Debenture Dated June 21, 2002

EXHIBIT (4)(l)(5)
DEBENTURE


DATE: June 21, 2002


PARTIES


1. XEROX CAPITAL (EUROPE) PLC, a company incorporated in England (number
3070508) of Bridge House, Oxford Road, Uxbridge, Middlesex UB8 1HS,
England, as chargor ("XCE").


2. BANK ONE, NA of One Bank One Plaza - IL 1-0631, 17th Floor, Chicago, IL
60670 as collateral agent and trustee for the Revolving Lenders (together
with its successors in title and assigns, the "Collateral Agent").


BACKGROUND


This Debenture is made as a deed to secure amounts expressed to be owed by XCE and outstanding under any of the Loan Documents.


The parties agree by way of deed as follows:


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PART I: INTERPRETATION


1. Interpretation


1.1 Definitions


In this Debenture:


"Actionable Event of Default" means an Event of Default specified in clause
(a), b), (h), (i) or (j) of Section 7.01 of the Credit Agreement.


"Assigned Agreements" means the Loan Agreements specified in Schedule 2 and
any Further Loan Agreements including in each case:


(a) any form of security, bond, guarantee, indemnity or other support of
any kind issued to or expressed to be for the benefit of XCE under or
in respect of any such document;


(b) any and all rights to make claims or otherwise require payment of any
amount under, or performance of, any provision of any such document;


(c) the benefit of the right to sue on all representations, warranties,
undertakings or other assurances given to XCE under or in respect of
any such document; and


(d) all causes and rights of action arising under or in respect of any
such document against any counterparty to that document.


"Book Debts" means all debts (including, among other things, book debts)
due or owing to XCE other than pursuant to any Assigned Agreement. The
expression includes the proceeds of all Book Debts and the benefit of all
Security, guarantees, indemnities, letters of credit and insurance held by
XCE in relation to Book Debts.


"Cash Collateralised Letter of Credit" means, at any time, any outstanding
Letter of Credit if (x) no Event of Default has occurred and is continuing
and (y) Xerox or XCE shall have (i) granted to the Collateral Agent, for
the benefit of the Revolving Lenders (or, if the obligations of the
Revolving Lenders to reimburse the applicable LC Issuing Banks have been
terminated, to such LC Issuing Banks), a security interest in Liquid
Investments or (ii) caused a bank acceptable to the Required Revolving
Lenders or such LC Issuing Banks, as the case may be, to issue a letter of
credit naming the Collateral Agent or such LC Issuing Banks as beneficiary)
in either case in an amount at least equal to 105% of the LC Exposure with
respect to such Letter of Credit (plus any accrued and unpaid interest
thereon) as of the date of release pursuant to Clause 6.1, on terms and
conditions and pursuant to documentation reasonably satisfactory to the
Required Revolving Lenders or such LC Issuing Banks, as the case may be.


"Charge" means any type of Security created by, or pursuant to, this
Debenture.


"Charged Derived Assets" means Derived Assets which are Collateral.


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"Charged Investments" means Investments which are Collateral.


"Collateral" means the assets subject, or expressed or required to be
subject, to the Charges, or any part of those assets.


"Collateral Account" means the cash collateral account established with the
Collateral Agent and notified to XCE.


"Contingent Secured Sums" means, at any time, any Secured Sums that are
contingent in nature at such time, including (without limitation) any
obligation under any Loan Document which is:


(i) an obligation to reimburse a Lender for drawings not yet made under a
Letter of Credit;


(ii) any other obligation (including any guarantee) that is contingent in
nature at such time; or


(iii) any obligation to provide collateral to secure any of the foregoing
types of obligation


"Credit Agreement" means the amended and restated credit agreement dated
[ ], 2002 and made between Xerox Corporation, a New York corporation,
XCE and certain other Overseas Borrowers, the Lenders party thereto, Bank
One, NA, as Administrative Agent, LC Issuing Bank and Collateral Agent,
JPMorgan Chase Bank, as Documentation Agent and Citibank, N.A., as
Syndication Agent. References to the "Credit Agreement" include that
agreement as it has been and may be novated and amended from time to time.


"Debt Securities" means debt securities including bonds, notes,
certificates of deposit, loan stock and debenture stock;


"Delegate" means a delegate or sub-delegate appointed pursuant to Clause
14.5.


"Derived Assets" means all Investments, rights or other property of a
capital nature which accrue or are offered, issued or paid in respect of
any Investments or any Derived Assets. This may occur, among other ways, by
way of bonus, rights, redemption, conversion, exchange, substitution,
consolidation, sub-division, preference, warrant, option or purchase.


"Domestic Guarantee and Security Agreement" means the guarantee and
security agreement dated [ ], 2002 among Xerox Corporation, the
Subsidiary Guarantors party thereto and Bank One, NA as Collateral Agent.


"Dissolution" of a person includes the bankruptcy, insolvency, liquidation,
amalgamation, reconstruction, reorganisation, administration under Part II
of the Insolvency Act 1986, administrative or other receivership, or
dissolution of that person,


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and any equivalent or analogous proceeding by whatever name known and in
whatever jurisdiction.


"Equity Securities" means all Equity Interests in each Material Foreign
Subsidiary directly owned by XCE and incorporated in any part of the United
Kingdom.


"Excluded Assets" means:


(i) rights of XCE in respect of any asset which is prohibited from being
charged to the Collateral Agent as part of the Collateral by any
Permitted Encumbrance;


(ii) Transferred Receivables and (A) any Security and property subject to
such Security thereto purporting to secure payment of such
Transferred Receivables, (B) leases, guarantees, insurance and other
arrangements supporting payment of such Transferred Receivables, (C)
rights to payment and collections in respect of such Transferred
Receivables, (D) books, records and similar information relating to
such Transferred Receivables or to the obligors under such
Transferred Receivables, (E) with respect to any such Transferred
Receivables, the transferee's interest in assets the sale of which
gave rise to such Transferred Receivables and (F) if such
Transferred Receivables arise from a lease financing or instalment
sale transaction, the assets that are the subject of the underlying
transaction and are transferred to a Receivables SPE;


(iii) Transferred Intellectual Property Rights;


(iv) government and local government Receivables of XCE;


(v) Third Party Vendor Financing Assets of XCE;


(vi) cash; and


(vii) Permitted Investments.


"Fixtures" means fixtures, fittings (including trade fixtures and fittings)
and fixed plant, machinery and equipment.


"Further Loan Agreement" means any Loan Agreement entered into after the
date of this Debenture.


"General Intangible" has the meaning given to it in Section 1(b) of the
Domestic Guarantee and Security Agreement.


"Insolvency Act" means the Insolvency Act 1986.


"Intellectual Property Rights" means patents, designs, copyrights, rights
in trade marks and service marks, rights in confidential information,
rights in know how and any interests (including by way of licence) in any
of them. It also includes any associated or similar rights (whether
registered or not) and all applications for any of these rights.


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"Intra-Group Loan Agreement" means any Loan Agreement under which each
borrower or beneficiary is a Xerox Company.


"Investments" means each of the following:


(A) Equity Securities;


(B) Debt Securities issued to XCE by (i) any subsidiary of XCE, (ii) any
Affiliate of XCE or (iii) any other issuer over which XCE exercises
Control;


(C) rights to acquire Investments, including warrants and options;


(D) rights to participate in a return from Investments held through a unit
trust scheme or other scheme involving the sharing of investment
returns among participants; and


(E) any Derived Assets,


including, in each case, rights to Investments which are held by a nominee,
depositary, custodian or clearing system. These rights may simply be rights
to the delivery of Investments which are held on a fungible basis.


"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all Letters of Credit outstanding at such time plus (b) the
aggregate amount of all payments made by an LC Issuing Bank in respect of a
drawing under a Letter of Credit that have not yet been reimbursed by XCE
at such time. The LC Exposure of any Revolving Lender at any time will be
its Revolving Percentage of the total LC Exposure at such time.


"Letter of Credit" means any Letter of Credit issued for the account of XCE
pursuant to the Credit Agreement.


"Liquid Investments" has the meaning given to it in the Domestic Guarantee
and Security Agreement.


"Loan Agreement" means any agreement pursuant to which XCE agrees to lend
moneys to any person and any letter of credit or letter of credit facility
agreement provided by XCE to any person.


"LPA" means the Law of Property Act 1925.


"Negotiable Instruments" means all bills of exchange, promissory notes and
other negotiable instruments of any description beneficially owned by XCE
(but excluding any Investments).


"Non-Contingent Secured Sums" means, at any time, any Secured Sums that are
not Contingent Secured Sums.


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"Permitted Encumbrances" means (i) any legally valid prohibitions on the
Charge to the Collateral Agent as part of the Collateral of the Equity
Interests of any Qualified Turnaround Program Subsidiary pursuant to any
agreement entered into in connection with the Turnaround Program with or
for the benefit of any other Person owning or acquiring Equity Interests in
such a Subsidiary, to the extent the Qualification Requirements have been
met with respect to such prohibitions, (ii) (A) any legally valid
contractual restrictions in connection with the Turnaround Program that do
not prohibit any Xerox Company's Equity Interests in a Turnaround Program
Subsidiary from being charged to the Collateral Agent as part of the
Collateral or (B) any legally valid contractual restrictions that do not
prohibit the granting of a security interest in any Xerox Company's Equity
Interests in any other Subsidiary that is not a Xerox Group Company, but,
in each case, that otherwise restrict the Transfer by the Collateral Agent
of, or other rights (including voting rights) and remedies of the
Collateral Agent with respect to, such Equity Interests as a consequence of
restrictions imposed on the owner of such Equity Interests (including put
and call arrangements, rights of first refusal, right of first offer,
tag-along rights and other similar rights to which such Equity Interest may
be subject), (iii) any legally valid and customary contractual restrictions
on the Charge to the Collateral Agent as part of the Collateral of the
Equity Interests of any Finance SPE or any Permitted Joint Venture created
in connection with any Qualified Receivables Transaction or that otherwise
restrict the Transfer by the Collateral Agent of, or other rights
(including voting rights) and remedies of the Collateral Agent with respect
to, such Collateral, (iv) any legally valid contractual restrictions on the
charge to the Collateral Agent as part of the Collateral of the Equity
Interests of any Third Party Vendor Financing Subsidiary or any Permitted
Joint Venture created in connection with the Third Party Vendor Financing
Program or that otherwise restrict the Transfer by the Collateral Agent of,
or other rights (including voting rights) and remedies of the Collateral
Agent with respect to, such Collateral, (v) any legally valid contractual
restrictions existing on the date hereof on the Charge to the Collateral
Agent as part of the Collateral of any Equity Interest or General
Intangible owned by XCE, or any legally valid contractual restrictions
existing on the date hereof that otherwise restrict the Transfer by the
Collateral Agent of, or other rights (including voting rights) and remedies
of the Collateral Agent with respect to, such Equity Interest or General
Intangible, (vi) any legally valid contractual restrictions permitted by
Section 6.10 of the Credit Agreement on the Charge to the Collateral Agent
of any of the Collateral, or on the Transfer by the Collateral Agent of any
Collateral (including put and call arrangements, rights of first refusal,
rights of first offer, tag-along rights and other similar rights to which
any Equity Interest which is Collateral may be subject) or (vii) the terms
of any legally valid provision of Applicable Law which (A) prohibits the
creation of any Security over any property or asset, (B) requires the
consent of any third party to the creation of any Security over any
property or asset, (C) gives rise to any right of termination (including,
without limitation, the abandonment, invalidation or rendering
unenforceable any right, title of interest in any Intellectual Property
Right) or default remedy by reason of the creation of Security over any
property or asset or (D) does not prohibit the creation of Security over
any property or asset but otherwise restricts the Transfer by the
Collateral Agent of any such property or asset or any other rights and
remedies of the Collateral Agent.


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"Policies" means all contracts or policies of insurance which XCE may from
time to time take out in respect of any Collateral to the extent that such
contracts or policies are not Excluded Assets.


"Proceedings" has the meaning given to it in Clause 28.1


"Receiver" means a receiver appointed under Clause 13. It also includes any
other receiver or receiver and manager appointed by the Collateral Agent,
or by a court at the request of the Collateral Agent, in respect of the
Collateral.


"Release Conditions" has the meaning given to it in Clause 6.1


"Required Revolving Lenders" means, at any time, Revolving Lenders holding
at least a majority of the aggregate amount of the Revolving Commitments
with respect to XCE or, if such Revolving Commitments have been terminated,
the Revolving Exposures with respect to XCE.


"Revolving Lender" means a Lender with a Revolving Commitment with respect
to XCE or, if such Revolving Commitments have terminated or expired, a
Lender with a Revolving Exposure with respect to XCE.


"Revolving Percentage" means, with respect to any Revolving Lender, the
percentage of the total Revolving Commitments with respect to XCE
represented by such Revolving Lender's Revolving Commitment with respect to
XCE. If the Revolving Commitments with respect to XCE have terminated or
expired, the Revolving Percentages will be determined based on Revolving
Exposures with respect to XCE.


"Secured Sums" means amounts expressed to be due owing and payable
(including, without limitation, any obligation under any guarantee or any
obligation to provide collateral) by XCE under any of the Loan Documents
(as amended, restated, supplemented or otherwise modified from time to
time) or under any promissory note issued by XCE pursuant to the Credit
Agreement (as amended, restated, supplemented or otherwise modified from
time to time). These include amounts and obligations currently due, those
due in the future and those which may become due.


"Security" means any mortgage, fixed or floating charge, encumbrance, lien,
pledge, hypothecation, assignment by way of security, or title retention
arrangement (other than in respect of goods purchased in the ordinary
course of trading), and any agreement or arrangement having substantially
the same economic or financial effect as any of the foregoing (including
any "hold back" or "flawed asset" arrangement) and any purchase option,
call or similar right of a third party with respect to securities.


"Transferred Intellectual Property Rights" means any Intellectual Property
Rights (including, without limitation, proceeds thereof) Transferred as
permitted by the Credit Agreement.


"Transferred Receivables" means any Receivables Transferred in connection
with a Qualified Receivables Transaction or the Third Party Vendor
Financing Program.


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1.2 Definitions in the Credit Agreement


Expressions defined in the Credit Agreement have the same meanings when
used in this Debenture. This does not, however, apply where the same
expression is defined differently in this Debenture.


1.3 References and Construction


(A) In this Debenture, unless otherwise specified:


(i) references to assets are to present and future assets and
include business, undertaking, property, rights, uncalled
capital and revenues and any interest in any of them;


(ii) references to rights include easements, quasi-easements and
appurtenances;


(iii) references to Clauses and Schedules are to Clauses of and
Schedules to this Debenture;


(iv) headings to Clauses are for convenience only and are to be
ignored in construing this Debenture;


(v) references to a "person" are to be construed so as to include
any individual, firm, company, government, state or agency of a
state, local or municipal authority, or any joint venture,
association or partnership (whether or not having separate
legal personality);


(vi) references to a "company" are to be construed so as to include
any company, corporation or other body corporate, wherever and
however incorporated or established;


(vii) references to any statute or statutory provision are to be
construed as references to the same as it may have been, or may
from time to time be, amended, modified or re-enacted, and
include references to all bye-laws, instruments, orders and
regulations for the time being made thereunder or deriving
validity therefrom; and


(viii) references to times of the day are to London time.


(B) Except to the extent that the context otherwise requires, any
reference in this Debenture to "this Debenture" or any other deed,
agreement or instrument is a reference to this Debenture or, as the
case may be, the relevant deed, agreement or instrument as amended,
supplemented, replaced or novated from time to time and includes a
reference to any document which amends, supplements, replaces, novates
or is entered into, made or given pursuant to or in accordance with
any of the terms of this Debenture or, as the case may be, the
relevant deed, agreement or instrument.


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1.4 Reimbursements


If a party wishes to claim reimbursement of any amount to which it is
entitled it will deliver a demand to the reimbursing party. This will set
out the losses, expenses or other amounts in respect of which it is
entitled to be reimbursed. The reimbursing party agrees to pay the amounts
to which such party is entitled no later than two Business Days after the
delivery of the certificate to the reimbursing party.


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PART II: AGREEMENT TO PAY SECURED SUMS AND CREATION OF SECURITY


2. Agreement to pay Secured Sums


XCE agrees to pay to the Collateral Agent (in its capacity as the
Administrative Agent under the Credit Agreement) all Secured Sums in
accordance with the Loan Documents to which it is a party.


3. Security


3.1 Creation of security


(A) Fixed Charge


XCE with full title guarantee (except to the extent that any Permitted
Encumbrance conflicts with such full title guarantee) and as
continuing security for the payment and discharge of all Secured Sums
charges in favour of the Collateral Agent (for the benefit of itself
and the Revolving Lenders) by way of first fixed charge:


(i) all plant, machinery and equipment owned by XCE and XCE's
interest in any plant, machinery or equipment in its
possession;


(ii) all Investments beneficially owned by XCE, and all dividends,
interest and other distributions paid or payable in respect of
those Investments;


(iii) moneys (including interest) now or hereafter standing to the
credit of the Collateral Account, and the debts represented by
such moneys;


(iv) all the goodwill of XCE;


(v) all the uncalled capital of XCE;


(vi) all the Intellectual Property Rights of XCE;


(vii) all Book Debts;


(viii) all Negotiable Instruments;


(ix) all its rights under or in connection with all licences held in
connection with the business of XCE or the use of any Charged
Asset. This does not, however, include any licence which
requires the consent of the licensor for the creation of this
Charge where that consent has not been obtained; and


(x) if not effectively assigned by Clause 3.2 all its rights and
benefits under or in connection with each of the Assigned
Agreements;


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(xi) if not effectively assigned by Clause 3.2, all its rights and
benefits under or in connection with each of the Policies,


including, in each case both those assets currently held by XCE and
those held in the future but excluding, in each case, any Excluded
Assets.


(B) Floating charge


XCE with full title guarantee (except to the extent that any Permitted
Encumbrance conflicts with such full title guarantee) and as
continuing security for the payment and discharge of all Secured Sums
charges in favour of the Collateral Agent (for the benefit of itself
and the Revolving Lenders) by way of first floating charge ranking
behind all the fixed charges created by or pursuant to this Debenture
but ranking, to the extent permitted by law, in priority to any other
Security created after the date of this Debenture, except:


(i) Security permitted by Clause 3.5(A); and


(ii) Security ranking in priority in accordance with Clause 13.2(E)


all its assets, including assets expressed to be charged by Clause
3.1(A) but excluding any Excluded Assets.


3.2 Security Assignment


(A) As further continuing security for the payment of the Secured Sums,
XCE assigns (to the fullest extent capable of assignment and subject
to Clause 3.2(B)) with full title guarantee in favour of the
Collateral Agent (for the benefit of itself and the Revolving Lenders)
all its rights, title and interest in:


(i) the Assigned Agreements; and


(ii) the Policies, including (without limitation):


(a) all payments (including bonuses) that may become due under
the Policies; and


(b) all amounts due to XCE in connection with the Policies
pursuant to section 76 of the Insurance Companies Act 1982,


except, in each case, to the extent that such rights, title and
interest in the Assigned Agreements or the Policies (as the case may
be) are Excluded Assets,


(B) (i) Until (y) the occurrence of an Actionable Event of Default which
is continuing or acceleration of the Loans in accordance with the
terms of the Credit Agreement and (z) receipt of notice from the
Collateral


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Agent, XCE shall be entitled to continue to deal with the
counterparties to the Assigned Agreements and the Policies.


(ii) On payment or discharge in full of the Secured Sums the
Collateral Agent will at the request and cost of XCE re-assign
the Assigned Agreements and the Policies to XCE (or as it shall
direct).


3.3 Conversion of floating charge into fixed charge

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