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                                                                   Exhibit 10(n)

                                                     As Amended By B/D 10/9/00


                                XEROX CORPORATION

                         1998 EMPLOYEE STOCK OPTION PLAN

                         ARTICLE I--Purpose of the Plan

The purpose of the Xerox Corporation 1998 Employee Stock Option Plan ("Plan") is
to increase the ownership interest in the Company of eligible employees of the
Company so as to align such interests with those of the shareholders of the
Company and to provide a further incentive to serve as an employee of the
Company through the issuance of stock options.

                             ARTICLE II--Definitions

Unless the context clearly indicates otherwise, the following terms shall have
the following meanings:

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2.1 "Administrator" means the individual and/or Committee or subcommittee
referred to in Paragraph 3.1 as the case may be.

2.2 "Award Summary" means the award summary or the agreement delivered by or on
behalf of the Administrator to each Optionee upon grant of an Option under the
Plan which shall set forth details of each Option, including, without
limitation, number of shares, option exercise price, Exercise Period, Waiting
Period and exercise dates.

2.3  "Board" means the Board of Directors of the Company.

2.4 "Change in Control" 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 (1) the Company, (2) any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company, (3) 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, or (4) any person who becomes a "beneficial owner" (as defined
below) in connection with a transaction described in clause (1) of subparagraph
(C) below, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person any securities
acquired directly from the Company or its affiliates) representing 20% or more
of the combined voting power of the Company's then outstanding securities; (B)
the following individuals cease for any reason to constitute a majority of the
directors then serving: individuals who, on October 9, 2000 constitute the Board
and any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or nomination for
election by the Company's shareholders was approved or recommended by a vote of
at least two- thirds of the directors then still in office who were directors on
October 9, 2000 or whose appointment, election or nomination for election was
previously so approved or recommended; (C) there is consummated a merger or
consolidation of the Company or any direct or indirect subsidiary of the Company
with any other corporation other than (1) a merger or consolidation which
results in the directors of the Company immediately prior to such merger or
consolidation continuing to constitute at least a majority of the board of
directors of the Company, the surviving entity or any parent thereof or (2) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities acquired directly
from the Company or its affiliates) representing 20% of more of the combined
voting power of the Company's then outstanding securities; or (D) the
shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or substantially all of
the Company's assets to an entity, at least 50% of the combined voting power of
the voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company immediately
prior to such sale.

2.5 "CIC Price" means the higher of (a) the highest price paid for a Share in
the transaction or series of transactions pursuant to which a Change in

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Control of the Company shall have occurred,  or (b) the highest price paid for a
Share  during the 60 day period  immediately  preceding  the date upon which the
event  constituting  a Change in Control  shall have occurred as reported in The
Wall Street Journal in the New York Stock  Exchange  Composite  Transactions  or
similar successor consolidated transactions reports.

2.6  "Company" means Xerox Corporation.

2.7  "Employee" means each employee of the Company or of any entity that is
directly or indirectly controlled by the Company all of whom are eligible for
grants under the Plan.

2.8  "Exercise Period" means the date which is eight years after the Option
Grant Date of such Option.

2.9  "Fair Market Value" means, with respect to any date, the average between
the  highest  and lowest  sale  prices per Share in the New York Stock  Exchange
Composite  Transactions  on such date as reported  in the Wall  Street  Journal,
provided  that if there should be no sale of Shares  reported on such date,  the
Fair Market  Value of a Share on such date shall be deemed  equal to the average
between  the  highest  and  lowest  sale  prices  per  Share  in such  Composite
Transactions for the last preceding date on which sales of Shares were reported.

2.10 "Option" means an option to purchase Shares awarded under the Plan which
does not meet the requirements of Section 422 of the Internal Revenue Code of
1986, as amended, or any successor law.

2.11 "Option Grant Date" means the effective date of an option grant under the
terms of the Plan.

2.12 "Option Surrender Right" has the meaning specified in Paragraph 6.4.

2.13 "Optionee" means each person to whom an Option has been granted.

2.14 "Plan" means the Xerox Corporation 1998 Employee Stock Option Plan, as
amended and restated from time to time.

2.15 "Shares" means shares of the Common Stock, par value $1.00 per share, of
the Company.

                     ARTICLE III--Administration of the Plan

3.1  Administrator of Plan. The Plan shall be administered by the individual who
is the Vice President of the Company then having responsibility for Human
Resources other than in respect of matters relating to officers of the Company
who are subject to Section 16 under the Securities Exchange Act of 1934, as
amended ("Section 16 Officers"). The Plan shall be administered in respect of
Section 16 Officers by the Executive Compensation and Benefits Committee of the
Board of Directors of the Company or the successor to such Committee or by a
subcommittee of such Committee.

3.2  Authority of the Administrator. Except as otherwise provided herein, the
Administrator shall have full power and authority to (i) designate the Employees
to whom Options are to be granted, (ii) determine the number of Shares to be
covered by each Option, (iii) determine the terms and conditions of Options
granted under Plan, (iv) interpret and construe the Plan, (v) adopt

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such  rules and  regulations  as the  Administrator  shall  deem  necessary  and
advisable to implement and  administer  the Plan and (vi)  designate  persons to
carry out the  Administrator's  responsibilities,  subject to such  limitations,
restrictions   and  conditions  as  the   Administrator   may  prescribe,   such
determinations to be made in accordance with the  Administrator's  best business
judgment as to the best  interests  of the Company and its  shareholders  and in
accordance  with the  purposes  of the Plan.  Options  granted and the number of
shares  covered by Options  shall be based upon one or more  measures of Company
performance selected by the Administrator.

                   ARTICLE IV--Shares Subject to the Plan

The total number of Shares which may be issued upon exercise of Options under
the Plan shall be 25,000,000 subject to adjustment as provided in Article IX.
Any Shares issued under the Plan may consist of authorized and unissued Shares
or of treasury Shares.

                 ARTICLE V--Non-Transferability of Options

All Options under the Plan will be nontransferable and shall not be assignable,
alienable, salable or otherwise transferable by the Optionee other than by will
or the laws of descent and distribution except pursuant to a domestic relations
order entered by a court of competent jurisdiction or as otherwise determined by
the Administrator. During the life of the Optionee, Options under the Plan shall
be exercisable only by him or her.

If so permitted by the Administrator, an Optionee may designate a beneficiary or
beneficiaries to exercise the rights of the Optionee under this Plan upon the
death of the Optionee.

                               ARTICLE VI--Options

Each Option shall be subject to the following terms and conditions:

6.1 Purchase Price. The purchase price per Share under each Option granted
pursuant to this Article shall be 100% of the Fair Market Value per Share on the
Option Grant Date. Any Option granted to replace an earlier unexercised Option
Grant shall have a price per share not less than the price per share of the
option being replaced.

6.2 Option Waiting Period and Exercise Dates. The Shares subject to an Option
may be purchased commencing on the January 1 next following the Option Grant
Date (the "Waiting Period") as follows:

    33-1/3% of such Shares commencing at the end of the Waiting Period;

    33-1/3% of such Shares commencing on the first day of the second year
following the Waiting Period; and

    33-1/3% of such Shares commencing on the first day of the third year
following the Waiting Period.

Subject to Article VII, an Option may be exercised until the end of the Exercise
Period. An Option, or portion thereof, may be exercised in whole or in part only
with respect to whole Shares.

To the extent that an Option is not exercised when it becomes initially

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exercisable, it shall not expire but shall be carried forward and shall be
exercisable until the expiration of the Exercise Period. Partial exercise will
be permitted from time to time within the percentage limitation described above
provided that no partial exercise may be for less than the lesser of twenty
Shares or the total number of Shares remaining unexercised under the Option.

6.3 Method of Exercising Option. The Options may be exercised from time to time
by written notice to the Company, which shall state the election to exercise the
Options and the number of shares with respect to which the Options are being
exercised, and shall be signed by the person exercising the Options. Such notice
must be accompanied by a check payable to the Company in payment of the full
purchase price. After receipt of such notice, the Company will advise the person
exercising the option of the amount of withholding tax which must be paid under
U.S. Federal, and where applicable, state and local law resulting from such
exercise. Upon receipt of payment of the purchase price and the withholding tax
the Company shall, without transfer or issue tax to the person exercising the
Options, issue a certificate or certificates for the number of shares covered by
such notice of exercise. In the event that the Options are being exercised
through the Company's cashless exercise program, there shall be no requirement
for the Employee to deliver a check in payment of the purchase price or for the
withholding tax, all of which shall be effectuated between the Company and its
then acting agent appointed to administer the cashless exercise program.

6.4 Option Surrender Rights. All Options granted hereunder shall be accompanied
by option surrender rights ("OSRs") covering an equal number of shares as are
covered under the related Option. Upon the occurrence of an event constituting a
Change in Control, all OSRs, to the extent that the CIC Price exceeds the
exercise price of the related Options, shall be paid in cash as soon as may be
practicable. Upon such payment, such rights and any related Option shall be
canceled. The amount of cash payable in respect of an OSR shall be determined by
multiplying the number of unexercised shares under the Option to which the right
relates by the difference between the option price of such shares and the CIC
Price.

6.5  Award Summary.  Each Option granted under the Plan shall be evidenced by
an Award Summary.

6.6  Reload Options.  Options shall not be granted which by the terms of the
grant provide for automatic award of additional Options upon exercise thereof.

                       ARTICLE VII--Termination of Service

Unless otherwise determined by the Administrator, termination of service,
disability, retirement or death of an Optionee shall have the following effects
on Options:

7.1 Termination of Service. If an Optionee ceases to be an employee of the
Company or any of its subsidiaries other than by reason of disability,
retirement or death, each Option held by such Optionee may thereafter be
exercised by such Optionee (or such Optionee's executor, administrator,
guardian, legal representative, beneficiary or similar person) solely to the
extent that they were exercisable on the date of such termination and shall
expire on the earlier of: (i) three months from the date of such termination or
(ii) expiration of the Exercise Period. Options which are not exercisable on the
date the Optionee ceases to be such an employee shall terminate.

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7.2 Disability, Retirement or Death. If an Optionee ceases to be an employee of
the Company or any of its subsidiaries by reason of disability or retirement,
each Option held by such Optionee may thereafter be exercised by such Optionee
in accordance with the provisions of Article VI. If the Optionee dies following
termination of service by reason of retirement or disability, outstanding
Options shall be exercisable to the extent that they were exercisable on the
date of death by such Optionee's executor, administrator, guardian, legal
representative, beneficiary or similar person and shall expire on the earlier
of: one year following the date of death or expiration of the Exercise Period.
If the Optionee ceases to be such an employee as a result of death after the
expiration of the Waiting Period for an Option award, such Option shall be
immediately vested and exercisable by the Optionee's legal representative at any
time within one year of the Optionee's death but in no event after the
expiration of the Exercise Period. Options which are not exercisable on the date
the Optionee ceases to be such an employee in accordance with the foregoing
shall terminate.

                     ARTICLE VIII--Amendment and Termination

The Board may amend the Plan from time to time or terminate the Plan at any time
except to the extent otherwise required by the Business Corporation Law of the
State of New York; provided, however, that no action authorized by this Article
shall adversely change the terms and conditions of an outstanding Option without
the Optionee's consent.

                        ARTICLE IX--Adjustment Provisions

9.1 If the Company shall at any time change the number of issued Shares without
new consideration to the Company (such as by stock dividend, stock split,
recapitalization, reorganization, exchange of shares, liquidation, combination
or other change in corporate structure affecting the Shares) or make a
distribution of cash or property which has a substantial impact on the value of
issued Shares, the number of Shares covered by each outstanding Option and the
purchase price per Share under each outstanding Option shall be adjusted so that
the aggregate consideration payable to the Company and the value of each such
Option shall not be changed.

9.2 Notwithstanding any other provision of the Plan, and without affecting the
number of Shares reserved or available hereunder, the Administrator shall
authorize the issuance, continuation or assumption of outstanding Options or
provide for other equitable adjustments after changes in the Shares resulting
from any merger, consolidation, sale of assets, acquisition of property or
stock, recapitalization, reorganization or similar occurrence in which the
Company is the continuing or surviving corporation, upon such terms and
conditions as it may deem necessary to preserve Optionees' rights under the
Plan.

9.3 In the case of any sale of assets, merger, consolidation or combination of
the Company with or into another corporation other than a transaction in which
the Company is the continuing or surviving corporation and which does not result
in the outstanding Shares being converted into or exchanged for different
securities, cash or other property, or any combination thereof (an
"Acquisition"), any Optionee who holds an outstanding Option shall have the
right (subject to the provisions of the Plan and any limitation applicable to
the Option) thereafter and during the term of the Option, to receive upon
exercise thereof the Acquisition Consideration (as defined below) receivable

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upon the Acquisition by a holder of the number of Shares which would have been
obtained upon exercise of the Option or portion thereof, as the case may be,
immediately prior to the Acquisition. The term "Acquisition Consideration" shall
mean the kind and amount of shares of the surviving or new corporation, cash,
securities, evidence of indebtedness, other property or any combination thereof
receivable in respect of one Share of the Company upon consummation of an
Acquisition.

9.4  Notwithstanding anything to the contrary in this Article IX, if any of the
events or transactions described herein constitute a Change in Control, to the
extent that the CIC Price exceeds the exercise price of the related Options,
then in lieu of the adjustments provided for in this Article IX, the provisions
of Paragraph 6.4 shall apply and outstanding Options shall be cashed out as
provided for therein.

                            ARTICLE X--Effective Date

The Plan shall be submitted to the shareholders of the Company for adoption in
accordance with the provisions of Section 505 of the Business Corporation Law of
the State of New York and, if adopted by a majority of the votes cast at the
1998 annual meeting of shareholders, shall become effective as of the date of
adoption by shareholders.

                      ARTICLE XI--Miscellaneous Provisions

11.1 Governing Law. The validity, construction and effect of the Plan and any
actions taken or relating to the Plan shall be determined in accordance with the
laws of the State of New York and applicable Federal law.

11.2 Successors and Assigns. The Plan shall be binding on all successors and
permitted assigns of an Optionee, including, without limitation, the estate of
such Optionee and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the Optionee's creditors.

11.3 General Restriction. Each Option shall be subject to the requirement that,
if at any time the Administrator shall determine, in its sole discretion, that
the listing, registration or qualification of any Option under the Plan upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Options or the grant
or settlement thereof, such Option may not be exercised or settled in whole or
in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Administrator.

11.4 Future Rights. No Employee shall have any rights by reason of the grant of
any Options under the Plan to continue as an employee of the Company or any
subsidiary of the Company for any period of time, or at any particular rate of
compensation.

11.5 Rights as a Shareholder. An Optionee shall have no rights as a shareholder
with respect to shares covered by Options granted hereunder until the date of
issuance of a stock certificate therefor, and no adjustment will be made for
dividends or other rights for which the record date is prior to the date such
certificate is issued.

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11.6 Fractions of Shares. The Company shall not be required to issue fractions
of shares. Whenever under the terms of the Plan a fractional share would be
required to be issued the Optionee shall be paid in cash for such fractional
share based upon Fair Market Value at the time of exercise of the Option.

11.7 Term of the Plan. No Option shall be granted under the Plan after May 21,
2003. However, any Option theretofore granted may extend beyond such date and
continue to be exercisable pursuant to its terms for its remaining Exercise
Period.