Form Of Exchange Agent Agreement

EXHIBIT 99.3


The First National Bank of Chicago c/o First Chicago Trust Company of New York 14 Wall Street 8th Floor, Window 2 New York, New York 10005


Ladies and Gentlemen:


Xerox Capital Trust I, a trust formed under the laws of the State of Delaware (the "Trust") proposes to make an offer (the "Exchange Offer") to exchange its 8% Series A Capital Securities (Liquidation Amount $1,000 per Capital Security) (the "Original Capital Securities") for its 8% Series B Capital Securities (Liquidation Amount $1,000 per Capital Security) (the "Exchange Capital Securities"). All of the beneficial interests represented by common securities of the Trust are owned by Xerox Corpora tion, a New York corporation (the "Corporation"). The terms and conditions of the Exchange Offer as currently contemplated are set forth in a prospectus, dated May , 1997 (the "Prospectus"), to be distributed to all record holders of the Original Capital Securities. The Original Capital Securities and the Exchange Capital Securities are collectively referred to herein as the "Securities."


The Trust hereby appoints The First National Bank of Chicago to act as ex change agent (the "Exchange Agent") in connection with the Exchange Offer. Refer ences hereinafter to "you" shall refer to The First National Bank of Chicago.


The Exchange Offer is expected to be commenced by the Trust on or about May , 1997. The Letter of Transmittal accompanying the Prospectus (or in the case of book entry securities, the ATOP system) is to be used by the holders of the Original Capital Securities to accept the Exchange Offer and contains instructions with respect to (i) the delivery of certificates for Original Capital Securities tendered in connection therewith and (ii) the book-entry transfer of Securities to the Exchange Agent's account.


The Exchange Offer shall expire at 5:00 P.M., New York City time, on June , 1997 or on such later date or time to which the Trust may extend the Exchange Offer (the "Expiration Date"). Subject to the terms and conditions set forth in the Prospec tus, the Trust expressly reserves the right to extend the Exchange Offer from time to time by giving oral (to be confirmed in writing) or written notice to you before 9:00 A.M., New York City time, on the business day following the previously scheduled Expiration Date.


The Trust expressly reserves the right to amend or terminate the Exchange Offer, and not to accept for exchange any Original Capital Securities not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offer specified in the Prospectus under the caption "The Exchange Offer--Conditions to


the Exchange Offer." The Trust will give oral (confirmed in writing) or written notice of any amendment, termination or nonacceptance of Original Capital Securities to you promptly after any amendment, termination or nonacceptance.


In carrying out your duties as Exchange Agent, you are to act in accordance with the following instructions:


1. You will perform such duties and only such duties as are specifically set forth in the section of the Prospectus captioned "The Exchange Offer" or as specifi cally set forth herein; provided, however, that in no way will your general duty to act in good faith be discharged by the foregoing.


2. You will establish an account with respect to the Original Capital Securities at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Exchange Offer within two business days after the date of the Prospectus, and any financial institution that is a participant in the Book- Entry Transfer Facility's system may make book-entry delivery of the Original Capital Securities by causing the Book-Entry Transfer Facility to transfer such Original Capital Securities into your account in accordance with the Book-Entry Transfer Facility's procedure for such transfer.


3. You are to examine each of the Letters of Transmittal and certificates for Original Capital Securities (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility) and any other documents delivered or mailed to you by or for holders of the Original Capital Securities to ascertain whether: (i) the Letters of Transmittal and any such other documents are duly executed and properly complet ed in accordance with instructions set forth therein and (ii) the Original Capital Securi ties have otherwise been properly tendered. In each case where the Letter of Trans mittal or any other document has been improperly completed or executed or any of the certificates for Original Capital Securities are not in proper form for transfer or some other irregularity in connection with the acceptance of the Exchange Offer exists, you will endeavor to inform the presenters of the need for fulfillment of all requirements and to take any other action as may be necessary or advisable to cause such irregular ity to be corrected.


4. With the approval of any Administrative Trustee of the Trust or any person designated in writing by the Corporation (a "Designated Officer") (such approval, if given orally, to be confirmed in writing) or any other party designated by any such Administrative Trustee or Designated Officer in writing, you are authorized to waive any irregularities in connection with any tender of Original Capital Securities pursuant to the Exchange Offer.


5. Tenders of Original Capital Securities may be made only as set forth in the Letter of Transmittal and in the section of the Prospectus captioned "The Exchange Offer--Procedures for Tendering Original Capital Securities," and Original Capital Securi ties shall be considered properly tendered to you only when tendered in accordance with the procedures set forth therein.


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Notwithstanding the provisions of this paragraph 5, Original Capital Securities which any Administrative Trustee of the Trust or Designated Officer of the Corporation shall approve as having been properly tendered shall be considered to be properly tendered (such approval, if given orally, shall be confirmed in writing).


6. You shall advise the Trust and the Corporation with respect to any Original Capital Securities received subsequent to the Expiration Date and accept their instruc tions with respect to disposition of such Original Capital Securities.


7. You shall accept tenders:


(a) in cases where the Original Capital Securities are registered in two or more names only if signed by all named holders;


(b) in cases where the signing person (as indicated on the Letter of Transmit tal) is acting in a fiduciary or a representative capacity only when proper evidence of such person's authority so to act is submitted; and


(c) from persons other than the registered holder of Original Capital Securities provided that customary transfer requirements, including any applicable transfer taxes, are fulfilled.


You shall accept partial tenders of Original Capital Securities where so indicated and as permitted in the Letter of Transmittal and deliver certificates for Original Capital Securities to the transfer agent for split-up and return any untendered Original Capital Securities to the holder (or such other person as may be designated in the Letter of Transmittal) as promptly as practicable after expiration or termination of the Exchange Offer.


8. Upon satisfaction or waiver of all of the conditions to the Exchange Offer, the Trust will notify you (such notice if given orally, to be confirmed in writing) of its acceptance, promptly after the Expiration Date, of all Original Capital Securities properly tendered and you, on behalf of the Trust, will exchange such Original Capital Securities for Exchange Capital Securities and cause such Original Capital Securities to be canceled. Delivery of Exchange Capital Securities will be made on behalf of the Trust by you at the rate of $1,000 principal amount of Exchange Capital Securities for each $1,000 principal amount of the corresponding series of Original Capital Securities tendered promptly after notice (such notice if given orally, to be confirmed in writing) of acceptance of said Original Capital Securities by the Trust; provided, however, that in all cases, Original Capital Securities tendered pursuant to the Exchange Offer will be exchanged only after timely receipt by you of certificates for such Original Capital Securities (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility), a properly completed and duly executed Lette ...