`
`CEO and Icahn;
`
`c)
`
`threatening proxy contests which resulted in, inter alia, Krongard’s
`
`appointment to the Board, Christodoro’s prior appointment to the Board, and the hiring of Bob
`
`Brody (“Brody”), as a member of Xerox’s management team;
`
`d)
`
`pushing Jeff Jacobson (“Jacobson”), Xerox’s CEO, to sell the Company,
`
`then:
`
`
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`FILED: NEW YORK COUNTY CLERK 12/26/2019 10:52 AM
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`RECEIVED NYSCEF: 12/26/2019
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`i.
`
`ii.
`
`iii.
`
`blocking a proposed merger with Fujifilm Holdings Corp. (“Fuji”);
`
`ousting Jacobson as the CEO, and;
`
`placing Visentin into the CEO position; and,
`
`e)
`
`On October 3, 2019, Louie Pastor, who had until that time been deputy
`
`
`
`general counsel of Icahn Enterprises L.P., was appointed as Xerox’s executive vice president and
`
`general counsel.
`
`22.
`
`Icahn is party to a confidentiality agreement with Xerox pursuant to which he and
`
`his affiliates receive non-public information regarding the Company. Icahn previously utilized a
`
`similar agreement to obtain access to key corporate documents, such as a joint enterprise contract
`
`(“the “JEC”) governing Xerox’s joint venture with Fuji. On May 3, 2017, Christodoro forwarded
`
`an e-mail and attachment from William F. Osbourn, Jr. (“Osbourn”), Xerox’s CFO, to Icahn’s in-
`
`house counsel that stated that the attachment was “not a public document.” Additionally, pursuant
`
`to his prior confidentiality agreement, Icahn tracked the contents of Board deliberations in near
`
`real-time.
`
`23.
`
`On May 15, 2017, Icahn hosted a dinner at his Manhattan residence with Brett
`
`Icahn, who is Icahn’s son, Christodoro, Jacobson, Brody, and Osbourn. Jacobson wrote a memo
`
`to his file the following day, stating, in part, that the discussion “centered around Icahn and
`
`Christodoro’s view that the industry ‘was a piece of shit’ and the Xerox business was not driving
`
`value.” Icahn instructed Jacobson to sell Xerox and said if “[Jacobson] could not have it sold, then
`
`[Icahn] would push to have [Jacobson] removed and [Icahn] would replace [Jacobson] with” Brody
`
`or Osbourn.
`
`24.
`
`On or about June 12, 2017, Fuji announced that losses from “accounting
`
`irregularities” related to Fuji Xerox Co., Ltd. (“Fuji Xerox” or the “JV”), a joint venture, through
`
`
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`which Fuji and Xerox had reciprocal access to products and intellectual property, were larger
`
`than first thought.
`
`25.
`
`On November 30, 2017, Xerox received a term sheet from Fuji pursuant to which
`
`Xerox and Fuji Xerox would merge, with Xerox shareholders owning 49.9% of the combination
`
`and receiving a $2.5 billion cash dividend funded by Xerox (the “Proposed Transaction”).
`
`26.
`
`On December 8, 2017, defendant Christodoro resigned from the Board, terminating
`
`a standstill agreement between Xerox and Icahn, and stating it appeared the Board would “take
`
`Xerox in a direction with which [he] strongly disagree[d.]” Defendant Christodoro informed
`
`Xerox he would be joining a slate of nominees of the Icahn Group in a proxy contest, including
`
`defendant Cozza.
`
`27.
`
`Icahn launched a proxy contest with a December 12, 2017, open letter to Xerox
`
`shareholders stating that Xerox “paints a rosy picture of what is in reality a bleak situation that I
`
`fear could turn out like that of Eastman Kodak” where the Board’s chairman and Jacobson had
`
`served as executives. Icahn wrote there was “much to unpack and debunk in Xerox’s statement”
`
`but he wanted to immediately address the “outrageous claim” about shareholder returns. In
`
`addressing that claim, Icahn claimed credit for the returns from the prior year.
`
`28.
`
`On January 22, 2018, Icahn and Deason disclosed that, as the “first and third largest
`
`shareholders of Xerox” they had formed a group to solicit proxies. They wrote to Xerox’s
`
`shareholders that: (1) the JV should be renegotiated or terminated in light of Fuji Xerox’s
`
`accounting scandal, (2) Xerox should explore strategic alternatives, (3) the JV’s terms should be
`
`disclosed, and (4) Jacobson should be replaced immediately, along with any directors unwilling to
`
`replace him.
`
`29.
`
`On January 31, 2018, Xerox and Fuji disclosed, inter alia, the Proposed Transaction
`
`
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`and the terms of the JEC between the Company and Fuji.
`
`30.
`
`On or about February 13, 2018, Deason I and several lawsuits later consolidated as
`
`Consolidated Class Action were filed, challenging the Proposed Transaction. Deason and Icahn
`
`shared the costs of litigating Deason I, Deason II (seeking a declaration that Xerox must waive its
`
`advanced notice deadline to nominate Board members), and a consulting arrangement with
`
`defendant Visentin to assist in their proxy fight over Xerox.
`
`31.
`
`On April 27, 2018, Justice Ostrager preliminarily enjoined the Proposed
`
`Transaction.
`
`32.
`
`On May 13, 2018, a Director Appointment, Nomination, and Settlement Agreement
`
`(the “Deason Settlement Agreement”) was entered into between, inter alia, Xerox, Icahn, Icahn
`
`Capital, High River, Deason, Eschevarria, and Krongard, resolving Deason I and Deason II by:
`
`(a) six Board members, including Jacobson, resigning; and (b) Icahn and Deason selecting and
`
`appointing five new directors and a new CEO. The five directors appointed by Icahn and Deason
`
`are: Christodoro (identified as a “New Independent Director”), Visentin, Letier (identified as a
`
`“Deason Designee”), and Cozza and Graziano (identified as the “Icahn Designees”).
`
`33.
`
`On May 13, 2018, immediately prior to entering the Deason Settlement Agreement,
`
`Xerox delivered a written notice of termination of the Proposed Transaction to Fuji (the
`
`“Termination Notice”).
`
`34.
`
`On May 15, 2018, the Company entered into a confidentiality agreement with the
`
`Icahn Defendants, certain of their affiliates, and Deason (the “Confidentiality Agreement”), which
`
`allows the Icahn Defendants and Deason to gain access to non-public information. In addition, on
`
`May 15, 2018, subject to the Confidentiality Agreement, Xerox provided certain representatives
`
`of Icahn and his affiliates, and Deason, with Board observer rights.
`
`
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`INDEX NO. 657692/2019
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`RECEIVED NYSCEF: 12/26/2019
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`ICAHN BUYS HP COMMON STOCK IN BREACH OF HIS FIDUCIARY DUTIES TO XEROX
`
`35.
`
`On February 5, 2019, during an investor conference held shortly after Icahn
`
`installed Visentin as Xerox’s CEO, Visentin raised the issue of “why we have to be acquired,
`
`why can’t we be the acquirers?”
`
`36.
`
`On April 25, 2019, Visentin stated during a call with analysts and investors that
`
`“we’re never going to comment on the potential targets. But we’re focused on building a deep
`
`M&A pipeline that will support our revenue road map.”
`
`37.
`
`On June 4, 2019, HP and Xerox disclosed that they had reached an agreement
`
`pursuant to which they expanded their relationship, with Xerox: sourcing from HP certain A4 and
`
`entry-level A3 products, with the majority running on Xerox’s ConnectKey software; supplying
`
`toner to HP for those and other products; partnering with HP in the Device-as-a-Service (“DaaS”)
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`market; becoming a DaaS specialist in HP’s Partner First program; being authorized to sell HP
`
`PCs, displays and accessories; and, expanding its software presence by making Xerox’s
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`DocuShare Flex content management platform available on certain HP PCs.
`
`38.
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`On July 30, 2019, Visentin repeated in his prepared remarks during a call with
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`analysts and investors that “[w]hile we don’t comment publicly about potential targets, we have
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`a broad M&A pipeline that is designed to support our strategic initiatives.”
`
`39.
`
`Xerox paved the way for future acquisitions by reorganizing on July 31, 2019, to
`
`form a holding company. No later than August 2019, Xerox and HP began engaging in private
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`discussions about a proposed strategic transaction pursuant to which Xerox would purchase HP.
`
`40.
`
`On October 29, 2019, Osbourn stated in a call with analysts and investors that as
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`part of Xerox’s “business transformation” into a holding company, it had “embarked on a
`
`comprehensive strategic review of [its] entire business[.]”
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`FILED: NEW YORK COUNTY CLERK 12/26/2019 10:52 AM
`NYSCEF DOC. NO. 1
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`INDEX NO. 657692/2019
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`RECEIVED NYSCEF: 12/26/2019
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`41.
`
`On November 5, 2019, Xerox sent a letter to HP’s board of directors (the “HP
`
`Board”), proposing that Xerox acquire HP for $33.5 billion, or $22 a share – $17 in cash and
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`0.137 Xerox shares for each HP share. On November 6, 2019, news of the proposal was publicly
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`reported before markets opened, causing HP’s stock, which had closed the prior day at a price of
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`$18.40 per share, to jump to $21.64 per share at the opening bell, and to close at $19.57 per share
`
`on November 6, 2019.
`
`42.
`
`On November 14, 2019, Icahn filed a Form 13F-HR with the SEC publicly
`
`disclosing holdings of 12,580,592 and 50,322,378 shares of HP common stock as of September
`
`30, 2019, by High River and Icahn Capital, respectively, or about 4.63% of his $25.69 billion
`
`equity portfolio, and significantly more than his Xerox holdings of $701.5 million. The
`
`nonconfidential portions of Icahn’s prior Form 13F, filed August 14, 2019, listed no HP common
`
`stock as of June 30, 2019. While the dates of Icahn’s purchases are undisclosed, on October 2,
`
`2019, two days after the end of the quarter in which Icahn acquired his common HP common stock,
`
`Gordon Haskett analyst Don Bilson speculated that an activist investor could be targeting HP
`
`common stock because: a huge spike in recent trading volume came despite a lack of an obvious
`
`catalyst; Nomura and UBS, which are used by activists to get into swaps, were among the largest
`
`purchasers of HP common stock; and, HP common stock had traded more than its average of 10
`
`million shares in eight of the last nine days, including two days with volume over 20 million.
`
`43.
`
`On November 17, 2019, HP rejected Xerox’s November 5, 2019, offer as
`
`insufficient and not in HP’s shareholders’ best interests. The HP Board expressed confidence in
`
`HP’s direction and said “the highly conditional and uncertain nature of the proposal, including the
`
`potential impact of outsized debt levels” created concerns. HP recognized the “potential benefits
`
`of consolidation[,]” stated an openness to exploring a strategic transaction, and requested due
`
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`FILED: NEW YORK COUNTY CLERK 12/26/2019 10:52 AM
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`INDEX NO. 657692/2019
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`RECEIVED NYSCEF: 12/26/2019
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`diligence of Xerox’s trajectory, prospects, and potential synergies of a combination.
`
`44.
`
`In a December 6, 2019, letter to HP’s shareholders, Icahn said HP’s standalone
`
`restructuring plan, which was announced on October 3, 2019, “seems to amount to little more
`
`than rearranging the deck chairs on the Titanic[,]” compared HP to Eastman Kodak, and
`
`expressed skepticism in its turnaround plan and of its prospects.
`
`45.
`
`A December 9, 2019, presentation from Xerox to HP’s shareholders states that
`
`Xerox’s proposed acquisition of HP is based upon “Undisputed Strategic Logic” including that
`
`“each can cross-sell one another’s technology into its existing install base and drive incremental
`
`revenue, all while eliminating Direct Enterprise Direct SMB Indirect duplicative SG&A costs.”
`
`Xerox’s claim about the obvious merits of its acquisition of HP echoed a statement by Icahn on
`
`December 4, 2019, that “the combination of HP and Xerox is one of the most obvious no-brainers
`
`I have ever encountered in my career – one where activism should not even be necessary at all
`
`because the merits of the combination are so obvious to everybody involved.”
`
`46.
`
`Since Xerox’s proposal to acquire HP was disclosed, the Icahn Defendants’
`
`62,902,970 shares of HP common stock have risen in market value by approximately $128 million,
`
`from approximately $1.16 billion on November 5, 2019, to approximately $1.285 billion as of the
`
`close of trading on December 12, 2019, and the Icahn Defendants are entitled to a dividend of
`
`approximately $11,070,922.72, on or about January 2, 2020, based upon a record date of December
`
`11, 2019, bringing their total profits from acquiring HP common stock to approximately $140
`
`million.
`
`
`
`DERIVATIVE ALLEGATIONS
`
`47.
`
`Plaintiff will adequately and fairly represent the interests of Xerox and its
`
`shareholders and has retained competent counsel experienced in shareholder derivative actions.
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`FILED: NEW YORK COUNTY CLERK 12/26/2019 10:52 AM
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`INDEX NO. 657692/2019
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`RECEIVED NYSCEF: 12/26/2019
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`48.
`
`The wrongful acts complained of herein have caused harm to Xerox and will
`
`continue to subject Xerox to harm because the adverse consequences of the injurious actions are
`
`still in effect and ongoing.
`
`49.
`
`Plaintiff has not made a demand upon the Board to institute this action as it would
`
`be a futile and useless act.
`
`50.
`
`There are currently seven (7) members of the Board. A majority of those directors
`
`are not independent with respect to the claims being alleged based on their personal and business
`
`relationships with Icahn or their participation in the wrongdoing alleged herein.
`
`51. Keith Cozza lacks independence with respect to any decision to sue the Icahn
`
`Defendants because of their close business relationship, and because he was designated to serve
`
`on the Board and several other boards of directors at Icahn’s behest. Cozza was installed as a
`
`director pursuant to the Deason Settlement Agreement and has served as the President, Chief
`
`Executive Officer of Icahn Enterprises L.P. since 2014. Cozza is also a director of other
`
`subsidiaries of Icahn Enterprises. Cozza received total compensation from Icahn Enterprises of
`
`$6,539,608 in 2018 (which included a $5 million discretionary bonus), $5,522,144 in 2017 (which
`
`included a $4 million discretionary bonus), and $4,068,515 in 2016 (which included a $2.5 million
`
`discretionary bonus).
`
`52.
`
`John Visentin lacks independence with respect to any decision to sue the Icahn
`
`Defendants because of their close business relationship. Visentin consulted for Icahn Capital in
`
`connection with the proxy contest at Xerox that resulted in Visentin becoming Xerox’s CEO.
`
`Visentin serves on the Board, and as Xerox’s CEO, because of Icahn’s influence and the Deason
`
`Settlement Agreement, and Icahn has ended the tenures of Xerox’s prior two CEOs.
`
`53.
`
`Jonathan Christodoro lacks independence with respect to any decision to sue the
`
`
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`INDEX NO. 657692/2019
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`RECEIVED NYSCEF: 12/26/2019
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`Icahn Defendants because of their close business relationship, and because he was twice
`
`designated to serve on the Board, and has served on several other boards of directors, at Icahn’s
`
`behest. From July 2012 through February 2017, Christodoro was a Managing Director of Icahn
`
`Capital LP. Christodoro was installed as a director per the Deason Settlement Agreement and had
`
`previously served on the Board as to resolve a proxy contest that Icahn had threatened. When he
`
`was first appointed to the Board, The Wall Street Journal called Christodoro “a top lieutenant of
`
`Carl Icahn[.]” After Christodoro was no longer employed by Icahn Capital LP, Christodoro
`
`requested the non-public JEC from Xerox’s management and immediately forwarded it to Icahn’s
`
`general counsel.
`
`54.
`
`Nicholas Graziano lacks independence with respect to any decision to sue the
`
`Icahn Defendants because of their close business relationship, and because he was designated to
`
`serve on the Board and several other boards of directors at Icahn’s behest. Graziano serves as a
`
`Portfolio Manager of Icahn Capital, and as Icahn’s representative on the Board.
`
`55.
`
`Cheryl Gordon Krongard lacks independence with respect to any decision to
`
`sue the Icahn Defendants because (a) she has a pre-existing social relationship with Icahn, (b)
`
`Krongard was nominated to the Board in December of 2016 to resolve a proxy contest that Icahn
`
`had threatened, (c) her husband serves as a director of Icahn Enterprises, L.P., and (d) according
`
`to her sworn testimony in Deason I and the Consolidated Class Action, when initially asked to
`
`serve on the Board she said she would be willing to do so “if our largest shareholder would be
`
`placated by that fact”, referring “[p]articularly [to] Mr. Icahn.”
`
`56.
`
`Andrew Scott Letier lacks independence with respect to any decision to sue the
`
`Icahn Defendants because of their close business relationship. Letier has been Managing Director
`
`of Deason Capital since July 2014 and was installed as a director pursuant to the Deason
`
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`INDEX NO. 657692/2019
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`RECEIVED NYSCEF: 12/26/2019
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`Settlement Agreement. Deason and the Icahn Defendants acted in concert and formed a “group”
`
`to appoint Xerox directors, including Letier, to the Board. Additionally, Letier serves on the board
`
`of directors of Conduent, which is 11.64% owned by Icahn-related entities (its largest shareholder)
`
`and 5.8% owned by Deason, with three Icahn designees, including Graziano.
`
`FIRST CLAIM FOR RELIEF
`BREACH OF FIDUCIARY DUTY OF LOYALTY AGAINST THE ICAHN DEFENDANTS
`
`57.
`
`Plaintiff incorporates by reference and re-alleges every allegation contained above,
`
`
`
`as though fully set forth herein.
`
`58.
`
`The Icahn Defendants owe fiduciary duties to Xerox based upon their control and
`
`domination of Xerox, and by serving on the Board through their representatives and nominees.
`
`59.
`
`The Icahn Defendants breached their fiduciary duties to Xerox in acquiring HP
`
`common stock based upon their knowledge that Xerox was either considering making an offer to
`
`purchase HP