The logo of Xerox company is seen on a building in Minsk, Belarus, March 21, 2016.
The new board will meet to "discuss strategic alternatives", with the Fujifilm deal back under the microscope, because those alternatives include "terminating or restructuring Xerox's relationship with Fujifilm and the proposed transaction with Fujifilm".
EOS vendor Xerox said it was ready to "vigorously defend itself" following allegations of fraud by its third-largest shareholder. The company had denied the assertion.
They had criticized the $6.1 billion deal to combine the USA printer and copier maker into Fuji Xerox, an existing joint venture with the Japanese company.
Xerox could not immediately be reached for comment.
Jacobson, together with chairman Robert Keegan, and existing Xerox board members Charles Prince, Ann Reese, William Hunter, Sara Tucker, and Stephen Rusckowski will all resign. It certainly is for Icahn himself - in addition to former Novitex head John Visentin, who will step in as CEO, Icahn Enterprises CEO Keith Cozza will become Xerox's chairman.
Xerox said it made a decision to settle given the risks and uncertainty of prolonged litigation.
Officials say the agreement will resolve the pending proxy contest for control of the company at the company's upcoming annual meeting as well as the ongoing litigation against Xerox and its directors related to the proposed merger with Fuji Xerox. With John Visentin at the helm, receiving support and guidance from Carl Icahn and me, I am confident the alternatives for Xerox and its shareholders will be fully and expeditiously maximized.
Icahn welcomed the court ruling and Tuesday's agreement with the Xerox board, saying they "mark a watershed moment for corporate governance generally and for Xerox specifically".
Fujifilm, whose shares dropped 5.5% in Tokyo trade on news of the ouster, said it planned to file an objection with a court over Xerox's settlement with Icahn and Deason. He was also a candidate considered by the old board to replace Jacobson as recently as previous year, according to court documents.
In his own statement, Icahn compared Fujifilm to American TV show House of Cards, but didn't quash a new deal with the company completely.
As more businesses go paperless, Fujifilm has looked elsewhere for growth, expanding in biotechnology and healthcare.
"We also believe that the Xerox new board of directors has an obligation to comply with the agreements which were unanimously approved on January 30, 2018 (US time) and signed by both companies on January 31, 2018".
Xerox shares were up 0.50% to US$32.45 in pre-market trading.
Deason argued this clause prevented the Xerox board from seeking another buyer and this in turn harmed the company's shareholders.