FORM 10-Q

		   SECURITIES AND EXCHANGE COMMISSION
			 Washington, D.C. 20549
(Mark One)

[ X ]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended: September 30, 1997

	OR

[   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934

	For the transition period from __________ to___________

Commission File Number 1-4471

			XEROX CORPORATION
		   (Exact Name of Registrant as
		     specified in its charter)

	    New York                       16-0468020             _
 (State or other jurisdiction   (IRS Employer Identification No.) 
of incorporation or organization)

			   P.O. Box 1600
		  Stamford, Connecticut   06904-1600
	      (Address of principal executive offices)
				(Zip Code)

			  (203) 968-3000             _  
	  (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months 
(or for such shorter period that the registrant was required to 
file such reports), and (2) has been subject to such filing 
requirements for the past 90 days.
 
Yes     X     No           

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

    Class                         Outstanding at October 31,1997

Common Stock                           325,888,334 shares

	      This document consists of 33 pages.


Forward-Looking Statements

From time to time the Registrant and its representatives may 
provide information, whether orally or in writing, including 
certain statements in this Form 10-Q under "Management's 
Discussion and Analysis of Results of Operations and Financial 
Condition", which are deemed to be "forward-looking" within the 
meaning of the Private Securities Litigation Reform Act of 1995 
("Litigation Reform Act"). These forward-looking statements and 
other information relating to the Company are based on the 
beliefs of management as well as assumptions made by and 
information currently available to management.

The words "anticipate", "believe", "estimate", "expect", 
"intends", and similar expressions, as they relate to the Company 
or the Company's management, are intended to identify forward-
looking statements.  Such statements reflect the current views of 
the Registrant with respect to future events and are subject to 
certain risks, uncertainties and assumptions.  Should one or more 
of these risks or uncertainties materialize, or should underlying 
assumptions prove incorrect, actual results may vary materially 
from those described herein as anticipated, believed, estimated 
or expected.   The Registrant does not intend to update these 
forward-looking statements.

In accordance with the provisions of the Litigation Reform Act we 
are making investors aware that such "forward-looking" 
statements, because they relate to future events, are by their 
very nature subject to many important factors which could cause 
actual results to differ materially from those contained in the 
"forward-looking" statements.  Such factors include but are not 
limited to the following:

Competition - the Registrant operates in an environment of 
significant competition, driven by rapid technological advances 
and the demands of customers to become more efficient.  There are 
a number of companies worldwide with significant financial 
resources which compete with the Registrant to provide document 
processing products and services in each of the markets served by 
the Registrant, some of whom operate on a global basis.  The 
Registrant's success in its future performance is largely 
dependent upon its ability to compete successfully in its 
currently-served  markets and to expand into additional market 
segments.  

Transition to Digital - presently black and white light lens 
copiers represent over half the Registrant's revenues.  This 
segment of the general office is  mature with anticipated 
declining industry revenues as the market transitions to digital 
technology. Some of the Registrant's new digital products replace 
or compete with the Registrant's current light lens equipment.  
Changes in the mix of products from light lens to digital, and 
the pace of that change as well as competitive developments could 
cause actual results to vary from those expected.

Pricing - the Registrant's ability to succeed is dependent upon 
its ability to obtain adequate pricing for its products and 
services which provide a reasonable return to shareholders. 
Depending on competitive market factors, future prices the 
Registrant can obtain for its products and services may vary from 
historical levels.

Financing Business - a significant portion of the Registrant's 
profits arise from the financing of its customers' purchase of 
the Registrant's equipment.  Presently the Registrant finances 
approximately 80% of such equipment purchases in the U.S. and 75% 
in Western Europe.   The Registrant's ability to provide such 
financing at competitive rates and realize profitable spreads is 
highly dependent upon its own costs of borrowing which, in turn, 
depend upon its credit ratings.  Significant changes in such 
ratings could reduce the profitability of such financing business 
and/or make the Registrant's financing less attractive to 
customers thus reducing the volume of financing business done.  
The Registrant's present credit ratings permit ready access to 
the credit markets and there is no assurance that these credit 
ratings can be maintained and/or ready access to the credit 
markets can be assured.

Productivity - the Registrant's ability to sustain and improve 
its profit margins is largely dependent on its ability to 
maintain an efficient, cost-effective operation. Productivity 
improvements through process reengineering, design efficiency and 
supplier cost improvements are required to offset labor and 
materials cost inflation and competitive price pressures.

International Operations -  the Registrant derives approximately 
half its revenue from operations outside of the United States.  
In addition, the Registrant manufactures many of its products 
and/or their components outside the United States.  The 
Registrant's future revenue, cost and profit results could be 
adversely affected by a number of factors, including changes in 
foreign currency exchange rates, changes in economic conditions 
from country to country, changes in a country's political 
conditions, trade protection measures, licensing requirements and 
local tax issues.


New Products/Research and Development -the process of developing 
new high technology products and solutions is inherently complex 
and uncertain.  It requires accurate anticipation of customers' 
changing needs and emerging technological trends.  The Registrant 
must then make long-term investments and commit significant 
resources before knowing whether these investments will 
eventually result in products that achieve customer acceptance 
and revenues required to provide anticipated returns from these 
investments.


Disengagement From Insurance Business - during the process of 
disengaging from the insurance segment, the Registrant will 
continue to be subject to all the business risks and rewards of 
such businesses.  Although Registrant believes that the proceeds 
received from  the disposition of the remaining insurance 
businesses will be consistent with the net carrying value of 
these businesses, until such remaining insurance companies are 
actually sold, no assurances can be given as to the ultimate 
impact the remaining insurance companies will have on the 
Registrant's total results from operations or whether the 
proceeds of sales will equal such carrying value.  The insurance 
business is subject to cyclical competitive conditions, judicial 
decisions affecting insurers' liabilities, and by volatile and 
unpredictable  developments, including changes in the propensity 
of courts to grant large awards, fluctuations in interest rates 
and other changes in the investment environment  (which affect 
market prices of insurance companies' investments, the income 
from those investments and inflationary pressures that may tend 
to affect the size of losses).  In addition, the operating 
results of the remaining insurance companies have been 
historically influenced by exposure to uncollectible reinsurance, 
which had been greater than for most other insurers.


			   Xerox Corporation
			       Form 10-Q
			   September 30, 1997

Table of Contents
							     Page
Part I -  Financial Information

   Item 1. Financial Statements                                 

      Consolidated Statements of Income                         7

      Consolidated Balance Sheets                               8

      Consolidated Statements of Cash Flows                     9

      Notes to Consolidated Financial Statements               10

   Item 2. Management's Discussion and Analysis of Results of
     Operations and Financial Condition                         

      Document Processing                                      16

      Discontinued Operations                                  23

      Capital Resources and Liquidity                          26

      Hedging Instruments                                      27

Part II - Other Information

   Item 1. Legal Proceedings                                   29

   Item 2. Changes in Securities                               29

   Item 6. Exhibits and Reports on Form 8-K                    29

Signatures                                                     31

Exhibit Index

   Computation of Net Income per Common Share                  32

   Computation of Ratio of Earnings to Fixed Charges           33

   By-Laws of Xerox Corporation as amended through June 11, 1997
   (filed in electronic form only)

   1997 Restatement of Xerox Corporation's Unfunded Retirement
   Income Guarantee Plan (filed in electronic form only)

   1997 Restatement of Xerox Corporation's Unfunded Supplemental
   Retirement Plan (filed in electronic form only)


Table of Contents (Continued)

   Xerox Corporation's Deferred Compensation Plan For Directors,
   1997 Amendment and Restatement (filed in electronic form only)

   Xerox Corporation's Deferred Compensation Plan For Executives,
   1997 Amendment and Restatement (filed in electronic form only)

Financial Data Schedule           (filed in electronic form only)


For additional information about The Document Company Xerox, 
please visit our World-wide Web site at www.xerox.com and select 
"Investor Information."


PART I - FINANCIAL INFORMATION

Item I                           Xerox Corporation
			  Consolidated Statements of Income

					Three months ended  Nine months ended
					    September 30,      September 30,
(In millions, except per-share data)        1997     1996      1997    1996

Revenues
  Sales                                  $ 2,346  $ 2,165   $ 6,611  $ 6,267
  Service and rentals                      1,787    1,740     5,394    5,280
  Finance income                             243      253       749      756
  Total Revenues                           4,376    4,158    12,754   12,303


Costs and Expenses
  Cost of sales                            1,281    1,214     3,635    3,496
  Cost of service and rentals                929      890     2,740    2,671
  Equipment financing interest               128      131       386      386
  Research and development expenses          273      261       816      779
  Selling, administrative and general 
    expenses                               1,284    1,256     3,752    3,691
  Gain on affiliates' sales of stock, net      -      (11)        -      (11)
  Other, net                                  31       34        50       65
  Total Costs and Expenses                 3,926    3,775    11,379   11,077


Income before Income Taxes, Equity Income
   and Minorities' Interests                 450      383     1,375    1,226

  Income taxes                               153      138       478      441
  Equity in net income of unconsolidated
    affiliates                                37       30       105       92
  Minorities' interests in earnings of
    subsidiaries                              14       25        75       97

Income from Continuing Operations            320      250       927      780

Discontinued Operations                        -        -         -        -

Net Income                                $  320  $   250    $  927  $   780

Primary Earnings per Share
  Continuing Operations                   $ 0.92  $  0.71    $ 2.70  $  2.24
  Discontinued Operations                      -        -         -        -
Primary Earnings per Share                $ 0.92  $  0.71    $ 2.70  $  2.24

Fully Diluted Earnings per Share
  Continuing Operations                   $ 0.88  $  0.68    $ 2.57  $  2.14
  Discontinued Operations                      -        -         -        -
Fully Diluted Earnings per Share          $ 0.88  $  0.68    $ 2.57  $  2.14

See accompanying notes.



				  Xerox Corporation
			    Consolidated Balance Sheets

					 September 30,     December 31,
(In millions, except share data in thousands)    1997             1996
Assets

Cash                                         $     62          $   104
Accounts receivable, net                        2,129            2,022
Finance receivables, net                        4,282            4,386
Inventories                                     3,092            2,676
Deferred taxes and other current assets           952              964
  Total Current Assets                         10,517           10,152

Finance receivables due after one year, net     7,096            6,986
Land, buildings and equipment, net              2,287            2,256
Investments in affiliates, at equity            1,434            1,282
Goodwill                                        1,345              623
Other assets                                    1,266            1,121
Investment in discontinued operations           3,303            4,398

Total Assets                                 $ 27,248         $ 26,818
									

Liabilities and Equity

Short-term debt and current portion of 
  long-term debt                             $  3,807        $   3,536
Accounts payable                                  476              577
Accrued compensation and benefit costs            717              761
Unearned income                                   201              208
Other current liabilities                       2,103            2,122

  Total Current Liabilities                     7,304            7,204

Long-term debt                                  9,015            8,424
Postretirement medical benefits                 1,079            1,050
Deferred taxes and other liabilities            2,266            2,429
Discontinued operations liabilities -                                 
  policyholders' deposits and other             1,850            2,274
Deferred ESOP benefits                           (494)            (494)
Minorities' interests in equity of subsidiaries   125              843
Company obligated, mandatorily redeemable
  preferred securities of subsidiary trust
  holding solely subordinated debentures
  of the Company                                  637                -
Preferred stock                                   709              721
Common shareholders' equity                     4,757            4,367

Total Liabilities and Equity                 $ 27,248        $  26,818

Shares of common stock issued                      325,902           325,902
Shares of common stock outstanding                 325,584           323,681

See accompanying notes.


										Xerox Corporation
		       Consolidated Statements of Cash Flows

Nine months ended September 30  (in millions)           1997         1996

Cash Flows from Operating Activities 
Income from Continuing Operations                      $ 927       $  780
Adjustments required to reconcile income to cash
 flows from operating activities:
  Depreciation and amortization                          517          528
  Provisions for doubtful accounts                       176          164
  Provision for postretirement medical
    benefits, net of payments                             30           30
  Minorities' interests in earnings of subsidiaries       75           97
  Undistributed equity in income of affiliated companies(101)         (91)
  Increase in inventories                               (723)        (747)
  Increase in finance receivables                       (513)        (379)
  Increase in accounts receivable                       (166)        (242)
  Decrease in accounts payable and accrued 
    compensation and benefit costs                      (126)        (223)
  Net change in current and deferred income taxes        108          194 
  Other, net                                            (183)        (434)
Total                                                     21         (323)

Cash Flows from Investing Activities                                    
  Cost of additions to land, buildings and equipment    (311)        (340)
  Proceeds from sales of land, buildings and equipment    25           30
  Purchase of additional interest in Xerox Limited      (812)           -
  Net change in payables to Discontinued Operations     (168)         (26)
Total                                                 (1,266)        (336)

Cash Flows from Financing Activities
  Net change in debt                                     249        1,314
  Dividends on common and preferred stock               (356)        (330)
  Proceeds from sale of common stock                     130           85
  Repurchase of common and preferred stock              (116)        (257)
  Dividends to minority shareholders                      (5)          (1)
  Net proceeds from issuance of mandatorily
    redeemable preferred stock                           637            -
Total                                                    539          811
Effect of Exchange Rate Changes on Cash                   (7)          (2)

Cash Provided (Used) by Continuing Operations           (713)         150
Cash Provided (Used) by Discontinued Operations          671         (150)
Decrease in Cash                                         (42)           -

Cash at Beginning of Period                              104          136

Cash at End of Period                                  $  62       $  136

See accompanying notes.



Xerox Corporation
Notes to Consoloidated Financial Statements


1.  The consolidated financial statements presented herein have 
been prepared by Xerox Corporation ("the Company") in accordance 
with the accounting policies described in its 1996 Annual Report 
to Shareholders and should be read in conjunction with the notes 
thereto.

Effective 1997, Fuji Xerox changed its reporting period from a 
fiscal year ending October 20 to a fiscal year ending December 
20.  The results of operations during the period between the end 
of the 1996 fiscal year and the beginning of the new fiscal year 
(the stub period) amounted to a gain of $8 million.  The gain was 
credited to retained earnings.

Effective July 1, 1997, we changed the functional currency for 
our Brazilian operation from the U.S. dollar to the Brazilian 
Real as we believe that the Brazilian economy is no longer 
considered hyperinflationary.  The effect of this change is 
immaterial to both the Company's results of operations and 
financial position in the third quarter.

In the opinion of management, all adjustments (consisting only of 
normal recurring adjustments) which are necessary for a fair 
statement of operating results for the interim periods presented 
have been made. Interim financial data presented herein are 
unaudited.

References herein to "we" or "our" refer to Xerox and 
consolidated subsidiaries unless the context specifically 
requires otherwise.


2.  Inventories consist of (in millions):

				     September 30,     December 31,
					     1997             1996

Finished products                       $   1,787         $  1,570
Work in process                               125               80
Raw materials and supplies                    446              322
Equipment on operating leases, net            734              704
    Total                               $   3,092         $  2,676


3.  In June, 1997, we acquired the remaining 20 percent of Xerox 
Limited (formerly Rank Xerox Limited) from The Rank Group Plc 
(Rank) in a transaction valued at 940 million pounds sterling, or 
approximately $1.5 billion.  As a result of this transaction, we 
now own 100 percent of Xerox Limited.  The transaction was funded 
entirely by debt consisting of 500 million pounds sterling of 
third party debt and 440 million pounds sterling of notes payable 
issued to Rank, which will be paid in deferred installments, half 
within one year and the other half at the end of two years.  An 
additional payment of up to 60 million pounds sterling would be 
made in 2000 based upon achievement of certain significant Xerox 
Limited earnings growth targets by 1999.  The purchase price was 
allocated such that goodwill increased by $737 million, minority 
interest in equity of subsidiaries was reduced by approximately 
$720 million, with the balance of $70 million applied to other 
assets and liabilities, primarily investment in affiliates, at 
equity.


4.  In January 1997, a trust sponsored and wholly owned by the 
Company issued 650,000 shares of 8% Capital Securities (the 
Preferred Securities) with an aggregate liquidation amount of 
$650 million to the public for net proceeds, after discount and 
fees, of $637 million.  The trust also issued 20,103 shares of 
common securities to the Company.  The proceeds from these 
offerings were invested by the trust in $650 million aggregate 
principal amount of the Company's newly-issued 8% Junior 
Subordinated Debentures due 2027 (the Debentures).  The 
Debentures represent all of the assets of the trust.  The 
proceeds from the issuance of the Debentures were used by the 
Company for general corporate purposes.  The Debentures and 
related income statement effects are eliminated in the Company's 
consolidated financial statements.

The Preferred Securities accrue and pay cash distributions semi-
annually at a rate of 8% per annum of the stated liquidation 
amount of $1,000 per Preferred Security.  The Company has 
guaranteed, on a subordinated basis, distributions and other 
payments due on the Preferred Securities (the Guarantee).  The 
Guarantee, when taken together with the Company's obligations 
under the Debentures and in the indenture pursuant to which the 
Debentures were issued and the Company's obligations under the 
Amended and Restated Declaration of Trust governing the trust, 
provides a full and unconditional guarantee of amounts due on the 
Preferred Securities.

The Preferred Securities are mandatorily redeemable upon the 
maturity of the Debentures on February 1, 2027, or earlier to the 
extent of any redemption by the Company of any Debentures.  The 
redemption price on February 1, 2027 will be $1,000 per share 
plus accrued and unpaid distributions to the date fixed for 
redemption.


5.  Common shareholders' equity consists of (in millions):

				     September 30,     December 31,
					     1997             1996

Common stock                             $    327         $    327
Additional paid-in-capital                  1,354            1,353
Retained earnings                           3,656            3,090
Net unrealized gain (loss) on
  investment securities                         5               (1)
Translation adjustments                      (506)            (241)
Treasury stock                                (79)            (161)
    Total                                $  4,757         $  4,367

6.  Interest expense totaled $450 million and $446 million for 
the nine months ended September 30, 1997 and 1996, respectively.  


7.  In 1996, the Board of Directors authorized the Company to 
repurchase up to $1 billion of Xerox common stock.  The stock 
would be purchased from time to time on the open market depending 
on market conditions.  Through September 30, 1997, 8.5 million 
shares had been repurchased for $422 million, some of which had 
been reissued to satisfy the exercise of stock options.  In the 
second quarter of 1997, the repurchase program was suspended in 
connection with the acquisition of the remaining interest in 
Xerox Limited, as described above.


8.  Summarized operating results of Insurance follow (in 
millions):

					 Three months ended  Nine months ended
					    September 30,       September 30,
					    1997     1996       1997     1996

Revenues
Insurance premiums earned                 $  285   $  433     $1,090   $1,287
Investment and other income                   90      112        313      325
     Total Revenues                          375      545      1,403    1,612
Costs and Expenses
Insurance losses and loss expenses           252      349      1,173    1,054
Insurance acquisition costs and
  other operating expenses                   100      178        377      461
Interest expense                              40       50        138      153
Administrative and general expenses           45       10         17       19
     Total Costs and Expenses                437      587      1,705    1,687
Realized Capital Gains                         2        -          9        2
Income (Loss) Before Income Taxes            (60)     (42)      (293)     (73)
Income Tax Benefits                           14       16         79       31
Income (Loss) From Insurance *            $  (46)  $  (26)    $ (214)  $  (42)

*  The above operating results exclude the gains and losses related to sales 
   of the Insurance subsidiaries.  All results, including the sale-related 
   impacts, were charged to reserves established for this purpose and, 
   therefore, did not impact our earnings.

The net assets at September 30, 1997 and December 31, 1996 of the 
Insurance businesses included in our consolidated balance sheets 
as discontinued operations are as follows (in millions):

					       September 30,     December 31,
							1997             1996
Insurance Assets
Investments                                          $ 5,850          $ 7,889
Reinsurance recoverable                                1,974            2,458
Premiums and other receivables                           646            1,082
Deferred taxes and other assets                          806            1,201
     Total Insurance Assets                          $ 9,276          $12,630

Insurance Liabilities
Unpaid losses and loss expenses                      $ 6,453          $ 8,572
Unearned income                                          565              812
Notes payable                                            200              215
Other liabilities                                        882            1,185
     Total Insurance Liabilities                     $ 8,100          $10,784
Investment in Insurance, net                         $ 1,176          $ 1,846




9.  Litigation 
     
Continuing Operations

On March 10, 1994, a lawsuit was filed in the United States 
District Court for the District of Kansas by two independent 
service organizations (ISOs) in Kansas City and St. Louis and 
their parent company. Plaintiffs claim damages predominately 
resulting from the Company's alleged refusal to sell parts for 
high volume copiers and printers to plaintiffs prior to 1994. The 
Company's policies and practices with respect to the sale of 
parts to ISOs were at issue in an antitrust class action in 
Texas, which was settled by the Company during 1994. Claims for 
individual lost profits of ISOs who were not named parties, such 
as the plaintiffs in the Kansas action, were not included in that 
class action. In their complaint plaintiffs allege monetary 
damages in the form of lost profits in excess of $10 million (to 
be trebled) and injunctive relief.  In a report prepared, 
pursuant to Rule 26(a)2)B)of the Federal Rules of Civil 
Procedure, an accountant retained by plaintiffs as an expert has 
indicated that he plans to testify at trial that, allegedly as a 
result of Xerox' conduct, plaintiffs have lost profits of 
approximately $75 million. The Company has asserted counterclaims 
against the plaintiffs alleging patent and copyright 
infringement, misappropriation of Xerox trade secrets and 
conversion. On December 11, 1995, the District Court issued a 
preliminary injunction against the parent company for copyright 
infringement.  On April 8, 1997, the District Court granted 
partial summary judgment in favor of the Company on plaintiffs' 
antitrust claims, ruling that the Company's unilateral refusal to 
sell or license its patented parts cannot give rise to antitrust 
liability.  The Court's ruling did not preclude a finding of 
antitrust liability based upon other allegations of exclusionary 
conduct, including the refusal to sell unpatented parts.  The 
District Court also granted summary judgment in favor of the 
Company on its patent infringement claim, leaving open with 
respect to patent infringement only the issues of willfulness and 
the amount of damages, and granted partial summary judgment in 
favor of the Company with respect to some of its claims of 
copyright infringement. On July 17, 1997 the District Court, 
pursuant to 28 U.S.C. Section 1292(b), certified its April 8, 
1997 Order for interlocutory appeal to the United States Court of 
Appeals for the Federal Circuit and stayed trial of the matter 
pending remand.


On January 3, 1996, an action was commenced by Barneyscan 
Corporation   against Registrant, Pixelcraft, Inc., a wholly 
owned subsidiary of   Registrant, and three individuals, seeking 
damages "in excess of $10   million" for breach of contract and 
fraud, punitive damages, attorneys' fees and an accounting.  
Plaintiff claimed it was entitled to royalties on certain 
machines and software sold by Pixelcraft   between July 1, 1992 
and June 30, 1996. In August 1997, in an amended   letter to a 
court-appointed mediator, plaintiff expanded its damage   claim 
by alleging that it was also entitled to royalties in excess of   
$400 million for use of Barneyscan technology in conjunction with   
Xerox color copiers and printers during that time period.  
Pixelcraft   admits that Barneyscan is entitled to royalties of 
approximately $750,000 from Pixelcraft alone, minus certain 
offsets, and no more.  Registrant (I) denies any liability to 
plaintiff, (ii) denies the use of Barneyscan technology as 
alleged by plaintiff, and (iii) asserts that   the royalty 
calculation used by plaintiff is inconsistent with the facts in 
numerous respects.  Defendants intend to vigorously defend the 
action.  There is no trial date.

Discontinued Operations

Farm & Home Savings Association, now part of Mercantile Bank, 
(Farm & Home) and certain Talegen Holdings, Inc. insurance 
companies  (Insurance Companies) entered into an agreement 
(Indemnification Agreement) under which the Insurance Companies 
are required to defend and indemnify Farm & Home from certain 
actual and punitive damage claims being made against Farm & Home 
relating to the Brio superfund site (Brio).  A number of lawsuits 
were filed against Farm & Home in the District Courts of Harris 
County, Texas, by several hundred plaintiffs, former residents 
of, or students attending school within, a residential 
subdivision known as Southbend, seeking both actual and punitive 
damages allegedly relating to injuries arising out of the 
hazardous substances at Brio.  The Insurance Companies have been 
defending these cases under a reservation of rights because it is 
unclear whether certain of the claims fall under the coverage of 
either the policies or the Indemnification Agreement.  On August 
29, 1997 the trial court granted motions for summary judgment 
filed on behalf of Farm & Home dismissing the claims of 
approximately 640 plaintiffs, finding that Farm & Home owed no 
duty to the plaintiffs as a matter of law.  As a result of that 
ruling, the parties consummated a previously agreed settlement, 
under which all but approximately 50 of the pending bodily injury 
claims have been settled, and no appeal will be taken from the 
trial court's ruling.  The final group of 50 plaintiffs have also 
agreed to a settlement which is to be submitted for court 
approval in November 1997.  After all of the properties within 
Southbend were acquired by the Insurance Companies, all of the 
structures were demolished.  Ownership of the land has been 
transferred to an unrelated third party, which has agreed to 
indemnify the Insurance Companies for any liability arising after 
the conveyance.


Item II                  Xerox Corporation
	     Management's Discussion and Analysis of
	   Results of Operations and Financial Condition

 Document Processing

Summary

Income from continuing operations increased 28 percent to $320 
million in the 1997 third quarter from $250 million in the 1996 
third quarter.  For the first nine months, income from continuing 
operations increased 19 percent to $927 million.

Revenues of $4.4 billion in the quarter represented 9 percent 
growth on a pre-currency basis.  After the adverse effect of 
currency, revenue growth was 5 percent.  The pre-currency revenue 
growth was driven by 21 percent growth in equipment sales 
(excluding OEM sales) and 31 percent growth in document 
outsourcing.  For the first nine months, revenues of $12.8 
billion represented 6 percent growth on a pre-currency basis or 4 
percent after the adverse effect of currency. 

Fully diluted earnings per share increased 29 percent to $0.88 in 
the third quarter.  For the first nine months of 1997, fully 
diluted earnings per share increased 20 percent to $2.57.

Pre-Currency Growth

To understand the trends in the business, we believe that it is 
helpful to adjust revenue and expense growth (except for ratios) 
to exclude the impact of changes in the translation of foreign 
currencies into U.S. dollars.  We refer to this adjusted growth 
as "pre-currency growth."

A substantial portion of our consolidated revenues is derived 
from operations outside of the United States where the U.S. 
dollar is not the functional currency, primarily in Europe. When 
compared with the average of the major European currencies on a 
revenue weighted basis, the U.S. dollar was approximately 11 
percent stronger in the 1997 third quarter than in the 1996 third 
quarter;  only the pound sterling was stronger. As a result, 
currency translation had an unfavorable impact of approximately 4 
percentage points on total revenues in the 1997 third quarter.

Revenues denominated in currencies where the local currency is 
the functional currency are not hedged for purposes of 
translation into U.S. dollars.



Revenues

For the major product categories, the pre-currency revenue growth 
rates are as follows:


				1996                     1997   _
		       Q1   Q2   Q3   Q4   FY        Q1   Q2   Q3

Total Revenues         4%   6%   5%   8%   6%        5%   6%   9%

Digital Products      19   21   23   26   23        18   24   26
Light Lens Copiers     -    -   (4)   -   (1)       (2)  (3)   1

Digital product revenues grew 26 percent in the 1997 third 
quarter following 24 percent growth in the second quarter and 18 
percent growth in the first quarter.  These revenues represent 35 
percent of total revenues in the 1997 third quarter compared with 
30 percent in the 1996 third quarter.  Color copying and printing 
grew 48 percent with continued excellent growth in the DocuColor 
40, the Company's 40 page-per-minute color document production 
system. Orders and installations of the new black and white 
Document Centre digital copiers introduced in April continue to 
exceed our expectations, and these copiers were supply 
constrained in the third quarter.  Production publishing grew 19 
percent in the 1997 third quarter compared with 9 percent growth 
in the 1997 second quarter, primarily as a result of excellent 
customer demand for the new 180 page-per-minute DocuTech 
Production Publisher.  Computer printing grew 4 percent in the 
1997 third quarter following two quarters of unusually strong 
growth.

Despite continuing pricing pressures, black-and-white light lens 
copier revenues grew 1 percent in the 1997 third quarter compared 
with a weak 1996 third quarter, and follows declines of 3 percent 
in the second quarter and 2 percent in the first quarter.  These 
revenues were 51 percent of total revenues in the 1997 third 
quarter compared with 55 percent in the 1996 third quarter.

Geographically, the pre-currency revenue growth rates are as 
follows:

				1996                   1997    _
			Q1   Q2   Q3   Q4   FY     Q1   Q2   Q3

Total Revenues          4%   6%   5%   8%   6%     5%   6%   9%

United States           5    6    5    9    6      6    3    7
Xerox Limited          (2)   2    2    2    1      3    6   11
Other Areas            11   10    6   14   10      3   11   11

Memo:  Fuji Xerox      13   15   11   11   12     11    4    4

Revenues from the U.S. sales and service operations grew 11 
percent in the third quarter driven by excellent digital 
equipment sales and strong black and white light lens copier 
sales. Lower OEM sales in the 1997 third quarter compared with a 
year ago reduced total U.S. revenue growth to 7 percent.

Xerox Limited (formerly Rank Xerox Limited) and related companies 
manufacture and market Xerox products principally in Europe. 
Overall, the European economies remain soft. However, Holland and 
Italy had strong revenue growth in the third quarter and growth 
in France and Germany was good. The U.K. had modest growth.

Other Areas include operations principally in Latin America, 
Canada and China.  Brazil had strong revenue growth in the 1997 
third quarter reflecting excellent growth in equipment sales and 
document outsourcing.  Revenue growth was also excellent in 
Mexico, but smaller Latin American countries such as Chile and 
Venezuela continue to be impacted by difficult economic 
conditions.  Revenues in Canada and China were essentially flat 
in the third quarter.

Fuji Xerox Co., Ltd., an unconsolidated entity, jointly owned by 
Xerox Limited and Fuji Photo Film Company Limited, develops, 
manufactures and distributes document processing products in 
Japan, Australia, New Zealand, and other areas of the Pacific 
Rim. The 1997 third quarter reflects modest growth in Japan, due 
to difficult economic conditions, and excellent growth in Fuji 
Xerox' other Asian territories.



The pre-currency growth rates by type of revenue are as follows:

				 1996                   1997    _
		       Q1   Q2   Q3   Q4   FY       Q1   Q2   Q3

Total Revenues         4%   6%   5%   8%   6%       5%   6%   9%

Sales                  3    6    7   12    7        5    6   12

  Equipment(1)         7    9    6   14   10       10   11   21
  Supplies             1    8   11   11    8        1    2    2
  Paper               (2)  (7) (12)  (7)  (7)      (9)  (1)   8

Service/Rentals/
 Outsourcing/Other     5    4    4    4    4        4    5    6
  Service              1   (2)  (3)  (1)  (1)      (2)   1    2
  Rentals              2    2    1   (4)   -      (11)  (8) (10)
  Doc. Outsourcing(2) 48   51   51   41   47       41   36   31

Finance Income         1    -    4    1    1        2    5    -

Memo:
Revenues Excluding
Equipment Sales        3    4    2    3    3        2    3    5

(1) Excluding OEM
(2) Excludes equipment in outsourcing contracts that are
    accounted for as sales.

Equipment sales in the 1997 third quarter grew 21 percent 
reflecting excellent growth in digital products, particularly 
color copying and printing, the recently introduced Document 
Centre black and white digital copiers, and production 
publishing.

Supplies sales: The decline in growth in the first three quarters 
of 1997 from the 1996 third and fourth quarters is due 
principally to a reduction in sales of OEM printer cartridges 
following the buildup of inventory for new products at OEM 
customers.

Paper sales: Our strategy is to charge a spread over mill 
wholesale prices to cover our costs and value added as a 
distributor.  Good revenue growth in the 1997 third quarter 
reflects volume increases partially offset by moderating 
industry-wide domestic price declines.

Combined service, rental, document outsourcing and other revenue 
growth improved to 6 percent in the 1997 third quarter. The 31 
percent growth in document outsourcing (excluding equipment in 
outsourcing contracts accounted for as sales) continued to divert 
revenues from service, rentals, finance income and supplies. 
Service revenues grew 2 percent as the impact of higher machine 
populations resulting from recent higher equipment sales was 
partially offset by competitive price pressures. Rental revenues 
continued to decline, due primarily to Latin American customers' 
preference for purchase or document outsourcing rather than 
rental.

Document Outsourcing revenues are included in Equipment Sales as 
well as in Service/Rental/Document Outsourcing/Other. Where 
document outsourcing contracts include revenue accounted for as 
equipment sales, this revenue is included as Equipment Sales on 
the income statement.  All other document outsourcing revenue, 
including service, equipment rental, supplies, paper, and labor, 
are included in Service/Rentals/Outsourcing/Other on the income 
statement.  Growth in total document outsourcing revenue is 
higher than the growth included in 
Service/Rentals/Outsourcing/Other, reflecting an increase in the 
proportion of equipment in outsourcing contracts accounted for as 
sales.

Finance income: Our strategy for financing equipment sales in the 
industrialized economies is to charge a spread over our cost of 
borrowing and to lock in that spread by match funding the finance 
receivables with borrowings of similar maturities. Good growth in 
the financing of equipment sales in the U.S. and Latin America 
has been partially offset by lower average interest rates.

Gross Profit and Expenses

The gross margins by revenue stream were as follows:

				1996                   1997    _
		  Q1    Q2    Q3    Q4    FY      Q1    Q2   Q3

Total Gross
    Margin      46.0% 47.9% 46.2% 47.1% 46.9%   46.5% 47.8% 46.6%

Sales           42.9  45.7  43.9  45.4  44.6    43.2  46.2  45.4
Service/Rent/
  DocOut        49.0  50.4  48.8  49.3  49.4    49.9  49.7  48.0
Financing       49.0  49.5  48.3  51.0  49.5    48.9  49.2  47.3

The total gross margin increased by 0.4 percentage points in the 
1997 third quarter from the 1996 third quarter.

The sales gross margin improved by 1.5 percentage points from the 
1996 third quarter principally due to product mix and 
productivity, partially offset by competitive pricing pressures. 
The service, rentals and document outsourcing gross margin 
declined by 0.8 percentage points from the 1996 third quarter due 
primarily to continued pricing pressures and adverse currency 
partially offset by productivity.

Research and development (R&D) expense increased 4 percent in the 
1997 third quarter as we continue to invest in technological 
development to maintain our premier position in the rapidly 
changing document processing market. Xerox R&D is strategically 
coordinated with that of Fuji Xerox which invested $537 million 
in R&D in the 1996 full year, for a combined total of $1.6 
billion.

Selling, administrative and general expenses (SAG) increased 5 
percent in the 1997 third quarter.  SAG was 29.4 percent of 
revenue in the 1997 third quarter, a decrease of 0.8 percentage 
points from the 1996 third quarter, primarily due to productivity 
initiatives and expense controls.

Worldwide employment increased by 1,000 in the 1997 third quarter 
to 90,100, primarily as a result of the net hiring of 500 
employees for the company's fast-growing document outsourcing 
business, 200 for increased sales coverage, and 200 for volume 
related manufacturing.

The $3 million decrease in other expenses, net, from the 1996 
third quarter was due to the non-recurrence of several one-time 
charges in 1996 partially offset by increased non-financing 
interest expense associated with our June 1997 acquisition of the 
Rank Group's remaining interest in Xerox Limited.  Also, we 
reduced debt with the proceeds from $650 million of mandatorily 
redeemable preferred stock issued through a trust in January 
1997. This partially offset the increase in non-financing 
interest expense because the after-tax impact of the dividend on 
these securities is included in the income statement in 
Minorities' Interests in the Earnings of Subsidiaries.

Income Taxes, Equity in Net Income of Unconsolidated Affiliates 
and Minorities' Interests in the Earnings of Subsidiaries

Income before income taxes increased 18 percent to $450 million 
in the 1997 third  quarter from $383 million in the 1996 third 
quarter.

The effective tax rate was 34.2 percent in the 1997 third quarter 
compared with 36.0 percent in the 1996 third quarter.  The 
effective tax rate for the 1997 first nine months is 34.8 percent 
and we expect the 1997 full-year tax rate to be in line with the 
first nine months.

Equity in the net income of unconsolidated affiliates is 
principally the Xerox Limited share of Fuji Xerox income. Total 
equity in net income increased in the 1997 third quarter as the 
underlying growth in Fuji Xerox was partially offset by the 
adverse impact of currency translation.

Minorities' interests reduction in the 1997 third quarter was due 
to our acquisition of the remaining interest in Xerox Limited, 
effective in June, partially offset by the after tax impact of 
the dividend on the mandatorily redeemable preferred stock 
discussed above.

Effective July 1, 1997, we changed the functional currency for 
our Brazilian operation from the U.S. dollar to the Brazilian 
Real because we believe the Brazilian economy is no longer 
considered hyperinflationary.  The effect of this change on our 
reported results is immaterial to both the Company's results of 
operations and financial position in the 1997 third quarter.

In June 1997, the Company completed the acquisition of The Rank 
Group's remaining 20 percent financial interest in Xerox Limited 
and related companies for 940 million pounds sterling, or 
approximately $1.5 billion. The transaction was funded entirely 
by debt consisting of 500 million pounds sterling of third party 
debt and 440 million pounds sterling of notes payable issued to 
The Rank Group.

In February 1996, the board of directors authorized the 
repurchase of up to $1 billion of Xerox common stock. Through the 
1997 second quarter, the company had repurchased 8.5 million 
shares for $422 million.  As a result of the Xerox Limited 
transaction, the repurchase program was suspended during the 
second quarter as use of the company's financial resources to 
fund the $1.5 billion acquisition of The Rank Group's remaining 
interest in Xerox Limited produces greater value for Xerox 
shareholders.

Effective 1997, Fuji Xerox changed its reporting period from a 
fiscal year ending October 20 to a fiscal year ending December 
20.  The results of operations during the period between the end 
of the 1996 fiscal year and the beginning of the new fiscal year 
(the stub period) amounted to a gain of $8 million.  The gain was 
credited directly to retained earnings.

In February 1997, the Financial Accounting Standards Board (FASB) 
issued Statement of Financial Accounting Standards (SFAS) No. 128 
"Earnings Per Share."  Commencing with our fourth quarter 
reporting, SFAS No. 128 will require us to present basic and 
diluted earnings per share (EPS) on the face of the income 
statement.  The computation of basic EPS replaces primary EPS.  
If we had implemented SFAS No. 128 during the third quarter, we 
would have reported basic EPS of $0.94 and $2.74 for the quarter 
and year to date, respectively, and diluted EPS of $0.89 and 
$2.58 for the quarter and year to date, respectively.

In June 1997, the FASB issued SFAS No. 130, "Reporting 
Comprehensive Income" and No. 131, "Disclosures about Segments of 
an Enterprise and Related Information."  Commencing in 1998, SFAS 
No. 130 will require companies to report comprehensive income and 
SFAS No. 131 will require companies to report segment performance 
as it is used internally to evaluate segment performance.  These 
statements merely add additional disclosure requirements.



		      Discontinued Operations

The net investment in the discontinued financial services 
businesses which includes Insurance, Other Financial Services and 
Third-Party Financing and Real Estate totaled $1,453 million at 
September 30, 1997 compared with $2,124 million at December 31, 
1996.  The decrease primarily reflects the sales of Coregis 
Group, Inc. (Coregis) and Industrial Indemnity Holdings, Inc. 
(II), somewhat offset by scheduled funding of reinsurance 
coverage to the Talegen Holdings, Inc. (Talegen) companies and 
The Resolution Group, Inc. (TRG) by Ridge Reinsurance Limited 
(Ridge Re) and interest for the period on the assigned debt.  A 
discussion of the discontinued businesses follows.

Insurance

In 1995, we recorded a $1,546 million after-tax charge in 
connection with agreements to sell all of our "Remaining" 
insurance companies, which included Coregis, Crum & Forster 
Holdings, Inc. (CFI), II, Westchester Specialty Group, Inc. 
(WSG), TRG and three insurance-related service companies.

On September 11, 1996, those transactions were terminated.  No 
additional charges are considered necessary as a result of the 
termination.  In September 1996, the Board of Directors of Xerox 
formally approved a plan of disposal under which we have retained 
investment bankers to assist us in the simultaneous disposition 
of each of the Remaining insurance and service companies.

During 1997, we made significant progress in the disposition of 
these companies, including the completion of the sales of three 
of the five Remaining insurance companies as well as the 
announced sale agreement for a fourth, and the completed 
disposition of one service company.  We expect to make an 
announcement related to the disposition of the one remaining 
insurance company, CFI, within the coming months.  Specifically, 
during 1997 the following has occurred:

- -  In the first quarter, we sold certain assets of Apprise Corp., 
one of Talegen's insurance-related service companies.  The 
financial terms of this transaction were not material.

- -  In the second quarter, we completed the sale of Coregis for 
$375 million in cash and the assumption of $75 million in debt.

- -  In the third quarter, we completed the sale of II for $365 
million in cash, plus the assumption of $79 million in debt.

- -  On September 18, 1997, we announced an agreement to sell WSG 
for $333 million in cash, less transaction related costs 
estimated to be $60 million.  This transaction is subject to 
customary closing conditions and regulatory approvals and is 
expected to close before the end of January 1998.

- -  On October 15, 1997 we completed the sale of TRG for $150 
million in cash and $462 million in performance-based instruments 
to an investor group led by the Chief Executive Officer of TRG.

The selling prices of the disposed companies were consistent with 
the estimated values of the units when we discontinued the 
insurance operations in 1995.  During the disposal process, we 
will continue to be subject to all business risks and rewards of 
the remaining units.  Until the remaining units are actually 
sold, no assurances can be given as to the ultimate impact on our 
total results from operations or whether the proceeds of sales 
will equal their carrying value.

Xerox Financial Services, Inc. (XFSI) continues to provide  
aggregate excess of loss reinsurance coverage to the current and 
former Talegen/TRG units through Ridge Reinsurance Limited (Ridge 
Re), a wholly owned subsidiary.  As of October 1997, XFSI is 
obligated to pay five remaining annual premium installments of 
$45 million, plus finance charges for coverage totaling $1,109 
million (which is net of 15 percent coinsurance).  At September 
30, 1997, Ridge Re had recognized approximately $632 million of 
the available coverage.

The net investment in Insurance at September 30, 1997 totaled 
$1,176 million compared with a balance of $1,846 million at 
December 31, 1996.  The decrease primarily reflects the sales of 
Coregis and II, somewhat offset by contractual payments to Ridge 
Re for annual premium installments and associated finance charges 
and interest on the assigned insurance debt.

Property and Casualty Operating Trends

The industry's profitability can be significantly affected by 
cyclical competitive conditions, judicial decisions affecting 
insurers' liabilities, and by volatile and unpredictable 
developments, including changes in the propensity of courts to 
grant large awards, fluctuations in interest rates and other 
changes in the investment environment (which affect market prices 
of insurance companies' investments, the income from those 
investments and inflationary pressures that may tend to affect 
the size of losses).  WSG and CFI's operating results have 
historically been influenced by these industry trends, as well as 
by their exposure to uncollectible reinsurance, which had been 
greater than most other insurers.

Other Financial Services

The net investment in Other Financial Services (OFS) at September 
30, 1997 was $124 million compared with $101 million at December 
31, 1996.  The increase in the investment primarily reflects the 
effect of a transfer from Insurance which had no effect on the 
total net investment in the discontinued financial services 
businesses.

On June 1, 1995, XFSI completed the sale of Xerox Financial 
Services Life Insurance Company and related companies (Xerox 
Life).  In connection with the transaction, OakRe Life Insurance 
Company (OakRe), a wholly-owned XFSI subsidiary, assumed 
responsibility, via Coinsurance Agreements, for existing Single 
Premium Deferred Annuity (SPDA) policies issued by Xerox Life.  
The Coinsurance Agreements include a provision for the assumption 
(at their election) by the purchaser's companies, of all of the 
SPDA policies at the end of their current rate reset periods.  A 
Novation Agreement with an affiliate of the new owner provides 
for the assumption of the liability under the Coinsurance 
Agreements for any SPDA policies not so assumed.  Other policies 
(of Immediate, Whole Life, and Variable annuities as well as a 
minor amount of SPDAs) were sold and are now the responsibility 
of the purchaser's companies. 

As a result of the Coinsurance Agreements, at September 30, 1997, 
OakRe retained approximately $1.7 billion of investment portfolio 
assets (transferred from Xerox Life) and liabilities related to 
the reinsured SPDA policies.  Interest rates on these policies 
are fixed and were established upon issuance of the respective 
policies.  Substantially all of these policies will reach their 
rate reset periods through the year 2000 and will be assumed 
under the Agreements as described above.  Xerox Life's portfolio 
was designed to recognize that policy renewals extended liability 
"maturities," thereby permitting investments with average 
duration somewhat beyond the rate reset periods.  OakRe's 
practice is to selectively improve this match over time as market 
conditions allow.

In connection with the aforementioned sale, XFSI established a 
$500 million letter of credit and line of credit with a group of 
banks to support OakRe's coinsurance obligations.  The term of 
this letter of credit is five years and it is unused and 
available at September 30, 1997.  Upon a drawing under the letter 
of credit, XFSI has the option to cover the drawing in cash or to 
draw upon the credit line.

Third-Party Financing and Real Estate

Third-Party Financing and Real Estate assets at September 30, 
1997 totaled $337 million, a $113 million reduction from the 
December 31, 1996 level due primarily to the continued run-off 
and sales of third-party assets.  The proceeds were used to 
reduce assigned debt to $134 million at September 30, 1997, a $89 
million decrease from the year-end 1996 level.


Capital Resources and Liquidity

Total debt, including ESOP and discontinued operations debt not 
shown separately in our consolidated balance sheets, was $13,206 
million at September 30, 1997 or $758 million more than at 
December 31, 1996.  The changes in consolidated indebtedness 
since year-end and versus the first nine months of 1996 are 
summarized as follows:

(In millions)                                1997       1996
Total Debt as of January 1                $12,448    $11,794
Non-Financing Businesses
Document Processing operations                173        553
Discontinued Businesses                      (506)       132
Total Non-Financing                          (333)       685
Financing Businesses                         (106)       (15)
Total Operations                             (439)       670
Shareholder dividends                         356        330
Acquisition of Additional Interest in RX    1,534          -
Mandatorily redeemable preferred stock       (637)         -
Equity redemption and other changes           (56)       165
Total Debt as of September 30             $13,206    $12,959

The following table summarizes the changes in total equity during 
the first nine months of 1997 and 1996:

(In millions)                                1997         1996
Total equity as of January 1               $5,931       $5,396
Income from Continuing Operations             927          780
Shareholder dividends paid                   (356)        (330)
Proceeds from Sale of Common Stock            130           85
Repurchase of common and preferred stock     (116)        (257)
Purchase of Minority Interest                (723)           -
Net proceeds from issuance of mandatorily
 redeemable preferred stock                   637            -
All other, net                               (202)         (15)
Balance as of September 30                 $6,228       $5,659


Non-Financing Operations

Operational cash flows are highly seasonal. Due primarily to 
profit sharing payments and inventory build up, historically our 
operations have used cash in the first half and generated cash 
later in the year.

The following table summarizes Document Processing non-financing 
operations cash generation and borrowing for the nine months 
ended September 30, 1997 and 1996:

				     Cash Generated/(Borrowed)
				  Nine Months Ended September 30
(In millions)                       1997                  1996
Document Processing
Non-Financing:
Income                            $  763               $  663
Depreciation and amortization        517                  528
Capital expenditures, net           (286)                (310)
Working capital/other             (1,167)              (1,434)
Total                             $ (173)              $ (553)

Nine-month cash usage of $173 million was $380 million less than 
in the first nine months of 1996 due primarily to higher net 
income, and lower restructuring payments.

Financing Businesses

Financing businesses debt was reduced by $106 million and $15 
million during the first nine months of 1997 and 1996, 
respectively.  This larger decline in 1997 reflects currency 
translation effects related to the strength of the U.S. dollar 
compared with the major European currencies largely offset by 
volume growth.


		      Hedging Instruments

We have entered into certain financial instruments to manage 
interest rate and foreign currency exposures.  These instruments 
are held solely for hedging purposes and include interest rate 
swap agreements, forward exchange contracts and foreign currency 
swap agreements.  We do not enter into derivative instrument 
transactions for trading purposes and we employ long-standing 
policies prescribing that derivative instruments only be used to 
achieve a set of very limited objectives.

Currency derivatives are primarily arranged in conjunction with 
underlying transactions that give rise to foreign currency-
denominated payables and receivables; for example, an option to 
buy foreign currency to settle the importation of goods from 
suppliers, or a forward exchange contract to fix the U.S. dollar 
value of a foreign currency-denominated loan.  In addition, when 
cost-effective, currency derivatives may be used to hedge balance 
sheet exposures.

Revenues denominated in currencies where the local currency is 
the functional currency are not hedged.

With regard to interest rate hedging, virtually all customer 
financing assets earn fixed rates of interest.  We "lock in" an 
interest rate spread by arranging fixed-rate liabilities with 
similar maturities as the underlying assets.  Additionally, 
customer financing assets in one currency are consistently funded 
with liabilities in the same currency.  We refer to the effect of 
these conservative practices as "match funding" customer 
financing assets. This practice effectively eliminates both the 
risk of a major compression in interest margins if interest rates 
increase and the opportunity for margin expansion if interest 
rates decline.

More specifically, pay fixed-rate and receive variable-rate swaps 
are typically used in place of more expensive fixed-rate debt.  
Pay variable-rate and receive variable-rate swaps are used to 
transform variable-rate medium-term debt into commercial paper or 
LIBOR obligations.  Additionally, pay variable-rate and receive 
fixed-rate swaps are used from time to time to transform longer-
term fixed-rate debt into commercial paper or LIBOR-rate 
obligations. The transactions performed within each of these 
three categories enable cost-effective management of interest 
rate exposures.  The potential risk attendant to this strategy is 
non-performance of a swap counterparty.  We address this risk by 
arranging swaps exclusively with a diverse group of strong-credit 
counterparties, regularly monitoring their credit ratings, 
determining the replacement cost, if any, of existing 
transactions, and internally capping related exposures.

Our currency and interest rate hedging is typically unaffected by 
changes in market conditions as forward contracts, options and 
swaps are normally held to maturity consistent with our objective 
to lock in currency rates and interest rate spreads on the 
underlying transactions.


PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

The information set forth under Note 9 contained in the "Notes to 
Consolidated Financial Statements" on pages 13-15 of this 
Quarterly Report, on Form 10-Q, is incorporated by reference in 
answer to this item.


Item 2.  Changes in Securities

During the quarter ended September 30, 1997, Registrant issued 
the following securities in transactions which were not 
registered under the Securities Act of 1933, as amended (the 
Act):

(a)  Securities Sold:  on July 1, 1997, Registrant issued 1,393
     shares of Common stock, par value $1 per share.

(b)  No underwriters participated.  The shares were issued to
     each of the non-employee Directors of Registrant: B.R.
     Inman, A.A.Johnson, V.E. Jordan, Jr., Y. Kobayashi,
     H. Kopper, R.S. Larsen, J.D. Macomber, G.J. Mitchell,
     N.J. Nicholas, Jr., J.E. Pepper, M.R. Seger and T.C.
     Theobald.

(c)  The shares were issued at a deemed purchase price of $78.875
     per share (aggregate price $109,125), based upon the
     market value on the date of issuance, in payment of the
     quarterly Directors' fees pursuant to Registrant's
     Restricted Stock Plan for Directors.

(d)  Exemption from registration under the Act was claimed based
     upon Section 4(2) as a sale by an issuer not involving a
     public offering.


Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibit 3(a)(1) Restated Certificate of Incorporation of
     Registrant filed by the Department of State of the State of
     New York on October 29, 1996.  Incorporated by reference to
     Exhibit 3(a)(1) to Registrant's Quarterly Report on Form
     10-Q for the Quarter Ended September 30, 1996.

     Exhibit 3(b) By-Laws of Registrant, as amended through
     June 11, 1997 (in electronic form only).

     Exhibit 10(e) 1997 Restatement of Registrant's Unfunded
     Retirement Income Guarantee Plan (in electronic form only).

     Exhibit 10(f)  1997 Restatement of Registrant's Unfunded
     Supplemental Retirement Plan (in electronic form only).

     Exhibit 10(k) Registrant's Deferred Compensation Plan For
     Directors, 1997 Amendment and Restatement (in electronic
     form only).

     Exhibit 10(l) Registrant's Deferred Compensation Plan For
     Executives, 1997 Amendment and Restatement (in electronic
     form only).

     Exhibit 11  Computation of Net Income per Common Share.

     Exhibit 12  Computation of Ratio of Earnings to Fixed
     Charges.

     Exhibit 27  Financial Data Schedule (in electronic form
     only).


(b)  A current report on Form 8-K dated June 30, 1997, August 1, 
1997 and September 18, 1997 reporting Item 5 "Other Events" was 
filed during the quarter for which this Quarterly Report is 
filed.



			   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 
1934, the registrant has duly caused this report to be signed on 
its behalf by the undersigned thereunto duly authorized.





					 XEROX CORPORATION
					   (Registrant)




				   _____________________________
Date: November 12, 1997                By  Philip D. Fishbach   
				   Vice President and Controller
				  (Principal Accounting Officer)




 








Exhibit 11
Xerox Corporation

		  Computation of Net Income Per Common Share
      (Dollars in millions, except per-share data; shares in thousands)

					  Three months        Nine months
				       ended September 30, ended September 30,
					    1997     1996       1997     1996

I. Primary Net Income Per Common Share

   Income from continuing operations    $   320 $    250   $    927 $    780
   Accrued dividends on ESOP preferred 
    stock, net                              (11)     (11)       (33)     (32)
   Accrued dividends on redeemable
     preferred stock                          -        -          -       (1)
   Adjusted income from 
     continuing operations                  309      239        894      747
   Discontinued operations                    -        -          -        - 
   Adjusted net income                  $   309 $    239   $    894 $    747

   Average common shares outstanding 
     during the period                  325,237  324,524    324,430  324,578
   Common shares issuable with respect 
     to common stock equivalents for
     stock options, incentive and 
     exchangeable shares                  6,520    9,049      6,520    9,049
   Adjusted average shares outstanding 
     for the period                     331,757  333,573    330,950  333,627

   Primary earnings per share:
     Continuing operations              $  0.92 $   0.71   $   2.70 $   2.24
     Discontinued operations                  -        -          -        -
   Primary earnings per share           $  0.92 $   0.71   $   2.70 $   2.24

II. Fully Diluted Net Income Per Common Share

   Income from continuing operations    $   320 $    250   $    927 $    780
   Accrued dividends on redeemable 
     preferred stock                          -        -          -       (1)
   ESOP expense adjustment, net of tax        -        -          -       (1)
   Interest on convertible debt, 
     net of tax                               1        -          2        1
   Adjusted income from 
     continuing operations                  321      250        929      779
   Discontinued operations                    -        -          -        -
   Adjusted net income                 $    321 $    250   $    929 $    779

   Average common shares outstanding  
     during the period                  325,237  324,524    324,430  324,578
   Stock options, incentive and 
     exchangeable shares                  6,760    9,050      6,760    9,050
   Convertible debt                       2,644    2,644      2,644    2,644
   ESOP preferred stock                  27,418   28,063     27,418   28,063
   Adjusted average shares outstanding 
     for the period                     362,059  364,281    361,252  364,335

   Fully diluted earnings per share:
     Continuing operations             $   0.88 $   0.68   $   2.57 $   2.14
     Discontinued operations                  -        -          -        -
   Fully diluted earnings per share    $   0.88 $   0.68   $   2.57 $   2.14


Exhibit 12
			       Xerox Corporation

		  Computation of Ratio of Earnings to Fixed Charges

		       Nine months ended            Year ended
			 September 30,              December 31,
(In millions)            1997    1996    1996    1995    1994    1993*  1992
Fixed charges:
  Interest expense    $   450  $  446  $  592  $  603  $  520  $  540 $  627
  Rental expense           92     110     140     142     170     180    187
  Preferred stock divi-
   dend of subsidiary      37       -       -       -       -       -      -
 Total fixed charges
  before capitalized
  interest                579     556     732     745     690     720    814
Capitalized interest        -       -       -       -       2       5     17
Total fixed charges   $   579  $  556  $  732  $  745  $  692  $  725 $  831

Earnings available for
  fixed charges:
  Earnings**          $ 1,480  $1,318  $2,067  $1,980  $1,602  $ (193)$1,183
  Less undistributed
   income in minority
   owned companies       (101)    (91)    (84)    (90)    (54)    (51)   (52)
  Add fixed charges 
    before capitalized
    interest and 
    preferred stock
    dividend of 
    subsidiary            542     556     732     745     690     720    814
  Total earnings 
    available for
    fixed charges     $ 1,921  $1,783  $2,715  $2,635  $2,238  $  476 $1,945

Ratio of earnings to
 fixed charges (1)(2)    3.32    3.21    3.71    3.54    3.23    0.66   2.34

(1) The ratio of earnings to fixed charges has been computed based on the 
    Company's continuing operations by dividing total earnings available for 
    fixed charges, excluding capitalized interest, by total fixed charges.  
    Fixed charges consist of interest, including capitalized interest,
    one-third of rent expense as representative of the interest portion of 
    rentals, and preferred stock dividend requirements of subsidiaries.
    Debt has been assigned to discontinued operations based on historical
    levels assigned to the businesses when they were continuing operations,
    adjusted for subsequent paydowns.  Discontinued operations consist of
    the Company's Insurance and Other Financial Services businesses and its
    real-estate development and third-party financing businesses.

(2) The Company's ratio of earnings to fixed charges includes the effect of 
    the Company's finance subsidiaries, which primarily finance Xerox 
    equipment.  Financing businesses are more highly leveraged and,
    therefore, tend to operate at lower earnings to fixed charges ratio 
    levels than do non-financial businesses.

*   1993 earnings were inadequate to cover fixed charges.  The coverage 
    deficiency was $249 million.

**  Sum of "Income before Income Taxes, Equity Income and Minorities' 
    Interests" and "Equity in Net Income of Unconsolidated Affiliates."


								 EXHIBIT 3(B)


				   BY-LAWS

				     of

			      XEROX CORPORATION


				June 11, 1997


			    ---------------------

				  ARTICLE I

			  MEETINGS OF STOCKHOLDERS

     SECTION 1.   ANNUAL MEETINGS:   A meeting of shareholders entitled to 
vote shall be held for the election of Directors and the transaction of other 
business in May of each year on any day (except a Saturday, Sunday, or 
holiday) in that month as determined by the Board of Directors.

     SECTION 2.   SPECIAL MEETINGS:   Special Meetings of the shareholders may 
be called at any time by the Chairman of the Board, the President  or the 
Board of Directors.

     SECTION 3.   PLACE OF MEETINGS:   Meetings of shareholders shall be held 
at the principal office of the Company or at such other place, within or 
without the State of New York, as may be fixed by the Board of Directors.

     SECTION 4.   NOTICE OF MEETINGS:

     (a)  Notice of each meeting of shareholders shall be in writing and shall 
state the place, date and hour of the meeting.  Notice of a Special Meeting 
shall state the purpose or purposes for which it is being called and shall 
also indicate that it is being issued by or at the direction of the person or 
persons calling the meeting.  If, at any meeting, action is proposed to be 
taken which would, if taken, entitle shareholders, fulfilling the requirements 
of Section 623 of the Business Corporation Law to receive payment for their 
shares, the notice of such meeting shall include a statement of that purpose 
and to that effect.

     (b)  A copy of the notice of any meeting shall be given, personally or by 
mail, not less than ten nor more than fifty days before the date of the 
meeting, to each shareholder entitled to vote at such meeting.  If mailed, 
such notice is given when deposited in the United States mail, with postage 
thereon prepaid, directed to the shareholder at his address as it appears on 
the record of shareholders, or, if he shall have filed with the Secretary a 
written request that notices to him be mailed to some other address, then 
directed to him at such other address.

     (c)  Notice of meeting need not be given to any shareholder who submits a 
signed waiver of notice, in person or by proxy, whether before or after the 
meeting.  The attendance of any shareholder at a meeting, in person or by 
proxy, without protesting prior to the conclusion of the meeting the lack of 
notice of such meeting, shall constitute a waiver of notice by him.

     SECTION 5.   QUORUM AND ADJOURNED MEETINGS:

     (a)  At any Annual or Special Meeting the holders of a majority of the 
shares of stock entitled to vote thereat, present in person or by proxy, shall 
constitute a quorum for the transaction of any business, provided that when a 
specified item of business is required to be voted on by a class or series, 
voting as a class, the holders of a majority of the shares of stock of such 
class or series shall constitute a quorum for the transaction of such 
specified item of business.  When a quorum is once present to organize a 
meeting, it is not broken by the subsequent withdrawal of any shareholders.

     (b)  Despite the absence of a quorum, the shareholders present may 
adjourn the meeting to another time and place, and it shall not be necessary 
to give any notice of the adjourned meeting if the time and place to which the 
meeting is adjourned are announced at the meeting at which the adjournment is 
taken.  At the adjourned meeting any business may be transacted that might 
have been transacted on the original date of the meeting.  If after the 
adjournment, however, the Board of Directors fixes a new record date for the 
adjourned meeting, a notice of the adjourned meeting shall be given to each 
shareholder on the new record date entitled to notice under Section 4 of this 
Article I of the By-Laws.

     SECTION 6.   ORGANIZATION:   At every meeting of the shareholders, the 
Chairman of the Board, or in his absence, the President, or in his absence, an 
Executive Vice President designated by the Chairman of the Board,  or in the 
absence of such officers, a person selected by the meeting, shall act as 
chairman of the meeting.  The Secretary or, in his absence, an Assistant 
Secretary shall act as secretary of the meeting, and in the absence of both 
the Secretary and an Assistant Secretary, a person selected by the meeting 
shall act as secretary of the meeting. 

     SECTION 7.   VOTING:

     (a)  Whenever any corporate action, other than the election of Directors, 
is to be taken by vote of the shareholders, it shall, except as otherwise 
required by law or by the Certificate of Incorporation be authorized by a 
majority of the votes cast at a meeting of shareholders by the holders of 
shares entitled to vote thereon.

     (b)  Directors shall, except as otherwise required by law, be elected by 
a plurality of the votes cast at a meeting of shareholders by holders of 
shares entitled to vote in the election; provided, however, a nomination shall 
be accepted, and votes cast for a nominee shall be counted by the inspectors 
of election, only if the Secretary of the Company has received at least 
twenty-four hours prior to the meeting a statement over the signature of the 
nominee that he consents to being a nominee and, if elected, intends to serve 
as a Director.

     SECTION 8.   QUALIFICATION OF VOTERS:

     (a)  Every shareholder of record of Common Stock and Series B Convertible 
Preferred Stock of the Company shall be entitled at every meeting of such 
shareholders to one vote for every share of Common Stock and Series B 
Convertible Preferred Stock, respectively, standing in his name on the record 
of shareholders.

     (b)  Shares of stock belonging to the Company and shares held by another 
domestic or foreign corporation of any type or kind, if a majority of the 
shares entitled to vote in the election of directors of such other corporation 
is held by the Company, shall not be shares entitled to vote or to be counted 
in determining the total number of outstanding shares.

     (c)  Shares held by an administrator, executor, guardian, conservator, 
committee, or other fiduciary, except a trustee, may be voted by him, either 
in person or by proxy, without transfer of such shares into his name.  Shares 
held by a trustee may be voted by him, either in person or by proxy, only 
after the shares have been transferred into his name as trustee or into the 
name of his nominee. 

     (d)  Shares standing in the name of another domestic or foreign 
corporation of any type or kind may be voted by such officer, agent or proxy 
as the By-Laws of such corporation may provide, or in the absence of such 
provision, as the Board of Directors of such corporation may provide.

     SECTION 9.   PROXIES:

      (a)  Every shareholder entitled to vote at a meeting of shareholders or 
to express consent or dissent without a meeting may authorize another person 
or persons to act for him by proxy.

     (b)  Every proxy must be signed by the shareholder or his attorney-in-
fact.  No proxy shall be valid after the expiration of eleven months from the 
date thereof unless otherwise provided in the proxy.  Every proxy shall be 
revocable at the pleasure of the shareholder executing it, except as otherwise 
provided by law.

     (c)  The authority of the holder of a proxy to act shall not be revoked 
by the incompetence or death of the shareholder who executed the proxy unless, 
before the authority is exercised, written notice of an adjudication of such 
incompetence or of such death is received by the Secretary or an Assistant 
Secretary.

     SECTION 10.   INSPECTORS OF ELECTION: 

      (a)  The Board of Directors, in advance of any shareholders' meeting, 
may appoint one or more inspectors to act at the meeting or any adjournment 
thereof.  If inspectors are not so appointed, the person presiding at a 
shareholders' meeting may, and on the request of any shareholder entitled to 
vote thereat, shall, appoint one or more inspectors.  In case any person 
appointed fails to appear or act, the vacancy may be filled by appointment 
made by the Board of Directors in advance of the meeting or at the meeting by 
the person presiding thereat.  Each inspector, before entering upon the 
discharge of his duties, shall take and sign an oath faithfully to execute the 
duties of inspector at such meeting with strict impartiality and according to 
the best of his ability.

     (b)  The inspectors shall determine the number of shares outstanding and 
the voting power of each, the shares represented at the meeting, the existence 
of a quorum, the validity and effect of proxies, and shall receive votes, 
ballots or consents, hear and determine all challenges and questions arising 
in connection with the right to vote, count and tabulate all votes, ballots or 
consents, determine the result, and do such acts as are proper to conduct the 
election or vote with fairness to all shareholders.  On request of the person 
presiding at the meeting or any shareholder entitled to vote thereat, the 
inspectors shall make a report in writing of any challenge, question or matter 
determined by them and execute a certificate of any fact found by them.  Any 
report or certificate made by them shall be prima facie evidence of the facts 
stated and of the vote as certified by them.

     SECTION 11.   LIST OF SHAREHOLDERS AT MEETINGS:   A list of share-holders 
as of the record date, certified by the Secretary or by the transfer agent, 
shall be produced at any meeting of shareholders upon the request thereat or 
prior thereto of any shareholder.  If the right to vote at any meeting is 
challenged, the inspectors of election, or person presiding thereat shall 
require such list of shareholders to be produced as evidence of the right of 
the persons challenged to vote at such meeting, and all persons who appear 
from such list to be shareholders entitled to vote thereat may vote at such 
meeting.


				 ARTICLE II

			     BOARD OF DIRECTORS

     SECTION 1.   POWER OF BOARD AND QUALIFICATION OF DIRECTORS:   The 
business of the Company shall be managed under the direction of the Board of 
Directors, each of whom shall be at least eighteen years of age.

     SECTION 2.   NUMBER, TERM OF OFFICE AND CLASSIFICATION:

     (a)  The Board of Directors shall consist of not less than five nor more 
than twenty-one members.  The number of Directors shall be determined from 
time to time by resolution of a majority of the entire Board of Directors then 
in office, provided that no decrease in the number of Directors shall shorten 
the term of any incumbent Director.  At each Annual Meeting of shareholders 
Directors shall be elected to hold office until the next annual meeting.

     (b)  If and whenever six full quarter-yearly dividends (whether or not 
consecutive) payable on the Cumulative Preferred Stock of any series shall be 
in arrears, in whole or in part, the number of Directors then constituting the 
Board of Directors shall be increased by two and the holders of the Cumulative 
Preferred Stock, voting separately as a class, regardless of series, shall be 
entitled to elect the two additional Directors at any annual meeting of 
shareholders or special meeting held in place thereof, or at a special meeting 
of the holders of the Cumulative Preferred Stock called as hereinafter 
provided.  Whenever all arrears in dividends on the Cumulative Preferred Stock 
then outstanding shall have been paid and dividends thereon for the current 
quarter-yearly dividend period shall have been paid or declared and set apart 
for payment, then the right of the holders of the Cumulative Preferred Stock 
to elect such additional two Directors shall cease (but subject always to the 
same provisions for the vesting of such voting rights in the case of any 
similar future arrearages in dividends), and the terms of office of all 
persons elected as Directors by the holders of the Cumulative Preferred Stock 
shall forthwith terminate and the number of the Board of Directors shall be 
reduced accordingly.  At any time after such voting power shall have been so 
vested in the Cumulative Preferred Stock, the Secretary of the Company may, 
and upon the written request of any holder of the Cumulative Preferred Stock 
(addressed to the Secretary at the principal office of the Company) shall, 
call a special meeting of the holders of the Cumulative Preferred Stock for 
the election of the two Directors to be elected by them as herein provided, 
such call to be made by notice similar to that provided in the By-Laws for a 
special meeting of the shareholders or as required by law.  If any such 
special meeting required to be called as above provided shall not be called by 
the Secretary within twenty days after receipt of any such request, then any 
holder of Cumulative Preferred Stock may call such meeting, upon the notice 
above provided, and for that purpose shall have access to the stock books of 
the Company.  The Directors elected at any such special meeting shall hold 
office until the next annual meeting of the shareholders or special meeting 
held in place thereof.  In case any vacancy shall occur among the Directors 
elected by the holders of the Cumulative Preferred Stock, a successor shall be 
elected to serve until the next annual meeting of the shareholders or special 
meeting held in place thereof by the then remaining Director elected by the 
holders of the Cumulative Preferred Stock or the successor of such remaining 
Director.

     (c)  All Directors shall have equal voting power.

     SECTION 3.   ORGANIZATION:   At each meeting of the Board of Directors, 
the Chairman of the Board, or in his absence, the President, or in his 
absence, a chairman chosen by a majority of the Directors present shall 
preside.  The Secretary shall act as secretary of the Board of Directors.  In 
the event the Secretary shall be absent from any meeting of the Board of 
Directors, the meeting shall select its secretary.

     SECTION 4.   RESIGNATIONS:   Any Director of the Company may resign at 
any time by giving written notice to the Chairman of the Board, the President 
or to the Secretary of the Company.  Such resignation shall take effect at the 
time specified therein or, if no time be specified, then on delivery.

     SECTION 5.   VACANCIES:   Newly created directorships resulting from an 
increase in the number of Directors and vacancies occurring in the Board of 
Directors for any reason may be filled by vote of a majority of the Directors 
then in office, although less than a quorum exists.  A Director elected to 
fill a vacancy shall hold office until the next annual meeting.

     SECTION 6.   PLACE OF MEETING:   The Board of Directors may hold its 
meetings at such place or places within or without the State of New York as 
the Board of Directors may from time to time by resolution determine.

     SECTION 7.   FIRST MEETING:    On the day of each annual election of 
Directors, the Board of Directors shall meet for the purpose of organization 
and the transaction of other business.  Notice of such meeting need not be 
given.  Such first meeting may be held at any other time which shall be 
specified in a notice given as hereinafter provided for special meetings of 
the Board of Directors.

     SECTION 8.   REGULAR MEETINGS:   Regular meetings of the Board of 
Directors may be held at such times as may be fixed from time to time by 
resolution of the Board of Directors without notice.

     SECTION 9.   SPECIAL MEETINGS:   Special meetings of the Board of 
Directors shall be held whenever called by the Chairman of the Board, the 
President, or by any two of the Directors.  Oral, telegraphic or written 
notice shall be given, sent or mailed not less than one day before the meeting 
and shall state, in addition to the purposes, the date, place and hour of such 
meeting.

     SECTION 10.   WAIVERS OF NOTICE:   Notice of a meeting need not be given 
to any Director who submits a signed waiver of notice whether before or after 
the meeting, or who attends the meeting without protesting, prior thereto or 
at its commencement, the lack of notice to him.

     SECTION 11.   QUORUM AND MANNER OF ACTING:

     (a)  If the number of Directors is twelve or more, seven Directors shall 
constitute a quorum for the transaction of business or any specified item of 
business.  If the number of Directors is less than twelve, a majority of the 
entire Board of Directors shall constitute a quorum.

     (b)  A majority of the Directors present, whether or not a quorum is 
present, may adjourn any meeting to another time and place without notice to 
any Director.

     SECTION 12.   WRITTEN CONSENTS:   Any action required or permitted to be 
taken by the Board of Directors or any committee thereof may be taken without 
a meeting if all members of the Board or the committee consent in writing to 
the adoption of a resolution authorizing the action. The resolution and the 
written consents thereto by the members of the Board or committee shall be 
filed with the minutes of the proceedings of the Board or committee.

     SECTION 13.   PARTICIPATION AT MEETINGS BY TELEPHONE:   Any one or more 
members of the Board of Directors or any committee thereof may participate in 
a meeting of such Board or committee by means of a conference telephone or 
similar communications equipment allowing all persons participating in the 
meeting to hear each other at the same time.  Participation by such means 
shall constitute presence in person at a meeting.

     SECTION 14.   COMPENSATION:   The Board of Directors shall have authority 
to fix the compensation of Directors for services in any capacity.

     SECTION 15.   INTERESTED DIRECTORS:

     (a)  No contract or other transaction between the Company and one or more 
of its Directors, or between the Company and any other corporation, firm, 
association or other entity in which one or more of its Directors are 
directors or officers, or are financially interested, shall be either void or 
voidable for this reason alone or by reason alone that such Director or 
Directors are present at the meeting of the Board of Directors, or of a 
committee thereof, which approves such contract or transaction, or that his or 
their votes are counted for such purpose, provided that the parties to the 
contract or transaction establish affirmatively that it was fair and 
reasonable as to the Company at the time it was approved by the Board, a 
committee, or the shareholders.

     (b)  Any such contract or transaction may not be avoided by the Company 
for the reasons set forth in (a) if

     (1)  the material facts as to such Director's interest in such contract 
or transaction and as to any such common directorship, officership or 
financial interest are disclosed in good faith or known to the Board or 
committee, and the Board or committee approves such contract or transaction by 
a vote sufficient for such purpose without counting the vote of such 
interested Director or, if the votes of the disinterested Directors are 
insufficient for such purpose, by unanimous vote of the disinterested 
Directors (although common or interested Directors may be counted in 
determining the presence of a quorum at a meeting of the Board or of a 
committee which approves such contract or transactions), or

     (2)  the material facts as to such Director's interest in such contract 
or transaction and as to any such common directorship, officership or 
financial interest are disclosed in good faith or known to the shareholders 
entitled to vote thereon, and such contract or transaction is approved by vote 
of such shareholders.

     SECTION 16.   LOANS TO DIRECTORS:   A loan shall not be made by the 
Company to any Director unless it is authorized by vote of the shareholders 
(the shares of the Director who would be the borrower shall not be shares 
entitled to vote); except that for purposes of loans made to any Directors 
under the Restricted Stock Purchase Plan, adopted by the shareholders of the 
Company on May 15, 1969, such adoption shall constitute full and complete 
authorization for any such loan made thereunder.


				 ARTICLE III

			    EXECUTIVE COMMITTEE

     SECTION 1.   HOW CONSTITUTED AND POWERS:   There shall be an Executive 
Committee, consisting of not less than three nor more than nine Directors, 
including the Chairman of the Board and the Chairman of the Executive 
Committee, elected by a majority of the entire Board of Directors, who shall 
serve at the pleasure of the Board.  The Executive Committee shall have all 
the authority of the Board, except it shall have no authority as to the 
following matters:

     (a)  The submission to shareholders of any action that needs 
shareholders' authorization.

     (b)  The filling of vacancies in the Board or in any committee.

     (c)  The fixing of compensation of the Directors for serving on the Board 
or on any committee.

     (d)  The amendment or repeal of the By-Laws, or the adoption of new By-
Laws.

     (e)  The amendment or repeal of any resolution of the Board which, by its 
terms, shall not be so amendable or repealable.

     (f)  The declaration of dividends.

     SECTION 2.   MEETINGS:   Meetings of the Executive Committee, of which no 
notice shall be necessary, shall be held on such days and at such place as 
shall be fixed, either by the Chairman of the Board, the Chairman of the 
Executive Committee, or by a vote of the majority of the whole Committee.

     SECTION 3.   QUORUM AND MANNER OF ACTING:   Unless otherwise provided by 
resolution of the Board of Directors, a majority of the Executive Committee 
shall constitute a quorum for the transaction of business and the act of a 
majority of all of the members of the Committee, whether present or not, shall 
be the act of the Executive Committee.  The members of the Executive Committee 
shall act only as a Committee.  The procedure of the Committee and its manner 
of acting shall be subject at all times to the directions of the Board of 
Directors.

     SECTION 4.   ADDITIONAL COMMITTEES:   The Board of Directors by 
resolution adopted by a majority of the entire Board may designate from among 
its members additional committees, each of which shall consist of three or 
more Directors and shall have such authority as provided in the resolution 
designating the committee, except such authority shall not exceed the 
authority conferred on the Executive Committee by Section 1 of this Article.

     SECTION 5.   ALTERNATE MEMBERS:   The Board of Directors may designate 
one or more eligible Directors as alternate members of the Executive 
Committee, or of any other committee of the Board, who may replace any absent 
member or members at any meeting of any such committee.


				  ARTICLE IV

				   OFFICERS

     SECTION 1.   NUMBER:   The officers of the Company shall be a Chairman of 
the Board, a President, a Chairman of the Executive Committee, one or more 
Vice Presidents, a Treasurer, a Secretary, a Controller, and such other 
officers as the Board of Directors may in its discretion elect.  Any two or 
more offices may be held by the same person, except the offices of Chairman of 
the Board and Secretary, and President and Secretary.

     SECTION 2.   TERM OF OFFICES AND QUALIFICATIONS:   Those officers whose 
titles are specifically mentioned in Section 1 of this Article IV shall be 
chosen by the Board of Directors on the day of the Annual Meeting.  Unless a 
shorter term is provided in the resolution of the Board electing such officer, 
the term of office of such officer shall extend to and expire at the meeting 
of the Board held on the day of the next Annual Meeting.  The Chairman of the 
Board, the President and the Chairman of the Executive Committee shall be 
chosen from among the Directors.

     SECTION 3.   ADDITIONAL OFFICERS:   Additional officers other than those 
whose titles are specifically mentioned in Section 1 of this Article IV shall 
be elected for such period, have such authority and perform such duties, 
either in an administrative or subordinate capacity, as the Board of Directors 
may from time to time determine.

     SECTION 4.   REMOVAL OF OFFICERS:   Any officer may be removed by the 
Board of Directors with or without cause, at any time.  Removal of an officer 
without cause shall be without prejudice to his contract rights, if any, but 
his election as an officer shall not of itself create contract rights.

     SECTION 5.   RESIGNATION:   Any officer may resign at any time by giving 
written notice to the Board of Directors, or to the Chairman of the Board, or 
to the Secretary.  Any such resignation shall take effect at the time 
specified therein, or if no time be specified, then upon delivery.

     SECTION 6.   VACANCIES:   A vacancy in any office shall be filled by the 
Board of Directors.

     SECTION 7.   CHAIRMAN OF THE BOARD:  The Chairman of the Board shall 
preside at all meetings of the shareholders at which he is present, unless at 
such meetings the shareholders shall appoint a chairman other than the 
Chairman of the Board. The Chairman of the Board shall preside at all meetings 
of the Directors at which he is present.  The Chairman of the Board shall act 
as the Chief Executive Officer of the Company and it shall be his duty to 
supervise generally the management of the business of the Company with 
responsibility direct to the Board and subject to the control of the Board. 
The Chairman of the Board shall have such powers and perform such other duties 
as may be assigned to him by the Board.

     SECTION 8.  PRESIDENT:  The President shall have such powers and perform 
such duties as may be assigned to him by the Board and the Chairman of the 
Board.  The President shall, in the absence of the Chairman of the Board, 
preside at all meetings of the shareholders and Directors at which he is 
present.  In the absence or inability to act of the Chairman of the Board, or 
if the Office of Chairman of the Board be vacant, the President, subject to 
the right of the Board from time to time to extend or confine such powers and 
duties or to assign them to others, shall perform all the duties and may 
exercise all the powers of the Chairman of the Board. 

     SECTION 9.  CHAIRMAN OF THE EXECUTIVE COMMITTEE:   The Chairman of the 
Executive Committee shall have such powers and perform such duties as may be 
assigned to him by the Board.  The Chairman of the Executive Committee shall 
preside at meetings of the Executive Committee of the Board of Directors.

     SECTION 10.  THE VICE PRESIDENTS:  Each Vice President shall have such 
powers and shall perform such duties as may be assigned to him by the Board of 
Directors, the Chairman of the Board or the President.

     SECTION 11.   THE TREASURER:   The Treasurer shall, if required by the 
Board of Directors, give a bond for the faithful discharge of his duties, in 
such sum and with such sureties as the Board of Directors shall require.  He 
shall have charge and custody of, and be responsible for, all funds and 
securities of the Company, and deposit all such funds in the name of and to 
the credit of the Company in such banks, trust companies, or other 
depositories as shall be selected by the Board of Directors.  The Treasurer 
may sign certificates for stock of the Company authorized by the Board of 
Directors.  He shall also perform all other duties customarily incident to the 
office of Treasurer and such other duties as from time to time may be assigned 
to him by the Board of Directors.

     SECTION 12.  THE CONTROLLER:  The Controller shall keep and maintain the 
books of account for internal and external reporting purposes.  He shall also 
perform all other duties customarily incident to the office of Controller and 
such other duties as may be assigned to him from time to time by the Board of 
Directors.

     SECTION 13.  THE SECRETARY:   It shall be the duty of the Secretary to 
act as secretary of all meetings of the Board of Directors, and of the 
shareholders, and to keep the minutes of all such meetings at which he shall 
so act in a proper book or books to be provided for that purpose; he shall see 
that all notices required to be given by the Company are duly given and 
served; he may sign and execute in the name of the Company certificates for 
the stock of the Company, deeds, mortgages, bonds, contracts or other 
instruments authorized by the Board of Directors; he shall prepare, or cause 
to be prepared, for use at meetings of shareholders the list of shareholders 
as of the record date referred to in Article I, Section 11 of these By-Laws 
and shall certify, or cause the transfer agent to certify, such list; he shall 
keep a current list of the Company's Directors and officers and their 
residence addresses; he shall be custodian of the seal of the Company and 
shall affix the seal, or cause it to be affixed, to all agreements, documents 
and other papers requiring the same.  The Secretary shall have custody of the 
Minute Book containing the minutes of all meetings of shareholders, Directors, 
the Executive Committee, and any other committees which may keep minutes, and 
of all other contracts and documents which are not in the custody of the 
Treasurer or the Controller of the Company, or in the custody of some other 
person authorized by the Board of Directors to have such custody.  

     SECTION 14.   APPOINTED OFFICERS:   The Board of Directors may delegate 
to any officer or committee the power to appoint and to remove any subordinate 
officer, agent or employee.

     SECTION 15. ASSIGNMENT AND TRANSFER OF STOCKS, BONDS, AND OTHER 
SECURITIES:  The Chairman of the Board, the Treasurer, the Secretary, any 
Assistant Secretary, any Assistant Treasurer, and each of them, shall have 
power to assign, or to endorse for transfer, under the corporate seal, and to 
deliver, any stock, bonds, subscription rights, or other securities, or any 
beneficial interest therein, held or owned by the Company.

				  ARTICLE V

		CONTRACTS, CHECKS, DRAFTS AND BANK ACCOUNTS

     SECTION 1.  EXECUTION OF CONTRACTS:   The Board of Directors, except as 
in these By-Laws otherwise provided, may authorize any officer or officers, 
agent, or agents, in the name of and on behalf of the Company to enter into 
any contract or execute and deliver any instrument, and such authority may be 
general or confined to specific instances; but, unless so authorized by the 
Board of Directors, or expressly authorized by these By-Laws, no officer, 
agent or employee shall have any power or authority to bind the Company by any 
contract or engagement or to pledge its credit or to render it liable 
pecuniarily in any amount for any purpose.

     SECTION 2.   LOANS:   No loans shall be contracted on behalf of the 
Company, and no negotiable paper shall be issued in its name unless 
specifically authorized by the Board of Directors.

     SECTION 3.  CHECKS, DRAFTS, ETC.:  All checks, drafts, and other orders 
for the payment of money out of the funds of the Company, and all notes or 
other evidences of indebtedness of the Company, shall be signed on behalf of 
the Company in such manner as shall from time to time be determined by 
resolution of the Board of Directors.

     SECTION 4.  DEPOSITS:  All funds of the Company not otherwise employed 
shall be deposited from time to time to the credit of the Company in such 
banks, trust companies or other depositories as the Board of Directors may 
select.


				 ARTICLE VI

			    STOCKS AND DIVIDENDS

     SECTION 1.  CERTIFICATES OF STOCK:   Certificates for stock of the 
Company shall be in such form as shall be approved by the Board of Directors.  
The certificates of stock shall be numbered in order of their issue, shall be 
signed by the Chairman of the Board, the President or a Vice President, and 
the Secretary or an Assistant Secretary, or the Treasurer or an Assistant 
Treasurer.  The signature of the officers upon a certificate may be facsimiles 
if the certificate is countersigned by a transfer agent or registered by a 
registrar other than the Company itself or its employee.  In case any officer 
who has signed or whose facsimile signature has been placed upon a certificate 
shall have ceased to be such officer before such certificate is issued, it may 
be issued by the Company with the same effect as if he were an officer at the 
date of issue.

     SECTION 2.   TRANSFER OF STOCK:   Transfers of stock of the Company shall 
be made only on the books of the Company by the holder thereof, or by his duly 
authorized attorney, on surrender of the certificate or certificates for such 
stock, properly endorsed.  Every certificate surrendered to the Company shall 
be marked "Canceled", with the date of cancellation, and no new certificate 
shall be issued in exchange therefor until the old certificate has been 
surrendered and canceled.  A person in whose name stock of the Company stands 
on the books of the Company shall be deemed the owner thereof as regards the 
Company; provided that, whenever any transfer of stock shall be made for 
collateral security, and not absolutely, such fact, if known to the Secretary 
of the Company, or to its transfer agent shall be so expressed in the entry of 
the transfer.  No transfer of stock shall be valid as against the Company, or 
its shareholders for any purpose, until it shall have been entered in the 
stock records of the Company as specified in these By-Laws by an entry showing 
from and to whom transferred.

     SECTION 3.   TRANSFER AND REGISTRY AGENTS:   The Company may, from time 
to time, maintain one or more transfer offices or agencies and/or registry 
offices at such place or places as may be determined from time to time by the 
Board of Directors; and the Board of Directors may, from time to time, define 
the duties of such transfer agents and registrars and make such rules and 
regulations as it may deem expedient, not inconsistent with these By-Laws, 
concerning the issue, transfer and registration of certificates for stock of 
the Company.

     SECTION 4.  LOST, DESTROYED AND MUTILATED CERTIFICATES:  The holder of 
any stock of the Company shall immediately notify the Company of any loss, 
destruction or mutilation of the certificate therefor.  The Company may issue 
a new certificate in place of the lost or destroyed certificate, but as a 
condition to such issue, the holder of such certificate must make satisfactory 
proof of the loss or destruction thereof, and must give to the Company a bond 
of indemnity in form and amount and with one or more sureties satisfactory to 
the Treasurer, the Secretary or any Assistant Treasurer or Assistant 
Secretary.  Such bond of indemnity shall also name as obligee each of the 
transfer agents and registrars for the stock the certificate for which has 
been lost or destroyed.

     SECTION 5.  RECORD DATES FOR CERTAIN PURPOSES:   The Board of Directors 
of the Company shall fix a day and hour not more than fifty days preceding the 
date of any meeting of shareholders, or the date for payment of any cash or 
stock dividend, or the date for the allotment of any rights of subscription, 
or the date when any change or conversion or exchange of capital stock shall 
go into effect, as a record date for the determination of the shareholders 
entitled to notice of, and to vote at, any such meeting and any adjournment 
thereof, or entitled to receive payment of any such dividend, or entitled to 
receive any such allotment of rights of subscription, or entitled to exercise 
rights in respect of any such change, conversion or exchange of capital stock, 
and in such case, such shareholders and only such shareholders as shall be 
shareholders of record on the day and hour so fixed shall be entitled to such 
notice of, and to vote at, such meeting or any adjournment thereof, or to 
receive payment of such dividend, or to receive such allotment of rights of 
subscription, or to exercise rights in connection with such change or 
conversion or exchange of capital stock, as the case may be, notwithstanding 
any transfer of any stock on the books of the Company after such day and hour 
fixed as aforesaid.

     SECTION 6.   DIVIDENDS AND SURPLUS:   Subject to the limitations 
prescribed by law, the Board of Directors (1) may declare dividends on the 
stock of the Company whenever and in such amounts as, in its opinion, the 
condition of the affairs of the Company shall render it advisable, (2) may use 
and apply, in its discretion, any part or all of the surplus of the Company in 
purchasing or acquiring any of the shares of stock of the Company, and (3) may 
set aside from time to time out of such surplus or net profits such sum or 
sums as it in its absolute discretion, may think proper as a reserve fund to 
meet contingencies or for equalizing dividends, or for the purpose of 
maintaining or increasing the property or business of the Company, or for any 
other purpose it may think conducive to the best interest of the Company.


				ARTICLE VII

			     OFFICES AND BOOKS

     SECTION 1.   OFFICES:   The Company shall maintain an office at such 
place in the County of Monroe, State of New York, as the Board of Directors 
may determine.  The Board of Directors may from time to time and at any time 
establish other offices of the Company or branches of its business at whatever 
place or places seem to it expedient.

     SECTION 2.   BOOKS AND RECORDS:

     (a)  There shall be kept at one or more offices of the Company (1) 
correct and complete books and records of account, (2) minutes of the 
proceedings of the shareholders, Board of Directors and the Executive 
Committee, (3) a current list of the Directors and officers of the Company and 
their residence addresses, and (4) a copy of these By-Laws.

     (b)  The stock records may be kept either at the office of the Company or 
at the office of its transfer agent or registrar in the State of New York, if 
any, and shall contain the names and addresses of all shareholders, the number 
and class of shares held by each and the dates when they respectively became 
the owners of record thereof.


				 ARTICLE VIII

				   GENERAL

     SECTION 1.   SEAL:  The corporate seal shall be in the form of a circle 
and shall bear the full name of the Company and the words and figures 
"Incorporated 1906, Rochester, N. Y.".

     SECTION 2.   INDEMNIFICATION OF DIRECTORS AND OFFICERS:   Except to the 
extent expressly prohibited by law, the Company shall indemnify any person, 
made or threatened to be made, a party in any civil or criminal action or 
proceeding, including an action or proceeding by or in the right of the 
Company to procure a judgment in its favor or by or in the right of any other 
corporation of any type or kind, domestic or foreign, or any partnership, 
joint venture, trust, employee benefit plan or other enterprise, which any 
Director or officer of the Company served in any capacity at the request of 
the Company, by reason of the fact that he, his testator or intestate is or 
was a Director or officer of the Company or serves or served such other 
corporation, partnership, joint venture, trust, employee benefit plan or other 
enterprise, in any capacity, against judgments, fines, penalties, amounts paid 
in settlement and reasonable expenses, including attorneys' fees, incurred in 
connection with such action or proceeding, or any appeal therein, provided 
that no such indemnification shall be required with respect to any settlement 
unless the Company shall have given its prior approval thereto.  Such 
indemnification shall include the right to be paid advances of any expenses 
incurred by such person in connection with such action, suit or proceeding, 
consistent with the provisions of applicable law. In addition to the 
foregoing, the Company is authorized to extend rights to indemnification and 
advancement of expenses to such persons by i) resolution of the shareholders, 
ii) resolution of the Directors or iii) an agreement, to the extent not 
expressly prohibited by law.


				 ARTICLE IX

				 FISCAL YEAR

     SECTION 1.   FISCAL YEAR:   The fiscal year of the Company shall end on 
the 31st day of December in each year.


				 ARTICLE X

				 AMENDMENTS

     SECTION 1.   AMENDMENTS:   By-Laws of the Company may be amended, 
repealed or adopted by vote of the holders of the shares at the time entitled 
to vote in the election of any Directors.  If, at any meeting of shareholders, 
action is proposed to be taken to amend, repeal or adopt By-Laws, the notice 
of such meeting shall include a brief statement or summary of the proposed 
action.  The By-Laws may also be amended, repealed or adopted by the Board of 
Directors, but any By-Law adopted by the Board may be amended or repealed by 
shareholders entitled to vote thereon as hereinabove provided.  If any By-Law 
regulating an impending election of Directors is adopted, amended or repealed 
by the Board of Directors, there shall be set forth in the notice of the next 
meeting of shareholders for the election of Directors the By-Law so adopted, 
amended or repealed, together with a concise statement of the changes made.


								EXHIBIT 10(e)



				  Restatement
				      of

			       XEROX CORPORATION 

		   UNFUNDED RETIREMENT INCOME GUARANTEE PLAN



XEROX CORPORATION, a New York corporation having its principal executive 
office in the City of Stamford, County of Fairfield and State of Connecticut, 
hereby adopts the XEROX CORPORATION UNFUNDED RETIREMENT INCOME GUARANTEE PLAN 
effective on the Effective Date as follows:



Restatement October 13, 1997

				     -1-


				    INDEX



No.                                                                      Page
- ---                                                                      ----

ARTICLE 1     Definitions..............................................   3

ARTICLE 2     Purpose of Plan..........................................   4

ARTICLE 3     Eligibility..............................................   4

ARTICLE 4     Benefits.................................................   4

ARTICLE 5     Change in Control........................................   6

ARTICLE 6     Administration...........................................   7

ARTICLE 7     Amendment and Termination................................   7

ARTICLE 8     Miscellaneous............................................   8



				     -2-


			      XEROX CORPORATION 

		 UNFUNDED RETIREMENT INCOME GUARANTEE PLAN


				  ARTICLE 1 
				  ---------

				 Definitions
				 -----------

     When used herein, the words and phrases defined hereinafter shall have 
the following meaning unless a different meaning is clearly required by the 
context of the Plan.  Terms used herein which are defined in Article 1 of the 
Funded Plan shall have the meanings assigned to them in the Funded Plan.  

     Section 1.1.     Administrator.  The Administrator appointed by the Vice 
President, Human Resources of the Company

     Section 1.2.     Average Monthly Compensation.  Shall be determined under  
Article 1 of  the Funded Plan, without regard to the dollar limitation 
contained therein.

     Section 1.3.     Board.  The Board of Directors of the Company.

     Section 1.4.     Code.  The Internal Revenue Code of 1986 as amended, or 
as it may be amended from time to time.

     Section 1.5.     Company.  Xerox Corporation.

     Section 1.6.     Effective Date.  The original effective date of the Plan 
was July 1, 1977.  This Restatement is effective as of October 13, 1997. 

     Section 1.7.     Employee.  A Member in the Funded Plan.

     Section 1.8.     Funded Plan.  The Xerox Corporation Retirement Income 
Guarantee Plan. 

     Section 1.9.     Plan.  The "Xerox Corporation Unfunded Retirement Income 
Guarantee Plan", as set forth herein or in any amendment hereto.

				  ARTICLE 2 
				  ---------

			       Purpose of Plan 
			       ---------------

     Section 2.1.     Purpose.  The Plan is designed to provide retirement 
benefits payable out of the general assets of the Company as provided in 
Section 4.1. 

				     -3-


				  ARTICLE 3 
				  ---------

				 Eligibility 
				 -----------

     Section 3.1.     Eligibility.  All Employees and beneficiaries of 
Employees eligible to receive benefits from the Funded Plan shall be eligible 
to receive benefits under this Plan in accordance with  Section 4.1 regardless 
of when the Employees may have retired. 

				  ARTICLE 4 
				  ---------

				  Benefits
				  --------

     Section 4.1.     Amount of Benefits.  The amount of the benefit payable 
under the Plan shall be equal to the monthly benefit which would be payable to 
or on behalf of an Employee under the Funded Plan as a Life Annuity if Section 
9.5 of the Funded Plan were inapplicable and if the  amount of any 
compensation deferred by the Employee was included in the calculation of 
Average Monthly Compensation (except the increase in compensation which became 
payable under the Company's policy of increasing compensation by the amount 
which cannot be added to an Employee's accounts under the Profit Sharing Plan 
by reason of the limitation contained in Section 415 of the Code), less the 
following:

     (a)  The monthly benefit actually payable as a Life Annuity to or on 
behalf of the Employee under the Funded Plan. 

     (b)  The monthly benefit which could be purchased as a Life Annuity with 
the balance, if any, in the Employee's deferred compensation account under the 
Xerox Corporation Deferred Compensation Plan For Executives  arising from the 
Retirement Account portion of the Profit Sharing Adjustment under Section 4  
thereof. 

     (c)  Any amount paid to the Employee from which FICA taxes are withheld 
related to nonqualified retirement benefits from a plan sponsored by the 
Company which have not been previously withheld (or deemed to be withheld 
because the maximum tax had already been paid) and are payable upon retirement 
but cannot be withheld from any single sum payment of compensation or other 
nonqualified plan benefits translated to an annuity (single life or joint and 
survivor as appropriate) payable commencing on the date of retirement.

     (d)  The amount of that certain provisional supplement provided to 
certain high-paid Employees in RIGP effective in 1989 when the RIGP benefit 
was modified payable to Employees in a lump sum translated to an annuity 
(single life or joint and survivor as appropriate) payable commencing on the 
date of retirement. 

				     -4-



     Section 4.2.     Form of Benefit Payments.  The forms of benefit 
available under the Plan shall be for single Employees a 10-Year certain and 
life annuity or a life annuity and for married Employees a 50% or 100% joint 
and survivor annuity option, all as shall have been elected by Employee on 
forms provided by the Administrator.  The benefit payable to a single Employee 
who has failed to make such an election shall be a life annuity and for any 
such married Employee a 50% joint and survivor annuity. The 10 year certain 
and life annuity is the actuarial equivalent of the life annuity and the 100% 
joint and survivor annuity is the actuarial equivalent of the 50% joint and 
survivor annuity.  Except as otherwise provided in Section 5.1 in no event is 
the benefit payable in a lump sum.

Notwithstanding the above, the lump sum actuarial equivalent of any benefit 
otherwise payable as a monthly amount of one hundred dollars ($100.00) or 
less, shall be distributed in accordance with Section 4.3.  The interest rate 
used in computing the lump sum actuarial equivalent amount shall be the 
interest rate described in the section entitled "Optional Forms of Benefit 
Payment" of the Funded Plan.

     Section 4.3     Death Prior to Benefit Commencement. The spouse of a 
Participant who dies before commencement of benefits under the Plan shall be 
entitled to a survivor benefit calculated in accordance with Article 7 of the 
Funded Plan in an amount equal to the amount determined under (a) or (b) 
below.

     (a)  In the case of a Participant who is eligible to retire under the 
Funded Plan on the date of his or her death, one-half of the retirement 
benefit to which the Participant would have  been entitled under the Plan if 
he or she had retired on the  last day of the month coincident with or next 
following the date of  the Participant's death; or

     (b)  In the case of a Participant who is not eligible to retire under the 
Funded Plan on the date of his or her death, one-half of the retirement 
benefit to which the Participant would have  been entitled under the Plan if 
he or she had terminated on his or her date of death and survived to the date 
of payment of benefits as determined under Section 4.4 below.

     Section 4.4.     Time of Benefit Payments.  Benefits due under the Plan 
shall be paid coincident with the payment date of benefits under the  Funded 
Plan or at such other time or times as the Administrator in his  discretion 
determines. 

     Section 4.5.     Employee's Rights Unsecured.  The benefits payable under 
this Plan shall be unfunded.  Consequently, no assets shall be segregated for 
purposes of this Plan and placed beyond the reach of the Company's general 
creditors.  The right of any Employee to receive benefits under the provisions 
of the Plan shall be an unsecured claim against the general assets of the 
Company. 

				     -5-



				  ARTICLE 5 
				  ---------

			      Change in Control
			      -----------------

     Section 5.1      Change In Control.   Notwithstanding anything to the 
contrary in this Plan, in the  event of a change in control of the Company, as 
hereinafter defined,  each Employee, including retired Employees, shall be 
entitled to a benefit hereunder without  regard to his or her age or Years of 
Service at the time of such change in  control.   Upon the occurrence of a 
change in control of the Company, the benefit of each Employee  shall be 
payable in a lump  sum within 30 days of such change in control equal in 
amount to the then  present value of a benefit expressed in the form provided 
in Section 4.1 hereof, commencing on the later of (i) the date of such change 
in  control and (ii) the date the Employee would be eligible for a benefit 
under the Funded Plan, and  based upon such Employee's Average Monthly 
Compensation and Years of Participation as of  the date of such change in 
control.  A "change in control of the  Company" shall  be deemed to have 
occurred if (A) any "person", as  such term is used in Sections 13(d) and 
14(d) of the Securities  Exchange Act of 1934, as amended (the "Exchange 
Act"), other than the Company, any trustee or other fiduciary holding 
securities under an  employee benefit plan of the Company, or any company 
owned, directly  or indirectly, by the shareholders of The Company in 
substantially the  same proportions as their ownership of stock of the 
Company, is or  becomes the "beneficial owner" (as defined in Rule 13d-3 under 
the  Exchange Act), directly or indirectly, of securities of the Company  
representing 20 percent or more of the combined voting power of the Company's 
then outstanding securities; or (B) during any period of two  consecutive 
years, individuals who at the beginning of such period  constitute the Board, 
including for this purpose any new director (other than a director designated 
by a person who has entered into an  agreement with the Company to effect a 
transaction described in this  Section)  whose election or nomination for 
election by the Company's  shareholders was approved by a vote of at least 
two-thirds of the  directors then still in office who were directors at the 
beginning of  the period or whose election or nomination for election was 
previously so approved, cease for any reason to constitute a majority thereof. 

     Section 5.2.     Termination of Employment Following Change in Control.  
Upon the termination of employment of a Employee following a  change in 
control of the Company, such Employee, if he or she has  otherwise satisfied 
the requirements of the Funded Plan for a benefit, shall be  entitled to a 
benefit equal to the benefit to which he or she would have been  entitled 
without application of Section 5.1, reduced (but not below  zero) to reflect 
the value of the benefit he or she received pursuant to  Section 5.1.

     Section 5.3.     Calculation of Present Value.  For purposes of Section 
5.1 hereof, the present value of a  benefit shall be calculated based upon the 
interest rate which would be used by the Pension Benefit Guaranty Corporation 
for purposes of determining lump sums for benefits payable as immediate 
annuities with respect 

				     -6-


to plans terminating on the  date on which the change in control of the 
Company occurs and the 1983 GAM mortality table, provided, however, that 
effective upon the date that the applicable interest rate as specified in 
Section 417(e)(3)(A) of the Code is adopted for use in the Funded Plan, the 
present value hereunder shall thereafter be determined under such applicable 
interest rate and the applicable mortality table as defined in Section 
417(e)(3)(A)(ii)(l) of the Code.  For purposes of the Funded Plan, each 
Employee shall be treated as if they terminated employment upon the change in 
control and had their benefits determined as if they were to begin receiving 
benefits on the commencement date used in developing the present value of the 
benefit in Section 5.1.

				  ARTICLE 6 
				  ---------

			       Administration 
			       --------------

     Section 6.1.     Duties of Administrator.  The Plan shall be administered  
by the Administrator in accordance with its terms and purposes.  The  
Administrator shall determine the amount and manner of payment of the  
benefits due to or on behalf of each Employee from the Plan and shall  cause 
them to be paid by the Company accordingly. 

     Section 6.2.     Finality of Decisions.  The decisions made by and the 
actions taken by the Administrator in the administration of the Plan shall be 
final and conclusive on all persons, and the Administrator shall not be 
subject to individual liability with respect to the Plan. 

				  ARTICLE 7 
				  ---------

			  Amendment and Termination
			  -------------------------

     Section 7.1.     Amendment and Termination.  It is the intention of the 
Company to continue the Plan indefinitely.  The Company expressly reserves the 
right to amend the Plan at any time and in any particular manner, provided 
that any such amendment shall be made in accordance with ERISA. Such 
amendments, other than amendments relating to termination of the Plan or 
relating to benefit levels under Section 4.1 of the Plan, may be effected by 
(i) the Board of Directors, (ii) a duly constituted committee of the Board of 
Directors, or (iii) the Vice President of the Company responsible for human 
resources or a representative thereof.  In the event such office is vacant at 
the time the amendment is to be made, the Chief Executive Officer of the 
Company shall approve such amendment or appoint a representative. Amendments 
relating to termination of the Plan or relating to benefit levels under 
Section 4.1 of the Plan shall be effected pursuant to a resolution duly 
adopted by the Board of Directors of the Company, or a duly constituted 
committee of the Board of Directors of the Company, in accordance with the 
Business Corporation Law of the State of New York.


				     -7-


Any amendment, alteration, modification or suspension under subsection (iii) 
of the preceding paragraph shall be set forth in a written instrument executed 
by any Vice President of the Company and by the Secretary or an Assistant 
Secretary of the Company

Section 7.2.     Contractual Obligation.  Notwithstanding Section 7.1, the 
Company hereby makes a contractual commitment to pay the benefits accrued 
under the Plan to the extent it is financially capable of meeting such 
obligations. 

				  ARTICLE 8 
				  ---------

				Miscellaneous
				-------------

     Section 8.1.     No Employment Rights.  Nothing contained in the Plan  
shall be construed as a contract of employment between the Company and an 
Employee, or as a right of any Employee to be continued in the employment of 
the Company, or as a limitation of the right of the Company to discharge any 
of its Employees, with or without cause. 

     Section 8.2.     Assignment.  The benefits payable under this Plan may 
not be assigned or alienated except as may otherwise be required by law or 
pursuant to the terms of a domestic relations order that has been approved by 
the Plan Administrator.  

     Section 8.3.     Law Applicable.  This Plan shall be governed by the laws 
of the State of New York.



								EXHIBIT 10(f)


				  Restatement 

				      of

			       XEROX CORPORATION 

		    UNFUNDED SUPPLEMENTAL RETIREMENT PLAN 



XEROX CORPORATION, a New York corporation having its principal  executive 
office in the City of Stamford, County of Fairfield and  State of Connecticut, 
hereby adopts the XEROX CORPORATION UNFUNDED  SUPPLEMENTAL RETIREMENT PLAN 
effective on the Effective Date as  follows: 





			 Restatement October 13, 1997


				     -1-


		    UNFUNDED SUPPLEMENTAL RETIREMENT PLAN



Section 1. Plan Name 

     The plan name is the Xerox Corporation Unfunded Supplemental Retirement 
Plan (the "Plan").

Section 2. Effective Date 

     The original effective date of the Plan is June 30, 1982.  The Plan  was 
restated on three previous occasions, effective February 4, 1985, January 1, 
1990, December 6, 1993 and December 9, 1996. This Restatement is effective as 
of October 13, 1997. 

Section 3. Purpose of the Plan 

     The Plan is designed to address special circumstances involved in the  
retirement of executives. 

Section 4. Covered Employees 

     The following employees of Xerox Corporation (the "Company") are covered 
by the Plan: 

     A.  All employees who were corporate officers of the Company at grade 
level 25 and above on the original effective date of the Plan (the 
"Grandfathered Officers"). 

     B.  All employees who were corporate officers at grades 23 or 24 on  the 
original effective date of the Plan or who first become corporate officers  of 
the Company at grade level 23 and above after the original effective date of  
the Plan and do not fall within categories D through G below (the "Officers"). 

     C.  Certain employees who received a letter dated September 2, 1982  from 
David T. Kearns regarding Executive Retirement Guidelines (the "Guideline 
Employees").

     D.  All employees who are corporate officers of the Company on the date 
of this 1996 Restatement who first commenced employment with the Company on or 
after attainment of age 40 and whose names appear on Schedule A ("Schedule A") 
presented at the meeting of the Executive Compensation and Benefits Committee 
held December 9, 1996 and made part of the records of that 

				     -2-


meeting which Schedule is incorporated herein by reference and made a part of 
the Plan ("Grandfathered Mid-Career Officers").

     E.  All employees who after the date of the 1996 Restatement first 
commence employment with the Company on or after attainment of age 40 who are 
elected corporate officers and whose names are added to Schedule A upon 
selection by the Chief Executive Officer of the Company as maintained with 
records of the Executive Compensation department of the Company which Schedule 
as so modified from time to time is incorporated herein by reference and made 
a part hereof ("Mid-Career Officer Hires").

     F.  All employees who are in payroll Band A of the Company on the date of 
the 1996 Restatement who first commenced employment with the Company on or 
after attainment of age 40 and whose names are set forth on Schedule B 
("Schedule B") which has been approved by the Vice President responsible for 
Human Resources and placed with the records of the Executive Compensation 
department of the Company which Schedule is incorporated herein by reference 
and made a part of the Plan ("Grandfathered Mid-Career Band A Employees").

     G.  All employees who after the date of the 1996 Restatement first 
commence employment with the Company on or after attainment of age 40 who are 
hired into payroll Band A selected  by the Vice President of the Company 
responsible for Human Resources, or his or her designee, such selection to be 
evidenced by the placement of the employee's name on Schedule C to be 
maintained from time to time by such Vice President or his or her designee, 
which Schedule is incorporated herein by reference and made a part of the Plan 
("Mid-Career Band A Hires")

     H.  Grandfathered Mid-Career Officers, Mid-Career Officer Hires, 
Grandfathered Mid-Career Band A Employees and Mid-Career Band A Hires are 
sometimes together referred to as "Mid-Career Executives".

     I.  The employees referred to in paragraphs A through G above are  
together referred to herein as "Participants".

Section 5. Eligibility for Benefits 

     Participants must have attained the following age and completed the  
following Years of Service to be eligible for benefits under the Plan:  

     A.  Grandfathered Officers and Guideline Employees -- age 55, Years of  
Service -- 5. 

     B.  Officers -- age 60, Years of Service -- 10.

				     -3-


     C.  Grandfathered Mid-Career Officers -- the age set forth opposite their 
respective names on Schedule A, Years of Service -- 5.

     D.  Mid-Career Officer Hires -- the age determined by the Chief Executive 
Officer of the Company as reflected in Schedule A, Years of Service -- 5.

     E.  Grandfathered Mid-Career Band A Employees -- the age set forth 
opposite their respective names on the Schedule B, Years of Service -- 5. 

     F.  Mid-Career Band A Hires -- the age determined by the Vice President 
responsible for Human Resources or his or her delegate as set forth on 
Schedule C referred to above, Years of Service 5.

Section 6. Supplemental Retirement Benefit 

     A.  The benefit payable under the Plan shall be a monthly retirement  
benefit  equal to:

     One and two-thirds percent of Average Monthly Compensation of the  
Participant multiplied by the number of full and fractional Years of  
Participation up to thirty less 

	 a)  One and two-thirds percent of the Social Security Benefit  
multiplied by the number of full and fractional Years of Participation  up to 
thirty; and

	 b)  The monthly retirement benefit payable under the Company's  
Retirement Income Guarantee Plan ("RIGP") (stated as a Life Annuity)*  as it 
is in effect as of and from time to time after January 1, 1990;

subject to the "Adjustments" set forth in subsections B through F below.

     "Average Monthly Compensation" shall be determined under RIGP without 
regard to the dollar limitation contained in the Plan as required by Section 
401(a)(17) of the Internal Revenue Code of 1986, as amended, or any successor 
thereto.


_____________________________________________________________________________
* Defined terms in RIGP shall have the same meanings in the Plan,  except as 
otherwise noted herein.

"Social  Security  Benefit" shall mean the monthly benefit which a  retired 
Participant or a terminated Participant receives or would be  entitled to 
receive at the age at which unreduced retirement benefits are then paid under 
the US Social Security Act (or at his sixty- second birthday, in the case of a 
retired 

				     -4-


Participant who has at least  thirty Years of Service or who, on such 
Participant's retirement, is  the pilot of an airplane operated by the 
Company), as a primary  insurance amount under the U. S. Social Security Act, 
as amended,  whether he or she applies for such benefit or not, and even 
though he or she may  lose part or all of such benefit for any reason.

     The amount of such Social Security Benefit to which the retired or 
terminated Participant is or would be entitled shall be computed by  the 
Administrator for the purposes of the Plan as of the January 1 of  the 
calendar year of retirement or termination.  In computing such  amount, the 
Administrator shall use estimated benefit tables developed  by the Plan's 
actuary, the five-year average compensation of the  Participant and the 
assumption that the Participant's compensation  prior to the fifth year 
preceding the year of termination grew in  accordance with average national 
wages.

     B.  Grandfathered Officers -- Adjustments shall be 

	 1.  The monthly benefit and the Social Security Benefit shall be 
calculated at the rate of 3 1/3% of  Average Monthly Compensation and of the 
Social Security Benefit, respectively, for each full or fractional Year of  
Participation up to a maximum of 15 Years of Participation. 

	 2.  There shall be no reduction in the benefit payable upon  
retirement on or after attainment of age 55 on account of payment commencing 
prior to attainment of age 65. 

	 3.  Amounts included in the Participant's Executive Expense Allowance 
shall be included in determining Average Monthly  Compensation. 

     C.  Officers -- Adjustments shall be that there shall be no  reduction in 
the benefit payable upon retirement on or after  attainment of age 60 on 
account of payment commencing prior to  attainment of age 65 and no part of 
the Executive Expense Allowance  shall be included in determining Average 
Monthly Compensation.

     D.  Guideline Employees -- An adjustment shall be that there shall be  no 
reduction in the benefit payable upon retirement on or after  attainment of 
age 55. 

     E.  Mid-Career Executives -- Adjustments shall be

	 1.  The monthly benefit and the Social Security Benefit shall be 
calculated at the rate of 2.5% of the Average Monthly Compensation and of the 
Social Security Benefit, respectively, for each full or fractional Year of  
Participation up to a maximum of 20 Years of Participation.

				     -5-


	 2.  There shall be no  reduction in the benefit payable upon 
retirement on or after  attainment of age 60 on account of payment commencing 
prior to  attainment of age 65 and no part of the Executive Expense Allowance, 
if any,  shall be included in determining Average Monthly Compensation.

     F.  All Participants -- Adjustments shall be 

	 1.  Average Monthly Compensation shall be calculated including any  
compensation deferred by the Participant during the period used in calculating 
Average Monthly Compensation (except that there shall not be included any 
increase in Participant's compensation which became payable under the 
Company's policy of increasing compensation  by the amount which cannot be 
added to the Participant's accounts  under the Company's Profit Sharing and 
Savings Plan ("Profit Sharing Plan") by reason of the limitation contained in 
Section  415 of the Internal Revenue Code of 1986, as amended, hereinafter the 
"Code"). 

	 2.  The following additional amounts shall be deducted from the  
hypothetical monthly benefit:

	     (a)  The value of the portion of the Participant's Account under  
	     the Company's Deferred Compensation Plan For Executives, if any, 
	     resulting from the  Retirement Account portion of the Profit 
	     Sharing Adjustment (as  defined in such Deferred Compensation 
	     Plan) translated into an annuity (single life or joint  and 
	     survivor, as appropriate) payable commencing on the date of  
	     retirement; and

	     (b)  The benefit payable under the Company's Unfunded Retirement  
	     Income Guarantee Plan ("Unfunded RIGP").

	     (c)  Any amount  paid to the participant from which FICA taxes 
	     are withheld related to nonqualified retirement benefits from a 
	     plan sponsored by the Company which have not been previously 
	     withheld (or deemed to have been withheld because the maximum tax 
	     had already been paid) and are payable upon retirement but cannot 
	     be withheld from any single sum payment of compensation or other 
	     nonqualified plan benefits translated to an annuity (single or 
	     joint and survivor as appropriate) payable commencing on the date 
	     of retirement.

	     (d)  The amount of that certain supplement provided to certain 
	     high -paid participants in RIGP effective in 1989 when the RIGP 
	     benefit was modified payable to the Participant in a lump sum 
	     translated to an 

				     -6-


	     annuity (single life or joint and survivor as appropriate) 
	     payable commencing on the date of retirement.

	     (e)  The amount of any pension, retirement or other post-
	     retirement income benefits paid or payable to a Participant under 
	     plans or arrangements provided by the Company or any subsidiary 
	     of the Company, whether incorporated or organized in the United 
	     States or in any other country of the world. 

     Section 7.  Change In Control.  A.  Notwithstanding anything to the 
contrary in this Plan, in the  event of a change in control of the Company, as 
hereinafter defined,  each Participant, including retired Participants, shall 
be entitled to a benefit hereunder without  regard to his or her age or Years 
of Service at the time of such change in  control (including, without 
limitation, the benefit provided under  Section 8 hereof, if applicable).  
Upon the occurrence of a change in control of the  Company, the benefit of 
each Participant  shall be payable in a lump  sum within five days of such 
change in control equal in amount to the then  present value of a benefit 
expressed in the form provided in Section 10  hereof, commencing on the later 
of (i) the date of such change in  control, (ii) the date Guideline Employee 
or Grandfathered Officer attains age 55, (iii) the date the Officers attain 
age 60 or (iv) in the  case of a Mid-Career Executive, the date such  
Participant attains the age specified in Schedule A, B or C, and  based upon 
such Participant's Average Monthly Compensation and Years of Participation as 
of  the date of such change in control.  A "change in control of the  Company" 
shall  be deemed to have occurred if (A) any "person", as  such term is used 
in Sections 13(d) and 14(d) of the Securities  Exchange Act of 1934, as 
amended (the "Exchange Act"), other than the  Company, any trustee or other 
fiduciary holding securities under an  employee benefit plan of the Company, 
or any company owned, directly  or indirectly, by the shareholders of the 
Company in substantially the  same proportions as their ownership of stock of 
the Company, is or  becomes the "beneficial owner" (as defined in Rule 13d-3 
under the  Exchange Act), directly or indirectly, of securities of the Company  
representing 20 percent or more of the combined voting power of the  Company's 
then outstanding securities; or (B) during any period of two  consecutive 
years, individuals who at the beginning of such period  constitute the Board, 
including for this purpose any new director ( other than a director designated 
by a person who has entered into an  agreement with the Company to effect a 
transaction described in this  Section)  whose election or nomination for 
election by the Company's  shareholders was approved by a vote of at least 
two-thirds of the  directors then still in office who were directors at the 
beginning of  the period or whose election or nomination for election was 
previously so approved, cease for any reason to constitute a majority thereof. 

     B.  Upon the termination of employment of a Participant following a  
change in control of the Company, such Participant, if he or she has  
otherwise satisfied 

				     -7-


the requirements of Section 5 hereof, shall be  entitled to a benefit equal to 
the benefit to which he or she would have been  entitled without application 
of Section 7A, reduced (but not below  zero) to reflect the value of the 
benefit he or she received pursuant to  Section 7A.

     C.  For purposes of Section 7A hereof, the present value of a  benefit 
shall be calculated based upon the interest rate which would  be used by the 
Pension Benefit Guaranty Corporation for purposes of determining lump sums for 
benefits payable as immediate annuities with respect to plans terminating on 
the  date on which the change in control of the Company occurs and the 1983 
GAM mortality table, provided, however, that effective upon the date that the 
applicable interest rate as specified in Section 417(e)(3)(A) of the Code is 
adopted for use in RIGP, the present value hereunder shall thereafter be 
determined under the applicable interest rate and mortality table as defined 
in Section 417(e)(3)(A)(ii)(l) of the Code.  For purposes of RIGP, each 
Participant shall be treated as if he or she terminated employment upon the 
change in control and had his or her benefits determined as if he or she were 
to begin receiving benefits on the commencement date used in developing the 
present value of the benefit in Section 7.A.

Section 8. Minimum Benefit 

     In no event shall the monthly retirement benefit payable to any  
Participant other than Mid-Career Executives under the Plan be less than an 
amount which, when added to  the benefits payable under RIGP, 25% of the 
amount of the Social  Security Benefit and the amounts described in Section 
6F2 above, is  equal to 25% of such Participant's Average Monthly Compensation 
as  adjusted in Section 6F1 for Participants and Section 6B3 for Grandfathered 
Officers.

Section 9.  Pre-Retirement Spouse's Benefit

     The spouse of a Participant who dies after completing the appropriate  
age and number of Years of Service pursuant to Section 5 (but in no case less 
than 10) while still  employed by the Company shall be entitled to a survivor 
benefit,  commencing on the death of the Participant, in an amount equal to 
one- half of the retirement benefit to which the Participant would have  been 
entitled under the Plan if the Participant had retired on the  last day of the 
month coincident with or next following the date of  the Participant's death.

Section 10. Form of Benefit 

     The forms of benefit available under the Plan shall be for single 
Participants a 10-Year certain and life annuity or life annuity and for 
married Participants a 50% or 100% joint and survivor annuity option, all as 
shall have been elected by Participant on forms provided by the Administrator.  
The benefit payable to  

				     -8-


single Participant who has failed to make such an election shall be a life 
annuity and for a married Participant a 50% joint and survivor annuity. The 10 
year certain and life annuity is the actuarial equivalent of the life annuity 
and the 100% joint and survivor annuity is the actuarial equivalent of  the 
50% joint and survivor annuity.  Except as otherwise provided in Section 7A in 
no event is the benefit payable in a lump sum.

Section 11. Participant's Rights Unsecured

     The benefits payable under this Plan shall be unfunded.  Consequently,  
no assets shall be segregated for purposes of the Plan and placed  beyond the 
reach of the Company's general creditors.  The right of any  Participant to 
receive benefits under the provisions of the Plan shall  be an unsecured claim 
against the general assets of the Company. 

Section 12. Other Plan Provisions 

     Other Plan provisions necessary to determine any benefit under the  Plan 
shall be the same as those described in RIGP.

Section 13. Duties of Administrator 

     The Plan shall be administered by the Administrator in accordance  with 
its terms and purposes.  The Administrator shall determine the  amount and 
manner of payment of the benefits due to or on behalf of  each Participant 
from the Plan and shall cause them to be paid by the  Company accordingly.  
The Administrator shall be appointed by the Vice  President, Human Resources 
of the Company. 

Section 14. Finality of Decisions 

     The decisions made by and the actions taken by the Administrator in  the 
administration of the Plan shall be final and conclusive on all  persons, and 
the Administrator shall not be subject to individual  liability with respect 
to the Plan.

Section 15. Amendment and Termination 

     It is the intention of the Company to continue the Plan indefinitely.  
The Company expressly reserves the right to amend the Plan at any time and in 
any particular manner, provided that any such amendment shall be made in 
accordance with ERISA. Such amendments, other than amendments relating to 
termination of the Plan or relating to benefit levels under Section 6 of the 
Plan, may be effected by (i) the Board of Directors, (ii) a duly constituted 
committee of the Board of Directors, or (iii) the Vice President of the 
Company responsible for Human Resources or a representative thereof.  In the 
event such office is vacant at  

				     -9-


the time the amendment is to be made, the Chief Executive Officer of the 
Company shall approve such amendment or appoint a representative. Amendments 
relating to termination of the Plan or relating to benefit levels under 
Section 6 of the Plan shall be effected pursuant to a resolution duly adopted 
by the Board of Directors of the Company, or a duly constituted committee of 
the Board of Directors of the Company, in accordance with the Business 
Corporation Law of the State of New York.

Any amendment, alteration, modification or suspension under subsection (iii) 
of the preceding paragraph shall be set forth in a written instrument executed 
by any Vice President of the Company and by the Secretary or an Assistant 
Secretary of the Company.

Section 16. No Employment Rights 

     Nothing contained in the Plan shall be construed as a contract of  
employment between the Company and a Participant, or as a right of any  
Participant to be continued in the employment of the Company, or as a  
limitation of the right of the Company to discharge any of its  employees, 
with or without cause. 

Section 17. Assignment 

     The benefits payable under this Plan may not be assigned or alienated 
except as may otherwise be required by law or pursuant to the terms of a 
domestic relations order that has been approved by the Plan Administrator.  

Section 18. Law Applicable 

     This Plan shall be governed by the laws of the State of New York. 

     Restatement adopted and approved as of October 13, 1997.



								 EXHIBIT 10(k)

							    As amended through
							      October 13, 1997 

			      XEROX CORPORATION 

		 DEFERRED COMPENSATION PLAN FOR DIRECTORS

	 (Formerly 1989 Deferred Compensation Plan For Directors)

			 AMENDMENT AND RESTATEMENT 



     Preamble.     This Plan is a private unfunded nonqualified deferred 
compensation arrangement for Directors and all rights shall be governed by and 
construed in accordance with the laws of New York, except where preempted by 
federal law.  It is intended to provide a vehicle for setting aside funds for 
retirement. 

     Section 1.     Effective Date.  The original effective date of the Plan 
is January 1, 1989. The effective date of this amendment and restatement is 
October 13, 1997. 

     Section 2.     Eligibility.  Any Director of Xerox Corporation (the 
"Company") who is not an officer or employee of the Company or a subsidiary of 
the Company is eligible to participate in the Plan (a Director who has so 
elected to participate is hereinafter referred to as a "Participant").  A 
Participant who terminates an election to defer receipt of compensation is not 
eligible to participate again in the Plan until twelve months after the 
effective date of such termination. 

     Section 3.     Deferred Compensation Accounts.  There shall be 
established for each  Participant  one or more deferred compensation Accounts 
(as hereinafter defined). 

     Section 4.     Amount of Deferral. 

     (a)     A Participant may elect to defer receipt of all or a specified 
part, expressed  as a percentage of the cash compensation otherwise payable to 
the Participant for serving on the Company's Board of Directors or committees 
of the Board of Directors. Any amount deferred is credited to the 
Participant's Accounts on the date such amount is otherwise payable. 

     (b)     In addition to the foregoing, there shall be credited to the 
deferred compensation accounts of each person who is serving as a Director on 
May 17, 1996 a sum computed by the Company as the present value of his or her 
accrued benefit under the Company's Retirement Income Plan For Directors, if 
any, as of such date and each such Director shall be given notice of such 
amount.  The amount so computed shall be final and binding on the Company and 
each such Director.  Within 30 days of the giving of such notice, each such 
Director shall make an election on a form provided 

				     -1-



by the Company as to the hypothetical investment of such amount and the 
payment methods as permitted under Sections 6 and 8 hereof as in effect on 
such date under the administrative rules adopted by the Administrator.

     Section 5.     Time of Election to Defer.  The election to defer will be 
made prior to the individual's commencement of services as a Director for 
amounts to be earned for the remainder of the calendar year.  In the case of 
an individual currently serving as a Director, the election to defer must be 
made prior to December 31, of any year for amounts to be earned in a 
subsequent calendar year or years.  An election to totally terminate deferrals 
may be made at any time prior to the relevant payment date. 

     Section 6.     Hypothetical Investment.  Deferred compensation is assumed 
to be invested, without charge, in the  (a) Balanced Fund, Income Fund, U.S. 
Stock Fund, International Stock Fund, Small Company Stock Fund or Xerox Stock 
Fund (or the successors thereto) (the "Funds") established from time to time 
under the Xerox Corporation Profit Sharing and Savings Plan (the "Profit 
Sharing Plan") (b) a fund with a variable fixed rate of return based upon the 
prime or base rate charged by one or more banks ("Prime Rate Investment")  and 
(c) such other fixed income return investments ("Fixed Return Investment"), 
all as shall be made available from time to time by the Administrator in his 
or her administrative discretion ("Investments") as elected by the participant

It is anticipated that the Administrator will substitute the Prime Rate 
Investment for the Income Fund effective January 1, 1998.  Amounts deferred 
prior to January 1, 1998 shall  have a rate of return at the Income Fund or 
the Prime Rate Investment as elected by Participants on forms provided by the 
Administrator in connection with the implementation of the Prime Investment 
Rate.

Elections to make hypothetical investments in any one or more of the 
Investments shall be subject to administrative rules adopted by the 
Administrator from time to time. 

No shares of Xerox stock will ever actually be issued to a Participant under 
the Plan. 

     Section 7.     Value of Deferred Compensation Accounts and Installment 
Payments.  The value of each Participant's  Accounts shall reflect all amounts 
deferred, gains , losses and rates of return from the Investments, and shall 
be determined at the close of business on each day on which securities are 
traded on the New York Stock Exchange. Hypothetical investments in  the Profit 
Sharing Plan shall be valued on each business day based upon the value of such 
hypothetical investment as determined under such Plan on the valuation date 
under such Plan coincident with or last preceding such business day.  The 
value of Investments not made under the  Profit Sharing Plan shall be 
determined from such available source or sources as the Administrator in his 
or her sole discretion shall from time to time determine. The date as of which 
investments are valued pursuant to the foregoing sentences are referred to 
herein as a Valuation Date. 

				     -2-



     Section 8.     Manner of Electing Deferral.  A Participant may elect to 
defer compensation by giving written notice to the Administrator on a form 
provided by the Company, which notice shall include (1) the percentage to be 
deferred; (2) if more than one is offered under the Plan, the hypothetical 
investment applicable to the amount deferred; and (3) the payment method that 
will apply to the deferred compensation.  A Participant may elect to a maximum 
of four separate payment methods during his or her participation in the Plan 
("Accounts"). Such payment methods once made may never be changed. Each 
election to defer compensation under the Plan shall specify an Account from 
which payment will be made. The Accounts available under the Plan shall be:

ACCOUNT 1 which shall be payable beginning the July 15 of a calendar year that 
follows the calendar year of retirement by the number of years elected by the 
Participant (0, 1, 2, 3, 4, or 5 years). The last payment shall be on the 
July 15 of the year in which the Participant attains a certain age elected by 
the Participant.

ACCOUNT 2 which shall be payable beginning the July 15 of a calendar year that 
follows the calendar year of retirement by the number of years elected by the 
Participant (0, 1, 2, 3, 4, or 5 years) and is payable on each subsequent 
July 15 until the number of payments elected by the Participant have been 
made.

ACCOUNT 3  which shall be payable on the July 15 of a calendar year that 
follows the calendar year of retirement by the number of years elected by the 
Participant (0, 1, 2, 3, 4, or 5 years) and is payable as a single sum.

ACCOUNT 4 shall be available with respect to amounts deferred during 1998 and 
later years. This account is payable beginning on the July 15 of a specified 
year whether before or after retirement. In addition to this payment date, the 
Participant must elect the number of payments that are to commence on this 
date. The payment(s) from this account can be as a single sum or payable in up 
to four annual installments. Once Account 4 is established (an election is 
made to defer and the payment date is defined), deferrals to Account 4 shall 
cease for any calendar year in which a payment is scheduled to be made from 
this Account. The full account balance shall be distributed by the end of the 
installment period. Once the final payment is made from this Account, the 
Participant may elect to create a new Account 4. The initial election or any 
subsequent election to use this Account must be made by December 31 of the 
year preceding the calendar year in which deferrals will be allocated to this 
Account. The first payment date that can be elected is the July 15 of the 
calendar year that follows the calendar year of election (calendar year 
containing the December 31 due date for election) by three years.

Not later than December 31, 1997, Participants who are currently serving as 
Directors of the Company may change their payment elections previously made 
under the Plan which specified payment dates relating to termination, 
retirement, death, or disability, by selecting payments pursuant to the 
methods described in Accounts 1 through 3 

				     -3-



above.  Such change shall be effected by the Participant filing with the 
Administrator a change of election on a form or forms established by the 
Administrator for such purpose.  Such change shall be effective only with 
respect to payments in 1999 or later for Participants who are serving on the 
Company's Board of Directors as of December 31, 1998.

The Administrator may adopt rules of general applicability for administration 
of payments under  the Plan which may be elected by Participants, including 
without limitation, fixing the maximum age selected for payments to terminate 
and the maximum number of payments. 

     Section 9.     Payment of Deferred Compensation.  

     (a)     No withdrawal may be made from the Participant's Account, except 
as provided under this Section and Sections 10 and 11. 

     (b)     Payments from a Participant's Account are made in cash in 
accordance with the elections made under Section 8 of the Plan based on the 
value  of the Participant's deferred compensation Accounts as of the Valuation 
Date immediately preceding the date of payment. 

     (c)     Unless otherwise elected by a Participant with the written 
approval of the Administrator, payments of deferred compensation shall be made 
pursuant to the following formula:  the amount of the first payment shall be a 
fraction of the value of the Participant's deferred compensation account on 
the preceding Valuation Date, the numerator of which is one and the 
denominator of which is the total number of installments elected, and the 
amount of each subsequent payment shall be a fraction of the value on the 
Valuation Date preceding each subsequent payment date, the numerator of which 
is one and the denominator of which is the total number of installments 
elected minus the number of installments previously paid. Any other payment 
method selected with the written approval of the Administrator must in all 
events provide for payments in substantially equal installments. 

     (d)     Upon termination of service on the Board of Directors, including 
termination resulting from death, prior to retirement,  the total value of the 
Participants Accounts under the Plan shall be paid to the Participant, or his 
or her estate, as the case may be, as soon as administratively possible after 
his or her date of termination.

     (e)     Upon the death of a Participant following retirement the total 
value of the Participant's Accounts under the Plan shall be paid in accordance 
with a onetime, irrevocable election made by such Participant as follows:

1.  The total value shall be paid to the Participant's estate as soon as 
administratively possible after the death of a Participant, or

				     -4-



2.   Payments shall continue under the election made by the Participant to the 
Participant's surviving spouse until the surviving spouse's death. Any 
remaining payments shall be paid as a single sum to the surviving spouse's 
estate.

     (f)     If a Participant dies after retirement without having made such 
irrevocable election, the total value of his or her Accounts under the Plan 
shall be paid in a single payment to the Participant's estate as soon as 
administratively possible after notice of his or her date of death has been 
received by the Administrator.

     Section 10.     Acceleration of Payment for Hardship. 

     (a)     For Hardship. Upon written approval from the Board of Directors 
(with the Participant requesting the withdrawal not participating) a 
Participant may be permitted to receive all or part of his accumulated 
benefits if, in the discretion of such Board of Directors,  it is determined 
that an emergency event beyond the Participant's control exists and which 
would cause such Participant severe financial hardship if the payment of his 
benefits were not approved.  Any such distribution for hardship shall be 
limited to the amount needed to meet such emergency.  A Participant who makes 
a hardship withdrawal cannot reenter the Plan for twelve months after the date 
of withdrawal.

     (b)     Upon a Change in Control. Within 5 days following the occurrence 
of a change in control of the Company (as hereinafter defined), each 
Participant shall receive a lump sum payment equal to the value of his or her  
Account.  For purposes hereof, a "change in control of the Company" shall be 
deemed to have occurred if (A) any "person", as such term is used in Sections 
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the 
"Exchange Act") other than the Company, any trustee or other fiduciary holding 
securities under an employee benefit plan of the Company, or any company 
owned, directly or indirectly, by the shareholders of the Company in 
substantially the same proportions as their ownership of stock of the Company, 
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the 
Exchange Act), directly or indirectly, of securities of the Company 
representing 20 percent or more of the combined voting power of the Company's 
then outstanding securities; or (B) during any period of two consecutive 
years, individuals who at the beginning of such period constitute the Board, 
including for this purpose any new director (other than a director designated 
by a person who has entered into an agreement with the Company to effect a 
transaction described in this Section)  whose election or nomination for 
election by the Company's shareholders was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the 
beginning of the period or whose election or nomination for election was 
previously so approved, cease for any reason to constitute a majority thereof.

     Section 11.     Other Penalized Withdrawals.  Notwithstanding the 
provisions of Sections 9 and 10, a Participant may be permitted to receive all 
or part of his accumulated benefits at any time provided that (A) the 
Administrator approves such distribution in his or her sole discretion, and 
(B) the Participant forfeits a portion of his account balance equal to a 
percentage of the amount distributed.  The percentage reduction shall  

				     -5-



be the greater of (A) six percent, or (B) a percentage equal to one-half of 
the prime interest rate, as determined by the Administrator. 

     Section 12.     Time Of Investment.  Amounts deferred under the Plan 
shall begin to be credited with gains, losses and rates of return from 
Investments commencing on the date credited to the Participant's Accounts.

     Section 13.     Participant's Rights Unsecured.  The benefits payable 
under this Plan shall be unfunded.  Consequently, no assets shall be 
segregated for purposes of this Plan and placed beyond the reach of the 
Company's general creditors.  The right of any Participant to receive future 
installments under the provisions of the Plan shall be an unsecured claim 
against the general assets of the Company. 

     Section 14.     Statement of Account.  Statements will be sent to each 
Participant by  February and August and more frequently if the Administrator 
so determines as to the value of their deferred compensation accounts as of 
the end of December and June, respectively. 

     Section 15.     Assignability.  No right to receive payments hereunder 
shall be transferable or assignable by a Participant, except by will or by the 
laws of descent and distribution or except as provided under Section 9.  

     Section 16.     Business Days.  In the event any date specified herein 
falls on a Saturday, Sunday or legal holiday, such date shall be deemed to 
refer to the next business day thereafter. 

     Section 17.     Administration.  The Plan shall be administered by the 
Vice President of the Company having responsibility for human resources (the 
"Administrator").  The Administrator shall have the authority to adopt rules 
and regulations for carrying out the plan, and interpret, construe and 
implement the provisions of the Plan. 

     Section 18.     Amendment. The Company expressly reserves the right to 
amend the Plan at any time and in any particular manner.  Such amendments, 
other than amendments relating to termination of the Plan or relating to 
Investments under Section 6 of the Plan, may be effected by (i) the Board of 
Directors, (ii) a duly constituted committee of the Board of Directors 
("Committee"), or (iii) the Vice President of the Company responsible for 
human resources or a representative thereof.  In the event such office is 
vacant at the time the amendment is to be made, the Chief Executive Officer of 
the Company shall approve such amendment or appoint a representative. 
Amendments relating to termination of the Plan or relating to Investments 
under Section 6 of the Plan shall be effected pursuant to a resolution duly 
adopted by the Board of Directors of the Company, or a duly constituted 
committee of the Board of Directors of the Company, in accordance with the 
Business Corporation Law of the State of New York.  

				     -6-



Any amendment, alteration, modification or suspension under subsection (iii) 
of the preceding paragraph shall be set forth in a written instrument executed 
by any Vice President of the Company and by the Secretary or an Assistant 
Secretary of the Company.

Upon  termination the Administrator in his or her sole discretion may pay  out 
account balances to participants.  No amendment, modification or  termination 
shall, without the consent of a Participant, adversely  affect such 
Participant's accruals in his/her Accounts.


								EXHIBIT 10(l)

						(As amended through 10/13/97)


			      XEROX CORPORATION

		 DEFERRED COMPENSATION PLAN FOR EXECUTIVES
	 (Formerly 1989 Deferred Compensation Plan For Executives)

			 AMENDMENT AND RESTATEMENT 


     Preamble. This Deferred Compensation Plan For Executives, 1997 Amendment 
and Restatement (the "Plan") is a private unfunded nonqualified deferred  
compensation arrangement for executives and all rights shall be  governed by 
and construed in accordance with the laws of New York,  except where preempted 
by federal law.  It is intended to provide a  vehicle for setting aside funds 
for retirement.

     Section 1.  Effective Date.  The original effective date of the Plan  is 
January 1, 1989.  The effective date of this amendment and  restatement is 
October 13, 1997.

     Section 2.  Eligibility.  Any employee of Xerox Corporation (the 
"Company"), and any employee of a wholly owned subsidiary of the  Company 
which has adopted this Plan with the approval of the Company's  Board of 
Directors or the  Committee (as hereinafter defined) ("Participating 
Subsidiary"), who is in Corporate B and A (or its equivalent) or above, and 
such additional group or groups  of employees of the Company or of a 
Participating Subsidiary as  designated from time to time by the 
Administrator, are eligible to  participate in the Plan (an individual who has 
so elected to participate is hereinafter referred to as a "Participant").  A 
Participant who terminates an election to  defer receipt of compensation is 
not eligible to  make deferrals again in  the Plan until twelve months after 
the effective date of such  termination. 

     Section 3.  Deferred Compensation Account.  There shall be established  
for each Participant one or more deferred compensation Accounts (as 
hereinafter defined). 

     Section 4.  Amount of Deferral.  A Participant may elect to defer  
receipt of compensation for services (up to 50% in the case of base salary and 
up to 100% in the case of any other long or short term compensation that is 
eligible for deferral) as an employee of the Company or a  Participating 
Subsidiary otherwise payable to the Participant in the  form of cash.  Any 
amount deferred is credited to the Participant's  Accounts on the date such 
amount is otherwise  payable.  

     Section 5. Time of Election of Deferral.  An election to defer  
compensation must be made by a Participant prior to the year in which  the 
Participant would 

				     -1-



otherwise have an unrestricted right to such  compensation.  When an employee 
first becomes eligible to participate  in the Plan, he or she may elect to 
defer any compensation to which he or she  has yet to have an unrestricted 
right to payment.  An election to  totally terminate future deferrals may be 
made at any time prior to  the relevant payment date.

     Section 6. Hypothetical Investment.  Deferred compensation is assumed  to 
be invested, without charge, in (a)  the Balanced Fund, Income Fund, U.  S. 
Stock Fund, International Stock Fund, Small Company Stock Fund or  Xerox Stock 
Fund (or the successors thereto) established from time to time under the 
Profit Sharing Plan, (b) a fund with a variable fixed rate of return based 
upon the prime or base rate charged by one or more banks ("Prime Rate 
Investment")  and (c) such other fixed income return investments ("Fixed 
Return Investment"), all as shall be made available from time by the 
Administrator in his or her administrative discretion ("Investments"), as 
elected by the Participant. 

It is anticipated that the Administrator will substitute the Prime Rate 
Investment for the Income Fund effective January 1, 1998.  Amounts deferred 
prior to January 1, 1998 shall  have a rate of return at the Income Fund or 
the Prime Rate Investment as elected by Participants on forms provided by the 
Administrator in connection with the implementation of the Prime Investment 
Rate.

Elections to make hypothetical investments in any one or more of the  
Investments shall be subject to administrative rules adopted by the  
Administrator from time to time.

No shares of Xerox stock will ever actually be issued to a  Participant under 
the Plan. 

     Section 7. Value of Deferred Compensation Accounts and Installment  
Payments.  The value of each Participant's Accounts shall reflect all amounts 
deferred, gains, losses and rates of return from the Investments, and shall be 
determined at the close of business on each day on which securities are traded 
on the New York Stock Exchange. Hypothetical investments in  the Profit 
Sharing Plan shall be valued on each business day based upon the value of such 
hypothetical investment as determined under such Plan on the valuation date 
under such Plan coincident with or last preceding such business day.  The 
value of Investments not made under the  Profit Sharing Plan shall be 
determined from such available source or sources as the Administrator in his 
or her sole discretion shall from time to time determine. The date as of which 
investments are valued pursuant to the foregoing sentences are referred to 
herein as a Valuation Date. 

				     -2-



     Section 8. Manner of Electing Deferral.  A Participant may elect to defer 
compensation by giving written notice to the Administrator on a  form provided 
by the Company, which notice shall include (1) the percentage to be deferred; 
(2) if more than one is  offered under the Plan, the Investment applicable to 
the  amount deferred; and (3) the payment  method that will apply to the  
deferred compensation. A Participant may elect up to a maximum of four 
separate payment methods during his or her participation in the Plan 
("Accounts"). Such payment methods once made may never be changed. Each 
election to defer compensation under the Plan shall specify an Account from 
which payment will be made. The Accounts available under the Plan shall be:

ACCOUNT 1 which shall be payable beginning the July 15 of a calendar year that 
follows the calendar year of retirement by the number of years elected by the 
Participant (0, 1, 2, 3, 4, or 5 years). The last payment shall be on the 
July 15 of the year in which the Participant attains a certain age elected by 
the Participant.

ACCOUNT 2 which shall be payable beginning the July 15 of a calendar year that 
follows the calendar year of retirement by the number of years elected by the 
Participant (0, 1, 2, 3, 4, or 5 years) and is payable on each subsequent 
July 15 until the number of payments elected by the Participant have been 
made.

ACCOUNT 3  which shall be payable on the July 15 of a calendar year that 
follows the calendar year of retirement by the number of years elected by the 
Participant (0, 1, 2, 3, 4, or 5 years) and is payable as a single sum.

ACCOUNT 4 shall be available with respect to amounts deferred during 1998 and 
later years. This account is payable beginning on the July 15 of a specified 
year whether before or after retirement. In addition to this payment date, the 
Participant must elect the number of payments that are to commence on this 
date. The payment(s) from this account can be as a single sum or payable in up 
to four annual installments. Once Account 4 is established (an election is 
made to defer and the payment date is defined), deferrals to Account 4 shall 
cease for any calendar year in which a payment is scheduled to be made from 
this Account. The full account balance shall be distributed by the end of the 
installment period. Once the final payment is made from this Account, the 
Participant may elect to create a new Account 4. The initial election or any 
subsequent election to use this Account must be made by December 31 of the 
year preceding the calendar year in which deferrals will be allocated to this 
Account. The first payment date that can be elected is the July 15 of the 
calendar year that follows the calendar year of election (calendar year 
containing the December 31 due date for election) by three years.

Not later than December 31, 1997, participants who are currently employed by 
the Company may change their payment elections previously made under the Plan 
which specified payment dates relating to termination, retirement, death, or 

				     -3-



disability, by selecting payments pursuant to the methods described in 
Accounts 1 through 3 above.  Such change shall be effected by the Participant 
filing with the Administrator a change of election on a form or forms 
established by the Administrator for such purpose.  Such change shall be 
effective only with respect to payments in 1999 or later for participants who 
are employed by Xerox as of December 31, 1998.

The Administrator may adopt rules of general applicability for administration 
of payments under the Plan which may be elected by participants, including 
without limitation, fixing the maximum age selected for payments to terminate 
and the maximum number of payments. 

     Section 9. Payment of Deferred Compensation.  

     (a)  No withdrawal may be  made from the Participant's Account, except as  
provided under this Section and Sections 10 and 11. 

     (b)  Payments from a Participant's Account are made in cash in accordance 
with the elections made under Section 8 of the Plan based on the value  of the 
Participant's deferred compensation Accounts as of the Valuation Date 
immediately preceding the date of payment. 

     (c)  Unless otherwise elected by a Participant with the written approval  
of the Administrator, payments of deferred compensation shall be made  
pursuant to the following formula:  the amount of the first payment  shall be 
a fraction of the value of the Participant's deferred  compensation account on 
the preceding Valuation Date, the  numerator of which is one and the 
denominator of which is the total  number of installments elected, and the 
amount of each subsequent  payment shall be a fraction of the value on the 
Valuation Date  preceding each subsequent payment date, the numerator of which 
is one  and the denominator of which is the total number of installments  
elected minus the number of installments previously paid. Any other payment 
method selected with the written approval of the  Administrator must in all 
events provide for payments in substantially  equal installments. 

     (d)  Upon termination of employment, including termination resulting from 
death, prior to retirement,  the total value of the participants Accounts 
under the Plan shall be paid to the Participant, or his or her estate, as the 
case may be, as soon as administratively possible after his or her date of 
termination.

     (e)  Upon the death of a Participant following retirement the total value 
of the Participant's Accounts under the Plan shall be paid in accordance with 
a one-time, irrevocable election made by such Participant as follows:

1.  The total value shall be paid to the Participant's estate as soon as 
administratively possible after the death of a Participant, or

				     -4-



2.  Payments shall continue under the election made by the Participant to the 
Participant's surviving spouse until the surviving spouse's death. Any 
remaining payments shall be paid as a single sum to the surviving spouse's 
estate.

     (f)  If a Participant dies after retirement without having made such 
irrevocable election, the total value of his or her Accounts under the Plan 
shall be paid in a single payment to the participant's estate as soon as 
administratively possible after notice of his or her date of death has been 
received by the Administrator.

     Section 10.  Acceleration of Payment.

     (a)  For Hardship.  Upon  written approval from the Company's Chief 
Executive Officer (the  Company's Board of Directors, in the case of a request 
from the Chief  Executive Officer), a Participant may be permitted to receive 
all or  part of his accumulated benefits if, in the discretion of the Chief  
Executive Officer (or the Board, if applicable),  it is determined  that an 
emergency event beyond the Participant's control exists and  which would cause 
such Participant severe financial hardship if the  payment of his benefits 
were not approved.  Any such distribution for  hardship shall be limited to 
the amount needed to meet such emergency. A Participant who makes a hardship 
withdrawal cannot reenter the Plan for twelve months after the date of 
withdrawal.

     (b)  Upon a Change in Control.  Within 5 days following the  occurrence 
of a change in control of the Company (as hereinafter  defined), each 
Participant shall receive a lump sum  payment equal to the value of his 
Account.

     For purposes hereof, a "change in control of the Company" shall  be  
deemed to have occurred if (A) any "person", as such term is used in  Sections 
13(d) and 14(d) of the Securities Exchange Act of 1934, as  amended (the 
"Exchange Act"), other than the Company, any trustee or  other fiduciary 
holding securities under an employee benefit plan of  the Company, or any 
company owned, directly or indirectly, by the  shareholders of the Company in 
substantially the same proportions as  their ownership of stock of the 
Company, is or becomes the "beneficial  owner" (as defined in Rule 13d-3 under 
the Exchange Act), directly or  indirectly, of securities of the Company 
representing 20 percent or  more of the combined voting power of the Company's 
then outstanding  securities; or (B) during any period of two consecutive 
years,  individuals who at the beginning of such period constitute the Board,  
including for this purpose any new director (other than a director  designated 
by a person who has entered into an agreement with the  Company to effect a 
transaction described in this Section)  whose  election or nomination for 
election by the Company's shareholders was  approved by a vote of at least 
two-thirds of the directors then still  in office who were directors at the 
beginning of the period or whose  

				     -5-



election or nomination for election was previously so approved, cease  for any 
reason to constitute a majority thereof.

     Section 11. Other Penalized Withdrawals.  Notwithstanding the  provisions 
of Sections 9 and 10, a Participant may be permitted to  receive all or part 
of his accumulated benefits at any time provided  that (A) the Administrator 
approves such distribution in his or her  sole discretion, and (B) the 
Participant forfeits a portion of his  account balance equal to a percentage 
of the amount distributed.  The  percentage reduction shall be the greater of 
(A) six percent, or (B) a  percentage equal to one-half of the prime interest 
rate, as determined  by the Administrator. 

     Section 12. Time Of Investment. Amounts deferred under the Plan shall 
begin to be credited with gains, losses and rates of return from Investments 
commencing on the date credited to the Participant's Accounts.

     Section 13. Participant's Rights Unsecured.  The benefits payable  under 
this Plan shall be unfunded.  Consequently, no assets shall be  segregated for 
purposes of this Plan and placed beyond the reach of  the Company's general 
creditors.  The right of any Participant to  receive future installments under 
the provisions of the Plan shall be  an unsecured claim against the general 
assets of the Company. 

     Section 14. Statement of Account.  Statements will be sent to each  
Participant by  February and August and more frequently if the  Administrator 
so determines as to the value of their deferred  compensation accounts as of 
the end of December and June, respectively.  

     Section 15. Assignability.  No right to receive payments hereunder  shall 
be transferable or assignable by a Participant, except by will  or by the laws 
of descent and distribution or except as provided under Section 9.  

     Section 16. Business Days.  In the event any date specified herein  falls 
on a Saturday, Sunday or legal holiday, such date shall be  deemed to refer to 
the next business day thereafter. 

     Section 17. Administration.  The Plan shall be administered by the  Vice 
President of the Company having responsibility for human  resources (the 
"Administrator").  The Administrator shall have the  authority to adopt rules 
and regulations for carrying out the plan,  and interpret, construe and 
implement the provisions of the Plan. 

     Section 18. Amendment.  The Company expressly reserves the right to amend 
the Plan at any time and in any particular manner.  Such amendments, other 
than amendments relating to termination of the Plan or relating to Investments 

				     -6-



under Section 6 of the Plan, may be effected by (i) the Board of Directors, 
(ii) a duly constituted committee of the Board of Directors ("Committee"), or 
(iii) the Vice President of the Company responsible for human resources or a 
representative thereof.  In the event such office is vacant at the time the 
amendment is to be made, the Chief Executive Officer of the Company shall 
approve such amendment or appoint a representative. Amendments relating to 
termination of the Plan or relating to Investments under Section 6 of the Plan 
shall be effected pursuant to a resolution duly adopted by the Board of 
Directors of the Company, or a duly constituted committee of the Board of 
Directors of the Company, in accordance with the Business Corporation Law of 
the State of New York.  

Any amendment, alteration, modification or suspension under subsection (iii) 
of the preceding paragraph shall be set forth in a written instrument executed 
by any Vice President of the Company and by the Secretary or an Assistant 
Secretary of the Company.

Upon  termination the Administrator in his or her sole discretion may pay  out 
account balances to participants.  No amendment, modification or  termination 
shall, without the consent of a Participant, adversely  affect such 
Participant's accruals in his/her Accounts.

 
  
5 This Schedule Contains Summary Financial Information Extracted From Xerox Corporation's September 30, 1997 Financial Statements And Is Qualified In Its Its Entirety By Reference To Such Financial Statements. 1,000,000 9-MOS DEC-31-1997 SEP-30-1997 62 0 13,931 424 3,092 10,517 5,106 2,819 27,248 7,304 13,006 637 709 327 4,430 27,248 6,611 12,754 3,635 6,761 4,618 176 450 1,375 478 927 0 0 0 927 2.70 2.57