Xerox 2013 Annual Report Download - page 130

Securities Exchange Act of 1934, as amended (1934 Act), and SEC Rule 10b-5 thereunder, each of the defendants
is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on
purchasers of the Company’s common stock during the Class Period by disseminating materially false and
misleading statements and/or concealing material facts relating to the defendants’ alleged failure to disclose the
material negative impact that the April 1998 restructuring had on the Company’s operations and revenues. The
complaint further alleges that the alleged scheme: (i) deceived the investing public regarding the economic
capabilities, sales proficiencies, growth, operations and the intrinsic value of the Company’s common stock;
(ii) allowed several corporate insiders, such as the named individual defendants, to sell shares of privately held
common stock of the Company while in possession of materially adverse, non-public information; and (iii) caused
the individual plaintiffs and the other members of the purported class to purchase common stock of the Company at
inflated prices. The complaint seeks unspecified compensatory damages in favor of the plaintiffs and the other
members of the purported class against all defendants, jointly and severally, for all damages sustained as a result of
defendants’ alleged wrongdoing, including interest thereon, together with reasonable costs and expenses incurred
in the action, including counsel fees and expert fees. In 2001, the Court denied the defendants’ motion for dismissal
of the complaint. The plaintiffs’ motion for class certification was denied by the Court in 2006, without prejudice to
refiling. In February 2007, the Court granted the motion of the International Brotherhood of Electrical Workers
Welfare Fund of Local Union No. 164, Robert W. Roten, Robert Agius (Agius) and Georgia Stanley to appoint them
as additional lead plaintiffs. In July 2007, the Court denied plaintiffs’ renewed motion for class certification, without
prejudice to renewal after the Court holds a pre-filing conference to identify factual disputes the Court will be
required to resolve in ruling on the motion. After that conference and Agius’s withdrawal as lead plaintiff and
proposed class representative, in February 2008 plaintiffs filed a second renewed motion for class certification. In
April 2008, defendants filed their response and motion to disqualify Milberg LLP as a lead counsel. On
September 30, 2008, the Court entered an order certifying the class and denying the appointment of Milberg LLP as
class counsel. Subsequently, on April 9, 2009, the Court denied defendants’ motion to disqualify Milberg LLP. On
November 6, 2008, the defendants filed a motion for summary judgment. On March 29, 2013, the Court granted
defendants' motion for summary judgment in its entirety. On April 26, 2013, plaintiffs filed a notice of appeal to the
United States Court of Appeals for the Second Circuit. The appeal process is ongoing. The individual defendants
and we deny any wrongdoing and are vigorously defending the action. At this time, we do not believe it is
reasonably possible that we will incur additional material losses in excess of the amount we have already accrued
for this matter. In the course of litigation, we periodically engage in discussions with plaintiffs’ counsel for possible
resolution of this matter. Should developments cause a change in our determination as to an unfavorable outcome,
or result in a final adverse judgment or a settlement for a significant amount, there could be a material adverse
effect on our results of operations, cash flows and financial position in the period in which such change in
determination, judgment or settlement occurs.
Guarantees, Indemnifications and Warranty Liabilities
Indemnifications Provided as Part of Contracts and Agreements
We are a party to the following types of agreements pursuant to which we may be obligated to indemnify the other
party with respect to certain matters:
• Contracts that we entered into for the sale or purchase of businesses or real estate assets, under which we
customarily agree to hold the other party harmless against losses arising from a breach of representations and
covenants, including obligations to pay rent. Typically, these relate to such matters as adequate title to assets
sold, intellectual property rights, specified environmental matters and certain income taxes arising prior to the
date of acquisition.
• Guarantees on behalf of our subsidiaries with respect to real estate leases. These lease guarantees may
remain in effect subsequent to the sale of the subsidiary.
• Agreements to indemnify various service providers, trustees and bank agents from any third-party claims
related to their performance on our behalf, with the exception of claims that result from third-party's own willful
misconduct or gross negligence.
• Guarantees of our performance in certain sales and services contracts to our customers and indirectly the
performance of third parties with whom we have subcontracted for their services. This includes indemnifications
to customers for losses that may be sustained as a result of the use of our equipment at a customer's location.
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