10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

_______________

(Mark One)

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

For the quarterly period ended: March 31, 2014

OR

o 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 001-04471

XEROX CORPORATION

(Exact Name of Registrant as specified in its charter)

New York	16-0468020
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
P.O. Box 4505, 45 Glover Avenue Norwalk, Connecticut	06856-4505
(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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o  No ý

Class	Outstanding at March 31, 2014
Common Stock, $1 par value	1,167,321,219 shares

Xerox 2014 Form 10-Q

1

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and any exhibits to this Report may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. These statements reflect management's current beliefs, assumptions and expectations and are subject to a number of factors that may cause actual results to differ materially. These factors include but are not limited to: changes in economic conditions, political conditions, trade protection measures, licensing requirements and tax matters in the United States and in the foreign countries in which we do business; changes in foreign currency exchange rates; actions of competitors; our ability to obtain adequate pricing for our products and services and to maintain and improve cost efficiency of operations, including savings from restructuring actions and the relocation of our service delivery centers; the risk that multi-year contracts with governmental entities could be terminated prior to the end of the contract term; the risk in the hiring and retention of qualified personnel; the risk that unexpected costs will be incurred; the risk that subcontractors, software vendors and utility and network providers will not perform in a timely, quality manner; our ability to recover capital investments; the risk that our Services business could be adversely affected if we are unsuccessful in managing the start-up of new contracts; development of new products and services; our ability to protect our intellectual property rights; our ability to expand equipment placements; the risk that individually identifiable information of customers, clients and employees could be inadvertently disclosed or disclosed as a result of a breach of our security; service interruptions; interest rates, cost of borrowing and access to credit markets; reliance on third parties, including subcontractors, for manufacturing of products and provision of services; our ability to drive the expanded use of color in printing and copying; the outcome of litigation and regulatory proceedings to which we may be a party; and other factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section and other sections of this Quarterly Report on Form 10-Q and our 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments, except as required by law.

Xerox 2014 Form 10-Q

1

XEROX CORPORATION

FORM 10-Q

MARCH 31, 2014

TABLE OF CONTENTS

		Page
Part I — Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Income	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Capital Resources and Liquidity	36
	Financial Risk Management	40
	Non-GAAP Financial Measures	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42
Part II — Other Information
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 6.	Exhibits	44
Signatures		45
Exhibit Index		46

For additional information about Xerox Corporation and access to our Annual Reports to Shareholders and SEC filings, free of charge, please visit our website at www.xerox.com/investor. Any information on or linked from the website is not incorporated by reference into this Form 10-Q.

Xerox 2014 Form 10-Q

2

ITEM 1 — FINANCIAL STATEMENTS

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended March 31,
(in millions, except per-share data)	2014		2013
Revenues
Sales	$	1,272	$	1,293
Outsourcing, maintenance and rentals	3,749		3,792
Financing	100		117
Total Revenues	5,121		5,202
Costs and Expenses
Cost of sales	790		815
Cost of outsourcing, maintenance and rentals	2,748		2,758
Cost of financing	36		43
Research, development and engineering expenses	144		154
Selling, administrative and general expenses	961		1,040
Restructuring and asset impairment charges	27		(8		)
Amortization of intangible assets	84		83
Other expenses, net	40		17
Total Costs and Expenses	4,830		4,902
Income before Income Taxes and Equity Income	291		300
Income tax expense	49		50
Equity in net income of unconsolidated affiliates	42		47
Income from Continuing Operations	284		297
Income from discontinued operations, net of tax	2		3
Net Income	286		300
Less: Net income attributable to noncontrolling interests	5		4
Net Income Attributable to Xerox	$	281	$	296
Amounts Attributable to Xerox:
Net income from continuing operations	$	279	$	293
Net income from discontinued operations	2		3
Net Income Attributable to Xerox	$	281	$	296
Basic Earnings per Share:
Continuing operations	$	0.23	$	0.23
Discontinued operations	—		—
Total Basic Earnings per Share	$	0.23	$	0.23
Diluted Earnings per Share:
Continuing operations	$	0.23	$	0.23
Discontinued operations	—		—
Total Diluted Earnings per Share	$	0.23	$	0.23

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Xerox 2014 Form 10-Q

3

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended March 31,
(in millions)	2014			2013
Net income	$	286		$	300
Less: Net income attributable to noncontrolling interests	5			4
Net Income Attributable to Xerox	281			296
Other Comprehensive (Loss) Income, Net(1):
Translation adjustments, net	(1		)	(363		)
Unrealized gains (losses), net	26			(8		)
Changes in defined benefit plans, net	(84		)	103
Other Comprehensive Loss, Net Attributable to Xerox	(59		)	(268		)
Comprehensive Income, Net	227			32
Less: Comprehensive income, net attributable to noncontrolling interests	5			4
Comprehensive Income, Net Attributable to Xerox	$	222		$	28

(1) Refer to Note 16 - Other Comprehensive Income for gross components of Other Comprehensive Income, reclassification adjustments out of Accumulated Other Comprehensive Loss and related tax effects.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Xerox 2014 Form 10-Q

4

XEROX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share data in thousands)	March 31, 2014			December 31, 2013
Assets
Cash and cash equivalents	$	1,567		$	1,764
Accounts receivable, net	3,032			2,929
Billed portion of finance receivables, net	134			113
Finance receivables, net	1,501			1,500
Inventories	1,044			998
Other current assets	1,184			1,207
Total current assets	8,462			8,511
Finance receivables due after one year, net	2,844			2,917
Equipment on operating leases, net	541			559
Land, buildings and equipment, net	1,438			1,466
Investments in affiliates, at equity	1,384			1,285
Intangible assets, net	2,436			2,503
Goodwill	9,243			9,205
Other long-term assets	2,520			2,590
Total Assets	$	28,868		$	29,036
Liabilities and Equity
Short-term debt and current portion of long-term debt	$	2,109		$	1,117
Accounts payable	1,568			1,626
Accrued compensation and benefits costs	803			734
Unearned income	517			496
Other current liabilities	1,603			1,713
Total current liabilities	6,600			5,686
Long-term debt	5,896			6,904
Pension and other benefit liabilities	2,310			2,136
Post-retirement medical benefits	766			785
Other long-term liabilities	611			757
Total Liabilities	16,183			16,268
Series A Convertible Preferred Stock	349			349
Common stock	1,186			1,210
Additional paid-in capital	5,040			5,282
Treasury stock, at cost	(204		)	(252		)
Retained earnings	9,039			8,839
Accumulated other comprehensive loss	(2,838		)	(2,779		)
Xerox shareholders’ equity	12,223			12,300
Noncontrolling interests	113			119
Total Equity	12,336			12,419
Total Liabilities and Equity	$	28,868		$	29,036
Shares of common stock issued	1,186,278			1,210,321
Treasury stock	(18,957		)	(22,001		)
Shares of common stock outstanding	1,167,321			1,188,320

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Xerox 2014 Form 10-Q

5

XEROX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended March 31,
(in millions)	2014			2013
Cash Flows from Operating Activities:
Net income	$	286		$	300
Adjustments required to reconcile net income to cash flows from operating activities:
Depreciation and amortization	345			329
Provision for receivables	16			26
Provision for inventory	10			9
Net gain on sales of businesses and assets	(30		)	—
Undistributed equity in net income of unconsolidated affiliates	(42		)	(47		)
Stock-based compensation	26			31
Restructuring and asset impairment charges	27			(8		)
Payments for restructurings	(36		)	(38		)
Contributions to defined benefit pension plans	(37		)	(45		)
Increase in accounts receivable and billed portion of finance receivables	(239		)	(363		)
Collections of deferred proceeds from sales of receivables	120			115
Increase in inventories	(60		)	(107		)
Increase in equipment on operating leases	(57		)	(59		)
Decrease in finance receivables	36			96
Collections on beneficial interest from sales of finance receivables	21			2
Increase in other current and long-term assets	(94		)	(101		)
Increase (decrease) in accounts payable and accrued compensation	8			(94		)
Decrease in other current and long-term liabilities	(26		)	(66		)
Net change in income tax assets and liabilities	29			17
Net change in derivative assets and liabilities	(1		)	(47		)
Other operating, net	(16		)	(37		)
Net cash provided by (used in) operating activities	286			(87		)
Cash Flows from Investing Activities:
Cost of additions to land, buildings and equipment	(84		)	(85		)
Proceeds from sales of land, buildings and equipment	33			3
Cost of additions to internal use software	(19		)	(22		)
Acquisitions, net of cash acquired	(54		)	(53		)
Other investing, net	4			4
Net cash used in investing activities	(120		)	(153		)
Cash Flows from Financing Activities:
Net proceeds on debt	4			57
Common stock dividends	(68		)	(52		)
Preferred stock dividends	(6		)	(6		)
Proceeds from issuances of common stock	20			22
Excess tax benefits from stock-based compensation	3			1
Payments to acquire treasury stock, including fees	(275		)	(10		)
Repurchases related to stock-based compensation	(1		)	(10		)
Distributions to noncontrolling interests	(16		)	(3		)
Other financing	(10		)	—
Net cash used in financing activities	(349		)	(1		)
Effect of exchange rate changes on cash and cash equivalents	(14		)	(12		)
Decrease in cash and cash equivalents	(197		)	(253		)
Cash and cash equivalents at beginning of period	1,764			1,246
Cash and Cash Equivalents at End of Period	$	1,567		$	993

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Xerox 2014 Form 10-Q

6

XEROX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in millions, except per-share data and where otherwise noted)

Note 1 – Basis of Presentation

References herein to “we,” “us,” “our,” the “Company” and “Xerox” refer to Xerox Corporation and its consolidated subsidiaries unless the context suggests otherwise.

We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with the accounting policies described in our 2013 Annual Report on Form 10-K (2013 Annual Report), and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. You should read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements included in our 2013 Annual Report.

In our opinion, all adjustments which are necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented have been made. These adjustments consist of normal recurring items. Interim results of operations are not necessarily indicative of the results of the full year.

For convenience and ease of reference, we refer to the financial statement caption “Income before Income Taxes and Equity Income” as “pre-tax income.”

Note 2 – Recent Accounting Pronouncements

Except for the Accounting Standard Updates (ASU's) discussed below, the new ASU's issued by the FASB during the last year did not have any significant impact on the Company.

Cumulative Translation Adjustments:In March 2013, the FASB issued ASU 2013-05, Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.The objective of ASU 2013-05 is to resolve the diversity in practice regarding the release into net income of the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. This update was effective prospectively for our fiscal year beginning January 1, 2014, and did not have nor is it expected to have a material impact on our financial condition, results of operations or cash flows.

Income Taxes:In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update provides guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss or a tax credit carryforward, exists. This update was effective prospectively for our fiscal year beginning January 1, 2014. Upon adoption of this standard, we reclassified approximately $180 of liabilities for unrecognized tax benefits against deferred tax assets.

Service Concession Arrangements:In January 2014, the FASB issued ASU 2014-05, Service Concession Arrangements (Topic 853). This update specifies that an entity should not account for a service concession arrangement within the scope of this update as a lease in accordance with Topic 840, Leases. The update does not provide specific accounting guidance for various aspects of service concession arrangements but rather indicates that an entity should refer to other Topics as applicable to account for various aspects of a service concession arrangement. The update is effective for our fiscal year beginning January 1, 2015. The adoption of this standard is not expected to have a material effect on our financial condition, results of operation or cash flows.

Discontinued Operations:In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The update changes the requirements for reporting discontinued operations in Subtopic 205-20. A discontinued operation may include a component of an entity or a group of components of an entity, or a business. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business or a major equity method investment.

Xerox 2014 Form 10-Q

7

Additionally, the update requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. This update is effective prospectively for our fiscal year beginning January 1, 2015 and early adoption is permitted. The standard primarily involves presentation and disclosure and therefore is not expected to have a material impact on our financial condition, results of operations or cash flows.

Note 3 – Segment Reporting

Our reportable segments are aligned with how we manage the business and view the markets we serve. We report our financial performance based on the following two primary reportable segments – Services and Document Technology. Our Services segment operations involve delivery of a broad range of services, including business process, document and IT outsourcing. Our Document Technology segment includes the sale and support of a broad range of document systems from entry level to high-end.

The Services segment is comprised of three outsourcing service offerings:

• Business Process Outsourcing (BPO)

• Document Outsourcing (which includes Managed Print Services) (DO)

• Information Technology Outsourcing (ITO)

Business process outsourcing services include service arrangements where we manage a customer’s business activity or process. Document outsourcing services include service arrangements that allow customers to streamline, simplify and digitize document-intensive business processes through automation and deployment of software applications and tools and the management of their printing needs. Document outsourcing services also include revenues from our partner print services offerings. Information technology outsourcing services include service arrangements where we manage a customer’s IT-related activities, such as application management and application development, data center operations or testing and quality assurance.

Our Document Technology segment includes the sale of products that share common technology, manufacturing and product platforms. Our products groupings range from:

• “Entry,” which includes A4 devices and desktop printers; to

• “Mid-range,” which includes A3 devices that generally serve workgroup environments in midsize to large enterprises and includes products that fall into the following market categories: Color 41+ ppm priced at less than $100K and Light Production 91+ ppm priced at less than $100K; to

• “High-end,” which includes production printing and publishing systems that generally serve the graphic communications marketplace and large enterprises.

Customers range from small and mid-sized businesses to large enterprises. Customers also include graphic communication enterprises as well as channel partners including distributors and resellers. Segment revenues reflect the sale of document systems and supplies, technical services and product financing.

The segment classified as Other includes several units, none of which meet the thresholds for separate segment reporting. This group includes paper sales in our developing market countries, Wide Format Systems, licensing revenues, Global Imaging Systems network integration solutions and electronic presentation systems, non-allocated corporate items including non-financing interest, and other items included in Other expenses, net.

Xerox 2014 Form 10-Q

8

Operating segment revenues and profitability were as follows:

	Three Months Ended March 31,
	Segment Revenue		Segment Profit(Loss)
2014
Services	$	2,923	$	251
Document Technology	2,045		250
Other	153		(51		)
Total	$	5,121	$	450
2013
Services	$	2,920	$	273
Document Technology	2,135		187
Other	147		(70		)
Total	$	5,202	$	390

	Three Months Ended March 31,
Reconciliation to Pre-tax Income	2014			2013
Segment Profit	$	450		$	390
Reconciling items:
Restructuring and related costs(1)	(30		)	8
Restructuring charges of Fuji Xerox	(3		)	(4		)
Amortization of intangible assets	(84		)	(83		)
Litigation matters (Q1 2013 only)	—			37
Equity in net income of unconsolidated affiliates	(42		)	(47		)
Other	—			(1		)
Pre-tax Income	$	291		$	300

__________________________

(1) First quarter 2014 includes Restructuring and asset impairment charges of $27 and Business transformation costs of $3. Business transformation costs represent incremental costs incurred directly in support of our business transformation and restructuring initiatives.

Note 4 – Acquisitions

In January 2014, we acquired Invoco Holding GmbH (Invoco), a German company, for approximately $54 (€40 million) in cash. The acquisition of Invoco expands our European customer care services and provides our global customers immediate access to German-language customer care services and provides Invoco's existing customers access to our broad business process outsourcing capabilities. Invoco is included in our Services segment.

The operating results of this acquisition are not material to our financial statements and are included within our results from the acquisition date. The purchase price was allocated primarily to intangible assets and goodwill based on third-party valuations and management’s estimates.

Note 5 – Divestitures

In 2013, in connection with our decision to exit from the Paper distribution business, we completed the sale of our North American and European Paper businesses. As a result of these transactions, we reported these paper-related operations as Discontinued Operations and reclassified their results from the Other segment to Discontinued Operations in 2013. We recorded a net pre-tax loss on disposal of $25 in 2013 for the disposition of these businesses - $23 in third quarter 2013 and $2 in the fourth quarter 2013. In the first quarter 2014, we recorded net income of $2 in Discontinued Operation primarily representing adjustments of amounts previously recorded due to changes in estimates.

Xerox 2014 Form 10-Q

9

The components of Discontinued Operations for the periods presented are as follows:

	Three Months Ended March 31,
	2014		2013
Revenues	$	—	$	154
Income from operations	$	—	$	5
Gain on disposal	2		—
Net Income Before Income Taxes	2		5
Income tax expense	—		(2		)
Income From Discontinued Operations, Net of Tax	$	2	$	3

Note 6 – Accounts Receivable, Net

Accounts receivable, net were as follows:

	March 31, 2014			December 31, 2013
Amounts billed or billable	$	2,772		$	2,651
Unbilled amounts	364			390
Allowance for doubtful accounts	(104		)	(112		)
Accounts Receivable, Net	$	3,032		$	2,929

Unbilled amounts include amounts associated with percentage-of-completion accounting and other earned revenues not currently billable due to contractual provisions. Amounts to be invoiced in the subsequent month for current services provided are included in amounts billable, and at March 31, 2014 and December 31, 2013 were approximately $1,049 and $1,054, respectively.

We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. The allowance for uncollectible accounts receivable is determined principally on the basis of past collection experience as well as consideration of current economic conditions and changes in our customer collection trends.

Accounts Receivable Sales Arrangements

Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and liquidity management. We have facilities in the U.S., Canada and several countries in Europe that enable us to sell certain accounts receivable without recourse to third-parties. The accounts receivable sold are generally short-term trade receivables with payment due dates of less than 60 days.

All of our arrangements involve the sale of our entire interest in groups of accounts receivable for cash. In most instances a portion of the sales proceeds are held back by the purchaser and payment is deferred until collection of the related receivables sold. Such holdbacks are not considered legal securities nor are they certificated. We report collections on such receivables as operating cash flows in the Condensed Consolidated Statements of Cash Flows because such receivables are the result of an operating activity and the associated interest rate risk is de minimis due to its short-term nature. Our risk of loss following the sales of accounts receivable is limited to the outstanding deferred purchase price receivable. These receivables are included in the caption “Other current assets” in the accompanying Condensed Consolidated Balance Sheets and were $125 and $121 at March 31, 2014 and December 31, 2013, respectively.

Under most of the arrangements, we continue to service the sold accounts receivable. When applicable, a servicing liability is recorded for the estimated fair value of the servicing. The amounts associated with the servicing liability were not material.

Xerox 2014 Form 10-Q

10

Of the accounts receivable sold and derecognized from our balance sheet, $736 and $723 remained uncollected as of March 31, 2014 and December 31, 2013, respectively. Accounts receivable sales were as follows:

	Three Months Ended March 31,
	2014		2013
Accounts receivable sales	$	822	$	854
Deferred proceeds	124		115
Loss on sales of accounts receivable	4		4
Estimated increase to operating cash flows(1)	11		16

__________________________

(1) Represents the difference between current and prior period receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and (iii) currency.

Note 7 - Finance Receivables, Net

Sale of Finance Receivables

In the third and fourth quarters of 2013 and 2012, we transferred our entire interest in certain groups of lease finance receivables to third-party entities for cash proceeds and beneficial interests. The transfers met the requirements for derecognition according to ASC Topic 860, Transfers and Servicing and therefore were accounted for as sales with derecognition of the associated lease receivables. There were no finance receivable transfers in the three months ending March 31, 2014 and 2013. We continue to service the sold receivables and record servicing fee income over the expected life of the associated receivables. The following is a summary of our prior sales activity:

	Year Ended December 31,
(in millions)	2013		2012
Net carrying value (NCV) sold	$	676	$	682
Allowance included in NCV	17		18
Cash proceeds received	635		630
Beneficial interests received	86		101
Pre-tax gain on sales	40		44
Net fees and expenses	5		5

The principal value of the finance receivables derecognized from our balance sheet was $874 and $1,006 at March 31, 2014 and December 31, 2013, respectively (sale value of approximately $952 and $1,098, respectively).

Summary

The lease portfolios transferred and sold were all from our Document Technology segment and the gains on these sales were reported in Financing revenues within the Document Technology segment. The ultimate purchaser has no recourse to our other assets for the failure of customers to pay principal and interest when due beyond our beneficial interests which were $130 and $150 at March 31, 2014 and December 31, 2013, respectively, and are included in Other current assets and Other long-term assets in the accompanying Condensed Consolidated Balance Sheets. Beneficial interests of $108 and $124 at March 31, 2014 and December 31, 2013, respectively, are held by bankruptcy-remote subsidiaries and therefore are not available to satisfy any of our creditor obligations. We report collections on the beneficial interests as operating cash flows in the Consolidated Statements of Cash Flows because such beneficial interests are the result of an operating activity and the associated interest rate risk is de minimis considering their weighted average lives of less than 2 years.

Xerox 2014 Form 10-Q

11

The net impact from the sales of finance receivables on operating cash flows is summarized below:

	Three Months Ended March 31,
(in millions)	2014			2013
Net cash received for sales of finance receivables	$	—		$	—
Impact from prior sales of finance receivables(1)	(149		)	(91		)
Collections on beneficial interest	26			2
Estimated Decrease to Operating Cash Flows	$	(123	)	$	(89	)

____________________________ 

(1) Represents cash that would have been collected if we had not sold finance receivables.

Finance Receivables – Allowance for Credit Losses and Credit Quality

Finance receivables include sales-type leases, direct financing leases and installment loans. Our finance receivable portfolios are primarily in the U.S., Canada and Europe. We generally establish customer credit limits and estimate the allowance for credit losses on a country or geographic basis. Our policy and methodology used to establish our allowance for doubtful accounts has been consistently applied over all periods presented.

The following table is a rollforward of the allowance for doubtful finance receivables as well as the related investment in finance receivables:

Allowance for Credit Losses:	United States			Canada			Europe			Other(3)			Total
Balance at December 31, 2013	$	45		$	22		$	81		$	6		$	154
Provision	3			2			7			3			15
Charge-offs	(1		)	(4		)	(5		)	(2		)	(12		)
Recoveries and other(1)	1			—			—			—			1
Balance at March 31, 2014	$	48		$	20		$	83		$	7		$	158
Finance receivables as of March 31, 2014 collectively evaluated for impairment(2)	$	1,676		$	402		$	2,242		$	316		$	4,636
Balance at December 31, 2012	$	50		$	31		$	85		$	4		$	170
Provision	2			2			9			—			13
Charge-offs	(2		)	(4		)	(15		)	—			(21		)
Recoveries and other(1)	1			—			(3		)	—			(2		)
Balance at March 31, 2013	$	51		$	29		$	76		$	4		$	160
Finance receivables as of March 31, 2013 collectively evaluated for impairment(2)	$	1,991		$	756		$	2,304		$	211		$	5,262

__________________

(1) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.

(2) Total Finance receivables exclude residual values of $1 and $2, and the allowance for credit losses of $158 and $160 at March 31, 2014 and 2013, respectively.

(3) Includes developing market countries and smaller units.

We evaluate our customers based on the following credit quality indicators:

• Investment grade: This rating includes accounts with excellent to good business credit, asset quality and the capacity to meet financial obligations. These customers are less susceptible to adverse effects due to shifts in economic conditions or changes in circumstance. The rating generally equates to a Standard & Poors (S&P) rating of BBB- or better. Loss rates in this category are normally minimal at less than 1%.

• Non-investment grade: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. This rating generally equates to a BB S&P rating. Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base. In addition, the higher loss rates are largely offset by the higher rates of return we obtain on such leases. Loss rates in this category are generally in the range of 2% to 4%.

Xerox 2014 Form 10-Q

12

• Substandard: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. We use numerous strategies to mitigate risk including higher rates of interest, prepayments, personal guarantees, etc. Accounts in this category include customers who were downgraded during the term of the lease from investment and non-investment grade status when the lease was originated. Accordingly, there is a distinct possibility for a loss of principal and interest or customer default. The loss rates in this category are around 10%.

Credit quality indicators are updated at least annually and the credit quality of any given customer can change during the life of the portfolio. Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:

	March 31, 2014								December 31, 2013
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables		Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
Finance and other services	$	191	$	112	$	46	$	349	$	189	$	102	$	34	$	325
Government and education	632		8		4		644		656		12		3		671
Graphic arts	138		70		102		310		142		59		108		309
Industrial	93		30		16		139		92		28		15		135
Healthcare	73		24		20		117		74		25		16		115
Other	58		29		30		117		55		27		29		111
Total United States	1,185		273		218		1,676		1,208		253		205		1,666
Finance and other services	45		19		11		75		46		18		11		75
Government and education	87		8		2		97		96		9		1		106
Graphic arts	53		54		41		148		56		52		48		156
Industrial	21		12		4		37		23		12		6		41
Other	31		10		4		45		29		9		5		43
Total Canada(1)	237		103		62		402		250		100		71		421
France	279		304		145		728		282		314		122		718
U.K./Ireland	201		162		39		402		199		171		42		412
Central(2)	260		391		44		695		287		394		43		724
Southern(3)	105		178		47		330		102		187		58		347
Nordics(4)	26		60		1		87		46		42		3		91
Total Europe	871		1,095		276		2,242		916		1,108		268		2,292
Other	214		86		16		316		226		69		9		304
Total	$	2,507	$	1,557	$	572	$	4,636	$	2,600	$	1,530	$	553	$	4,683

_____________________________

(1) Historically the Company has included certain Canadian customers with graphic arts activity in their industry sector. In 2014, these customers were reclassified to Graphic Arts to better reflect their primary business activity. The December 31, 2013 amounts have been reclassified to move $33 of graphic arts customers out of Finance and Other Services and to move $38 out of Industrial to be consistent with the March 31, 2014 presentation.

(2) Switzerland, Germany, Austria, Belgium and Holland.

(3) Italy, Greece, Spain and Portugal.

(4) Sweden, Norway, Denmark and Finland.

Xerox 2014 Form 10-Q

13

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:

	March 31, 2014
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	9	$	2	$	1	$	12	$	337	$	349	$	12
Government and education	17		4		3		24		620		644		29
Graphic arts	13		2		1		16		294		310		9
Industrial	4		1		1		6		133		139		6
Healthcare	4		1		—		5		112		117		5
Other	3		1		—		4		113		117		4
Total United States	50		11		6		67		1,609		1,676		65
Canada	3		3		3		9		393		402		20
France	2		1		3		6		722		728		42
U.K./Ireland	—		3		1		4		398		402		3
Central(1)	3		3		3		9		686		695		20
Southern(2)	26		5		6		37		293		330		32
Nordics(3)	2		—		—		2		85		87		3
Total Europe	33		12		13		58		2,184		2,242		100
Other	8		1		—		9		307		316		—
Total	$	94	$	27	$	22	$	143	$	4,493	$	4,636	$	185
	December 31, 2013
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	7	$	2	$	1	$	10	$	315	$	325	$	12
Government and education	17		4		3		24		647		671		34
Graphic arts	12		1		—		13		296		309		5
Industrial	3		1		1		5		130		135		6
Healthcare	3		1		—		4		111		115		5
Other	3		1		—		4		107		111		3
Total United States	45		10		5		60		1,606		1,666		65
Canada	4		3		3		10		411		421		19
France	—		—		—		—		718		718		40
U.K./Ireland	1		1		—		2		410		412		2
Central(1)	3		2		3		8		716		724		23
Southern(2)	21		5		7		33		314		347		45
Nordics(3)	2		—		—		2		89		91		—
Total Europe	27		8		10		45		2,247		2,292		110
Other	8		1		—		9		295		304		—
Total	$	84	$	22	$	18	$	124	$	4,559	$	4,683	$	194

 _____________________________

(1) Switzerland, Germany, Austria, Belgium and Holland.

(2) Italy, Greece, Spain and Portugal.

(3) Sweden, Norway, Denmark and Finland.

Xerox 2014 Form 10-Q

14

Note 8 – Inventories

The following is a summary of Inventories by major category:

	March 31, 2014		December 31, 2013
Finished goods	$	872	$	837
Work-in-process	65		60
Raw materials	107		101
Total Inventories	$	1,044	$	998

Note 9 – Investment in Affiliates, at Equity

Our equity in net income of our unconsolidated affiliates was as follows:

	Three Months Ended March 31,
	2014		2013
Fuji Xerox	$	39	$	44
Other investments	3		3
Total Equity in Net Income of Unconsolidated Affiliates	$	42	$	47

Fuji Xerox

Equity in net income of Fuji Xerox is affected by certain adjustments required to reflect the deferral of profit associated with intercompany sales. These adjustments may result in recorded equity income that is different from that implied by our 25% ownership interest.

Condensed financial data of Fuji Xerox was as follows:

	Three Months Ended March 31,
	2014		2013
Summary of Operations:
Revenues	$	3,021	$	3,028
Costs and expenses	2,801		2,784
Income before income taxes	220		244
Income tax expense	58		61
Net Income	162		183
Less: Net income – noncontrolling interests	1		1
Net Income – Fuji Xerox	$	161	$	182
Weighted Average Exchange Rate(1)	102.67		92.64

_____________________________

(1) Represents Yen/U.S. Dollar exchange rate used to translate.

Note 10 – Restructuring Programs

During the three months ended March 31, 2014, we recorded net restructuring and asset impairment charges of $27, which included approximately $28 of severance costs related to headcount reductions of approximately 1,250 employees worldwide, $1 of lease cancellations and $4 of asset impairments. These costs were offset by $6 of net reversals, primarily resulting from changes in estimated reserves from prior period initiatives.

Xerox 2014 Form 10-Q

15

Information related to restructuring program activity during the three months ended March 31, 2014 is outlined below:

	Severance and Related Costs			Lease Cancellation and Other Costs			Asset Impairments(2)			Total
Balance at December 31, 2013	$	109		$	7		$	—		$	116
Provision	28			1			4			33
Reversals	(6		)	—			—			(6		)
Net Current Period Charges(1)	22			1			4			27
Charges against reserve and currency	(35		)	(2		)	(4		)	(41		)
Balance at March 31, 2014	$	96		$	6		$	—		$	102

_____________________________

(1) Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown.

(2) Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded concurrently with the recognition of the provision.

Reconciliation to the Condensed Consolidated Statements of Cash Flows:

	Three Months Ended March 31,
	2014			2013
Charges against reserve	$	(41	)	$	(37	)
Asset impairments	4			—
Effects of foreign currency and other non-cash items	1			(1		)
Restructuring Cash Payments	$	(36	)	$	(38	)

The following table summarizes the total amount of costs incurred in connection with these restructuring programs by segment:

	Three Months Ended March 31,
	2014		2013
Services	$	10	$	(2	)
Document Technology	16		(6		)
Other	1		—
Total Net Restructuring Charges	$	27	$	(8	)

Note 11 – Debt

Credit facility

On March 18, 2014, we entered into an Amended and Restated Credit Agreement that extended the maturity date of our $2.0 billion unsecured revolving Credit Facility to March 18, 2019 from December 2016. The amendment also included modest improvements in pricing and minor changes in the composition of the group of lenders. The amended and restated Credit Facility retains certain provisions from the existing Credit Facility including the $300 letter of credit sub-facility and the accordion feature that would allow us to increase (from time to time, with willing lenders) the overall size of the facility up to an aggregate amount not to exceed $2.75 billion. We also have the right to request a one year extension on each of the first and second anniversary of the amendment date.

We deferred $7 of debt issuance costs in connection with this amendment, which includes approximately $4 of unamortized deferred debt issue costs associated with the existing Credit Facility. The write-off of debt issuance costs associated with lenders that reduced their participation in the amended and restated Credit Facility was not material.

At March 31, 2014, we had no outstanding borrowings or letters of credit under our Credit Facility.

Xerox 2014 Form 10-Q

16

Interest Expense and Income

Interest expense and interest income were as follows:

	Three Months Ended March 31,
	2014		2013
Interest expense(1)	$	100	$	104
Interest income(2)	102		120

____________

(1) Includes Equipment financing interest, as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

(2) Includes Finance income, as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

Net (Payments) Proceeds on Debt

Net proceeds on debt as shown on the Condensed Consolidated Statements of Cash Flows was as follows: 

	Three Months Ended March 31,
	2014			2013
Net proceeds on short-term debt	$	1		$	36
Proceeds from issuance of long-term debt	18			25
Payments on long-term debt(1)	(15		)	(4		)
Net Proceeds on Debt	$	4		$	57

____________

(1) Includes current maturities.

Note 12 – Financial Instruments

Interest Rate Risk Management

We use interest rate swap agreements to manage our interest rate exposure and to achieve a desired proportion of variable and fixed rate debt. These derivatives may be designated as fair value hedges or cash flow hedges depending on the nature of the risk being hedged.

Fair Value Hedges

As of March 31, 2014, pay variable/receive fixed interest rate swaps with notional amounts of $300 and net liability fair value of $3 were designated and accounted for as fair value hedges. The swaps were structured to hedge the fair value of related debt by converting them from fixed rate instruments to variable rate instruments. No ineffective portion was recorded to earnings during 2014. We did not have any interest rate swaps outstanding at December 31, 2013.

The following is a summary of our fair value hedges at March 31, 2014:

Debt Instrument	Year First Designated	Notional Amount		Net Fair Value			Weighted Average Interest Rate Paid		Interest Rate Received		Basis	Maturity
Senior Note 2021	2014	$	300	$	(3	)	2.42	%	4.5	%	Libor	2021

Xerox 2014 Form 10-Q

17

Foreign Exchange Risk Management

We are a global company that is exposed to foreign currency exchange rate fluctuations in the normal course of our business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily forward contracts and purchased option contracts, to hedge the following foreign currency exposures, thereby reducing volatility of earnings or protecting fair values of assets and liabilities:

• Foreign currency-denominated assets and liabilities

• Forecasted purchases and sales in foreign currency

Summary of Foreign Exchange Hedging Positions

At March 31, 2014, we had outstanding forward exchange and purchased option contracts with gross notional values of $2,994, which is reflective of the amounts that are normally outstanding at any point during the year. Approximately 68% of these contracts mature within three months, 9% in three to six months and 23% in six to twelve months.

The following is a summary of the primary hedging positions and corresponding fair values as of March 31, 2014:

Currency Hedged (Buy/Sell)	Gross Notional Value		Fair  Value Asset (Liability)(1)
Euro/U.K. Pound Sterling	$	769	$	(4	)
Japanese Yen/U.S. Dollar	487		(8		)
Canadian Dollar/Euro	409		(4		)
U.S. Dollar/Euro	397		(1		)
Japanese Yen/Euro	378		(11		)
U.K. Pound Sterling/Euro	167		—
Philippine Peso/U.S. Dollar	52		—
Mexican Peso/U.S. Dollar	47		1
Swiss Franc/Euro	44		—
Indian Rupee/U.S. Dollar	41		3
Euro/Danish Krone	29		—
Mexican Peso/Euro	24		—
All Other	150		(1		)
Total Foreign Exchange Hedging	$	2,994	$	(25	)

__________________

(1) Represents the net receivable (payable) amount included in the Condensed Consolidated Balance Sheet at March 31, 2014.

Foreign Currency Cash Flow Hedges

We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases, sales and expenses. No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or loss was included in the assessment of hedge effectiveness. The net liability fair value of these contracts was $16 and $50 as of March 31, 2014 and December 31, 2013, respectively.

Xerox 2014 Form 10-Q

18

Summary of Derivative Instruments Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments:

Designation of Derivatives	Balance Sheet Location	March 31, 2014			December 31, 2013
Derivatives Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	4		$	1
	Other current liabilities	(20		)	(51		)
Interest rate swaps	Other long-term liabilities	(3		)	—
	Net Designated Derivative Liability	$	(19	)	$	(50	)
Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	5		$	5
	Other current liabilities	(14		)	(19		)
	Net Undesignated Derivative Liability	$	(9	)	$	(14	)
Summary of Derivatives	Total Derivative Assets	$	9		$	6
	Total Derivative Liabilities	(37		)	(70		)
	Net Derivative Liability	$	(28	)	$	(64	)

Summary of Derivative Instruments Gains (Losses)

Derivative gains (losses) affect the income statement based on whether such derivatives are designated as hedges of underlying exposures. The following is a summary of derivative gains (losses).

Designated Derivative Instruments Gains (Losses)

The following tables provide a summary of gains (losses) on derivative instruments:

Derivatives in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income	Derivative Gain (Loss) Recognized in income					Hedged Item Gain (Loss) Recognized in Income
		Three Months Ended March 31,					Three Months Ended March 31,
		2014			2013		2014		2013
Interest Rate Contracts	Interest Expense	$	(3	)	$	—	$	3	$	—

Derivatives in Cash Flow Hedging Relationships	Derivative Gain (Loss) Recognized in OCI (Effective Portion)					Location of Derivative Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Gain (Loss) Reclassified from AOCI to Income (Effective Portion)
	Three Months Ended March 31,						Three Months Ended March 31,
	2014		2013				2014			2013
Foreign exchange contracts – forwards	$	18	$	(34	)	Cost of sales	$	(21	)	$	(17	)

No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain (loss) was included in the assessment of hedge effectiveness. In addition, no amount was recorded for an underlying exposure that did not occur or was not expected to occur.

At March 31,2014, net after-tax losses of $11 were recorded in accumulated other comprehensive loss associated with our cash flow hedging activity. The entire balance is expected to be reclassified into net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

Xerox 2014 Form 10-Q

19

Non-Designated Derivative Instruments Gains (Losses)

Non-designated derivative instruments are primarily instruments used to hedge foreign currency-denominated assets and liabilities. They are not designated as hedges since there is a natural offset for the re-measurement of the underlying foreign currency-denominated asset or liability.

The following table provides a summary of gains (losses) on non-designated derivative instruments:

Derivatives NOT Designated as Hedging Instruments		Three Months Ended March 31,
	Location of Derivative Gain (Loss)	2014		2013
Foreign exchange contracts – forwards	Other expense – Currency losses, net	$	—	$	(15	)

During the three months ended March 31,2014 and March 31,2013, Currency (loss) gains, net were $(1) and $4, respectively. Net Currency gains and losses are included in Other expenses, net and include the mark-to market adjustments of the derivatives not designated as hedging instruments and the related cost of those derivatives, as well as the re-measurement of foreign currency-denominated assets and liabilities.

Note 13 – Fair Value of Financial Assets and Liabilities

The following table represents assets and liabilities measured at fair value on a recurring basis. The basis for the measurement at fair value in all cases is Level 2 – Significant Other Observable Inputs.

	March 31, 2014		December 31, 2013
Assets:
Foreign exchange contracts-forwards	$	9	$	6
Deferred compensation investments in cash surrender life insurance	90		88
Deferred compensation investments in mutual funds	30		28
Total	$	129	$	122
Liabilities:
Foreign exchange contracts-forwards	$	34	$	70
Interest rate swaps	3		—
Deferred compensation plan liabilities	127		125
Total	$	164	$	195

We utilize the income approach to measure the fair value for our derivative assets and liabilities. The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates and forward prices, and therefore are classified as Level 2.

Fair value for our deferred compensation plan investments in Company-owned life insurance is reflected at cash surrender value. Fair value for our deferred compensation plan investments in mutual funds is based on quoted market prices for actively traded investments similar to those held by the plan. Fair value for deferred compensation plan liabilities is based on the fair value of investments corresponding to employees’ investment selections, based on quoted prices for similar assets in actively traded markets.

Xerox 2014 Form 10-Q

20

Summary of Other Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

The estimated fair values of our other financial assets and liabilities not measured at fair value on a recurring basis were as follows:

	March 31, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	1,567	$	1,567	$	1,764	$	1,764
Accounts receivable, net	3,032		3,032		2,929		2,929
Short-term debt	2,109		2,114		1,117		1,126
Long-term debt	5,896		6,374		6,904		7,307

The fair value amounts for Cash and cash equivalents and Accounts receivable, net, approximate carrying amounts due to the short maturities of these instruments. The fair value of Short- and Long-term debt was estimated based on quoted market prices for publicly-traded securities or on the current rates offered to us for debt of similar maturities. The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at such date.

Note 14 – Employee Benefit Plans

The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows for the three months ended March 31:

	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Retiree Health
	2014			2013			2014			2013			2014			2013
Components of Net Periodic Benefit Costs:
Service cost	$	2		$	2		$	9		$	22		$	2		$	2
Interest cost	40			37			69			64			9			9
Expected return on plan assets	(38		)	(44		)	(87		)	(77		)	—			—
Recognized net actuarial loss	2			7			14			19			—			1
Amortization of prior service credit	—			—			(1		)	—			(11		)	(11		)
Recognized settlement loss	12			48			—			—			—			—
Defined Benefit Plans	18			50			4			28			—			1
Defined contribution plans	16			19			11			7			—			—
Net Periodic Benefit Cost	34			69			15			35			—			1
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income:
Net actuarial loss(1)	197			—			—			—			—			—
Amortization of prior service credit	—			—			1			—			11			11
Amortization of net actuarial loss	(14		)	(55		)	(14		)	(19		)	—			(1		)
Total Recognized in Other Comprehensive Income(2)	183			(55		)	(13		)	(19		)	11			10
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	$	217		$	14		$	2		$	16		$	11		$	11

_____________________________

(1) The net actuarial loss for U.S. Plans in the first quarter 2014 is related to the remeasurement of our primary U.S. pension plans as a result of the payment of periodic settlements. The loss in the first quarter 2014 primarily reflects the decrease in discount rates during the period as compared to the discount rates from our annual measurement of the plans at December 31, 2013.

(2) Amounts represent the pre-tax effect included within Other comprehensive income. Refer to Note 16 - Other Comprehensive Income for related tax effects and the after-tax amounts.

Contributions

During the three months ended March 31, 2014, we made cash contributions of $37 ($6 U.S. and $31 Non-U.S.) to our defined benefit pension plans and $25 to our retiree health benefit plans. We presently anticipate additional cash contributions of $213 ($84 U.S. and $129 Non-U.S.) to our defined benefit pension plans and $46 to our

Xerox 2014 Form 10-Q

21

retiree health benefit plans in 2014 for total full-year cash contributions of approximately $250 ($90 U.S. and $160 Non-U.S.) to our defined benefit pension plans and $71 to our retiree health benefit plans.

Note 15 – Shareholders’ Equity

	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL(1)			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2013	$	1,210		$	5,282		$	(252	)	$	8,839		$	(2,779	)	$	12,300		$	119		$	12,419
Comprehensive income (loss), net	—			—			—			281			(59		)	222			5			227
Cash dividends declared- common stock(2)	—			—			—			(75		)	—			(75		)	—			(75		)
Cash dividends declared - preferred stock(3)	—			—			—			(6		)	—			(6		)	—			(6		)
Conversion of notes to common stock	1			8			—			—			—			9			—			9
Stock option and incentive plans, net	3			45			—			—			—			48			—			48
Payments to acquire treasury stock, including fees	—			—			(275		)	—			—			(275		)	—			(275		)
Cancellation of treasury stock	(28		)	(295		)	323			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(11		)	(11		)
Balance at March 31, 2014	$	1,186		$	5,040		$	(204	)	$	9,039		$	(2,838	)	$	12,223		$	113		$	12,336

	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL(1)			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2012	$	1,239		$	5,622		$	(104	)	$	7,991		$	(3,227	)	$	11,521		$	143		$	11,664
Comprehensive income (loss), net	—			—			—			296			(268		)	28			4			32
Cash dividends declared-common stock(2)	—			—			—			(73		)	—			(73		)	—			(73		)
Cash dividends declared-preferred stock(3)	—			—			—			(6		)	—			(6		)	—			(6		)
Stock option and incentive plans, net	5			36			—			—			—			41			—			41
Payments to acquire treasury stock, including fees	—			—			(10		)	—			—			(10		)	—			(10		)
Cancellation of treasury stock	(16		)	(98		)	114			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(2		)	(2		)
Balance at March 31, 2013	$	1,228		$	5,560		$	—		$	8,208		$	(3,495	)	$	11,501		$	145		$	11,646

_____________________________

(1) Refer to Note 16 - Other Comprehensive Income for components of AOCL.

(2) Cash dividends declared on common stock of $0.0625 per share in the first quarter of 2014 and $0.0575 per share in the first quarter of 2013.

(3) Cash dividends declared on preferred stock of $20.00 per share in the first quarter of 2014 and 2013.

Treasury Stock

The following is a summary of the purchases of common stock made during the three months ended March 31, 2014 under our authorized stock repurchase programs (shares in thousands):

	Shares		Amount
December 31, 2013	22,001		$	252
Purchases (1)	24,950		275
Cancellations	(27,994	)	(323		)
March 31, 2014	18,957		$	204

____________________________

(1) Includes associated fees.

Xerox 2014 Form 10-Q

22

Note 16 - Other Comprehensive Income

Other Comprehensive Income is comprised of the following:

	Three Months Ended March 31,
	2014						2013
	Pre-tax			Net of Tax			Pre-tax			Net of Tax
Translation Adjustments Gains (Losses)	$	2		$	(1	)	$	(363	)	$	(363	)
Unrealized Gains (Losses):
Changes in fair value of cash flow hedges - gains (losses)	18			13			(34		)	(22		)
Changes in cash flow hedges reclassed to earnings(1)	21			14			17			12
Other (losses) gains	(1		)	(1		)	2			2
Net Unrealized Gains (Losses)	38			26			(15		)	(8		)
Defined Benefit Plans (Losses) Gains:
Net actuarial losses	(197		)	(122		)	—			—
Prior service amortization(2)	(12		)	(7		)	(11		)	(7		)
Actuarial loss amortization(2)	28			19			75			49
Fuji Xerox changes in defined benefit plans, net(3)	27			27			(16		)	(16		)
Other (losses) gains(4)	(1		)	(1		)	77			77
Change in Defined Benefit Plans (Losses) Gains	(155		)	(84		)	125			103
Other Comprehensive Loss Attributable to Xerox	$	(115	)	$	(59	)	$	(253	)	$	(268	)

_____________________________

(1) Reclassified to Cost of sales - refer to Note 12 - Financial Instruments for additional information regarding our cash flow hedges.

(2) Reclassified to Total Net Periodic Benefit Cost - refer to Note 14 - Employee Benefit Plans for additional information.

(3) Represents our share of Fuji Xerox's benefit plan changes.

(4) Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits included in AOCL.

Accumulated Other Comprehensive Loss (AOCL)

AOCL is comprised of the following:

	March 31, 2014			December 31, 2013
Cumulative translation adjustments	$	(1,011	)	$	(1,010	)
Benefit plans net actuarial losses and prior service credits(1)	(1,816		)	(1,732		)
Other unrealized losses, net	(11		)	(37		)
Total Accumulated Other Comprehensive Loss Attributable to Xerox	$	(2,838	)	$	(2,779	)

_____________________________

(1) Includes our share of Fuji Xerox.

Xerox 2014 Form 10-Q

23

Note 17 – Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share of common stock (shares in thousands):

	Three Months Ended March 31,
	2014			2013
Basic Earnings per Share:
Net income from continuing operations attributable to Xerox	$	279		$	293
Accrued dividends on preferred stock	(6		)	(6		)
Adjusted Net Income From Continuing Operations Available to Common Shareholders	273			287
Net income from discontinued operations attributable to Xerox	2			3
Adjusted Net Income Available to Common Shareholders	$	275		$	290
Weighted-average common shares outstanding	1,178,828			1,225,271
Basic Earnings per Share:
Continuing operations	$	0.23		$	0.23
Discontinued operations	—			—
Total	$	0.23		$	0.23
Diluted Earnings per Share:
Net income from continuing operations attributable to Xerox	$	279		$	293
Accrued dividends on preferred stock	—			—
Interest on convertible securities, net	—			—
Adjusted Net Income From Continuing Operations Available to Common Shareholders	$	279		$	293
Net income from discontinued operations attributable to Xerox	2			3
Adjusted Net Income Available to Common Shareholders	$	281		$	296
Weighted-average common shares outstanding	1,178,828			1,225,271
Common shares issuable with respect to:
Stock options	3,580			4,854
Restricted stock and performance shares	15,021			21,372
Convertible preferred stock	26,966			26,966
Convertible securities	332			1,992
Adjusted Weighted Average Common Shares Outstanding	1,224,727			1,280,455
Diluted Earnings per Share:
Continuing operations	$	0.23		$	0.23
Discontinued operations	—			—
Total	$	0.23		$	0.23
The following securities were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive (shares in thousands):
Stock options	7,742			25,230
Restricted stock and performance shares	19,183			18,412
Total Anti-Dilutive Securities	26,925			43,642
Dividends per Common Share	$	0.0625		$	0.0575

Xerox 2014 Form 10-Q

24

Note 18 – Contingencies and Litigation

Legal Matters

As more fully discussed below, we are involved in a variety of claims, lawsuits, investigations and proceedings concerning securities law, intellectual property law, environmental law, employment law and the Employee Retirement Income Security Act (ERISA). We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We assess our potential liability by analyzing our litigation and regulatory matters using available information. We develop our views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs.

Brazil Tax and Labor Contingencies

Our Brazilian operations are involved in various litigation matters and have received or been the subject of numerous governmental assessments related to indirect and other taxes, as well as disputes associated with former employees and contract labor. The tax matters, which comprise a significant portion of the total contingencies, principally relate to claims for taxes on the internal transfer of inventory, municipal service taxes on rentals, gross revenue taxes and import taxes and duties. We are disputing these tax matters and intend to vigorously defend our position. Based on the opinion of legal counsel and current reserves for those matters deemed probable of loss, we do not believe that the ultimate resolution of these matters will materially impact our results of operations, financial position or cash flows.The labor matters principally relate to claims made by former employees and contract labor for the equivalent payment of all social security and other related labor benefits, as well as consequential tax claims, as if they were regular employees.

As of March 31, 2014, the total amounts related to the unreserved portion of the tax and labor contingencies, inclusive of any related interest, amounted to approximately $1 billion with the increase from December 31, 2013 balance of approximately $933, primarily related to currency and interest. With respect to the unreserved balance of $1 billion, the majority has been assessed by management as being remote as to the likelihood of ultimately resulting in a loss to the company. In connection with the above proceedings, customary local regulations may require us to make escrow cash deposits or post other security of up to half of the total amount in dispute. As of March 31, 2014, we had $171 of escrow cash deposits for matters we are disputing, and there are liens on certain Brazilian assets with a net book value of $8 and additional letters of credit of approximately $254, which include associated indexation. Generally, any escrowed amounts would be refundable and any liens would be removed to the extent the matters are resolved in our favor. We routinely assess all these matters as to probability of ultimately incurring a liability against our Brazilian operations and record our best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable.

Litigation Against the Company

In re Xerox Corporation Securities Litigation: A consolidated securities law action (consisting of 17 cases) is pending in the United States District Court for the District of Connecticut. Defendants are the Company, Barry Romeril, Paul Allaire and G. Richard Thoman. The consolidated action is a class action on behalf of all persons and entities who purchased Xerox Corporation common stock during the period October 22, 1998 through October 7, 1999 inclusive (Class Period) and who suffered a loss as a result of misrepresentations or omissions by Defendants as alleged by Plaintiffs (the “Class”). The Class alleges that in violation of Section 10(b) and/or 20(a) of the Securities Exchange Act of 1934, as amended (1934 Act), and SEC Rule 10b-5 thereunder, each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of the Company’s common stock during the Class Period by disseminating materially false and misleading statements and/or concealing material facts relating to the defendants’ alleged failure to disclose the material negative impact that the April 1998 restructuring had on the Company’s operations and revenues. The complaint further alleges that the alleged scheme: (i) deceived the investing public regarding the economic capabilities, sales proficiencies, growth, operations and the intrinsic value of the Company’s common stock; (ii) allowed several corporate insiders, such as the named individual defendants, to sell shares of privately held common stock of the Company while in possession of materially adverse, non-public information; and (iii) caused

Xerox 2014 Form 10-Q

25

the individual plaintiffs and the other members of the purported class to purchase common stock of the Company at inflated prices. The complaint seeks unspecified compensatory damages in favor of the plaintiffs and the other members of the purported class against all defendants, jointly and severally, for all damages sustained as a result of defendants’ alleged wrongdoing, including interest thereon, together with reasonable costs and expenses incurred in the action, including counsel fees and expert fees. In 2001, the Court denied the defendants’ motion for dismissal of the complaint. The plaintiffs’ motion for class certification was denied by the Court in 2006, without prejudice to refiling. In February 2007, the Court granted the motion of the International Brotherhood of Electrical Workers Welfare Fund of Local Union No. 164, Robert W. Roten, Robert Agius (Agius) and Georgia Stanley to appoint them as additional lead plaintiffs. In July 2007, the Court denied plaintiffs’ renewed motion for class certification, without prejudice to renewal after the Court holds a pre-filing conference to identify factual disputes the Court will be required to resolve in ruling on the motion. After that conference and Agius’s withdrawal as lead plaintiff and proposed class representative, in February 2008 plaintiffs filed a second renewed motion for class certification. In April 2008, defendants filed their response and motion to disqualify Milberg LLP as a lead counsel. On September 30, 2008, the Court entered an order certifying the class and denying the appointment of Milberg LLP as class counsel. Subsequently, on April 9, 2009, the Court denied defendants’ motion to disqualify Milberg LLP. On November 6, 2008, the defendants filed a motion for summary judgment. On March 29, 2013, the Court granted defendants' motion for summary judgment in its entirety. On April 26, 2013, plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit. The appeal process is ongoing. The individual defendants and we deny any wrongdoing and are vigorously defending the action. At this time, we do not believe it is reasonably possible that we will incur additional material losses in excess of the amount we have already accrued for this matter. In the course of litigation, we periodically engage in discussions with plaintiffs’ counsel for possible resolution of this matter. Should developments cause a change in our determination as to an unfavorable outcome, or result in a final adverse judgment or a settlement for a significant amount, there could be a material adverse effect on our results of operations, cash flows and financial position in the period in which such change in determination, judgment or settlement occurs.

Other Contingencies

We have issued or provided the following guarantees as of March 31, 2014:

• $490 for letters of credit issued to (i) guarantee our performance under certain services contracts; (ii) support certain insurance programs; and (iii) support our obligations related to the Brazil tax and labor contingencies.

• $740 for outstanding surety bonds. Certain contracts, primarily those involving public sector customers, require us to provide a surety bond as a guarantee of our performance of contractual obligations.

In general, we would only be liable for the amount of these guarantees in the event of default in our performance of our obligations under each contract; the probability of which we believe is remote. We believe that our capacity in the surety markets as well as under various credit arrangements (including our Credit Facility) is sufficient to allow us to respond to future requests for proposals that require such credit support.

We have service arrangements where we service third party student loans in the Federal Family Education Loan program (FFEL) on behalf of various financial institutions. We service these loans for investors under outsourcing arrangements and do not acquire any servicing rights that are transferable by us to a third party. At March 31, 2014, we serviced a FFEL portfolio of approximately 3.1 million loans with an outstanding principal balance of approximately $44.5 billion. Some servicing agreements contain provisions that, under certain circumstances, require us to purchase the loans from the investor if the loan guaranty has been permanently terminated as a result of a loan default caused by our servicing error. If defaults caused by us are cured during an initial period, any obligation we may have to purchase these loans expires. Loans that we purchase may be subsequently cured, the guaranty reinstated and the loans repackaged for sale to third parties. We evaluate our exposure under our purchase obligations on defaulted loans and establish a reserve for potential losses, or default liability reserve, through a charge to the provision for loss on defaulted loans purchased. The reserve is evaluated periodically and adjusted based upon management’s analysis of the historical performance of the defaulted loans. As of March 31, 2014, other current liabilities include reserves of approximately $2 for losses on defaulted loans purchased.

Xerox 2014 Form 10-Q

26

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis (MD&A) is intended to help the reader understand the results of operations and financial condition of Xerox Corporation. MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying notes.

Throughout this document, references to “we,” “our,” the “Company,” and “Xerox” refer to Xerox Corporation and its subsidiaries. References to “Xerox Corporation” refer to the stand-alone parent company and do not include its subsidiaries.

To understand the trends in the business, we believe that it is helpful to analyze the impact of changes in the translation of foreign currencies into U.S. dollars on revenue and expenses. We refer to this analysis as “currency impact” or “the impact from currency.” This includes translating the most recent financial results of operations using foreign currency of the earliest period presented. Currencies for our developing market countries (Latin America, Brazil, the Middle East, India, Eurasia and Central-Eastern Europe) are reflected at actual exchange rates for all periods presented, since these countries generally have volatile currency and inflationary environments, and our operations in these countries have historically implemented pricing actions to recover the impact of inflation and devaluation. We do not hedge the translation effect of revenues or expenses denominated in currencies where the local currency is the functional currency.

Overview

First quarter 2014 results reflect the benefits of our diversified portfolio of businesses as well as improved performance across a number of areas including Document Technology, Document Outsourcing and Commercial Business Processing Outsourcing (BPO), including Commercial Healthcare. These improvements were partially offset by challenges in our Government Healthcare business.

Total revenue of $5.1 billion for the three months ended March 31, 2014 declined 2% from the prior year with no impact from currency. Services segment revenues were flat as compared to the prior year as growth in Document Outsourcing (DO) and Information Technology Outsourcing (ITO) was offset by lower BPO revenue. Services segment revenues represent 57% of total revenues. Services segment margin of 8.6% decreased 0.7-percentage points as compared to the prior year primarily due to incremental costs associated with the implementation of our new Medicaid and health insurance exchange platforms. Document Technology segment revenues declined by 4% with a 1% positive impact from currency. The decline reflects the continued migration of customers to Xerox managed print services (included in our Services segment), weakness in developing markets and price declines as well as the impacts from the prior period sales of finance receivables. Document Technology segment margin of 12.2% increased by 3.4-percentage points as compared to the prior year, reflecting the benefits from productivity improvements and restructuring, lower pension expense and favorable currency impacts.

Net income from continuing operations attributable to Xerox for the three months ended March 31, 2014 was $279 million and included $52 million of after-tax amortization of intangibles. Net income from continuing operations attributable to Xerox for the three months ended March 31, 2013 was $293 million and included $51 million of after-tax amortization of intangibles.

Cash flow from operations was $286 million for the three months ended March 31, 2014, as compared to an $87 million use in the prior year period. The increase reflects improvements from accounts receivables and accounts payables, in part reflecting timing, as well as an improvement in inventory due to a higher level of inventory in 2013 related to our ConnectKey product launch. Cash used in investing activities of $120 million reflects capital expenditures of $103 million and acquisitions of $54 million partially offset by $33 million of proceeds from the sale of surplus real estate. Cash used in financing activities was $349 million, reflecting $74 million for dividends and $275 million for share repurchases.

As a result of the slower than anticipated start in Services revenue, we expect full year 2014 revenue in the range of flat to slightly down with contributions from acquisitions coming later in the year. Full year 2014 earnings are expected to be impacted by a lower than previously expected Services segment margin partially offset by a modest upside in Document Technology segment margin and a lower full-year tax rate. We will continue to improve our cost infrastructure and align our investments and capital consistent with expected market opportunities.

Xerox 2014 Form 10-Q

27

Financial Review

Revenues

	Three Months Ended March 31,								Three Months Ended March 31,
(in millions)	2014			2013			% Change		% of Total Revenue 2014		% of Total Revenue 2013
Equipment sales	$	715		$	724		(1	)%	14	%	14	%
Annuity revenue	4,406			4,478			(2	)%	86	%	86	%
Total Revenue	$	5,121		$	5,202		(2	)%	100	%	100	%
Reconciliation to Condensed Consolidated Statements of Income:
Sales	$	1,272		$	1,293		(2	)%
Less: Supplies, paper and other sales	(557		)	(569		)	(2	)%
Equipment Sales	$	715		$	724		(1	)%
Outsourcing, maintenance and rentals	$	3,749		$	3,792		(1	)%
Add: Supplies, paper and other sales	557			569			(2	)%
Add: Financing	100			117			(15	)%
Annuity Revenue	$	4,406		$	4,478		(2	)%

First quarter 2014 Total revenues decreased 2% as compared to the first quarter 2013, with no impact from currency, and reflected the following:

• Annuity revenue decreased 2% as compared to the first quarter 2013, with no impact from currency. Annuity revenue is comprised of the following:

◦ Outsourcing, maintenance and rentals revenue of $3,749 million includes outsourcing revenue within our Services segment and maintenance revenue (including bundled supplies) and rental revenue, both primarily within our Document Technology segment.The decrease of 1% was primarily driven by an decrease in the Document Technology segment.

◦ Supplies, paper and other sales of $557 million includes unbundled supplies and other sales, primarily within our Document Technology segment. The decrease of 2% was driven by moderately lower supplies demand.

◦ Financing revenueis generated from financed sale transactions primarily within our Document Technology segment. The decrease of 15% reflects a lower finance receivable balance primarily as a result of prior period sales of finance receivables and lower originations due to decreased equipment sales. See "Sales of Finance Receivables" section for further discussion.

• Equipment sales revenueis reported primarily within our Document Technology segment and the document outsourcing business within our Services segment.Equipment sales revenue decreased 1% as compared to the first quarter 2013, including a 1-percentage point positive impact from currency. Benefits from product introductions and a positive mix impact were more than offset by lower sales in developing markets and overall price declines ranging from 5% to 10%, which is consistent with prior periods.

Additional analysis of the change in revenue for each business segment is included in the “Segment Review” section.

Xerox 2014 Form 10-Q

28

Costs, Expenses and Other Income

Summary of Key Financial Ratios

	Three Months Ended March 31,
	2014		2013		Change
Total Gross Margin	30.2	%	30.5	%	(0.3) pts
RD&E as a % of Revenue	2.8	%	3.0	%	(0.2) pts
SAG as a % of Revenue	18.8	%	20.0	%	(1.2) pts
Operating Margin(1)	8.6	%	7.5	%	1.1 pts
Pre-tax Income Margin	5.7	%	5.8	%	(0.1) pts

Operating Margin

First quarter 2014 operating margin¹ of 8.6% increased 1.1-percentage points as compared to the first quarter 2013, driven primarily by a 1.4-percentage point improvement in operating expenses as a percent of revenue partially offset by a decline in gross margin of 0.3-percentage points. This operating margin improvement reflects continued productivity and restructuring benefits partially offset by pressure on Services margins from higher government healthcare platform expenses and the run-off of the student loan business. As anticipated, gross margin, SAG and RD&E benefited from lower year-over-year pension expense and settlement losses and we expect these benefits to continue throughout 2014, but at a lower amount than in the first quarter.

(1)Refer to the Operating Margin reconciliation table in the Non-GAAP Financial Measures section.

Gross Margins

Total gross margin for the first quarter 2014 of 30.2% decreased 0.3-percentage points as compared to the first quarter 2013. While the Document Technology segment gross margin increased 1.2-percentage points, a decrease of 0.7-percentage points in the Services segment gross margin, along with the impact of a higher mix of Services revenue, resulted in the overall decrease in gross margin.

Research, Development and Engineering Expenses (RD&E)

	Three Months Ended March 31,
(in millions)	2014		2013		Change
R&D	$	113	$	126	$	(13	)
Sustaining engineering	31		28		3
Total RD&E Expenses	$	144	$	154	$	(10	)

First quarter 2014 RD&E as a percentage of revenue of 2.8% was lower by 0.2-percentage points from the first quarter 2013. Benefits from the higher mix of Services revenue (which historically has lower RD&E as a percentage of revenue), lower spending and productivity improvements exceeded the overall revenue decline on a percentage basis.

RD&E of $144 million was $10 million lower than the first quarter 2013, reflecting the impact of restructuring and productivity improvements.

Innovation continues to be a core strength and we continue to invest at levels that enhance our innovation, particularly in Services, color and software. Xerox R&D is strategically coordinated with Fuji Xerox.

Selling, Administrative and General Expenses (SAG)

SAG as a percentage of revenue of 18.8% decreased 1.2-percentage points from the first quarter 2013. The decrease was driven primarily by the higher mix of Services revenue (which historically has lower SAG as a percentage of revenue), restructuring and productivity improvements, lower compensation and benefit related expenses and lower bad debt expense. The net reduction in SAG spending exceeded the overall revenue decline on a percentage basis.

Xerox 2014 Form 10-Q

29

SAG of $961 million was $79 million lower than the first quarter 2013. This included a $3 million unfavorable impact from currency for the quarter. SAG expenses reflect the following:

• $32 million decrease in selling expenses.

• $37 million decrease in general and administrative expenses.

• $10 million decrease in bad debt expenses to $14 million, primarily due to a recovery against a prior period write-off. Bad debt expense for the quarter remained at less than one percent of receivables.

Restructuring and Asset Impairment Charges

During the first quarter 2014, we recorded net restructuring and asset impairment charges of $27 million, which included approximately $28 million of severance costs related to headcount reductions of approximately 1,250 employees worldwide, $1 million of lease cancellation costs and $4 million of asset impairments. Included within these amounts are approximately $4 million of severance costs and asset impairments associated with the decision to shut down a Services business in Latin America. These costs were partially offset by $6 million of net reversals for changes in estimated reserves from prior period initiatives.

During the first quarter 2013, we recorded net restructuring and asset impairment credits of $8 million, primarily resulting from net reversals and adjustments in estimated reserves from prior period initiatives.

The restructuring reserve balance as of March 31, 2014, for all programs was $102 million, of which approximately $96 million is expected to be spent over the next twelve months.

We expect to incur additional restructuring charges of approximately $0.02 per diluted share in the second quarter of 2014, for actions and initiatives which have not yet been finalized.

Refer to Note 10 - Restructuring Programs, in the Condensed Consolidated Financial Statements for additional information regarding our restructuring programs.

Worldwide Employment

Worldwide employment of approximately 141,400 at March 31, 2014 decreased by approximately 1,700 from December 31, 2013, primarily due to restructuring-related actions and normal attrition outpacing hiring and the impact of acquisitions.

Other Expenses, Net

	Three Months Ended March 31,
(in millions)	2014			2013
Non-financing interest expense	$	64		$	61
Interest income	(2		)	(2		)
Gains on sales of businesses and assets	(30		)	—
Currency losses (gains), net	1			(4		)
Litigation matters	(1		)	(37		)
Loss on sales of accounts receivable	4			4
Deferred compensation investment gains	(2		)	(6		)
All other expenses, net	6			1
Total Other Expenses, Net	$	40		$	17

Note: Total Other Expenses, Net with the exception of Deferred compensation investment gains are included in the Other segment. Deferred compensation investment gains are included in the Services segment together with the related deferred compensation expense.

Non-Financing Interest Expense:Non-financing interest expense for the three months ended March 31, 2014 of $64 million was $3 million higher than the prior year comparable period. However, when non-financing interest expense is combined with financing interest expense (cost of financing), total company interest expense declined by $4 million from the prior year comparable period, primarily driven by a lower average debt balance partially offset by a moderately higher average cost of debt.

Xerox 2014 Form 10-Q

30

Gains on Sales of Businesses and Assets: Gains on sales of businesses and assets in the first quarter 2014 was primarily the result of a $30 million gain on the sale of a surplus facility in Latin America.

Litigation Matters: Litigation matters for the three months ended March 31, 2013 of $(37) million primarily reflects the benefit resulting from a reserve reduction related to litigation developments in the first quarter 2013.

Income Taxes

First quarter 2014 effective tax rate was 16.8%. On an adjusted basis¹, the first quarter 2014 tax rate was 21.6%, which was lower than the U.S. statutory tax rate primarily due to a net benefit of approximately $33 million resulting from the redetermination of certain unrecognized tax positions upon conclusion of several audits as will as foreign tax creditsfrom anticipated dividends.

The effective tax rate for the three months ended March 31, 2013 was 16.7%. On an adjusted basis¹ the tax rate for the three months ended March 31, 2013 was 21.4%. The adjusted tax rates for the three months were lower than the U.S. statutory tax rate primarily due to foreign tax credits resulting from anticipated dividends and other foreign transactions and the retroactive tax benefits from the American Taxpayer Relief Act of 2012 tax law change of approximately $19 million.

Xerox operations are widely dispersed. The statutory tax rate in most non-U.S. jurisdictions is lower than the combined U.S. and state tax rate. The amount of income subject to these lower foreign rates relative to the amount of U.S. income will impact our effective tax rate. However, no one country outside of the U.S. is a significant factor to our overall effective tax rate. Certain foreign income is subject to U.S. tax net of any available foreign tax credits. Our full-year effective tax rate includes a benefit of approximately 10 percentage points from these non-U.S. operations, which is comparable to 2013.

Our effective tax rate is based on nonrecurring events as well as recurring factors, including the taxation of foreign income. In addition, our effective tax rate will change based on discrete or other nonrecurring events that may not be predictable. Excluding the effects of intangibles amortization, we anticipate that our effective tax rate for the remaining quarters of 2014 will be approximately 25% to 27% and for the full year we anticipate it will be approximately 24% to 26%.

(1) Refer to the Effective Tax Rate reconciliation table in the Non-GAAP Financial Measures section.

Equity in Net Income of Unconsolidated Affiliates

	Three Months Ended March 31,
(in millions)	2014		2013
Total equity in net income of unconsolidated affiliates	$	42	$	47
Fuji Xerox after-tax restructuring costs included in equity income	3		4

Equity in net income of unconsolidated affiliates primarily reflects our 25% share of Fuji Xerox net income. The decrease in equity income is due primarily to negative translation currency impact.

Net Income from Continuing Operations

First quarter 2014 net income from continuing operations attributable to Xerox was $279 million, or $0.23 per diluted share. On an adjusted basis¹, net income from continuing operations attributable to Xerox was $331 million, or $0.27 per diluted share and reflects the adjustment for amortization of intangible assets.

First quarter 2013 net income from continuing operations attributable to Xerox was $293 million, or $0.23 per diluted share. On an adjusted basis¹, net income from continuing operations attributable to Xerox was $344 million, or $0.27 per diluted share and reflected adjustments for the amortization of intangible assets.

(1) Refer to the Net Income and EPS reconciliation table in the Non-GAAP Financial Measures section.

Xerox 2014 Form 10-Q

31

Discontinued Operations

In 2013, in connection with our decision to exit from the Paper distribution business, we completed the sale of our North American (N.A.) and Western European Paper businesses. As a result of these transactions, we reported these paper-related operations as Discontinued Operations and reclassified their results from the Other segment to Discontinued Operations in 2013. We recorded a net pre-tax loss on disposal of $25 million in 2013 for the disposition of these businesses. In the first quarter 2014, we recorded income of $2 million in discontinued operations primarily representing adjustments to the loss on disposal recorded in 2013 due to changes in estimates.

Refer to Note 5 - Divestitures, in the Condensed Consolidated Financial Statements for additional information regarding discontinued operations.

Net Income

First quarter 2014 net income attributable to Xerox was $281 million, or $0.23 per diluted share. First quarter 2013 net income attributable to Xerox was $296 million, or $0.23 per diluted share.

Other Comprehensive Income

First quarter 2014 Other comprehensive loss attributable to Xerox was $59 million as compared to a $268 million loss in the first quarter 2013. The decreased loss of $209 million was primarily due to a significant decrease in the losses from the translation of our foreign currency denominated net assets in the first quarter 2014 as compared to the first quarter 2013, which was only partially offset by net changes in our defined benefit plans. The lower amount of translation losses are primarily the result of a relatively flat movement of our major foreign currencies against the U.S. Dollar in the first quarter of 2014 as compared to a significant weakening in the first quarter of 2013. Refer to Note 14 - Employee Benefit Plans, in the Condensed Consolidated Financial Statements for additional information regarding net changes in our defined benefit plans.

Segment Review

	Three Months Ended March 31,
(in millions)	Equipment Sales Revenue		Annuity Revenue		Total Revenue		% of Total Revenue		Segment Profit (Loss)			Segment Margin
2014
Services	$	116	$	2,807	$	2,923	57	%	$	251		8.6	%
Document Technology	576		1,469		2,045		40	%	250			12.2	%
Other	23		130		153		3	%	(51		)	(33.3	)%
Total	$	715	$	4,406	$	5,121	100	%	$	450		8.8	%
2013
Services	$	100	$	2,820	$	2,920	56	%	$	273		9.3	%
Document Technology	597		1,538		2,135		41	%	187			8.8	%
Other	27		120		147		3	%	(70		)	(47.6	)%
Total	$	724	$	4,478	$	5,202	100	%	$	390		7.5	%

Services

Our Services segment comprises three service offerings: Business Process Outsourcing (BPO), Document Outsourcing (DO) and Information Technology Outsourcing (ITO).

Xerox 2014 Form 10-Q

32

Revenue

	Three Months Ended March 31,
(in millions)	2014			2013			Change
Business Processing Outsourcing	$	1,767		$	1,802		(2	)%
Document Outsourcing	823			788			4	%
Information Technology Outsourcing	378			375			1	%
Less: Intra-segment elimination	(45		)	(45		)	—	%
Total Services Revenue	$	2,923		$	2,920		—	%

_______________

Note: The 2013 BPO and ITO revenues have been revised to conform to the 2014 presentation of revenues.

First quarter 2014 Services total revenue of $2,923 million was 57% of total revenue and was essentially flat with the first quarter 2013, with no impact from currency.

• BPO revenue decreased 2% and represented 59% of total Services revenue. The anticipated run-off of the student loan business had a 2% negative impact on BPO revenue growth in the quarter. Growth in the commercial and government healthcare businesses and in the commercial European BPO businesses was offset by lower volumes in portions of our customer care and government and transportation businesses.

◦ First quarter 2014 BPO revenue mix across the major business areas was as follows: commercial 45%, government and transportation 25%. commercial healthcare 17% and government healthcare 13%.

• DO revenue increased 4% and represented 28% of total Services revenue. DO growth was driven primarily by our partner print services offerings and improvement in Europe.

• ITO revenue increased 1% and represented 13% of total Services revenue. ITO growth was driven by the continued revenue ramp from prior period signings and strength in our healthcare offerings. As expected, ITO growth continues to decelerate as compared to prior quarters

Considering the slower than anticipated start in Services revenue in the first quarter 2014 and the delayed contribution from acquisitions, we expect Services revenues will grow approximately 3% for the full year 2014. However, we expect revenue growth to average in the mid-single digits in the second half of the year reflecting a ramp in signings, renewals, a strong pipeline and acquisitions as well as the lessening impact from the run-off of the student loan business.

Segment Margin

First quarter 2014 Services segment margin of 8.6% decreased 0.7-percentage points from the first quarter 2013, driven primarily by a gross margin decline of 0.7-percentage points, as margin improvements in DO, commercial BPO and commercial healthcare were more than offset by decreased margin in government healthcare. Productivity improvements and restructuring benefits were not enough to offset higher expenses in the government healthcare business associated with the implementation of our Medicaid and Health Insurance Exchange platforms, the anticipated run-off of the student loan business and price declines that were consistent with prior periods. SAG and RD&E combined improved moderately overall and as a percent of revenue. The higher than anticipated government healthcare platform costs had a 0.7-percentage point negative impact on segment margin.

Full year 2014 Services segment margin is expected to be flat to 0.4-percentage points lower as compared to full year 2013 segment margin of 9.8%, reflecting our first quarter 2014 performance and expectations for continued higher costs in government healthcare. Longer term, we expect to continue to take actions to improve our mix to higher value offerings while continuing to drive productivity and cost structure improvements.

Xerox 2014 Form 10-Q

33

Metrics

Pipeline:Our total Services sales pipeline grew 9% over the first quarter 2013. This sales pipeline includes the Total Contract Value (TCV) of new business opportunities that potentially could be contracted within the next six months and excludes business opportunities with estimated annual recurring revenue in excess of $100 million.

Signings:Signings are defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts.

Signings were as follows:

(in millions)	Three Months Ended March 31, 2014
BPO	$	2.1
DO	0.7
ITO	0.2
Total Signings	$	3.0

Signings on a trailing twelve month basis increased 1% in relation to the comparable prior year period. Signings decreased 20% as compared to the first quarter 2013, primarily due to a much lower level of renewal decisions than in first quarter 2013, and lower new business signings which were partially impacted by customer decision delays. New business annual recurring revenue (ARR) and non-recurring revenue (NRR) decreased 7% from the first quarter 2013, partially attributable to customer decision delays in the quarter. The above DO signings amount does not include signings from our partner print services offerings.

Note: TCV is the estimated total revenue for future contracts for the pipeline or signed contracts for signings, as applicable.

Renewal Rate (BPO and ITO): Renewal rate is defined as the ARR on contracts that are renewed during the period as a percentage of ARR on all contracts on which a renewal decision was made during the period. The first quarter 2014 contract renewal rate for BPO and ITO contracts was 91%, which was 2-percentage points higher than the first quarter 2013 and exceeded target range of 85% to 90%. Although the renewal rate was higher, total renewal decisions were lower than the first quarter 2013.

Document Technology

Our Document Technology segment includes the sale of products and supplies, as well as the associated maintenance and financing of those products.

Revenue

	Three Months Ended March 31,				Change
(in millions)	2014		2013
Equipment sales	$	576	$	597	(4	)%
Annuity revenue	1,469		1,538		(4	)%
Total Revenue	$	2,045	$	2,135	(4	)%

Xerox 2014 Form 10-Q

34

First quarter 2014 Document Technology revenue of $2,045 million decreased 4% from the first quarter 2013, including a 1-percentage point positive impact from currency. Document Technology revenue excludes the impact of growth in Document Outsourcing. Inclusive of Document Outsourcing, first quarter 2014 aggregate document-related revenue decreased 2% from the first quarter 2013. Document Technology segment revenue results included the following:

• Equipment sales revenue decreased by 4% from the first quarter 2013 with no impact from currency. Equipment sales continue to benefit from product refreshes in 2013, growth and acquisitions in the small and mid-sized business market and increased demand for color digital production presses. These benefits were more than offset by the continued migration of customers to our growing partner print services offering (included in our Services segment), weakness in developing markets and price declines, which were in the historical 5% to 10% range.

• Annuity revenue decreased by 4% from the first quarter 2013, including a 1-percentage point positive impact from currency. The decrease reflects a modest decline in total pages, weakness in developing markets and a continued decline in financing revenue as a result of prior period sales of finance receivables and lower originations. Annuity revenue is also impacted by the continued migration of customers to our partner print services offering (included in our Services segment).

• Document Technology revenue mix was 57% mid-range, 22% high-end and 21% entry, consistent with recent quarters.

Total revenue declines are expected to remain at the mid-single digit level for the Document Technology segment. The 2014 expected revenue decline for the Document Technology segment is consistent with the trend we have experienced for this segment over the past two years as we continue to transform the company from a technology-based equipment company to a document outsourcing services-based entity and customers continue to migrate their business to more services-based offerings. These services-based offerings are reported within our Services segment. This business is also heavily impacted by price and page declines. Consistent with this trend, annual revenue declines are expected in future years. 

Segment Margin

First quarter 2014 Document Technology segment margin of 12.2% increased by 3.4-percentage points from the first quarter 2013, driven by a 1.2-percentage point increase in gross margin as the benefits from restructuring, cost productivities, lower pension expense and settlement losses, and favorable currency on Yen-based purchases more than offset price declines. SAG and RD&E benefits from restructuring, productivity improvements and lower pension and settlement losses more than offset the impact of overall lower revenues on a percentage basis.

We expect Document Technology segment margin to remain strong and be at the high end of our target range of 9 to 11% for the full-year 2014. We continue to maintain our focus on productivity and cost improvements in light of the expected decline in revenues.

Total Installs (Document Technology and Document Outsourcing¹)

Install activity includes installations for document outsourcing and Xerox-branded products shipped to Global Imaging Systems. Details by product groups is shown below:

Entry:Installs for the first quarter 2014:

• 20% increase in color multifunction devices driven by demand for the WorkCentre^® products.

• 2% increase in color printers.

• 4% decrease in black-and-white multifunction devices driven by developing markets.

Mid-Range:Installs for the first quarter 2014 :

• 7% increase in mid-range color devices driven by demand for the ConnectKey products.

• 14% decrease in of mid-range black-and-white devices.

High-End:Installs for the first quarter 2014:

• 33% increase in high-end color systems driven by growth in the Color J75 and C75 Presses and the iGen as we continue to strengthen our market leadership in the Production Color segment. Excluding Fuji Xerox DFE sales, high-end color installs increased 47%.

• 14% decrease in high-end black-and-white systems, reflecting decreased demand across our DocuPrint and Nuvera product lines.

Xerox 2014 Form 10-Q

35

Note: Install activity percentages include installations for Document Outsourcing and the Xerox-branded product shipments to Global Imaging Systems. Descriptions of “Entry”, “Mid-range” and “High-end” are defined in Note 3 - Segment Reporting, in the Condensed Consolidated Financial Statements.

____________________

(1) Equipment sales associated with Document Outsourcing are reported in our Services segment revenue.

Other

Revenue

First quarter 2014 Other revenue of $153 million increased 4% from the first quarter 2013, with a 1-percentage point positive impact from currency. The increase is due primarily to higher sales of electronic presentation systems. After the aforementioned presentation of our N.A. and European Paper distribution businesses as discontinued operations, total paper revenue (all within developing markets) comprised approximately 40% of the first quarter 2014 Other segment revenue.

Segment Margin

First quarter 2014 Other segment loss of $51 million decreased $19 million from the first quarter 2013, primarily driven by the previously discussed gain on the sale of the surplus facility in Latin America partially offset by increased non-financing interest expense and currency impacts. Non-financing interest expense as well as all Other expenses, net (excluding Deferred compensation investment gains) are reported within the Other segment.

Capital Resources and Liquidity

As of March 31, 2014 and December 31, 2013, total cash and cash equivalents were $1,567 million and $1,764 million, respectively. There were no borrowings under our Commercial Paper Program or letters of credit under our $2 billion Credit Facility at March 31, 2014 and December 31, 2013.

Cash Flow Analysis

The following table summarizes our cash and cash equivalents:

	Three Months Ended March 31,						Change
(in millions)	2014			2013
Net cash provided by (used in) operating activities	$	286		$	(87	)	$	373
Net cash used in investing activities	(120		)	(153		)	33
Net cash used in financing activities	(349		)	(1		)	(348		)
Effect of exchange rate changes on cash and cash equivalents	(14		)	(12		)	(2		)
Decrease in cash and cash equivalents	(197		)	(253		)	56
Cash and cash equivalents at beginning of period	1,764			1,246			518
Cash and Cash Equivalents at End of Period	$	1,567		$	993		$	574

Cash Flows from Operating Activities

Net cash provided by operating activities was $286 million in the first quarter 2014. The $373 million increase in operating cash from the first quarter 2013 was primarily due to the following:

• $82 million increase in pre-tax income before depreciation and amortization, restructuring and litigation.

• $129 million increase from accounts receivable primarily due to lower year-end 2013 accelerated collection programs such as early pay discounts.

• $102 million increase in accounts payable and accrued compensation primarily related to the timing of accounts payable payments.

• $47 million increase primarily due to higher levels of inventory in the first quarter 2013 to support the ConnectKey product launch.

• $46 million increase due to the timing of settlements of foreign currency derivative contracts. These derivatives primarily relate to hedges of Yen inventory purchases.

• $41 million decrease due to lower net run-off of finance receivables primarily related to the impact from the prior period sales of receivables. See "Sales of Finance Receivables" for further discussion.

Xerox 2014 Form 10-Q

36

We continue to expect that cash flows from operations will be between $1.8 and $2.0 billion for 2014, which includes the adverse impact of prior period sales of finance receivables of approximately $400 million. No sales of finance receivables are planned for 2014.

Cash Flows from Investing Activities

Net cash used in investing activities was $120 million in the first quarter 2014. The $33 million decrease in the use of cash from the first quarter 2013 was primarily due to proceeds from the sale of a surplus facility in Latin America.

Cash Flows from Financing Activities

Net cash used in financing activities was $349 million in the first quarter 2014. The $348 million increase in the use of cash from the first quarter 2013 was primarily due to the following:

• $53 million lower net proceeds on debt primarily due to the prior year increase of $40 million in Commercial Paper.

• $265 million increase in share repurchase activity.

• $29 million increase due to higher common stock dividends of $16 million as well as distributions to noncontrolling interests of $13 million.

Customer Financing Activities and Debt

The following represents our Total finance assets, net associated with our lease and finance operations:

(in millions)	March 31, 2014		December 31, 2013
Total Finance receivables, net(1)	$	4,479	$	4,530
Equipment on operating leases, net	541		559
Total Finance Assets, net(2)	$	5,020	$	5,089

___________________________

(1) Includes (i) billed portion of finance receivables, net, (ii) finance receivables, net and (iii) finance receivables due after one year, net as included in our Condensed Consolidated Balance Sheets.

(2) The change from December 31, 2013 includes an decrease of $22 million due to currency across all Finance Assets, with the remainder due primarily to repayments exceeding new originations.

Our lease contracts permit customers to pay for equipment over time rather than at the date of installation; therefore, we maintain a certain level of debt (that we refer to as financing debt) to support our investment in these lease contracts, which are reflected in Total Finance assets, net. For this financing aspect of our business, we maintain an assumed 7:1 leverage ratio of debt to equity as compared to our finance assets. Based on this leverage, the following represents the breakdown of total debt between financing debt and core debt:

(in millions)	March 31, 2014		December 31, 2013
Financing debt(1)	$	4,393	$	4,453
Core debt	3,612		3,568
Total Debt	$	8,005	$	8,021

____________________________

(1) Financing debt includes $3,919 million and $3,964 million as of March 31, 2014 and December 31, 2013, respectively, of debt associated with Total finance receivables, net and is the basis for our calculation of “Equipment financing interest” expense. The remainder of the financing debt is associated with Equipment on operating leases.

Xerox 2014 Form 10-Q

37

The following summarizes the components of our debt:

(in millions)	March 31, 2014			December 31, 2013
Principal debt balance(1)	$	7,975		$	7,979
Net unamortized discount	(56		)	(58		)
Fair value adjustments(2)	86			100
Total Debt	$	8,005		$	8,021

____________________________

(1) Includes Notes Payable of $6 million and $5 million as of March 31, 2014 and December 31, 2013, respectively.

(2) Fair value adjustments include the following - (i) fair value adjustments to debt associated with terminated interest rate swaps, which are being amortized to interest expense over the remaining term of the related notes; and (ii) changes in fair value of hedged debt obligations attributable to movements in benchmark interest rates. Hedge accounting requires hedged debt instruments to be reported inclusive of any fair value adjustment.

Credit Facility

In March 2014, we entered into an Amended and Restated Credit Agreement that extended the maturity date of our $2.0 billion unsecured revolving Credit Facility to March 2019 from December 2016. The amendment also included modest improvements in pricing and minor changes in the composition of the group of lenders.

At March 31, 2014 we had no outstanding borrowings or letters of credit under our Credit Facility.

Refer to Note 11 - Debt in the Condensed Consolidated Financial Statements for additional information.

Sales of Accounts Receivable

Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and liquidity management. We have facilities in the U.S., Canada and several countries in Europe that enable us to sell to third-parties, on an on-going basis, certain accounts receivables without recourse. The accounts receivables sold are generally short-term trade receivables with payment due dates of less than 60 days.

Accounts receivables sales were as follows:

	Three Months Ended March 31,
(in millions)	2014		2013
Accounts receivable sales	$	822	$	854
Deferred proceeds	124		115
Loss on sales of accounts receivable	4		4
Estimated increase to operating cash flows(1)	11		16

____________________________

(1) Represents the difference between current and prior period receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter, and (iii) currency.

Refer to Note 6 - Accounts Receivable, Net in the Condensed Consolidated Financial Statements for additional information.

Sales of Finance Receivables

In the third and fourth quarters of 2013 and 2012, we transferred our entire interest in certain groups of lease finance receivables to third-party entities. The transfers were accounted for as sales and resulted in the derecognition of the lease receivables with a net carrying value of $676 million and $682 million, respectively, and associated pre-tax gains of $40 million and $44 million, respectively. We continue to service the sold receivables and record servicing fee income over the expected life of the associated receivables.

Xerox 2014 Form 10-Q

38

The net impact on operating cash flows from these transactions for the periods presented is summarized below:

	Three Months Ended March 31,
(in millions)	2014			2013
Net cash received for sales of finance receivables	$	—		$	—
Impact from prior sales of finance receivables(1)	(149		)	(91		)
Collections on beneficial interest	26			2
Estimated Decrease to Operating Cash Flows	$	(123	)	$	(89	)

______________ 

(1) Represents cash that would have been collected if we had not sold finance receivables.

Refer to Note 7 - Finance Receivables, Net in the Condensed Consolidated Financial Statements for additional information.

Liquidity and Financial Flexibility

We manage our worldwide liquidity using internal cash management practices, which are subject to (1) the statutes, regulations and practices of each of the local jurisdictions in which we operate, (2) the legal requirements of the agreements to which we are a party and (3) the policies and cooperation of the financial institutions we utilize to maintain and provide cash management services.

Our principal debt maturities are in line with historical and projected cash flows and are spread over the next ten years as follows (in millions):

Year	Amount
2014 Q2	$	1,070
2014 Q3	12
2014 Q4	11
2015	1,287
2016	979
2017	1,022
2018	1,013
2019	1,157
2020	7
2021	1,067
2022	—
2023 and thereafter	350
Total	$	7,975

Treasury Stock

During the first quarter 2014, we repurchased 24.9 million shares for an aggregate cost of $275 million, including fees. Through April 28, 2014, we repurchased an additional 5.2 million shares at an aggregate cost of $59.2 million, including fees, for a cumulative total of 523.6 million shares at a cost of $5.7 billion, including fees.

We increased our expected full year 2014 total share repurchases from at least $500 million, previously disclosed, to at least $700 million.

Xerox 2014 Form 10-Q

39

Financial Risk Management

We are exposed to market risk from changes in foreign currency exchange rates and interest rates, which could affect operating results, financial position and cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. These derivative financial instruments are utilized to hedge economic exposures, as well as to reduce earnings and cash flow volatility resulting from shifts in market rates. We enter into limited types of derivative contracts, including interest rate swap agreements, foreign currency spot, forward and swap contracts and net purchased foreign currency options to manage interest rate and foreign currency exposures. Our primary foreign currency market exposures include the Yen, Euro and Pound Sterling. The fair market values of all our derivative contracts change with fluctuations in interest rates and/or currency rates and are designed so that any changes in their values are offset by changes in the values of the underlying exposures. Derivative financial instruments are held solely as risk management tools and not for trading or speculative purposes.

We are required to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. As permitted, certain of these derivative contracts have been designated for hedge accounting treatment. Certain of our derivatives that do not qualify for hedge accounting are effective as economic hedges. These derivative contracts are likewise required to be recognized each period at fair value and therefore do result in some level of volatility. The level of volatility will vary with the type and amount of derivative hedges outstanding, as well as fluctuations in the currency and interest rate markets during the period. The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.

By their nature, all derivative instruments involve, to varying degrees, elements of market and credit risk. The market risk associated with these instruments resulting from currency exchange and interest rate movements is expected to offset the market risk of the underlying transactions, assets and liabilities being hedged. We do not believe there is significant risk of loss in the event of non-performance by the counterparties associated with these instruments because these transactions are executed with a diversified group of major financial institutions. Further, our policy is to deal with counterparties having a minimum investment grade or better credit rating. Credit risk is managed through the continuous monitoring of exposures to such counterparties.

The current market events have not required us to materially modify or change our financial risk management strategies with respect to our exposures to interest rate and foreign currency risk. Refer to Note 12 – Financial Instruments in the Condensed Consolidated Financial Statements for further discussion and information on our financial risk management strategies.

Non-GAAP Financial Measures

We have reported our financial results in accordance with generally accepted accounting principles (GAAP). In addition, we have discussed the non-GAAP measures described below. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are set forth below.

These non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.

Adjusted Earnings Measures

To better understand the trends in our business, we believe it is necessary to adjust the following amounts determined in accordance with GAAP to exclude the effects of certain items as well as their related income tax effects.

• Net income and Earnings per share (EPS)

• Effective tax rate

Our adjustments are limited to the amortization of intangible assets which is driven by our acquisition activity which can vary in size, nature and timing as compared to other companies within our industry and from period to period. Accordingly, due to the incomparability of acquisition activity among companies and from period to period, we believe exclusion of the amortization associated with intangible assets acquired through our acquisitions allows investors to better compare and understand our results. The use of intangible assets contributed to our revenues

Xerox 2014 Form 10-Q

40

earned during the periods presented and will contribute to our future period revenues as well. Amortization of intangible assets will recur in future periods.

We also calculate and utilize an operating income and margin earnings measure by adjusting our pre-tax income and margin amounts to exclude certain expenses. In addition to the above excluded item, operating income and margin also exclude Other expenses, net as well as Restructuring and asset impairment charges. Other expenses, net is primarily composed of non-financial interest expense and other non-operating costs and expenses. Restructuring and asset impairment charges consist of costs primarily related to severance and benefits for employees pursuant to formal restructuring and workforce reduction plans. Such charges are expected to yield future benefits and savings with respect to our operational performance. We exclude these amounts in order to evaluate our current and past operating performance and to better understand the expected future trends in our business.

Management believes that these non-GAAP financial measures provide an additional means of analyzing the current periods’ results against the corresponding prior periods’ results. However, the following non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures.

A reconciliation of these non-GAAP financial measures and the most directly comparable measures calculated and presented in accordance with GAAP are set forth on the following tables:

Net Income and EPS reconciliation:

	Three Months Ended March 31, 2014				Three Months Ended March 31, 2013
(in millions; except per share amounts)	Net Income		EPS		Net Income		EPS
As Reported(1)	$	279	$	0.23	$	293	$	0.23
Adjustments:
Amortization of intangible assets	52		0.04		51		0.04
Adjusted	$	331	$	0.27	$	344	$	0.27
Weighted average shares for adjusted EPS(2)			1,225				1,280
Fully diluted shares at end of period(3)			1,213

 ____________________________

(1) Net income and EPS from continuing operations attributable to Xerox.

(2) Average shares for the calculation of adjusted EPS include 27 million of shares associated with the Series A convertible preferred stock and therefore the related quarterly dividend was excluded.

(3) Represents common shares outstanding at March 31, 2014, as well as shares associated with our Series A convertible preferred stock plus dilutive potential common shares as used for the calculation of diluted earnings per share for the first quarter 2014.

Xerox 2014 Form 10-Q

41

Effective Tax reconciliation:

	Three Months Ended March 31, 2014						Three Months Ended March 31, 2013
(in millions)	Pre-Tax Income		Income Tax Expense		Effective Tax Rate		Pre-Tax Income		Income Tax Expense		Effective Tax Rate
As Reported(1)	$	291	$	49	16.8	%	$	300	$	50	16.7	%
Adjustments:
Amortization of intangible assets	84		32				83		32
Adjusted	$	375	$	81	21.6	%	$	383	$	82	21.4	%

____________________________

(1) Pre-tax income and Income tax expense from continuing operations attributable to Xerox.

Operating Income / Margin reconciliation:

	Three Months Ended March 31, 2014							Three Months Ended March 31, 2013
(in millions)	Profit			Revenue		Margin		Profit			Revenue		Margin
Reported Pre-tax Income(1)	$	291		$	5,121	5.7	%	$	300		$	5,202	5.8	%
Adjustments:
Amortization of intangible assets	84							83
Xerox restructuring charge	27							(8		)
Other expenses, net	40							17
Adjusted Operating Income/Margin	$	442		$	5,121	8.6	%	$	392		$	5,202	7.5	%
Equity in net income of unconsolidated affiliates	42							47
Business transformation costs	3							—
Fuji Xerox restructuring charge	3							4
Litigation matters	—							(37		)
Other expenses, net*	(40		)					(16		)
Segment Profit / Revenue	$	450		$	5,121	8.8	%	$	390		$	5,202	7.5	%

____________________________

* Includes rounding adjustments.

(1) Profit and revenue from continuing operations attributable to Xerox.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information set forth under the caption “Financial Risk Management” of this Quarterly Report on Form 10-Q is hereby incorporated by reference in answer to this Item.

ITEM 4 — CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of our principal executive officer and principal financial officer, or persons performing similar functions, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms relating to Xerox Corporation, including our consolidated subsidiaries, and was accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b)Changes in Internal Controls

In connection with the evaluation required by paragraph (d) of Rule 13a-15 under the Exchange Act, there was no change identified in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Xerox 2014 Form 10-Q

42

PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

The information set forth under Note 18 – Contingencies and Litigation contained in the “Notes to Condensed Consolidated Financial Statements” of this Quarterly Report on Form 10-Q is incorporated by reference in answer to this Item.

ITEM 1A — RISK FACTORS

Reference is made to the Risk Factors set forth in Part I, Item 1A of our 2013 Annual Report. The Risk Factors remain applicable from our 2013 Annual Report.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Sales of Unregistered Securities during the Quarter ended March 31, 2014

During the quarter ended March 31, 2014, Registrant issued the following securities in transactions that were not registered under the Securities Act of 1933, as amended (the “Act”).

Semi-Annual Director Fees:

a. Securities issued on January 15, 2014: Registrant issued 47,376 deferred stock units (DSUs), representing the right to receive shares of Common stock, par value $1 per share, at a future date.

b. No underwriters participated. The shares were issued to each of the non-employee Directors of Registrant: Glenn A. Britt, Richard J. Harrington, William Curt Hunter, Robert J. Keegan, Robert A. McDonald, Charles Prince, Ann N. Reese, Sara Martinez Tucker and Mary Agnes Wilderotter.

c. The DSUs were issued at a deemed purchase price of $12.35 per DSU (aggregate price $585,094), based upon the market value on the date of issuance, in payment of the semi-annual Director's fees pursuant to Registrant’s 2004 Equity Compensation Plan for Non-Employee 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.

Dividend Equivalent:

a. Securities issued on January 31, 2014: Registrant issued 3,753 DSUs, representing the right to receive shares of Common stock, par value $1 per share, at a future date.

b. No underwriters participated. The shares were issued to each of the non-employee Directors of Registrant: Glenn A. Britt, Richard J. Harrington, William Curt Hunter, Robert J. Keegan, Robert A. McDonald, Charles Prince, Ann N. Reese, Sara Martinez Tucker and Mary Agnes Wilderotter.

c. The DSUs were issued at a deemed purchase price of $12.18 per DSU (aggregate price $45,712), based upon the market value on the date of record, in payment of the dividend equivalents due to DSU holders pursuant to Registrant’s 2004 Equity Compensation Plan for Non-Employee 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.

(b) Issuer Purchases of Equity Securities during the Quarter ended March 31, 2014

Repurchases of Xerox Common Stock, par value $1.00 per share include the following:

Board Authorized Share Repurchase Programs:

	Total Number of Shares Purchased	Average Price Paid per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)	Maximum Approximate Dollar Value of Share That May Yet Be Purchased Under the Plans or Programs(2)
January 1 through 31	5,993,439	$	11.67	5,993,439	$	1,044,331,819
February 1 through 28	11,711,100	10.69		11,711,100	919,172,063
March 1 through 31	7,245,910	10.91		7,245,910	840,121,791
Total	24,950,449			24,950,449

____________________________

(1) Exclusive of fees and costs.

(2) Of the cumulative $6.5 billion of share repurchase authority previously granted by our Board of Directors, exclusive of fees and expenses, approximately $5.7 billion has been used through March 31, 2014. Repurchases may be made on the open market, or through derivative

Xerox 2014 Form 10-Q

43

or negotiated transactions. Open-market repurchases will be made in compliance with the Securities and Exchange Commission’s Rule 10b-18, and are subject to market conditions, as well as applicable legal and other considerations.

Repurchases Related to Stock Compensation Programs⁽¹⁾:

	Total Number of Shares Purchased	Average Price Paid per Share(2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum That May Be Purchased under the Plans or Programs
January 1 through 31	84,977	$	12.17	n/a	n/a
February 1 through 28	—	—		n/a	n/a
March 1 through 31	—	—		n/a	n/a
Total	84,977

 ____________________________

(1) These repurchases are made under a provision in our restricted stock compensation programs for the indirect repurchase of shares through a net-settlement feature upon the vesting of shares in order to satisfy minimum statutory tax-withholding requirements.

(2)Exclusive of fees and costs.

ITEM 6 — EXHIBITS

3(a)	Restated Certificate of Incorporation of Registrant filed with the Department of State of New York on February 21, 2013.
	Incorporated by reference to Exhibit 3(a) to Registrant’s Annual Report on Form 10-K dated for the fiscal year ended December 31, 2012.
3(b)	By-Laws of Registrant, as amended through May 21, 2009.
	Incorporated by reference to Exhibit 3(b) to Registrant’s Current Report on Form 8-K dated May 21, 2009.
4(c)	Form of Amended and Restated Credit Agreement dated as of March 18, 2014 between Registrant and the Initial Lenders named therein; Citibank, N.A., as Administrative Agent, and Citigroup Global Markets Inc., JPMorgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and BNP Paribas Securities Corp., as Joint Lead Arrangers and joint Bookrunners.
12	Computation of Ratio of Earnings to Fixed Charges.
31(a)	Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
31(b)	Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
32	Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.INS	XBRL Instance Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.
101.SCH	XBRL Taxonomy Extension Schema Linkbase.

Xerox 2014 Form 10-Q

44

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)
By:	/S/ JOSEPH H. MANCINI, JR.
	Joseph H. Mancini, Jr. Vice President and Chief Accounting Officer (Principal Accounting Officer)

Date: May 1, 2014

Xerox 2014 Form 10-Q

45

EXHIBIT INDEX

3(a)	Restated Certificate of Incorporation of Registrant filed with the Department of State of New York on February 21, 2013.
	Incorporated by reference to Exhibit 3(a) to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
3(b)	By-Laws of Registrant, as amended through May 21, 2009.
	Incorporated by reference to Exhibit 3(b) to Registrant's Current Report on Form 8-K dated May 21, 2009.
4(c)	Form of Amended and Restated Credit Agreement dated as of March 18, 2014 between Registrant and the Initial Lenders named therein; Citibank, N.A., as Administrative Agent, and Citigroup Global Markets Inc., JPMorgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and BNP Paribas Securities Corp., as Joint Lead Arrangers and joint Bookrunners.
12	Computation of Ratio of Earnings to Fixed Charges.
31(a)	Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
31(b)	Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
32	Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.INS	XBRL Instance Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.
101.SCH	XBRL Taxonomy Extension Schema Linkbase.

Xerox 2014 Form 10-Q

46

EX-4.C

EXHIBIT 4(c)

EXECUTION COPY

U.S. $2,000,000,000

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of March 18, 2014

Among

XEROX CORPORATION

asInitial Borrower

and

THE INITIAL LENDERS NAMED HEREIN

asInitialLenders

and

CITIBANK, N.A.

asAdministrativeAgent

and

JPMORGAN CHASE BANK, N.A.

asSyndicationAgent

and

BANK OF AMERICA, N.A.

and

BNP PARIBAS

asDocumentationAgents

and

CITIGROUP GLOBAL MARKETS INC.

J.P. MORGAN SECURITIES LLC

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

and

BNP PARIBAS SECURITIES CORP.

asJointLeadArrangersandJointBookrunners

NYDOCS01/1357750.4

TABLE OF CONTENTS
ARTICLE I		1
	SECTION 1.01. Certain Defined Terms	1
	SECTION 1.02. Computation of Time Periods	23
	SECTION 1.03. Accounting Terms	23
ARTICLE II		23
	SECTION 2.01. The Advances and Letters of Credit	23
	SECTION 2.02. Making the Advances	24
	SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit	25
	SECTION 2.04. Fees	27
	SECTION 2.05. Termination or Reduction of the Commitments	28
	SECTION 2.06. Repayment of Advances and Letter of Credit Drawings	29
	SECTION 2.07. Interest on Advances	30
	SECTION 2.08. Interest Rate Determination	31
	SECTION 2.09. Optional Conversion of Advances	32
	SECTION 2.10. Prepayments of Advances	33
	SECTION 2.11. Increased Costs	34
	SECTION 2.12. Illegality	35
	SECTION 2.13. Payments and Computations	35
	SECTION 2.14. Taxes	37
	SECTION 2.15. Sharing of Payments, Etc.	39
	SECTION 2.16. Evidence of Debt	40
	SECTION 2.17. Use of Proceeds	41
	SECTION 2.18. Increase in the Aggregate Commitments	41
	SECTION 2.19. Extension of Termination Date	42
	SECTION 2.20. Defaulting Lenders	44
	SECTION 2.21. Mitigation Obligations; Replacement of Lenders	47
ARTICLE III		48
	SECTION 3.01. Conditions Precedent to Effectiveness of the Amendment and Restatement	48
	SECTION 3.02. Initial Advance to Each Designated Subsidiary	49
	SECTION 3.03. Conditions Precedent to Each Borrowing, Issuance, Commitment Increase and Extension Date.	50
	SECTION 3.04. Determinations Under Section 3.01	51
ARTICLE IV		51
	SECTION 4.01. Representations and Warranties of the Company	51
ARTICLE V		53
	SECTION 5.01. Affirmative Covenants	53
	SECTION 5.02. Negative Covenants	57

2

NYDOCS01/1357750.4

	SECTION 5.03. Financial Covenants	62
ARTICLE VI		62
	SECTION 6.01. Events of Default	62
	SECTION 6.02. Actions in Respect of the Letters of Credit upon Default	65
ARTICLE VII		65
	SECTION 7.01. Unconditional Guaranty	65
	SECTION 7.02. Guaranty Absolute	66
	SECTION 7.03. Waivers and Acknowledgments	67
	SECTION 7.04. Subrogation	68
	SECTION 7.05. Subordination	68
	SECTION 7.06. Continuing Guaranty; Assignments	69
ARTICLE VIII		70
	SECTION 8.01. Appointment and Authority	70
	SECTION 8.02. Rights as a Lender	70
	SECTION 8.03. Exculpatory Provisions	70
	SECTION 8.04. Reliance by Agent	71
	SECTION 8.05. Indemnification	72
	SECTION 8.06. Delegation of Duties	73
	SECTION 8.07. Resignation of Agent	73
	SECTION 8.08. Non-Reliance on Agent and Other Lenders.	74
	SECTION 8.09. No Other Duties, etc.	74
ARTICLE IX		74
	SECTION 9.01. Amendments, Etc.	74
	SECTION 9.02. Notices, Etc.	75
	SECTION 9.03. No Waiver; Remedies	77
	SECTION 9.04. Costs and Expenses	77
	SECTION 9.05. Right of Set-off	78
	SECTION 9.06. Binding Effect	78
	SECTION 9.07. Assignments and Participations	79
	SECTION 9.08. Confidentiality	82
	SECTION 9.09. Designated Subsidiaries	83
	SECTION 9.10. Governing Law	84
	SECTION 9.11. Execution in Counterparts	84
	SECTION 9.12. Judgment	84
	SECTION 9.13. Jurisdiction, Etc.	85
	SECTION 9.14. Substitution of Currency	86
	SECTION 9.15. No Liability of the Issuing Banks	86
	SECTION 9.16. Patriot Act Notice	86
	SECTION 9.17. Power of Attorney	87
	SECTION 9.18. No Fiduciary Duties	87
	SECTION 9.19. Waiver of Jury Trial	87

3

NYDOCS01/1357750.4

Schedules

Schedule I - Commitments

Exhibits

Exhibit A - Form of Note

Exhibit B - Form of Notice of Borrowing

Exhibit C - Form of Assignment and Assumption

Exhibit D-1 - Form of Opinion of Counsel for the Initial Borrower

Exhibit D-2 - Form of Opinion of General Counsel of the Company

Exhibit D-3 - Form of Opinion of Counsel for Designated Subsidiary

Exhibit E - Form of Commitment Increase Opinion

Exhibit F - Form of Designation Agreement

4

NYDOCS01/1357750.4

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of March 18, 2014

XEROX CORPORATION, a New York corporation (the “Company” or the “Initial Borrower”), the banks, financial institutions and other institutional lenders (the “Initial Lenders”) and issuers of letters of credit (“Initial Issuing Banks”) listed on Schedule I hereto, CITIBANK, N.A. (“Citibank”), as administrative agent (the “Agent”) for the Lenders (as hereinafter defined), JPMORGAN CHASE BANK, N.A., as syndication agent, BANK OF AMERICA, N.A. and BNP PARIBAS, as documentation agents, and CITIGROUP GLOBAL MARKETS INC., J.P. MORGAN SECURITIES LLC, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and BNP PARIBAS SECURITIES CORP., as Joint Lead Arrangers and Joint Bookrunners, agree as follows:

PRELIMINARY STATEMENT. The Company, the lenders parties thereto and Citibank, as agent, are parties to the Credit Agreement dated as of December 16, 2011, as amended (the “Existing Credit Agreement”). Subject to the satisfaction of the conditions set forth in Section 3.01, the Company, the parties hereto and Citibank, as Agent, desire to amend and restate the Existing Credit Agreement as herein set forth.

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Agent.

“Advance” means an advance by a Lender to any Borrower as part of a Borrowing and refers to a Base Rate Advance or a Eurocurrency Rate Advance (each of which shall be a “Type” of Advance).

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person or is a director of such Person.

“Agent Parties” has the meaning specified in Section 9.02(d)(ii).

“Agent’s Account” means (a) in the case of Advances denominated in Dollars, the account of the Agent maintained by the Agent at Citibank at its office at 1615 Brett Road, Building #3, New Castle, Delaware 19720, Account No. 36852248, Attention: Bank Loan Syndications, (b) in the case of Advances denominated in any Committed Currency, the account of the Sub-Agent designated in writing from time to time by the Agent to the Company and the Lenders for such purpose and (c) in any such case, such other account of

1

NYDOCS01/1357750.4

the Agent as is designated in writing from time to time by the Agent to the Company and the Lenders for such purpose.

“Amendment and Restatement” has the meaning specified in Section 3.01.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Company or its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Applicable Lending Office” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of a Base Rate Advance and such Lender’s Eurocurrency Lending Office in the case of a Eurocurrency Rate Advance.

“Applicable Margin” means, as of any date from and after the Restatement Date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:

Public Debt Rating S&P/Moody’s/Fitch	Applicable Margin for Eurocurrency Rate Advances	Applicable Margin for Base Rate Advances
Level 1 A-/A3/A- or better	0.900%	0.000%
Level 2 BBB+/Baa1/BBB+	1.000%	0.000%
Level 3 BBB/Baa2/BBB	1.100%	0.100%
Level 4 BBB-/Baa3/BBB-	1.300%	0.300%
Level 5 BB+/Ba1/BB+ or below	1.450%	0.450%

“Applicable Percentage” means, as of any date from and after the Restatement Date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:

Public Debt Rating S&P/Moody’s/Fitch	Applicable Percentage
Level 1 A-/A3/A- or better	0.100%
Level 2 BBB+/Baa1/BBB+	0.125%
Level 3 BBB/Baa2/BBB	0.150%
Level 4 BBB-/Baa3/BBB-	0.200%
Level 5 BB+/Ba1/BB+ or below	0.300%

2

NYDOCS01/1357750.4

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit C hereto.

“Assuming Lender” has the meaning specified in Section 2.18(d).

“Assumption Agreement” has the meaning specified in Section 2.18(d)(ii).

“Available Amount” of any Letter of Credit issued by an Issuing Bank means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing).

“Bankruptcy Law” means any proceeding of the type referred to in Section 6.01(e) or Title 11, U.S. Code, or any similar foreign, federal or state law for the relief of debtors.

“Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:

(a)    the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank’s base rate (the “Prime Rate”);

(b)    ½ of 1% above the Federal Funds Rate; and

(c)    the Eurocurrency Rate for Dollars for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the avoidance of doubt, the Eurocurrency Rate for any day shall be based on the rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page of such page) at approximately 11:00 a.m. London time on such day.

Any change in the Base Rate due to a change in the Prime Rate, the Federal Funds Rate or the Eurocurrency Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Rate or the Eurocurrency Rate, respectively.  

“Base Rate Advance” means an Advance denominated in Dollars that bears interest as provided in Section 2.07(a)(i).

“Borrowers” means, collectively, the Initial Borrower and the Designated Subsidiaries from time to time.

“Borrowing” means a borrowing consisting of simultaneous Advances of the same Type made by each of the Lenders.

3

NYDOCS01/1357750.4

“Borrowing Minimum” means, in respect of Advances denominated in Dollars, $10,000,000, in respect of Advances denominated in Sterling, £5,000,000, in respect of Advances denominated in Swiss Francs, SFr5,000,000, in respect of Advances denominated in Yen, ¥1,000,000,000, in respect of Advances denominated in Canadian Dollars, Cdn$5,000,000 and, in respect of Advances denominated in Euros, €5,000,000.

“Borrowing Multiple” means, in respect of Advances denominated in Dollars, $1,000,000, in respect of Advances denominated in Sterling, £1,000,000, in respect of Advances denominated in Swiss Francs, SFr1,000,000, in respect of Advances denominated in Yen, ¥100,000,000, in respect of Advances denominated in Canadian Dollars, Cdn$1,000,000 and, in respect of Advances denominated in Euros, €1,000,000.

“Business Day” means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurocurrency Rate Advances, on which dealings are carried on in the London interbank market and banks are open for business in London and in the country of issue of the currency of such Eurocurrency Rate Advance (or, in the case of an Advance denominated in Euro, on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open).

“Cash Collateralize” means, in respect of an obligation, to provide and pledge (as a first priority perfected security interest) cash collateral in Dollars, at a location and pursuant to documentation in form and substance satisfactory to the Agent and each Issuing Bank (and “Cash Collateralization” has a corresponding meaning).

“CDOR Rate” shall mean the rate per annum, equal to the average of the annual yield rates applicable to Canadian banker’s acceptances at or about 10:00 a.m. (Toronto, Canada time) on the first day of such Interest Period on the Reuters Screen CDOR Page (or any successor page or other relevant Reuters Screen page) for a term equivalent to such Interest Period (or if such Interest Period is not equal to a number of months, for a term equivalent to the number of months closest to such Interest Period).

“Citibank” means Citibank, N.A.

“Commitment” means a Revolving Credit Commitment or a Letter of Credit Commitment.

“Commitment Date” has the meaning specified in Section 2.18(b).

“Commitment Increase” has the meaning specified in Section 2.18(a).

“Committed Currencies” means lawful currency of the United Kingdom of Great Britain and Northern Ireland, lawful currency of the Swiss Confederation, lawful currency of Japan, lawful currency of Canada and Euros.

“Communications” has the meaning specified in Section 9.02(d)(ii).

4

NYDOCS01/1357750.4

“Company Information” has the meaning specified in Section 9.08.

“Consenting Lender” has the meaning specified in Section 2.19(b).

“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

“Consolidated EBITDA” means, for any period, net income (or net loss) (before discontinued operations) plus the sum of (a) Consolidated Interest Expense, (b) income tax expense, (c) depreciation expense, (d) amortization expense, and (e) any losses or expenses from any unusual, extraordinary or otherwise non-recurring items, including but not limited to (i) aggregate foreign exchange losses included in “other expense” and (ii) losses from minority interest, and minus (x) Consolidated Interest Income and (y) the sum of the amounts for such period of any income tax benefits and any income or gains from any unusual, extraordinary or otherwise non-recurring items, including but not limited to (i) aggregate foreign exchange gains included in “other income” and (ii) income from minority interest; in each case determined on a Consolidated basis for the Company and its Subsidiaries and in the case of items (a) through (e) and items (x) and (y), to the extent such amounts were included in the calculation of net income. For the purposes of calculating Consolidated EBITDA for any period, if during such period the Company or any Subsidiary shall have made an acquisition or a disposition, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto as if such acquisition or disposition, as the case may be, occurred on the first day of such period.

“Consolidated Interest Expense” means, for any period, for the Company and its Subsidiaries on a Consolidated basis, interest expense (including equipment financing interest) for such period, determined in accordance with GAAP.

“Consolidated Interest Income” means, for any period, for the Company and its Subsidiaries on a Consolidated basis, interest, fees and other income, arising from investments in cash and cash equivalents, included in Consolidated net income for such period, determined in accordance with GAAP.

“Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Convert”, “Conversion” and “Converted” each refers to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.08 or 2.09.

“Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement (other than under any such

5

NYDOCS01/1357750.4

agreement which constitutes or creates an account payable in the ordinary course of business) with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances, letters of credit or similar bank guarantees (other than bankers’ acceptances, letters of credit or similar bank guarantees issued in support of trade), (g) all Debt of others referred to in clauses (a) through (f) above or clause (h) below (collectively, “Guaranteed Debt”) guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (1) to pay or purchase such Guaranteed Debt or to advance or supply funds for the payment or purchase of such Guaranteed Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, with the primary intent and purpose of such Person being to enable the debtor to make payment of such Guaranteed Debt or to assure the holder of such Guaranteed Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered), with the primary intent and purpose of such Person being to enable the debtor to make payment of such Guaranteed Debt or to assure the holder of such Guaranteed Debt against loss, or (4) where the primary intent and purpose of such Person is to otherwise assure a creditor against loss (but, in each case, only to the extent so assured or guaranteed), and (h) all Debt referred to in clauses (a) through (g) above (including Guaranteed Debt) secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt.

“Debt for Borrowed Money” means all items that, in accordance with GAAP, would be classified as debt on the Company’s Consolidated balance sheet, provided, that notwithstanding the treatment thereof under GAAP, “Debt for Borrowed Money” shall exclude (without duplication) (a) any Preferred Stock outstanding on the Effective Date and (b) any amount shown on such balance sheet in respect of any securities issued on or prior to Effective Date that are Qualified Equity Securities on such date of determination.

“Default” means any Event of Default or any event that, unless cured or waived, would constitute an Event of Default but for the requirement hereunder that notice be given or time elapse or both.

“Default Interest” has the meaning specified in Section 2.07(b).

“Defaulting Lender” means at any time, subject to Section 2.20(d), (i) any Lender that has failed for two or more Business Days to comply with its obligations under this Agreement to make an Advance, make a payment to an Issuing Bank in respect of drawing under a Letter of Credit or make any other payment due hereunder (each, a “funding obligation”), unless such Lender has notified the Agent and the Company in writing that

6

NYDOCS01/1357750.4

such failure is the result of such Lender’s determination that one or more conditions precedent to funding has not been satisfied (which conditions precedent, together with the applicable default, if any, will be specifically identified in such writing), (ii) any Lender that has notified the Agent, the Company or an Issuing Bank in writing, or has stated publicly, that it does not intend to comply with its funding obligations hereunder, unless such writing or statement states that such position is based on such Lender’s determination that one or more conditions precedent to funding cannot be satisfied (which conditions precedent, together with the applicable default, if any, will be specifically identified in such writing or public statement), (iii) any Lender that has defaulted on its funding obligations under other loan agreements or credit agreements generally under which it has commitments to extend credit or that has notified, or whose Parent Company has notified, the Agent or the Company in writing, or has stated publicly, that it does not intend to comply with its funding obligations under loan agreements or credit agreements generally, (iv) any Lender that has, for three or more Business Days after written request of the Agent or the Company, failed to confirm in writing to the Agent and the Company that it will comply with its prospective funding obligations hereunder (provided that such Lender will cease to be a Defaulting Lender pursuant to this clause (iv) upon the Agent’s and the Company’s receipt of such written confirmation), or (v) any Lender with respect to which a Lender Insolvency Event has occurred and is continuing with respect to such Lender or its Parent Company; provided that a Lender Insolvency Event shall not be deemed to occur with respect to a Lender or its Parent Company solely as a result of the acquisition or maintenance of an ownership interest in such Lender or Parent Company by a governmental authority or instrumentality thereof where such action does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such governmental authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Agent that a Lender is a Defaulting Lender under any of clauses (i) through (v) above will be conclusive and binding absent manifest error, and such Lender will be deemed to be a Defaulting Lender (subject to Section 2.20(d)) upon notification of such determination by the Agent to the Company, the Issuing Banks and the Lenders.

“Designated Subsidiary” means any direct or indirect Wholly-Owned Subsidiary of the Company designated for borrowing privileges under this Agreement pursuant to Section 9.09.

“Designation Agreement” means, with respect to any Designated Subsidiary, an agreement substantially in the form of Exhibit E hereto signed by such Designated Subsidiary and the Company.

“Disclosed Matter” shall mean the existence or occurrence of any matter which has been disclosed either in writing by the Company to the Agent and the Lenders or in any filing made with the SEC, in each case prior to the Restatement Date.

“Disqualified Equity Securities” means that portion of any Equity Interest (other than such Equity Interest that is solely redeemable, or at the election of the Company (not

7

NYDOCS01/1357750.4

subject to any condition), may be redeemed, with Qualified Equity Securities) which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the sole option of the holder thereof on or prior to the latest Termination Date of any Lender.

“Dollars” and the “$” sign each means lawful currency of the United States of America.

“Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” in its Administrative Questionnaire, or such other office of such Lender as such Lender may from time to time specify to the Company and the Agent.

“Domestic Subsidiary” means a Subsidiary of the Company organized under the laws of a jurisdiction inside the United States.

“Effective Date” means December 16, 2011.

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 9.07(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 9.07(b)(iii)).

“EMU Legislation” means the legislative measures of the European Council for the introduction of, changeover to or operation of a single or unified European currency.

“Environmental Action” means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.

“Environmental Law” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial interpretation relating to pollution or protection of the environment or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

8

NYDOCS01/1357750.4

“Equity Interests” means (a) shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person or (b) any warrants, options or other rights to acquire such shares or interests.

“Equivalent” in Dollars of any Committed Currency, or in any Committed Currency of Dollars, on any date, means the applicable rate quoted as the Historical Currency Exchange Rate on the day immediately prior to such date of determination, as determined by OANDA Corporation and made available on its website at http://www.oanda/convert/fxhistory; provided that if such rate is not available for any reason, the Agent may use any reasonable method it deems appropriate to determine such exchange rate, and such determination shall be conclusive absent manifest error.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the Company’s controlled group, or under common control with the Company, within the meaning of Section 414 of the Internal Revenue Code.

“ERISA Event” means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the Company or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the Company or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f)  the conditions for the imposition of a lien under Section 303(k) of ERISA shall have been met with respect to any Plan; (g) a determination that any Plan is in “at risk” status (within the meaning of Section 303 of ERISA); or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Plan.

“Euro” means the lawful currency of the European Union as constituted by the Treaty of Rome which established the European Community, as such treaty may be amended from time to time and as referred to in the EMU Legislation.

9

NYDOCS01/1357750.4

“Eurocurrency Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Eurocurrency Lending Office” in its Administrative Questionnaire, or such other office of such Lender as such Lender may from time to time specify to the Company and the Agent.

“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

“Eurocurrency Rate” means, for any Interest Period for each Eurocurrency Rate Advance comprising part of the same Borrowing (a) denominated in Dollars or any Committed Currency other than Canadian Dollars, an interest rate per annum equal to the rate per annum obtained by dividing (i) the rate per annum (rounded upward to the nearest whole multiple of 1/100 of 1% per annum) appearing on Reuters Screen LIBOR01 Page (or any successor page or other relevant Reuters Screen page) as the London interbank offered rate for deposits in Dollars or the applicable Committed Currency at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period by (ii) a percentage equal to 100% minus the Eurocurrency Rate Reserve Percentage for such Interest Period or (b) denominated in Canadian Dollars, an interest rate per annum equal to the rate per annum obtained by dividing (i) the CDOR Rate by (ii) a percentage equal to 100% minus the Eurocurrency Rate Reserve Percentage for such Interest Period.

“Eurocurrency Rate Advance” means an Advance denominated in Dollars or a Committed Currency that bears interest as provided in Section 2.07(a)(ii).

“Eurocurrency Rate Reserve Percentage” for any Interest Period for all Eurocurrency Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurocurrency Rate Advances is determined) having a term equal to such Interest Period.

“Events of Default” has the meaning specified in Section 6.01.

“Excluded Taxes” means, with respect to any Lender and the Agent, or any other recipient of a payment made by or on account of any obligation of any Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income or net profits (however denominated), or taxes imposed in lieu of such income or franchise taxes, by the United States, or by the jurisdiction under the laws of which such Lender, such Lender’s Applicable Lending Office or the Agent (as the case may be) is organized or any political subdivision thereof, (b) any branch profits taxes imposed by the United States or any similar tax or capital tax imposed by any other jurisdiction described in clause (a), (c) in the case

10

NYDOCS01/1357750.4

of a Lender organized under the laws of a jurisdiction outside the United States, any withholding tax imposed on any such payment by the United States to the extent that it is determined on the basis of laws in effect and tax rates applicable to such Lender at the time such Lender becomes a party to this Agreement (or designates a new Applicable Lending Office) or is attributable to such Lender’s failure to comply with Section 2.14(e), except to the extent that such Lender, or its assignor, if any, was entitled, at the time of designation of a new Applicable Lending Office or assignment, as applicable, to receive additional amounts from any Borrower with respect to such withholding tax pursuant to Section 2.14(a) (it being understood and agreed, for the avoidance of doubt, that any withholding tax imposed on such a Lender as a result of a change in law or regulation or interpretation thereof occurring after the time such Lender became a party to this Agreement shall not be an Excluded Tax) and (d) any U.S. federal withholding Taxes imposed under FATCA.

“Existing Credit Agreement” has the meaning specified in the Preliminary Statement.

“Extension Date” has the meaning specified in Section 2.19(b).

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.

“Finance SPE” means (a) any Receivables SPE and (b) any Subsidiary that (i) is a special purpose financing vehicle, (ii) was created solely for the purpose of facilitating the incurrences of Debt or issuances of Equity Interests by the Company or any Subsidiary, (iii) has no business other than the facilitation of such incurrence or issuance and activities incidental thereto and (iv) is capitalized with an amount not materially more than the cash proceeds received by such Finance SPE from such transaction, provided that such transaction does not constitute or create Debt secured by a Lien that is prohibited by Section 5.02(a).

“Financial Officer” means the chief financial officer or treasurer of the Company.

“Fiscal Quarter” means a fiscal quarter of the Company.

“Fitch” means Fitch, Inc.

11

NYDOCS01/1357750.4

“Foreign Jurisdiction” has the meaning specified in Section 2.14(g).

“Foreign Subsidiary” means a Subsidiary organized under the laws of a jurisdiction outside the United States.

“Fronting Exposure” means, at any time there is a Defaulting Lender and with respect to any Issuing Bank, such Defaulting Lender’s Ratable Share of the L/C Obligations with respect to Letters of Credit issued by such Issuing Bank, other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

“Fuji Xerox” means Fuji Xerox Co., Limited.

“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“GAAP” has the meaning specified in Section 1.03.

“Guaranteed Obligations” has the meaning specified in Section 7.01.

“Guarantor” means any Domestic Subsidiary that has or is required to execute and deliver the guaranty described in Section 5.01(j) hereof.

“Guaranty” means the guaranty by the Company pursuant to Article VII hereof.

“Hazardous Materials” means (a) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any applicable Environmental Law.

“Hedge Agreements” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements.

“Increase Date” has the meaning specified in Section 2.18(a).

“Increasing Lender” has the meaning specified in Section 2.18(b).

“Indemnified Taxes” shall mean Taxes other than Excluded Taxes.

“Information Memorandum” means the information memorandum dated February 2014 used by the Agent in connection with the syndication of the Commitments.

“Initial GAAP” has the meaning specified in Section 1.03.

12

NYDOCS01/1357750.4

“Indemnified Costs” has the meaning specified in Section 8.05.

“Indemnified Party” has the meaning specified in Section 9.04(b).

“Interest Period” means, for each Eurocurrency Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurocurrency Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurocurrency Rate Advance and ending on the last day of the period selected by the Borrower requesting such Borrowing pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by such Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months, or, subject to clause (c) below, nine or twelve months, as the applicable Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:

(a)    the Borrowers may not select any Interest Period that ends after the Termination Date unless, after giving effect to any reduction of the Revolving Credit Commitments on such Termination Date, the aggregate principal amount of Base Rate Advances and of Eurocurrency Rate Advances having Interest Periods that end on or prior to such Termination Date shall be at least equal to the aggregate principal amount of Advances due and payable on or prior to such date;

(b)    Interest Periods commencing on the same date for Eurocurrency Rate Advances comprising part of the same Borrowing shall be of the same duration;

(c)    the Borrowers shall not be entitled to select an Interest Period having a duration of nine or twelve months unless, by 2:00 P.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, each Lender notifies the Agent that such Lender will be providing funding for such Borrowing with such Interest Period (the failure of any Lender to so respond by such time being deemed for all purposes of this Agreement as an objection by such Lender to the requested duration of such Interest Period); provided that, if any or all of the Lenders object to the requested duration of such Interest Period, the duration of the Interest Period for such Borrowing shall be one, two, three or six months, as specified by the Borrower requesting such Borrowing in the applicable Notice of Borrowing as the desired alternative to an Interest Period of nine or twelve months;

(d)    whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and

13

NYDOCS01/1357750.4

(e)    whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“IP Company” has the meaning specified in Section 5.02(f).

“issuance” or “issue” with respect to any Letter of Credit means and includes the issuance, amendment, renewal or extension of such Letter of Credit.

“Issuing Bank” means an Initial Issuing Bank or any Eligible Assignee to which a portion of the Letter of Credit Commitment hereunder has been assigned pursuant to Section 9.07 or any other Lender that agrees with the Company that it shall be an Issuing Bank so long as such Eligible Assignee or Lender expressly agrees to perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as an Issuing Bank and notifies the Agent of its Letter of Credit Commitment, for so long as such Initial Issuing Bank, Eligible Assignee or Lender, as the case may be, shall have a Letter of Credit Commitment.

“L/C Cash Deposit Account” means an interest bearing cash deposit account to be established and maintained by the Agent, over which the Agent shall have sole dominion and control, upon terms as may be satisfactory to the Agent.

“L/C Obligations” means, as of any date, the aggregate Available Amount of outstanding Letters of Credit and Advances made by an Issuing Bank in accordance with Section 2.03(c) that have not been funded by the Lenders and, in the case of any Letters of Credit denominated in any Committed Currency, shall be the Equivalent in Dollars of such amount, determined as of the third Business Day prior to such date.

“L/C Related Documents” has the meaning specified in Section 2.06(b)(i).

“Lender Insolvency Event” means that (a) a Lender or its Parent Company is adjudicated as, or determined by any governmental authority having regulatory authority over such Person or its assets to be, insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, or (b) such Lender or its Parent Company is the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or the like has been appointed for such Lender or its Parent Company, or such Lender or its Parent Company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment.

14

NYDOCS01/1357750.4

“Lenders” means each Initial Lender, each Issuing Bank, each Assuming Lender that shall become a party hereto pursuant to Section 2.18 and each Person that shall become a party hereto pursuant to Section 9.07.

“Letter of Credit” has the meaning specified in Section 2.01(b).

“Letter of Credit Agreement” has the meaning specified in Section 2.03(a).

“Letter of Credit Commitment” means, with respect to each Issuing Bank, the obligation of such Issuing Bank to issue Letters of Credit for the account of the Borrowers and their specified Subsidiaries in (a) in the case of an Initial Issuing Bank, the Dollar amount set forth opposite the Issuing Bank’s name on Schedule I hereto under the caption “Letter of Credit Commitment” or (b) if such Initial Issuing Bank has entered into one or more Assignment and Assumptions and for each other Issuing Bank, the Dollar amount set forth for such Issuing Bank in the Register maintained by the Agent pursuant to Section 9.07(c) as such Issuing Bank’s “Letter of Credit Commitment”, in each case as such amount may be reduced prior to such time pursuant to Section 2.05.

“Letter of Credit Facility” means, at any time, an amount equal to the least of (a) the aggregate amount of the Issuing Banks’ Letter of Credit Commitments at such time, (b) $300,000,000 and (c) the aggregate amount of the Revolving Credit Commitments, as such amount may be reduced at or prior to such time pursuant to Section 2.05.

“Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property, it being understood that a license or assignment of intellectual property not securing Debt, a lease or sublease of assets to another Person or the filing of a precautionary financing statement (or similar filing) in connection with an operating lease or consignment does not constitute a “Lien”.

“Material Adverse Change” means any material adverse change in the business, assets, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole, (b) the rights and remedies of the Agent or any Lender under this Agreement or any Note or (c) the ability of any Borrower to perform its monetary obligations under this Agreement or any Note.

“Material Subsidiary” means any Wholly-Owned Subsidiary of the Company that as of the end of the most recently completed Fiscal Quarter had Consolidated net worth of $100,000,000 or more, provided, however, that any change in a Person’s status as a Material Subsidiary shall become effective as of the date of delivery of the financial statements for

15

NYDOCS01/1357750.4

such Fiscal Quarter (or, in the case of the last Fiscal Quarter of a Fiscal Year, such Fiscal Year) pursuant to Section 5.01(i).

“Moody’s” means Moody’s Investors Service, Inc.

“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

“Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Company or any ERISA Affiliate and at least one Person other than the Company and the ERISA Affiliates or (b) was so maintained and in respect of which the Company or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.

“Non-Approving Lender” has the meaning specified in Section 2.21(b).

“Non-Consenting Lender” has the meaning specified in Section 2.19(b).

“Non-Defaulting Lender” means, at any time, a Lender that is not a Defaulting Lender or a Potential Defaulting Lender.

“Note” means a promissory note of any Borrower payable to the order of any Lender, delivered pursuant to a request made under Section 2.16 in substantially the form of Exhibit A hereto, evidencing the aggregate indebtedness of such Borrower to such Lender resulting from the Advances made by such Lender to such Borrower.

“Notice of Borrowing” has the meaning specified in Section 2.02(a).

“Notice of Issuance” has the meaning specified in Section 2.03(a).

“Other Taxes” has the meaning specified in Section 2.14(b).

“PARC” means Palo Alto Research Center, Incorporated, a Delaware corporation.

“Parent Company” means, with respect to a Lender, the bank holding company (as defined in Federal Reserve Board Regulation Y), if any, of such Lender, or if such Lender does not have a bank holding company, then any corporation, association, partnership or other business entity owning, beneficially or of record, directly or indirectly, a majority of the shares of such Lender.

“Participant” has the meaning specified in Section 9.07(d).

“Participant Register” has the meaning specified in Section 9.07(d).

16

NYDOCS01/1357750.4

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001.

“Payment Office” means, for any Committed Currency, such office of Citibank as shall be from time to time selected by the Agent and notified by the Agent to the Company and the Lenders.

“PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

“Permitted Liens” means: (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed by law, such as warehouseman’s, landlord’s, materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business; (c) pledges or deposits and other Liens arising or otherwise to secure obligations under workers’ compensation, unemployment insurance and other social security laws or regulations or similar legislation or to secure public or statutory obligations or to secure payments of workers’ compensation or unemployment insurance; (d) easements, rights of way and other encumbrances on title to real property that do not secure Debt; (e) deposits or other Liens to secure the performance of bids, contracts (other than for Debt), leases, statutory obligations, performance bonds and other obligations of a like nature incurred in the ordinary course of business, or to secure surety and appeal bonds and other obligations of a like nature; (f) liens arising from judgments or awards not otherwise constituting an Event of Default; (g) security given in the ordinary course of business consistent with past practice to any public utility or governmental authority or in favor of a prime contractor under a government contract in connection with the operation of the business, other than security for borrowed money; and (h) deposits securing letters of credit or similar instruments issued in support of any obligation referred to in clauses (a) through (g) above.

“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

“Platform” has the meaning specified in Section 9.02(d)(i).

“Post-Petition Interest” has the meaning specified in Section 7.05.

“Potential Defaulting Lender” means, at any time, a Lender (i) as to which an event of the kind referred to in the definition of “Lender Insolvency Event” has occurred and is continuing in respect of any Subsidiary of such Lender, (ii) as to which the Agent or any Issuing Bank has in good faith determined and notified the Company and (in the case of an Issuing Bank) the Agent, that such Lender or its Parent Company or a Subsidiary thereof has notified the Agent, or has stated publicly, that it will not comply with its funding obligations under any other loan agreement or credit agreement or other similar/other

17

NYDOCS01/1357750.4

financing agreement or (iii) that has, or whose Parent Company has, a non-investment grade rating from Moody’s or S&P or another nationally recognized rating agency. Any determination that is made that a Lender is a Potential Defaulting Lender under any of clauses (i) through (iii) above will be made by the Agent or, in the case of clause (ii), an Issuing Bank, in its sole discretion acting in good faith. The Agent will promptly send to all parties hereto a copy of any notice to the Company provided for in this definition.

“Preferred Stock” of any Person shall mean capital stock or other ownership interests of or in such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends and/or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of capital stock or other ownership interests of or in any other class of such person.

“Primary Currency” has the meaning specified in Section 9.12(c).

“Protesting Lender” has the meaning specified in Section 9.09(a).

“Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P, Moody’s or Fitch, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the Company or, if any such rating agency shall have issued more than one such rating, the lowest such rating issued by such rating agency. For purposes of the foregoing, (a) if only one of S&P, Moody’s and Fitch shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage shall be determined by reference to the available rating; (b) if none of S&P, Moody’s or Fitch shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage will be set in accordance with Level 6 under the definition of “Applicable Margin” or “Applicable Percentage”, as the case may be; (c) if only two of S&P, Moody’s and Fitch shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage shall be determined by reference to the higher rating unless there is a split in such ratings of more than one level, in which case the level that is one level higher than the lower such ratings shall apply, (d) if all three have established ratings and the ratings established by S&P, Moody’s and Fitch shall fall within two different levels, the Applicable Margin and the Applicable Percentage shall be based upon the rating assigned by two of such agencies, or if the ratings established by S&P, Moody’s and Fitch shall fall within three different levels, the Applicable Margin and the Applicable Percentage shall be based upon the middle rating; (e) if any rating established by S&P, Moody’s or Fitch shall be changed (other than as a result of a change in the basis of such rating or the rating system of such agency), such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change and ending on the date immediately preceding the effective date of the next such change; and (f) if S&P, Moody’s or Fitch shall change the basis or system on which ratings are established, each reference to the Public Debt Rating announced by S&P, Moody’s or Fitch, as the case may be, shall refer to the then equivalent rating by S&P, Moody’s or Fitch, as the case may be or, if there is no equivalent or such change would otherwise result in a change in the Applicable Margin or Applicable Percentage, the Company and the Lenders shall negotiate in good faith to

18

NYDOCS01/1357750.4

amend this definition or the definitions of “Applicable Margin” or “Applicable Percentage” to reflect such changed rating system or ratings basis and, pending the effectiveness of any such amendment, the Applicable Margin and the Applicable Percentage shall be determined by reference to the ratings of the other rating agencies (or, if the circumstances referred to in this clause (f) shall affect all such agencies, the ratings most recently in effect prior to such changes).

“Qualified Equity Securities” means any Equity Interest that is not Disqualified Equity Securities.

“Qualified Receivables Transaction” means any transaction or arrangement or series of transactions or arrangements entered into by the Company or any of its Subsidiaries in order to monetize or otherwise finance, or as a result of which it may receive earlier than otherwise due amounts that will become receivable or be earned in the future in respect of, a discrete pool (which may be fixed or revolving) of Receivables, leases or other financial assets including financing contracts and any transaction or arrangement that is not a sale or transfer but pursuant to and by virtue of which a Person succeeds to, and becomes entitled to, the rights under or in respect of such Receivables, leases or other financial assets (in each case whether now existing or arising in the future), and which may include a Lien on (a) Receivables, (b) deposit or other accounts (and the funds or investments from time to time credited thereto) established in connection with a Qualified Receivables Transaction to secure obligations of the Company or any Subsidiary arising in connection with or otherwise related to such transaction, (c) any promissory note issued by the Company or any Subsidiary evidencing the repayment of amounts directly or indirectly distributed to the Company or any Subsidiary from any such accounts and (d) any assets of or Equity Interests in each and any Receivables SPE used to facilitate such transaction, provided that such transaction or arrangement does not constitute or create Debt secured by a Lien that is prohibited by Section 5.02(a).

“Ratable Share” of any amount means, with respect to any Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender’s Revolving Credit Commitment at such time (or, if the Revolving Credit Commitments shall have been terminated pursuant to Section 2.05 or 6.01, such Lender’s Revolving Credit Commitment as in effect immediately prior to such termination) and the denominator of which is the aggregate amount of all Revolving Credit Commitments at such time (or, if the Revolving Credit Commitments shall have been terminated pursuant to Section 2.05 or 6.01, the aggregate amount of all Revolving Credit Commitments as in effect immediately prior to such termination).

“Receivables” means “accounts” (as such term is defined in the Uniform Commercial Code as in effect from time to time in the State of New York (or, if by reason of mandatory provisions of law, the Uniform Commercial Code as in effect in a jurisdiction other than New York) or the Personal Property Security Act in effect in each of the provinces or territories in Canada (other than Quebec) to the extent applicable), including the proceeds of inventory to the extent it also constitutes an account), “claims” as such term is defined

19

NYDOCS01/1357750.4

in the Civil Code of Quebec to the extent applicable, book debts and any other existing or hereafter arising accounts receivable, lease receivables, finance receivables, service receivables and supply receivables and any property or assets (including equipment, inventory, software, leases and servicing contracts) related thereto.

“Receivables SPE” means a Subsidiary that is a special purpose entity that (a) borrows against Receivables or purchases, leases or otherwise acquires Receivables or sells, disposes, assigns, leases, conveys or otherwise transfers Receivables to one or more third party purchasers or another Receivables SPE in connection with a Qualified Receivables Transaction or (b) engages in other activities that are necessary or desirable to effectuate the activities described in the definitions of Qualified Receivables Transaction or Third-Party Vendor Financing Program, or (c) is established or then used solely for the purpose of, and has no business other than, owning a Receivables SPE, servicing Receivables owned by a Receivables SPE, owning or holding title to the property or assets giving rise to such Receivables or any activities incidental thereto (including those described in the definitions of Qualified Receivables Transaction or Third-Party Vendor Financing Program).

“Register” has the meaning specified in Section 9.07(c).

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“Removal Effective Date” has the meaning specified in Section 8.07.

“Required Lenders” means at any time Lenders owed at least a majority in interest of the then aggregate unpaid principal amount (based on the Equivalent in Dollars at such time) of the Advances owing to Lenders, or, if no such principal amount is then outstanding, Lenders having at least a majority in interest of the Revolving Credit Commitments; provided that if any Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination of Required Lenders at such time the Revolving Credit Commitments of such Lender at such time.

“Resignation Effective Date” has the meaning specified in Section 8.07.

“Responsible Officers” means the chief executive officer, any Financial Officer, the controller and the general counsel of the Company.

“Restatement Date” has the meaning specified in Section 3.01.

“Revolving Credit Commitment” means as to any Lender (a) the Dollar amount set forth opposite such Lender’s name on Schedule I hereto as such Lender’s “Revolving Credit Commitment”, (b) if such Lender has become a Lender hereunder pursuant to an Assumption Agreement, the Dollar amount set forth in such Assumption Agreement or (c) if such Lender has entered into an Assignment and Assumption, the Dollar amount set forth for such Lender in the Register maintained by the Agent pursuant to Section 9.07(c), as such amount may

20

NYDOCS01/1357750.4

be reduced pursuant to Section 2.05 or increased pursuant to Section 2.18. As of the Restatement Date, the aggregate amount of the Revolving Credit Commitments is $2,000,000,000.

“S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

“Sanctioned Country” means, at any time, a country or territory which is the subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.

“SEC” means Securities and Exchange Commission.

“Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Company or any ERISA Affiliate and no Person other than the Company and the ERISA Affiliates or (b) was so maintained and in respect of which the Company or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.

“Sub-Agent” means Citibank International plc.

“Subordinated Obligations” has the meaning specified in Section 7.05.

“Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, or other business entity of which (or in which) (a) more than 50% of the issued and outstanding capital stock, securities or other ownership interests having ordinary voting power or (b) in the case of a partnership, more than 50% of the partnership interests, are, in each case, at the time directly or indirectly owned or Controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“Taxes” means any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto.

“Termination Date” means the earlier of (a) March 18, 2019 or, as to any Lender for which the Termination Date is extended pursuant to Section 2.19, the date to which the

21

NYDOCS01/1357750.4

Termination Date is so extended, (b) the date of termination in whole of the Commitments pursuant to Section 2.05(a) or 6.01 or (c) as to any Lender who becomes a Defaulting Lender, the date of termination of such Defaulting Lender’s Commitments pursuant to Section 2.05(b); provided,however, that the Termination Date of any Lender that is a Non-Consenting Lender to any requested extension pursuant to Section 2.19 shall be the Termination Date in effect immediately prior to the applicable Extension Date for all purposes of this Agreement.

“Third-Party Vendor Financing Program” means each and any arrangement by the Company or any Subsidiary of third-party vendor financing directly or indirectly for customers of the Company and its Subsidiaries, including (a) the sale of a financing business, (b) sales, dispositions, assignments, leases, licenses, conveyances or other transfers of all or any portion of the business of, and assets relating to the business of, providing billing, collection and other services in respect of finance, lease and other Receivables, (c) Qualified Receivables Transactions and (d) other arrangements for the indirect financing of Receivables wherein a third-party financier makes loans to Subsidiaries that are Finance SPEs in respect of Receivables generated by the Company and its Subsidiaries, whether generated prior to or during such arrangements and whether the relevant transaction is treated as on or off the Company’s consolidated balance sheet.

“Unissued Letter of Credit Commitment” means, with respect to any Issuing Bank, the obligation of such Issuing Bank to issue Letters of Credit for the account of any Borrower or its specified Subsidiaries in an amount equal to the excess of (a) the amount of its Letter of Credit Commitment over (b) the aggregate Available Amount of all Letters of Credit issued by such Issuing Bank.

“Unused Commitment” means, with respect to each Lender at any time, (a) such Lender’s Revolving Credit Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all Advances made by such Lender (in its capacity as a Lender) and outstanding at such time, plus (ii) such Lender’s Ratable Share of (A) the aggregate Available Amount of all the Letters of Credit outstanding at such time and (B) the aggregate principal amount of all Advances made by each Issuing Bank pursuant to Section 2.03(c) that have not been ratably funded by such Lender and outstanding at such time.

“Voting Stock” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

“Wholly-Owned Subsidiary” means, at any time, any Subsidiary of the Company in which more than 80% (90% in the case of PARC) of the Equity is at such time directly or indirectly owned by the Company, provided, however, that “Wholly-Owned Subsidiary” shall not include any Finance SPE.

22

NYDOCS01/1357750.4

SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”.

SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles as in effect in the United States from time to time (“GAAP”), provided that (a) if there is any change in GAAP from such principles applied in the preparation of the audited financial statements referred to in Section 4.01(e) (“Initial GAAP”), that is material in respect of the calculation of compliance with the covenants set forth in Section 5.03, the Company shall give prompt notice of such change to the Agent and the Lenders, (b) if the Company notifies the Agent that the Company requests an amendment of any provision hereof to eliminate the effect of any change in GAAP (or the application thereof) from Initial GAAP (or if the Agent or the Required Lenders request an amendment of any provision hereof for such purpose), regardless of whether such notice is given before or after such change in GAAP (or the application thereof), then such provision shall be applied on the basis of generally accepted accounting principles as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision is amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under Statement of Financial Accounting Standards 133 and 159 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Company or any Subsidiary at “fair value”, as defined therein.

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT

SECTION 2.01. The Advances and Letters of Credit. (a) The Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Advances to any Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date of such Lender in an amount (based in respect of any Advances to be denominated in a Committed Currency by reference to the Equivalent thereof in Dollars determined on the date of delivery of the applicable Notice of Borrowing) not to exceed such Lender’s Unused Commitment. Each Borrowing shall be in an amount not less than the Borrowing Minimum or the Borrowing Multiple in excess thereof and shall consist of Advances of the same Type and in the same currency made on the same day by the Lenders ratably according to their respective Revolving Credit Commitments. Within the limits of each Lender’s Revolving Credit Commitment, any Borrower may borrow under this Section 2.01(a), prepay pursuant to Section 2.10 and reborrow under this Section 2.01(a).

(b)    Letters of Credit. Each Issuing Bank agrees, on the terms and conditions hereinafter set forth, in reliance upon the agreements of the other Lenders set forth in this Agreement, to issue letters of credit (each, a “Letter of Credit”) denominated in Dollars or a Committed Currency for the account of any Borrower and its specified Subsidiaries from time to time on any Business Day during the period from the Effective Date until 30 days before the Termination Date in an

23

NYDOCS01/1357750.4

aggregate Available Amount (based in respect of any Letters of Credit to be denominated in a Committed Currency by reference to the Equivalent thereof in Dollars determined on the date of delivery of the applicable Notice of Issuance) (i) for all Letters of Credit issued hereunder not to exceed at any time the Letter of Credit Facility at such time and (ii) for all Letters of Credit issued by each Issuing Bank not to exceed at any time such Issuing Bank’s Letter of Credit Commitment at such time and (iii) for each such Letter of Credit not to exceed an amount equal to the Unused Commitments of the Lenders at such time. No Letter of Credit shall have an expiration date (including all rights of the applicable Borrower or the beneficiary to require renewal) later than 10 Business Days before the Termination Date, provided that no Letter of Credit may expire after the Termination Date of any Non-Consenting Lender if, after giving effect to such issuance, the aggregate Revolving Credit Commitments of the Consenting Lenders (including any replacement Lenders) for the period following such Termination Date would be less than the Available Amount of the Letters of Credit expiring after such Termination Date. Within the limits referred to above, the Borrowers may from time to time request the issuance of Letters of Credit under this Section 2.01(b). Each letter of credit listed on Schedule 2.01(b) shall be deemed to constitute a Letter of Credit issued hereunder, and each Lender that is an issuer of such a Letter of Credit shall, for purposes of Section 2.03, be deemed to be an Issuing Bank for each such letter of credit, provided than any renewal or replacement of any such letter of credit shall be issued by an Issuing Bank pursuant to the terms of this Agreement.

SECTION 2.02. Making the Advances. (a) Except as otherwise provided in Section 2.03(c), each Borrowing shall be made on notice, given not later than (x) 12:00 noon (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurocurrency Rate Advances denominated in Dollars, (y) 12:00 noon (New York City time) on the fourth Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurocurrency Rate Advances denominated in any Committed Currency, or (z) 12:00 noon (New York City time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances, by any Borrower to the Agent (and, in the case of a Borrowing consisting of Eurocurrency Rate Advances, simultaneously to the Sub-Agent), which shall give to each Lender prompt notice thereof by telecopier or email. Each such notice of a Borrowing (a “Notice of Borrowing”) shall be by telephone, confirmed immediately in writing, or telecopier or email in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing consisting of Eurocurrency Rate Advances, initial Interest Period and currency for each such Advance. Each Lender shall, before 1:00 P.M. (New York City time) on the date of such Borrowing, in the case of a Borrowing consisting of Eurocurrency Rate Advances denominated in Dollars, before 2:00 P.M. (New York City time) on the date of such Borrowing, in the case of a Borrowing consisting of Base Rate Advances, and before 9:00 A.M. (New York City time) on the date of such Borrowing, in the case of a Borrowing consisting of Eurocurrency Rate Advances denominated in any Committed Currency, make available for the account of its Applicable Lending Office to the Agent at the applicable Agent’s Account, in same day funds, such Lender’s ratable portion of such Borrowing. After the Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower requesting the Borrowing at the Agent’s address referred to in Section 9.02 or at the applicable Payment Office, as the case may be.

24

NYDOCS01/1357750.4

(b)    Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrowers may not select Eurocurrency Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than the Borrowing Minimum or if the obligation of the Lenders to make Eurocurrency Rate Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the Eurocurrency Rate Advances may not be outstanding as part of more than ten separate Borrowings.

(c)    Each Notice of Borrowing shall be irrevocable and binding on the Borrower requesting the Borrowing. In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurocurrency Rate Advances, such Borrower shall indemnify each Lender against any loss (excluding loss of anticipated profits), cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.

(d)    Unless the Agent shall have received notice from a Lender prior to the time of any Borrowing that such Lender will not make available to the Agent such Lender’s ratable portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02, and the Agent may, in reliance upon such assumption, make available to the Borrower requesting the Borrowing on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and such Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Agent, at (i) in the case of such Borrower, the higher of (A) the interest rate applicable at the time to the Advances comprising such Borrowing and (B) the cost of funds incurred by the Agent in respect of such amount and (ii) in the case of such Lender, (A) the Federal Funds Rate in the case of Advances denominated in Dollars or (B) the cost of funds incurred by the Agent in respect of such amount in the case of Advances denominated in Committed Currencies. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement.

(e)    The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit. (a) Request for Issuance. (i) Each Letter of Credit shall be issued upon notice, given not later than 11:00 A.M. (New York City time) on the fifth Business Day prior to the date of the proposed Issuance of such Letter of Credit (or on such shorter notice as the applicable Issuing Bank may agree), by any Borrower to any Issuing Bank, and such Issuing Bank shall give the Agent, prompt

25

NYDOCS01/1357750.4

notice thereof. Each such notice by a Borrower of issuance of a Letter of Credit (a “Notice of Issuance”) shall be by telecopier or email or by telephone, confirmed immediately in writing, specifying therein the requested (A) date of such issuance (which shall be a Business Day), (B) Available Amount of such Letter of Credit, (C) desired currency for such Letter of Credit, which shall be Dollars or a Committed Currency, (D) expiration date of such Letter of Credit, (E) name and address of the beneficiary of such Letter of Credit and (F) form of such Letter of Credit. Such Letter of Credit shall be issued pursuant to such application and agreement for letter of credit as such Issuing Bank and the applicable Borrower shall agree for use in connection with such requested Letter of Credit (a “Letter of Credit Agreement”). If the requested form of such Letter of Credit is acceptable to such Issuing Bank in its reasonable discretion (it being understood that any such form shall have only explicit documentary conditions to draw and shall not include discretionary conditions), and such Issuing Bank has not received written notice from any Lender, the Agent or the Company, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Section 3.03 shall not be satisfied, such Issuing Bank will, upon fulfillment of the applicable conditions set forth in Section 3.03, make such Letter of Credit available to the applicable Borrower at its office referred to in Section 9.02 or as otherwise agreed with such Borrower in connection with such Issuance. In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern.

(b)    Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Ratable Share of the Available Amount of such Letter of Credit. Each Borrower hereby agrees to each such participation. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Agent, for the account of such Issuing Bank, such Lender’s Ratable Share of each drawing made under a Letter of Credit funded by such Issuing Bank and not reimbursed by the applicable Borrower on the date made, or of any reimbursement payment required to be refunded to such Borrower for any reason, which amount will be advanced, and deemed to be an Advance to such Borrower hereunder, regardless of the satisfaction of the conditions set forth in Section 3.03. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender further acknowledges and agrees that its participation in each Letter of Credit will be automatically adjusted to reflect such Lender’s Ratable Share of the Available Amount of such Letter of Credit at each time such Lender’s Revolving Credit Commitment is amended pursuant to a Commitment Increase in accordance with Section 2.18, an assignment in accordance with Section 9.07 or otherwise pursuant to this Agreement.

(c)    Drawing and Reimbursement. The payment by an Issuing Bank of a draft drawn under any Letter of Credit which is not reimbursed by the Borrower that requested such Letter of Credit on the date made shall constitute for all purposes of this Agreement the making by

26

NYDOCS01/1357750.4

any such Issuing Bank of an Advance to such Borrower which, in the case of a Letter of Credit denominated in Dollars, shall be a Base Rate Advance in the amount of such draft, and, in the case of a Letter of Credit denominated in a Committed Currency, shall be a Base Rate Advance in an amount determined by reference to the Equivalent of such drawn amount in Dollars determined on the date of such drawing, without regard to whether the making of such an Advance would exceed such Issuing Bank’s Unused Commitment. Each Issuing Bank shall give prompt notice of each drawing under any Letter of Credit issued by it to the applicable Borrower and the Agent. Upon written demand by such Issuing Bank, with a copy of such demand to the Agent and the applicable Borrower, each Lender shall pay to the Agent such Lender’s Ratable Share of such outstanding Advance pursuant to Section 2.03(b). Each Lender acknowledges and agrees that its obligation to make Advances pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Promptly after receipt thereof, the Agent shall transfer such funds to such Issuing Bank. Each Lender agrees to fund its Ratable Share of an outstanding Advance on (i) the Business Day on which demand therefor is made by such Issuing Bank, provided that notice of such demand is given not later than 11:00 A.M. (New York City time) on such Business Day, or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time. If and to the extent that any Lender shall not have so made the amount of such Advance available to the Agent, such Lender agrees to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by any such Issuing Bank until the date such amount is paid to the Agent, at the Federal Funds Rate for its account or the account of such Issuing Bank, as applicable. If such Lender shall pay to the Agent such amount for the account of any such Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute an Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Advance made by such Issuing Bank shall be reduced by such amount on such Business Day.

(d)    Letter of Credit Reports. Each Issuing Bank shall furnish (A) to the Agent and each Lender (with a copy to the Company) on the first Business Day of each month a written report summarizing issuance and expiration dates of Letters of Credit issued by such Issuing Bank during the preceding month and drawings during such month under all Letters of Credit and (B) to the Agent and each Lender (with a copy to the Company) on the first Business Day of each calendar quarter a written report setting forth the average daily aggregate Available Amount during the preceding calendar quarter of all Letters of Credit issued by such Issuing Bank.

(e)    Failure to Make Advances. The failure of any Lender to make the Advance to be made by it on the date specified in Section 2.03(c) shall not relieve any other Lender of its obligation hereunder to make its Advance on such date, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on such date.

SECTION 2.04. Fees. (a) Facility Fee. The Company agrees to pay to the Agent for the account of each Lender a facility fee on the aggregate amount of such Lender’s Revolving Credit Commitment from the Restatement Date in the case of each Initial Lender and from the effective date specified in the Assumption Agreement or in the Assignment and Assumption pursuant

27

NYDOCS01/1357750.4

to which it became a Lender in the case of each other Lender until the Termination Date for such Lender (or such later date on which the Advances made by such Lender shall have been paid in full and the participations in Letters of Credit of such Lender have terminated) at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing with the quarter ended March 31, 2014, and on the Termination Date applicable to such Lender, provided that no Defaulting Lender shall be entitled to receive any facility fee except in respect of its outstanding Advances for any period during which that Lender is a Defaulting Lender (and the Company shall not be required to pay such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(b)    Letter of Credit Fees. (i) Each Borrower shall pay to the Agent for the account of each Lender a commission on such Lender’s Ratable Share of the average daily aggregate Available Amount of all Letters of Credit issued for the account of such Borrower and outstanding from time to time at a rate per annum equal to the Applicable Margin for Eurocurrency Rate Advances in effect from time to time during such calendar quarter, payable in arrears quarterly on the last day of each March, June, September and December, commencing with the quarter ended March 31, 2014, and on the Termination Date applicable to such Lender; provided that the Applicable Margin shall be 2% above the Applicable Margin in effect upon the occurrence and during the continuation of an Event of Default if such Borrower is required to pay default interest on all outstanding Advances pursuant to Section 2.07(b); provided,further, that (i) to the extent that all or a portion of the Fronting Exposure in respect of any Defaulting Lender is reallocated to the Non-Defaulting Lenders pursuant to Section 2.20(a), such fees that would have accrued for the benefit of such Defaulting Lender will instead accrue for the benefit of and be payable to such Non-Defaulting Lenders, prorata in accordance with their respective Revolving Credit Commitments, and (ii) to the extent that all or any portion of such Fronting Exposure cannot be so reallocated, such fees will instead accrue for the benefit of and be payable to the respective Issuing Banks ratably according to the outstanding Letters of Credit issued by each Issuing Bank.

(ii)    Each Borrower shall pay to each Issuing Bank, for its own account, a fronting fee equal to 0.125% per annum (or such lesser amount as such Issuing Bank may approve in its sole discretion) on the Available Amount of all Letters of Credit issued for the account of such Borrower by such Issuing Bank, payable in arrears quarterly on the last day of each March, June, September and December, commencing with the quarter ended March 31, 2014, and on the Termination Date, and such other commissions, issuance fees, transfer fees and other fees and charges in connection with the Issuance or administration of each Letter of Credit as such Borrower and such Issuing Bank shall agree.

(c)    Agent’s Fees. The Company shall pay to the Agent for its own account such fees as may from time to time be agreed between the Company and the Agent.

SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional Ratable Termination or Reduction. The Company shall have the right, upon at least two Business Days’ notice to the Agent, to terminate in whole or permanently reduce ratably in part the Unused Commitments or the Unissued Letter of Credit Commitments of the Lenders, provided, however,

28

NYDOCS01/1357750.4

that each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof.

(b)    Non-Ratable Reduction. The Company shall have the right, at any time, upon at least ten Business Days notice to a Defaulting Lender (with a copy to the Agent), to terminate in whole such Lender’s Commitments. Such termination shall be effective, (x) with respect to such Lender’s Unused Commitment, on the date set forth in such notice, provided, however, that such date shall be no earlier than ten Business Days after receipt of such notice and (y) with respect to each Advance outstanding to such Lender, in the case of Base Rate Advances, on the date set forth in such notice and, in the case of Eurocurrency Rate, on the last day of the then current Interest Period relating to such Advance. Upon termination of a Lender’s Commitments under this Section 2.05(b), the Company will pay or cause to be paid all principal of, and interest accrued to the date of such payment on, Advances owing to such Lender and pay any accrued facility fees or Letter of Credit fees payable to such Lender pursuant to the provisions of Section 2.04, and all other amounts payable to such Lender hereunder (including, but not limited to, any increased costs or other amounts owing under Section 2.11 and any indemnification for Taxes under Section 2.14); and, if such Lender is an Issuing Bank, shall pay to the Agent for deposit in the L/C Cash Deposit Account an amount equal to the Available Amount of all Letters of Credit issued by such Issuing Bank, and upon such payments, the obligations of such Lender hereunder shall, by the provisions hereof, be released and discharged; provided, however, that such Lender’s rights under Sections 2.11, 2.14 and 9.04, and, in the case of an Issuing Bank, Sections 2.04(b) and 6.02, and its obligations under Section 8.05 shall survive such release and discharge as to matters occurring prior to such date. Subject to Section 2.18, the aggregate amount of the Commitments of the Lenders once reduced pursuant to this Section 2.05(b) may not be reinstated; provided, further, however, that if pursuant to this Section 2.05(b), the Borrowers shall pay to a Defaulting Lender any principal of, or interest accrued on, the Advances owing to such Defaulting Lender, then the Borrowers shall either (x) confirm to the Agent that the conditions set forth in Section 3.03(a) are met on and as of such date of payment or (y) pay or cause to be paid a ratable payment of principal and interest to all Lenders who are not Defaulting Lenders.

SECTION 2.06. Repayment of Advances and Letter of Credit Drawings. (a) Advances. Each Borrower shall repay to the Agent for the ratable account of each Lender on the Termination Date applicable to such Lender the aggregate principal amount of the Advances made to it by such Lender and then outstanding.

(b)    Letter of Credit Drawings. The obligations of each Borrower under any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit issued for the account of such Borrower shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances (it being understood that any such payment by such Borrower is without prejudice to, and does not constitute a waiver of, any rights such Borrower might have or might acquire as a result of the payment by any Lender of any draft or the reimbursement by such Borrower thereof):

29

NYDOCS01/1357750.4

(i)    any lack of validity or enforceability of this Agreement, any Note, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the “L/C Related Documents”);

(ii)    any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of such Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents;

(iii)    the existence of any claim, set-off, defense or other right that such Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for which any such beneficiary or any such transferee may be acting), any Issuing Bank, the Agent, any Lender or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction;

(iv)    any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(v)    payment by any Issuing Bank under a Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit;

(vi)    any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of such Borrower in respect of the L/C Related Documents; or

(vii)    any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, such Borrower or a guarantor.

SECTION 2.07. Interest on Advances. (a) Scheduled Interest. Each Borrower shall pay interest on the unpaid principal amount of each Advance made to it and owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:

(i)    Base Rate Advances. During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) Base Rate in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full plus (y) the Applicable Margin in effect from time to time.

(ii)    Eurocurrency Rate Advances. During such periods as such Advance is a Eurocurrency Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (x) the Eurocurrency Rate for such Interest Period for such Advance plus (y) the Applicable Margin in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than

30

NYDOCS01/1357750.4

three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurocurrency Rate Advance shall be Converted or paid in full.

(b)    Default Interest. Upon the occurrence and during the continuance of an Event of Default under Section 6.01(a), the Agent shall, upon the request of the Required Lenders, require the Borrowers to pay interest (“Default Interest”) on (i) the overdue principal amount of each Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above; provided, however, that following acceleration of the Advances pursuant to Section 6.01, Default Interest shall accrue and be payable hereunder whether or not previously required by the Agent.

SECTION 2.08. Interest Rate Determination. (a) The Agent shall give prompt notice to the Company and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.07(a)(i) or (ii).

(b)    If, with respect to any Eurocurrency Rate Advances, the Required Lenders notify the Agent that (i) they are unable to obtain matching deposits in the London inter-bank market at or about 11:00 A.M. (London time) on the second Business Day before the making of a Borrowing in sufficient amounts to fund their respective Advances as a part of such Borrowing during its Interest Period or (ii) the Eurocurrency Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurocurrency Rate Advances for such Interest Period, the Agent shall forthwith so notify the Company and the Lenders, whereupon (A) the Borrower of such Eurocurrency Rate Advances will, on the last day of the then-existing Interest Period therefor, (1) if such Eurocurrency Rate Advances are denominated in Dollars, either (x) prepay such Advances or (y) Convert such Advances into Base Rate Advances and (2) if such Eurocurrency Rate Advances are denominated in any Committed Currency, either (x) prepay such Advances or (y) exchange such Advances into an Equivalent amount of Dollars and Convert such Advances into Base Rate Advances and (B) the obligation of the Lenders to make, or to Convert Advances into, Eurocurrency Rate Advances shall be suspended until the Agent shall notify the Company and the Lenders that the circumstances causing such suspension no longer exist.

(c)    If any Borrower shall fail to select the duration of any Interest Period for any Eurocurrency Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Agent will forthwith so notify such Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, (i) if such Eurocurrency Rate Advances are denominated in Dollars, Convert into Base Rate

31

NYDOCS01/1357750.4

Advances and (ii) if such Eurocurrency Rate Advances are denominated in a Committed Currency, be exchanged for an Equivalent amount of Dollars and Convert into Base Rate Advances.

(d)    On the date on which the aggregate unpaid principal amount of Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than the Borrowing Minimum, such Advances shall automatically (i) if such Eurocurrency Rate Advances are denominated in Dollars, Convert into Base Rate Advances and (ii) if such Eurocurrency Rate Advances are denominated in a Committed Currency, be exchanged for an Equivalent amount of Dollars and Convert into Base Rate Advances.

(e)    Upon the occurrence and during the continuance of any Event of Default under Section 6.01(a), (i) each Eurocurrency Rate Advance will automatically, on the last day of the then existing Interest Period therefor, (A) if such Eurocurrency Rate Advances are denominated in Dollars, be Converted into Base Rate Advances and (B) if such Eurocurrency Rate Advances are denominated in any Committed Currency, be exchanged for an Equivalent amount of Dollars and be Converted into Base Rate Advances and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurocurrency Rate Advances shall be suspended.

(f)    If Reuters Screen LIBOR01 Page or the Reuters Screen CDOR Page (or any successor page or other relevant Reuters Screen page), as applicable, is unavailable for any Eurocurrency Rate Advance,

(i)    the Agent shall forthwith notify the applicable Borrower and the Lenders that the interest rate cannot be determined for such Eurocurrency Rate Advances,

(ii)    each such Eurocurrency Rate Advance will automatically, on the last day of the then existing Interest Period therefor, (A) if such Eurocurrency Rate Advance is denominated in Dollars, Convert into a Base Rate Advance and (B) if such Eurocurrency Rate Advance is denominated in any Committed Currency, be prepaid by the applicable Borrower or be automatically exchanged for an Equivalent amount of Dollars and be Converted into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and

(iii)    the obligation of the Lenders to make Eurocurrency Rate Advances in the applicable currency or to Convert Advances into Eurocurrency Rate Advances shall be suspended until the Agent shall notify the Company and the Lenders that the circumstances causing such suspension no longer exist.

SECTION 2.09. Optional Conversion of Advances. The Borrower of any Advance may on any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion in the case of a Conversion to Eurocurrency Rate Advances and not later than 11:00 A.M. (New York City time) on the date of the proposed Conversion in the case of a Conversion to Base Rate Advances and subject to the provisions of Sections 2.08, 2.12 and 9.04(c), Convert all Advances denominated in Dollars of one Type comprising the same Borrowing into Advances denominated in Dollars of the other Type; provided, however, that any Conversion of Base Rate Advances into Eurocurrency

32

NYDOCS01/1357750.4

Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Dollar denominated Advances to be Converted, and (iii) if such Conversion is into Eurocurrency Rate Advances, the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower giving such notice.

SECTION 2.10. Prepayments of Advances. (a) Optional. Each Borrower may, upon notice at least two Business Days’ prior to the date of such prepayment, in the case of Eurocurrency Rate Advances, and not later than 11:00 A.M. (New York City time) on the date of such prepayment, in the case of Base Rate Advances, to the Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given such Borrower shall, prepay the outstanding principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment of Advances shall be in an aggregate principal amount of not less than the Borrowing Minimum or a Borrowing Multiple in excess thereof, and (y) in the event of any such prepayment of a Eurocurrency Rate Advance, such Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 9.04(c).

(b)    Mandatory. (i) If, on any date, the Agent notifies the Company that, on any interest payment date, the sum of (A) the aggregate principal amount of all Advances denominated in Dollars plus the aggregate Available Amount of all Letters of Credit denominated in Dollars then outstanding plus (B) the Equivalent in Dollars (determined on the third Business Day prior to such interest payment date) of the aggregate principal amount of all Advances and the Available Amount of all Letters of Credit denominated in Committed Currencies then outstanding exceeds 105% of the aggregate Revolving Credit Commitments of the Lenders on such date, the Borrowers shall, as soon as practicable and in any event within two Business Days after receipt of such notice, prepay the outstanding principal amount of any Advances owing by the Borrowers in an aggregate amount sufficient to reduce such sum to an amount not to exceed 100% of the aggregate Revolving Credit Commitments of the Lenders on such date together with any interest accrued to the date of such prepayment on the aggregate principal amount of Advances prepaid; provided that if the Company has Cash Collateralized Letters of Credit in accordance with Section 2.20(a), the Available Amount of the outstanding Letters of Credit shall be deemed to have been reduced by the amount of such cash collateral. The Agent shall give prompt notice of any prepayment required under this Section 2.10(b)(i) to the Company and the Lenders, and shall provide prompt notice to the Company of any such notice of required prepayment received by it from any Lender.

(ii)    Each prepayment made pursuant to this Section 2.10(b) shall be made together with any interest accrued to the date of such prepayment on the principal amounts prepaid and, in the case of any prepayment of a Eurocurrency Rate Advance on a date other than the last day of an Interest Period or at its maturity, any additional amounts which the applicable Borrower shall be obligated to reimburse to the Lenders in respect thereof pursuant to Section 9.04(c). The

33

NYDOCS01/1357750.4

Agent shall give prompt notice of any prepayment required under this Section 2.10(b) to the Company and the Lenders.

SECTION 2.11. Increased Costs. (a) If, due to either (i) the introduction of or any change after the Effective Date in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority including, without limitation, any agency of the European Union or similar monetary or multinational authority (whether or not having the force of law), (A) there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurocurrency Rate Advances or of agreeing to issue or of issuing or maintaining or participating in Letters of Credit, (B) any Lender or its Applicable Lending Office is subjected to any Taxes, or there shall be a change the basis of taxation of payments to such Lender (other than with respect to Taxes for which Lenders are indemnified under Section 2.14 and Excluded Taxes as to both of which Section 2.14 shall govern), or (C) there shall be imposed, modified or deemed applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurocurrency Rate) or any Issuing Bank, then the Company shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Company and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error.

(b)    If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) that becomes effective after the Effective Date, or any change in any such existing law, regulation, guideline or request, affects or would affect the amount of capital or liquidity required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital or liquidity is increased by or based upon the existence of such Lender’s commitment to lend or to issue or participate in Letters of Credit hereunder and other commitments of such type or the issuance or maintenance of or participation in the Letters of Credit (or similar contingent obligations), then, upon demand by such Lender (with a copy of such demand to the Agent), the Company shall pay to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital or liquidity to be allocable to the existence of such Lender’s commitment to lend or to issue or participate in Letters of Credit hereunder or to the issuance or maintenance of or participation in any Letters of Credit. A certificate as to such amounts submitted to the Company and the Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error.

(c)    Notwithstanding anything to the contrary in this Section 2.11, the Company shall not be required to compensate a Lender pursuant to this Section 2.11 for any amounts incurred more than 270 days prior to the date that such Lender notifies the Company of such Lender’s intention to claim compensation therefor; provided that, if the circumstances giving rise to such

34

NYDOCS01/1357750.4

claim have a retroactive effect, then such 270-day period shall be extended to include the period of such retroactive effect.

(d)    For the avoidance of doubt, for purposes of this Section 2.11, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority ) or the United States or foreign regulatory authorities (whether or not having the force of law), in each case pursuant to Basel III, shall in each case be deemed to be a change in law regardless of the date enacted, adopted, issued, promulgated or implemented.

SECTION 2.12. Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurocurrency Lending Office to perform its obligations hereunder to make Eurocurrency Rate Advances in Dollars or any Committed Currency or to fund or maintain Eurocurrency Rate Advances in Dollars or any Committed Currency hereunder, (a) each Eurocurrency Rate Advance will automatically, upon such demand (i) if such Eurocurrency Rate Advance is denominated in Dollars, be Converted into a Base Rate Advance and (ii) if such Eurocurrency Rate Advance is denominated in any Committed Currency, be exchanged into an Equivalent amount of Dollars and be Converted into a Base Rate Advance and (b) the obligation of the Lenders to make Eurocurrency Rate Advances or to Convert Advances into Eurocurrency Rate Advances shall be suspended until the Agent shall notify the Company and the Lenders that the circumstances causing such suspension no longer exist; provided, however, that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Eurocurrency Lending Office if the making of such a designation would allow such Lender or its Eurocurrency Lending Office to continue to perform its obligations to make Eurocurrency Rate Advances or to continue to fund or maintain Eurocurrency Rate Advances and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender.

SECTION 2.13. Payments and Computations. (a) Each Borrower shall make each payment required to be made by such Borrower hereunder (except with respect to principal of, interest on, and other amounts relating to, Advances denominated in a Committed Currency), irrespective of any right of counterclaim or set-off, not later than 11:00 A.M. (New York City time) on the day when due in Dollars to the Agent at the applicable Agent’s Account in same day funds. Each Borrower shall make each payment required to be made by such Borrower hereunder with respect to principal of, interest on, and other amounts relating to, Advances denominated in a Committed Currency, irrespective of any right of counterclaim or set-off, not later than 11:00 A.M. (at the Payment Office for such Committed Currency) on the day when due in such Committed Currency to the Agent, by deposit of such funds to the applicable Agent’s Account in same day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest, fees or commissions ratably (other than amounts payable pursuant to

35

NYDOCS01/1357750.4

Section 2.04(b), 2.11, 2.14 or 9.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon any Assuming Lender becoming a Lender hereunder as a result of a Commitment Increase pursuant to Section 2.18 or an extension of the Termination Date pursuant to Section 2.19 and upon the Agent’s receipt of such Lender’s Assumption Agreement and recording of the information contained therein in the Register, from and after the applicable Increase Date or Extension Date, as the case may be, the Agent shall make all payments hereunder and under any Notes issued in connection therewith in respect of the interest assumed thereby to the Assuming Lender. Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 9.07(c), from and after the effective date specified in such Assignment and Assumption, the Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b)    Each Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender by such Borrower is not made when due hereunder or under the Note held by such Lender, to charge from time to time against any or all of such Borrower’s accounts with such Lender any amount so due.

(c)    All computations of interest based on the Base Rate (other than when the Base Rate is determined by reference to the Federal Funds Rate or the Eurocurrency Rate) shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurocurrency Rate or the Federal Funds Rate and of fees and Letter of Credit commissions shall be made by the Agent on the basis of a year of 360 days (or, in each case of Advances denominated in Committed Currencies where market practice differs, in accordance with market practice), in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(d)    Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest, fee or commission, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurocurrency Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

(e)    Unless the Agent shall have received notice from any Borrower prior to the date on which any payment is due to the Lenders hereunder that such Borrower will not make such payment in full, the Agent may assume that such Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent such Borrower shall not have so made such payment in full to the Agent, each Lender

36

NYDOCS01/1357750.4

shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at (i) the Federal Funds Rate in the case of Advances denominated in Dollars or (ii) the cost of funds incurred by the Agent in respect of such amount in the case of Advances denominated in Committed Currencies.

(f)    To the extent that the Agent receives funds for application to the amounts owing by any Borrower under or in respect of this Agreement or any Note in currencies other than the currency or currencies required to enable the Agent to distribute funds to the Lenders in accordance with the terms of this Section 2.13, the Agent shall be entitled to convert or exchange such funds into Dollars or into a Committed Currency or from Dollars to a Committed Currency or from a Committed Currency to Dollars, as the case may be, to the extent necessary to enable the Agent to distribute such funds in accordance with the terms of this Section 2.13; provided that each Borrower and each of the Lenders hereby agree that the Agent shall not be liable or responsible for any loss, cost or expense suffered by such Borrower or such Lender as a result of any conversion or exchange of currencies affected pursuant to this Section 2.13(f) or as a result of the failure of the Agent to effect any such conversion or exchange; and providedfurther that each Borrower agrees to indemnify the Agent and each Lender, and hold the Agent and each Lender harmless, for any and all losses, costs and expenses incurred by the Agent or any Lender for any conversion or exchange of currencies (or the failure to convert or exchange any currencies) in accordance with this Section 2.13(f) paid by such Borrower.

SECTION 2.14. Taxes. (a) Any and all payments by each Borrower to or for the account of any Lender or the Agent hereunder or under the Notes or any other documents to be delivered hereunder shall be made, in accordance with Section 2.13 or the applicable provisions of such other documents, free and clear of and without deduction for any and all Indemnified Taxes. If any Borrower shall be required by law to deduct any Indemnified Taxes from or in respect of any sum payable hereunder or under any Note or any other documents to be delivered hereunder to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.14) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

(b)    In addition, the Company shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or any other documents to be delivered hereunder or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes or any other documents to be delivered hereunder, excluding, however, such taxes imposed as a result of an assignment (other than an assignment that occurs as a result of the Company’s demand) or participation (hereinafter referred to as “Other Taxes”).

(c)    Each Borrower shall indemnify each Lender and the Agent for and hold it harmless against the full amount of Indemnified Taxes or Other Taxes imposed on or paid by such

37

NYDOCS01/1357750.4

Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor. The written demand shall include the original or a copy of a receipt or a demand issued by the relevant governmental authority evidencing such payment or demanding such payment, together with a certificate setting forth the amount of such Indemnified Taxes or Other Taxes and, in reasonable detail, the calculation and basis for such Indemnified Taxes or Other Taxes.

(d)    Within 30 days after the date of any payment of Indemnified Taxes by a Borrower to a governmental authority, each Borrower shall furnish to the Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Agent.

(e)    (i) Each Lender that is a United States person, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender and on the date of the Assumption Agreement or the Assignment and Assumption pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as reasonably requested in writing by the Company, shall provide each of the Agent and the Company with two duly completed original Internal Revenue Service Forms W-9 or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender is exempt from United States withholding tax on payments pursuant to this Agreement or the Notes. For purposes of this subsection (e), the terms “United States” and “United States person” shall have the meanings specified in Section 7701 of the Internal Revenue Code.

(ii)    Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender and on the date of the Assumption Agreement or the Assignment and Assumption pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as reasonably requested in writing by the Company, shall provide each of the Agent and the Company with two duly completed original Internal Revenue Service Forms W-8BEN, W-8ECI or W-8IMY, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes.

(iii)    If a payment made to a Lender would be subject to United States federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Lender shall deliver to the Company, at the time or times prescribed by law and at such time or times reasonably requested in writing by the Company, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested in writing by the Company as may be necessary for the Borrowers to comply with their obligations under FATCA, to determine that such Lender

38

NYDOCS01/1357750.4

has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.

(f)    Should a Lender become subject to Excluded Taxes because of its failure to deliver a form, certificate or other document described in Section 2.14(e), the Company shall take such steps as the Lender shall reasonably request to assist the Lender to recover such Excluded Taxes.

(g)    Any Lender that is entitled to an exemption from or reduction of withholding tax imposed by any jurisdiction other than the United States (a “Foreign Jurisdiction”) with respect to payments under this Agreement shall deliver to the relevant Borrower (with a copy to the Agent) within 15 Business Days following receipt of the written notice referred to below, such properly completed and executed documentation as is reasonably requested by such Borrower or the Agent in order to permit such payments to be made with the benefit of such exemption or reduction (and shall make application to the relevant governmental authority for exemption or reduced rates if it is the party required by law to do so), provided, however, that such Lender has received written notice from such Borrower or the Agent identifying the requirements for such exemption or reduction, supplying all applicable documentation and specifying the time period within which documentation is to be provided under this Section 2.14(g) (or such application is to be made). Without limiting the Lenders’ obligations under the preceding sentence, each Lender agrees that it will, without material cost or other material disadvantage (as determined in such Lender’s good faith judgment), cooperate with such Borrower to minimize the applicable withholding tax burdens in such Foreign Jurisdiction. If any Lender becomes subject to any Tax because it fails to comply with this Section 2.14(g), each Borrower shall take such steps as such Lender shall reasonably request to assist such Lender to recover such Tax. The Agent agrees that it will provide administrative and ministerial assistance to each relevant Borrower with respect to any payments made by such Borrower to the Lenders, and the calculation, reporting, withholding and remitting of any Taxes imposed by such Foreign Jurisdiction to the appropriate governmental authority. Notwithstanding the foregoing, (i) the Borrowers shall retain primary responsibility for ascertaining the requirements of applicable law and providing to the Lenders the written notice described in the first sentence of this Section 2.14(g), and (ii) no failure by the Agent to meet any obligations under this Section 2.14(g) shall operate to excuse any Borrower from its obligations to the Lenders under this Section 2.14(g). In all events, as between the Company and the Agent, the Company shall make all final decisions concerning whether payments to a Lender are subject to any withholding.

(h)    If the Agent or a Lender (or an assignee) determines, in its reasonable discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by any Borrower or with respect to which any Borrower has paid additional amounts pursuant to this Section 2.14, it shall pay over such refund plus any interest received from the governmental authority, to such Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by such Borrower under this Section 2.14 with respect to the Indemnified Taxes or the Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Agent or such Lender (or assignee).

SECTION 2.15. Sharing of Payments, Etc. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest

39

NYDOCS01/1357750.4

on any of its Advances or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Advances and accrued interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Agent of such fact, and (b) purchase (for cash at face value) participations in the Advances and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Advances and other amounts owing them; provided that:

(i)    if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

(ii)    the provisions of this paragraph shall not be construed to apply to (x) any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Advances or participations in L/C Obligations to any assignee or participant, other than to a Borrower or any Subsidiary thereof (as to which the provisions of this paragraph shall apply).

Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Borrower in the amount of such participation.

SECTION 2.16. Evidence of Debt. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Advance owing to such Lender from time to time hereunder, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder in respect of Advances. Each Borrower agrees that upon notice by any Lender to such Borrower (with a copy of such notice to the Agent) to the effect that a Note is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Advances owing to, or to be made by, such Lender to such Borrower, such Borrower shall promptly execute and deliver to such Lender a Note payable to the order of such Lender in a principal amount up to the Revolving Credit Commitment of such Lender.

(b)    The Register maintained by the Agent pursuant to Section 9.07(c) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assumption Agreement and each Assignment and Assumption delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iv) the amount of any sum received by the Agent from such Borrower hereunder and each Lender’s share thereof.

40

NYDOCS01/1357750.4

(c)    Entries made in good faith by the Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection (a) above, shall be primafacie evidence of the amount of principal and interest due and payable or to become due and payable from each Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided, however, that the failure of the Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of any Borrower under this Agreement.

SECTION 2.17. Use of Proceeds. The proceeds of the Advances shall be available (and each Borrower agrees that it shall use such proceeds) solely for general corporate purposes of the Company and its Subsidiaries.

SECTION 2.18. Increase in the Revolving Credit Commitments. (a) The Company may, at any time but in any event not more than twice in any calendar year prior to the Termination Date, by notice to the Agent, request that the aggregate amount of the Revolving Credit Commitments be increased by an amount of $50,000,000 or an integral multiple of $5,000,000 in excess thereof (each a “Commitment Increase”) to be effective as of a date that is at least 90 days prior to the scheduled Termination Date then in effect (the “Increase Date”) as specified in the related notice to the Agent; provided, however that (i) in no event shall the aggregate amount of the Revolving Credit Commitments at any time exceed $2,750,000,000 and (ii) on the date of any request by the Company for a Commitment Increase and on the related Increase Date the applicable conditions set forth in Article III shall be satisfied.

(b)    The Agent shall promptly notify the Lenders of a request by the Company for a Commitment Increase, which notice shall include (i) the proposed amount of such requested Commitment Increase, (ii) the proposed Increase Date and (iii) the date (which shall be earlier than the Increase Date) by which Lenders wishing to participate in the Commitment Increase must commit to an increase in the amount of their respective Revolving Credit Commitments (the “Commitment Date”). Each Lender that is willing to participate in such requested Commitment Increase (each an “Increasing Lender”) shall, in its sole discretion, give written notice to the Agent on or prior to the Commitment Date of the amount by which it is willing to increase its Revolving Credit Commitment (and any failure by a Lender to respond to such request for a Commitment Increase shall be deemed to be a rejection by such Lender or such request). If the Lenders notify the Agent that they are willing to increase the amount of their respective Revolving Credit Commitments by an aggregate amount that exceeds the amount of the requested Commitment Increase, the requested Commitment Increase shall be allocated among the Lenders willing to participate therein in such amounts as are agreed between the Company and the Agent.

(c)    Promptly following each Commitment Date, the Agent shall notify the Company as to the amount, if any, by which the Lenders are willing to participate in the requested Commitment Increase. If the aggregate amount by which the Lenders are willing to participate in any requested Commitment Increase on any such Commitment Date is less than the requested Commitment Increase, then the Company may extend offers to one or more Eligible Assignees to participate in any portion of the requested Commitment Increase that has not been committed to by

41

NYDOCS01/1357750.4

the Lenders as of the applicable Commitment Date; provided, however, that the Revolving Credit Commitment of each such Eligible Assignee shall be in an amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof.

(d)    On each Increase Date, each Eligible Assignee that accepts an offer to participate in a requested Commitment Increase in accordance with Section 2.18(b) (each such Eligible Assignee, an “Assuming Lender”) shall become a Lender party to this Agreement as of such Increase Date and the Revolving Credit Commitment of each Increasing Lender for such requested Commitment Increase shall be so increased by such amount (or by the amount allocated to such Lender pursuant to the last sentence of Section 2.18(b)) as of such Increase Date; provided, however, that the Agent shall have received on or before such Increase Date the following, each dated such date:

(i)    an opinion of counsel for the Company (which may be in-house counsel), in substantially the form of Exhibit E hereto;

(ii)    an assumption agreement from each Assuming Lender, if any, in form and substance reasonably satisfactory to the Company and the Agent (each an “Assumption Agreement”), duly executed by such Eligible Assignee, the Agent and the Company; and

(iii)    confirmation from each Increasing Lender of the increase in the amount of its Revolving Credit Commitment in a writing reasonably satisfactory to the Company and the Agent.

On each Increase Date, upon fulfillment of the conditions set forth in the immediately preceding sentence of this Section 2.18(d), the Agent shall notify the Lenders (including, without limitation, each Assuming Lender) and the Company, on or before 1:00 P.M. (New York City time), by telecopier, of the occurrence of the Commitment Increase to be effected on such Increase Date and shall record in the Register the relevant information with respect to each Increasing Lender and each Assuming Lender on such date. Each Increasing Lender and each Assuming Lender shall, before 2:00 P.M. (New York City time) on the Increase Date, purchase that portion of outstanding Advances of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Advances to be funded and held on a pro rata basis by the Lenders in accordance with their Ratable Shares.

SECTION 2.19. Extension of Termination Date. (a) At least 60 days but not more than 90 days prior to either or both of the first and second anniversaries of the Restatement Date, the Company, by written notice to the Agent, may request an extension of the Termination Date in effect at such time by one year from its then scheduled expiration. The Agent shall promptly notify each Lender of such request, and each Lender shall in turn, in its sole discretion, not later than 20 days prior to such anniversary date, notify the Company and the Agent in writing as to whether such Lender will consent to such extension. If any Lender shall fail to notify the Agent and the Company in writing of its consent to any such request for extension of the Termination Date at least 20 days prior to such anniversary date, such Lender shall be deemed to be a Non-Consenting Lender with respect to such request. The Agent shall notify the Company not later than 15 days prior to

42

NYDOCS01/1357750.4

such anniversary date of the decision of the Lenders regarding the Company’s request for an extension of the Termination Date.

(b)    If all the Lenders consent in writing to any such request in accordance with subsection (a) of this Section 2.19, the Termination Date in effect at such time shall, effective as at the applicable anniversary date (the “Extension Date”) and subject to the satisfaction of the conditions set forth in Section 3.03, be extended for one year. If less than all of the Lenders consent in writing to any such request in accordance with subsection (a) of this Section 2.19, the Termination Date in effect at such time shall, effective as at the applicable Extension Date and subject to subsection (d) of this Section 2.19, be extended as to those Lenders that so consented (each a “Consenting Lender”) but shall not be extended as to any other Lender (each a “Non-Consenting Lender”). To the extent that the Termination Date is not extended as to any Lender pursuant to this Section 2.19 and the Commitment of such Lender is not assumed in accordance with subsection (c) of this Section 2.19 on or prior to the applicable Extension Date, the Commitment of such Non-Consenting Lender shall automatically terminate in whole on such unextended Termination Date without any further notice or other action by the Company, such Lender or any other Person; provided that such Non-Consenting Lender’s rights under Sections 2.11, 2.14 and 9.04, and its obligations under Section 8.05, shall survive the Termination Date for such Lender as to matters occurring prior to such date. It is understood and agreed that no Lender shall have any obligation whatsoever to agree to any request made by the Company for any requested extension of the Termination Date.

(c)    If less than all of the Lenders consent to any such request pursuant to subsection (a) of this Section 2.19, the Agent shall promptly so notify the Consenting Lenders, and each Consenting Lender may, in its sole discretion, give written notice to the Agent not later than 10 days prior to the Extension Date of the amount of the Non-Consenting Lenders’ Commitments for which it is willing to accept an assignment. If the Consenting Lenders notify the Agent that they are willing to accept assignments of Commitments in an aggregate amount that exceeds the amount of the Commitments of the Non-Consenting Lenders, such Commitments shall be allocated among the Consenting Lenders willing to accept such assignments in such amounts as are agreed between the Company and the Agent. If after giving effect to the assignments of Commitments described above there remains any Commitments of Non-Consenting Lenders, the Company may arrange for one or more Consenting Lenders or other Eligible Assignees as Assuming Lenders to assume, effective as of the Extension Date, any Non-Consenting Lender’s Commitment and all of the obligations of such Non-Consenting Lender under this Agreement thereafter arising, without recourse to or warranty by, or expense to, such Non-Consenting Lender; provided, however, that the amount of the Commitment of any such Assuming Lender as a result of such substitution shall in no event be less than $10,000,000 unless the amount of the Commitment of such Non-Consenting Lender is less than $10,000,000, in which case such Assuming Lender shall assume all of such lesser amount; and providedfurther that:

(i)    any such Consenting Lender or Assuming Lender shall have paid to such Non-Consenting Lender (A) the aggregate principal amount of, and any interest accrued and unpaid to the effective date of the assignment on, the outstanding Advances, if any, of such Non-Consenting Lender plus (B) any accrued but unpaid facility fees owing to such Non-Consenting Lender as of the effective date of such assignment;

43

NYDOCS01/1357750.4

(ii)    all additional costs reimbursements, expense reimbursements and indemnities payable to such Non-Consenting Lender, and all other accrued and unpaid amounts owing to such Non-Consenting Lender hereunder, as of the effective date of such assignment shall have been paid to such Non-Consenting Lender; and

(iii)    with respect to any such Assuming Lender, the applicable processing and recordation fee required under Section 9.07 for such assignment shall have been paid;

provided further that such Non-Consenting Lender’s rights under Sections 2.11, 2.14 and 9.04, and its obligations under Section 8.05, shall survive such substitution as to matters occurring prior to the date of substitution. At least three Business Days prior to any Extension Date, (A) each such Assuming Lender, if any, shall have delivered to the Company and the Agent an Assumption Agreement, duly executed by such Assuming Lender, such Non-Consenting Lender, the Company and the Agent, (B) any such Consenting Lender shall have delivered confirmation in writing satisfactory to the Company and the Agent as to the increase in the amount of its Commitment and (C) each Non-Consenting Lender being replaced pursuant to this Section 2.19 shall have delivered to the Agent any Note or Notes held by such Non-Consenting Lender. Upon the payment or prepayment of all amounts referred to in clauses (i), (ii) and (iii) of the immediately preceding sentence, each such Consenting Lender or Assuming Lender, as of the Extension Date, will be substituted for such Non-Consenting Lender under this Agreement and shall be a Lender for all purposes of this Agreement, without any further acknowledgment by or the consent of the other Lenders, and the obligations of each such Non-Consenting Lender hereunder shall, by the provisions hereof, be released and discharged, provided that the Extension Date effectiveness shall be subject to the satisfaction of the conditions set forth in clause (d) below.

(d)    If (after giving effect to any assignments or assumptions pursuant to subsection (c) of this Section 2.19) Lenders having Commitments equal to at least 50% of the Commitments in effect immediately prior to the Extension Date consent in writing to a requested extension (whether by execution or delivery of an Assumption Agreement or otherwise) not later than one Business Day prior to such Extension Date, the Agent shall so notify the Company, and, subject to the satisfaction of the conditions set forth in Section 3.03, the Termination Date then in effect shall be extended for the additional one-year period as described in subsection (a) of this Section 2.19, and all references in this Agreement, and in the Notes, if any, to the “Termination Date” shall, with respect to each Consenting Lender and each Assuming Lender for such Extension Date, refer to the Termination Date as so extended. Promptly following each Extension Date, the Agent shall notify the Lenders (including, without limitation, each Assuming Lender) of the extension of the scheduled Termination Date in effect immediately prior thereto and shall thereupon record in the Register the relevant information with respect to each such Consenting Lender and each such Assuming Lender.

SECTION 2.20. Defaulting Lenders. (a) If any Letters of Credit are outstanding at the time a Lender becomes a Defaulting Lender, and the Commitments have not been terminated in accordance with Section 6.01, then:

(i)    so long as no Default has occurred and is continuing, all or any part of the Available Amount of outstanding Letters of Credit shall be reallocated among the Non-

44

NYDOCS01/1357750.4

Defaulting Lenders in accordance with their respective Ratable Shares (disregarding any Defaulting Lender’s Revolving Credit Commitment) but only to the extent that the sum of (A) the aggregate principal amount of all Advances made by such Non-Defaulting Lenders (in their capacity as Lenders) and outstanding at such time, plus (B) such Non-Defaulting Lenders’ Ratable Shares (before giving effect to the reallocation contemplated herein) of the Available Amount of all outstanding Letters of Credit, plus (C) the aggregate principal amount of all Advances made by each Issuing Bank pursuant to Section 2.03(c) that have not been ratably funded by such Non-Defaulting Lenders and outstanding at such time, plus (D) such Defaulting Lender’s Ratable Share of the Available Amount of such Letters of Credit, does not exceed the total of all Non-Defaulting Lenders’ Revolving Credit Commitments and, after giving effect thereto with respect to each Non-Defaulting Lender, the sum of the Advances and participations in Letters of Credit (including any Advances made by an Issuing bank pursuant to Section 2.03(c) that have not been ratably funded by the Lenders and outstanding at such time) does not exceed such Non-Defaulting Lender’s Revolving Credit Commitment.

(ii)    if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrowers shall within one Business Day following notice by any Issuing Bank, Cash Collateralize such Defaulting Lender’s Ratable Share of the Available Amount of such Letters of Credit (after giving effect to any partial reallocation pursuant to clause (i) above) by paying cash collateral to such Issuing Bank; provided that, so long as no Default shall be continuing, such cash collateral shall be released promptly upon the earliest of (A) the reallocation of the Available Amount of outstanding Letters of Credit among Non-Defaulting Lenders in accordance with clause (i) above, (B) the termination of the Defaulting Lender status of the applicable Lender or (C) such Issuing Bank’s good faith determination that there exists excess cash collateral (in which case, the amount equal to such excess cash collateral shall be released);

(iii)    if the Ratable Shares of Letters of Credit of the Non-Defaulting Lenders are reallocated pursuant to this Section 2.20(a), then the fees payable to the Lenders pursuant to Section 2.04(b)(i) shall be adjusted in accordance with such Non-Defaulting Lenders’ Ratable Shares of Letters of Credit;

(iv)    if any Defaulting Lender’s Ratable Share of Letters of Credit is neither Cash Collateralized nor reallocated pursuant to this Section 2.20(a), then, without prejudice to any rights or remedies of any Issuing Bank or any Lender hereunder, all Letter of Credit fees payable under Section 2.04(b)(i) with respect to such Defaulting Lender’s Ratable Share of Letters of Credit shall be payable to the applicable Issuing Bank until such Defaulting Lender’s Ratable Share of Letters of Credit is Cash Collateralized and/or reallocated; and

(v)    to the extent that the Available Amount of any outstanding Letter of Credit is Cash Collateralized by the Borrowers pursuant to this Section 2.20, the Borrowers shall not be required to pay any commission otherwise payable pursuant to Section 2.05(b)(i) on that portion of the Available Amount that is so Cash Collateralized.

45

NYDOCS01/1357750.4

(b)    So long as any Lender is a Defaulting Lender, no Issuing Bank shall be required to issue, amend or increase any Letter of Credit unless it is satisfied that the related exposure will be 100% covered by the Revolving Credit Commitments of the Non-Defaulting Lenders and/or cash collateral will be provided by the applicable Borrower, and participating interests in any such newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.20(a)(i) (and Defaulting Lenders shall not participate therein).

(c)    No Revolving Credit Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.20, performance by the Borrowers of their obligations shall not be excused or otherwise modified as a result of the operation of this Section 2.20. The rights and remedies against a Defaulting Lender under this Section 2.20 are in addition to any other rights and remedies which the Borrowers, the Agent, any Issuing Bank or any Lender may have against such Defaulting Lender.

(d)    If the Borrowers, the Agent and each Issuing Bank agree in writing in their reasonable determination that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Advances of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Advances and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Lenders in accordance with their Ratable Share (without giving effect to Section 2.20(a)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of any Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.

(e)    Notwithstanding anything to the contrary contained in this Agreement, any payment of principal, interest, commitment fees, Letter of Credit commissions or other amounts received by the Agent for the account of any Defaulting Lender under this Agreement (whether voluntary or mandatory, at maturity, pursuant to Article VI or otherwise) shall be applied at such time or times as may be reasonably determined by the Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to any Issuing Bank hereunder; third, if so reasonably determined by the Agent or requested by any Issuing Bank, to be held as cash collateral for future funding obligations of such Defaulting Lender in respect of any participation in any Letter of Credit; fourth, as the Borrowers may request (so long as no Default exists), to the funding of any Advance in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as reasonably determined by the Agent; fifth, if so reasonably determined by the Agent and the Borrowers, to be held in the L/C Cash Deposit Account and released in order to satisfy obligations of such Defaulting Lender to fund Advances under this Agreement; sixth, to the payment of any amounts owing to the Lenders or the Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Lender or Issuing Bank against such

46

NYDOCS01/1357750.4

Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default exists, to the payment of any amounts owing to any Borrower as a result of any judgment of a court of competent jurisdiction obtained by such Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Advance in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Advances were made or the related Letters of Credit were issued at a time when the applicable conditions set forth in Article III were satisfied or waived, such payment shall be applied solely to pay the Advances of all Non-Defaulting Lenders and Potential Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Advances of such Defaulting Lender and providedfurther that any amounts held as cash collateral for funding obligations of a Defaulting Lender shall be returned to such Defaulting Lender upon the termination of this Agreement and the satisfaction of such Defaulting Lender’s obligations hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this Section 2.20 shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

SECTION 2.21. Mitigation Obligations; Replacement of Lenders. (a) Designation of a Different Lending Office. If any Lender requests compensation under Section 2.11, or requires a Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any governmental authority for the account of any Lender pursuant to Section 2.14, then such Lender shall (at the request of the Company) use reasonable efforts to designate a different lending office for funding or booking its Advances hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.11 or 2.14, as the case may be, in the future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Company hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)    Replacement of Lenders. If any Lender requests compensation under Section 2.11, or if any Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any governmental authority for the account of any Lender pursuant to Section 2.14 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 2.21(a), or if any Lender is a Defaulting Lender, a Protesting Lender or a Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Lenders in accordance with the terms of Section 9.01 and (ii) has been approved by the Required Lenders (a “Non-Approving Lender”), then the Company may, at its sole expense and effort, upon notice to such Lender and the Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 9.07), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.11 or Section 2.14) and obligations under this Agreement to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

47

NYDOCS01/1357750.4

(i)    the Agent shall have received the assignment fee (if any) specified in Section 9.07;

(ii)    such Lender shall have received payment of an amount equal to the outstanding principal of its Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including any amounts under Section 9.04(c)) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);

(iii)    in the case of any such assignment resulting from a claim for compensation under Section 2.11 or payments required to be made pursuant to Section 2.14, such assignment will result in a reduction in such compensation or payments thereafter;

(iv)    such assignment does not conflict with applicable law; and

(v)    in the case of any assignment resulting from a Lender becoming a Non-Approving Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply.

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

SECTION 3.01. Conditions Precedent to Effectiveness of the Amendment and Restatement . This amendment and restatement of the Existing Credit Agreement (this “Amendment and Restatement”) shall become effective on the first date (the “Restatement Date”) on which the following conditions have been satisfied:

(a)    Except for the Disclosed Matters, no Material Adverse Change shall have occurred and be continuing since December 31, 2013.

(b)    There shall exist no action, suit, investigation, litigation or proceeding affecting the Company or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) except for the Disclosed Matters, could be reasonably likely to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby.

(c)    The Company shall have notified each Lender and the Agent in writing as to the proposed Restatement Date.

48

NYDOCS01/1357750.4

(d)    The Company shall have paid all accrued fees and expenses of the Agent and the Lenders (including the accrued fees and expenses of counsel to the Agent (but not other Lenders)) required to be paid by it.

(e)    On the Restatement Date, the following statements shall be true and the Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Company, dated the Restatement Date, stating that:

(i)    The representations and warranties contained in Section 4.01 are correct on and as of the Restatement Date, and

(ii)    No event has occurred and is continuing that constitutes a Default.

(f)    The Agent shall have received on or before the Restatement Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for the Notes) in sufficient copies for each Lender:

(i)    The Notes of the Initial Borrower to the order of the Lenders to the extent requested by any Lender pursuant to Section 2.16.

(ii)    Certified copies of the resolutions of the board of directors or other governing body of the Initial Borrower approving this Amendment and Restatement and the Notes, and of all documents evidencing other necessary corporate or similar action and governmental approvals, if any, with respect to this Amendment and Restatement and the Notes to be delivered by it.

(iii)    A certificate of the Secretary or an Assistant Secretary of the Initial Borrower certifying the names and true signatures of the officers of the Initial Borrower authorized to sign this Amendment and Restatement and the Notes to be delivered by it and the other documents to be delivered hereunder.

(iv)    Favorable opinions of (A) Nixon Peabody LLP, counsel for the Initial Borrower, and (B) Don H. Liu, General Counsel of the Initial Borrower, substantially in the form of Exhibits D-1 and D-2 hereto, respectively.

(v)    A favorable opinion of Shearman & Sterling LLP, counsel for the Agent, in form and substance satisfactory to the Agent.

SECTION 3.02. Initial Advance to Each Designated Subsidiary. The obligation of each Lender to make an initial Advance to each Designated Subsidiary is subject to the receipt by the Agent on or before the date that is at least five days prior to the proposed date of such initial Advance of each of the following, in form and substance reasonably satisfactory to the Agent and dated such date, and (except for the Notes) in sufficient copies for each Lender:

(a)    The Notes of such Designated Subsidiary to the order of the Lenders to the extent requested by any Lender pursuant to Section 2.16.

49

NYDOCS01/1357750.4

(b)    Certified copies of the resolutions of the board of directors or other governing body of such Designated Subsidiary (with a certified English translation if the original thereof is not in English) approving this Agreement, its Designation Agreement and the Notes to be delivered by it, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement.

(c)    A certificate of a proper officer of such Designated Subsidiary certifying the names and true signatures of the officers of such Designated Subsidiary authorized to sign its Designation Agreement and the Notes to be delivered by it and the other documents to be delivered by it hereunder.

(d)    A certificate signed by a duly authorized officer of the Company, certifying that such Designated Subsidiary has obtained all governmental and third party authorizations, consents, approvals (including exchange control approvals) and licenses required under applicable laws and regulations necessary for such Designated Subsidiary to execute and deliver its Designation Agreement and the Notes to be delivered by it and to perform its obligations hereunder and thereunder.

(e)    A Designation Agreement duly executed by such Designated Subsidiary and the Company.

(f)    Favorable opinions of counsel (which may be in-house counsel) to such Designated Subsidiary substantially in the form of Exhibit D-3 hereto, and as to such other matters as any Lender through the Agent may reasonably request.

(g)    Favorable opinions of counsel to the Company as to the enforceability of Article VII hereof.

(h)    Such other approvals, opinions or documents as any Lender, through the Agent may reasonably request.

SECTION 3.03. Conditions Precedent to Each Borrowing, Issuance, Commitment Increase and Extension Date. The obligation of each Lender to make an Advance (other than an Advance made by any Issuing Bank or any Lender pursuant to Section 2.03(c)) on the occasion of each Borrowing, the obligation of each Issuing Bank to issue a Letter of Credit, each Commitment Increase and each extension of Commitments pursuant to Section 2.19 shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Borrowing, such issuance, the applicable Increase Date or the applicable Extension Date (as the case may be) (a) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing, Notice of Issuance, request for Commitment Increase or request for Commitment extension and the acceptance by any Borrower of the proceeds of such Borrowing, such issuance, such Increase Date or such extension of Commitments shall constitute a representation and warranty by such Borrower that on the date of such Borrowing, such issuance or such Increase Date or such Extension Date such statements are true):

50

NYDOCS01/1357750.4

(i)    the representations and warranties contained in Section 4.01 (except, in the case of Borrowings and issuances, the representations set forth in the last sentence of subsection (e) thereof and in subsection (f)(i) thereof) are correct on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true on and as of such earlier date), before and after giving effect to such Borrowing, such issuance, such Commitment Increase or such extension of Commitments and to the application of the proceeds therefrom, as though made on and as of such date, and additionally, if such Borrowing or issuance shall have been requested by a Designated Subsidiary, the representations and warranties of such Designated Subsidiary contained in its Designation Agreement are correct on and as of the date of such Borrowing or such issuance, before and after giving effect to such Borrowing, such issuance, such Commitment Increase or such extension of Commitments and to the application of the proceeds therefrom, as though made on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true on and as of such earlier date), and

(ii)    no event has occurred and is continuing, or would result from such Borrowing, such issuance, such Commitment Increase or such extension of Commitments or from the application of the proceeds therefrom, that constitutes a Default,

and (b) if such Borrowing or issuance shall have been requested by a Designated Subsidiary that is a Foreign Subsidiary, it shall not be illegal or contravene any law or regulation for such Lender to make, maintain or participate in such Borrowing or issuance.

SECTION 3.04. Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Company, by notice to the Lenders, designates as the proposed Restatement Date or the date of the initial Advance to the applicable Designated Subsidiary, as the case may be, specifying its objection thereto. The Agent shall promptly notify the Lenders of the occurrence of the Restatement Date and each date of initial Advance to a Designated Subsidiary, as applicable.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Company. The Company represents and warrants as follows:

(a)    The Initial Borrower is duly organized, validly existing and in good standing (to the extent such concept is applicable in the relevant jurisdiction) under the laws of the jurisdiction of its organization.

51

NYDOCS01/1357750.4

(b)    The execution, delivery and performance by the Initial Borrower of this Agreement and the Notes to be delivered by it, and the consummation of the transactions contemplated hereby, are within the Initial Borrower’s corporate or similar powers, have been duly authorized by all necessary corporate or similar action, and do not contravene (i) the Initial Borrower’s organizational documents or by-laws, (ii) any law applicable to the Initial Borrower or (iii) any indenture or other agreement governing Debt or other material agreement or other instrument binding upon the Company, any of its Subsidiaries or any of their properties, or give rise to a right thereunder to require the Company or any of its Subsidiaries to make any payment thereunder.

(c)    No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the Initial Borrower of this Agreement or the Notes to be delivered by it, except as have been obtained or made and are in full force and effect or where the failure to obtain the same would not have a Material Adverse Effect.

(d)    This Agreement has been, and each of the Notes to be delivered by it when delivered hereunder will have been, duly executed and delivered by the Initial Borrower. This Agreement is, and each of the Notes to which it is a party, when delivered hereunder will be, the legal, valid and binding obligation of the Initial Borrower enforceable against the Initial Borrower in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(e)    The Consolidated balance sheet of the Company and its Subsidiaries as at December 31, 2013, and the related Consolidated statements of income and cash flows of the Company and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of PricewaterhouseCoopers LLP, independent public accountants, copies of which have been furnished to each Lender, fairly present the Consolidated financial condition of the Company and its Subsidiaries as at such date and the Consolidated results of the operations of the Company and its Subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied. Except for the Disclosed Matters, no Material Adverse Change has occurred and is continuing since December 31, 2013.

(f)    There is no pending or, to the Company’s knowledge, threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Company or any of its Subsidiaries before any court, governmental agency or arbitrator that (i) except for the Disclosed Matters, could reasonably be expected to result in a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby.

(g)    Following application of the proceeds of each Advance, not more than 25 percent of the value of the assets (either of the applicable Borrower only or of such Borrower

52

NYDOCS01/1357750.4

and its Subsidiaries on a Consolidated basis) subject to the provisions of Section 5.02(a) or 5.02(d) or subject to any restriction contained in any agreement or instrument between such Borrower and any Lender or any Affiliate of any Lender relating to Debt and within the scope of Section 6.01(d) will be margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System).

(h)    No Borrower is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

(i)    Neither the Information Memorandum nor any other information, exhibit or report furnished by or on behalf of the Company or any other Borrower to the Agent or any Lender in connection with the negotiation and syndication of this Agreement or pursuant to the terms of this Agreement (as modified or supplemented by other information so furnished, when taken together as a whole and with the Disclosed Matters) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading in any material respect, provided that, with respect to projected financial information, the Company represents only that such information was prepared in good faith based on assumptions believed to be reasonable at the time, it being recognized by the Agent and the Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and that such differences may be material.

(j)    The Company has implemented and maintains in effect policies and procedures developed in accordance with standard industry practice and designed to reasonably ensure compliance by the Company, its Subsidiaries and their respective officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Company, its Subsidiaries and their respective officers and, to the knowledge of the Company, their respective employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Company, any Subsidiary or any of their respective officers, or (b) to the knowledge of the Company, their respective employees or any agent of the Company or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.

ARTICLE V

COVENANTS OF THE COMPANY

SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit is outstanding or any Lender shall have any Commitment hereunder, the Company will:

(a)    Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA, Environmental Laws and the Patriot Act, except

53

NYDOCS01/1357750.4

where failures to do so, in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, and maintain in effect and enforce policies and procedures designed to ensure compliance in all material respects by the Company, its Subsidiaries and their respective officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

(b)    Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Company nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim (x) that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained or (y) as to which failure to make payment could not reasonably be expected to result in a Material Adverse Effect.

(c)    Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Company or such Subsidiary operates; provided, however, that the Company and its Subsidiaries may self-insure to the extent it determines in its good faith reasonable business judgment that such insurance is consistent with prudent business practice.

(d)    Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its corporate existence, rights (charter and statutory) and franchises; provided, however, that the foregoing shall not prohibit (i) any merger or consolidation permitted under Section 5.02(b) or any liquidation or dissolution of any Subsidiary that is not a Borrower, or (ii) failures (other than with respect to the existence of any Borrower) that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

(e)    Visitation Rights. At any reasonable time and from time to time during normal business hours, permit the Agent or any of the Lenders or any agents or representatives thereof (other than financial advisors or similar persons), to examine and make abstracts from the records and books of account of, and visit the properties of, the Company and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Company and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants (in the presence of the officers of the Company or such Subsidiary); provided that (a) except as provided in Section 9.04 hereof, any inspection by any Lender or the Agent or any such representative shall be at such Lender’s or the Agent’s own expense, as applicable, (b) the Lenders shall coordinate the timing of their inspections and provide reasonable notice thereof and (c) unless an Event of Default shall have occurred and be continuing, such inspections, visitations and/or examinations shall be limited to once during any calendar year for each Lender.

54

NYDOCS01/1357750.4

(f)    Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made in a manner sufficient to enable the Company to prepare consolidated financial statements in accordance with GAAP.

(g)    Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, except where all failures to do so could not reasonably be expected to have a Material Adverse Effect.

(h)    Transactions with Affiliates. Conduct, and cause each of its Wholly-Owned Subsidiaries to conduct, all transactions otherwise permitted under this Agreement with any of their Affiliates on terms no less favorable in any material respect to the Company or such Subsidiary than it would obtain in its good faith judgment in a comparable arm’s-length transaction with a Person not an Affiliate, except for: (i) transactions between the Company and its Subsidiaries or between the Company’s Subsidiaries; (ii) any compensation or similar arrangements approved by the board of directors or other governing body of the Company or the respective Subsidiary or entered into in the ordinary course of business; (iii) issuances of Equity Securities of the Company; (iv) transactions existing on the Effective Date; and (v) transactions with Fuji Xerox, any Finance SPE or any Subsidiary, joint venture or other arrangement created in connection with any Third-Party Vendor Financing Program or any other receivables financing, and the provision of billing, collection and other services in connection with the foregoing.

(i)    Reporting Requirements. Furnish to the Agent for distribution to each Lender:

(i)    as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Company, the Consolidated balance sheet of the Company and its Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of the Company and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by a Financial Officer as having been prepared in accordance with GAAP and a certificate of a Financial Officer (x) certifying whether or not any Responsible Officer has knowledge as to whether a Default has occurred and is continuing and, if a Default has occurred and is continuing, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (y) setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03;

(ii)    as soon as available and in any event within 90 days after the end of each fiscal year of the Company, a copy of the annual audit report for such year for the Company and its Subsidiaries, containing the Consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and Consolidated

55

NYDOCS01/1357750.4

statements of income and cash flows of the Company and its Subsidiaries for such fiscal year, in each case accompanied by an opinion without qualification by PricewaterhouseCoopers LLP or other independent public accountants of recognized national standing and a certificate of a Financial Officer (x) certifying whether or not any Responsible Officer has knowledge as to whether a Default has occurred and is continuing and, if a Default has occurred and is continuing, specifying the details thereof and any action taken or proposed to be taken with respect thereto and (y) setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03;

(iii)    promptly after a Responsible Officer has knowledge of the occurrence of each Default continuing on the date of such statement, a statement of a Financial Officer setting forth details of such Default and the action that the Company has taken and proposes to take with respect thereto;

(iv)    promptly after the filing thereof, copies of all periodic reports, proxy statements and current reports on Form 8-K that the Company files with the SEC;

(v)    promptly after a Responsible Officer has knowledge of the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Company or any of its Subsidiaries of the type described in Section 4.01(f); and

(vi)    such other information regarding the operations, business affairs and financial condition of the Company or any of its Subsidiaries, or regarding compliance with this Agreement, as any Lender through the Agent may from time to time reasonably request;

The Company shall be deemed to have delivered the financial statements and other information referred to in subclauses (i), (ii), (iv) and (v) of this Section 5.01(i), when (A) such SEC filings, financials or other information have been posted on the Internet website of the SEC (http://www.sec.gov) or on the Company’s own internet website as previously identified to the Agent and Lenders and (B) the Company has notified the Agent by electronic mail of such posting. If the Agent or a Lender requests such SEC filings, financial statements or other information to be delivered to it in hard copies, the Company shall furnish to the Agent or such Lender, as applicable, such statements accordingly, provided that no such request shall affect that such SEC filings, financial statements or other information have been deemed to have been delivered in accordance with the terms of the immediately preceding sentence.

(j)    Covenant to Guarantee Obligations. (i) On any date after the Effective Date that any Domestic Subsidiary incurs any Debt of the types described in clause (g) or (h) of the definition of “Debt” in respect of Guaranteed Debt (as defined in the definition of “Debt”) for borrowed money of the Company having an outstanding principal amount of more than $100,000,000, or (ii) on any date after the Effective Date following a written request by the

56

NYDOCS01/1357750.4

Company to the Agent stating the Company’s intention to add a Guarantor hereunder, then the Company shall, at its own expense:

(A)    promptly and in any event within 10 Business Days after such incurrence, cause each such Domestic Subsidiary to duly execute and deliver to the Agent a guaranty, in form and substance reasonably satisfactory to the Agent, guaranteeing the obligations of the Borrowers under this Agreement and the Notes (x) in the case of clause (i) above, to the same extent as such Domestic Subsidiary guarantees such Guaranteed Debt for borrowed money of the Company, or (y) in the case of clause (ii) above, pursuant to a guaranty that is substantially similar to Article VII hereof and in form and substance reasonably satisfactory to the Agent; and

(B)    upon the request of the Agent in its sole discretion, deliver to the Agent within 30 days after such request a signed copy of a favorable opinion, addressed to the Agent and the Lenders, of counsel for such Domestic Subsidiary reasonably acceptable to the Agent as to such guaranties, guaranty supplements, being legal, valid and binding obligations of each Domestic Subsidiary party thereto enforceable in accordance with their terms.

provided, however, that any guaranty by a Domestic Subsidiary shall be terminated upon the request of the Company delivered to the Agent, provided that any guaranty delivered in accordance with Section 5.01(j)(i) shall be terminated only upon delivery by the Company to the Agent of evidence of (x) the payment in full and satisfaction of all of the obligations relating to the Guaranteed Debt for borrowed money of the Company that caused the incurrence of Debt by such Domestic Subsidiary or (y) the release and discharge in full of the guaranty in respect of such Guaranteed Debt.

SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid, any Letter of Credit is outstanding or any Lender shall have any Commitment hereunder, the Company will not:

(a)    Liens, Etc. Create or suffer to exist, or permit any of its Material Subsidiaries to create or suffer to exist, any Lien on or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Material Subsidiaries to assign, any right to receive income, in each case to secure Debt of any Person, other than:

(i)    Permitted Liens;

(ii)    (x) the Liens existing on the Effective Date and described on Schedule 5.02(a) hereto and (y) other Liens existing on the Effective Date that secure Debt existing on the Effective Date the aggregate outstanding principal amount of which does not exceed $50,000,000;

(iii)    Liens under any Qualified Receivables Transaction or Third-Party Vendor Financing Programs;

57

NYDOCS01/1357750.4

(iv)    purchase money Liens upon or in any real property, equipment or any fixed or capital assets acquired or held by the Company or any Material Subsidiary to secure the purchase price of such property, equipment or assets or to secure Debt incurred solely for the purpose of financing the acquisition, construction or improvement of such property, equipment or assets, in each case created within 180 days of any such acquisition or the completion of such construction or improvement, or Liens existing on such property, equipment or assets at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property), or Liens securing capital lease obligations;

(v)    any Lien existing on any property before the acquisition thereof by the Company or any Subsidiary of the Company, and Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Subsidiary of the Company or becomes a Material Subsidiary of the Company; provided that such Liens were not created in contemplation of such merger, consolidation or acquisition and do not extend to any assets other than those of the Person so merged into or consolidated with the Company or such Subsidiary or acquired by the Company or such Subsidiary;

(vi)    other Liens securing Debt which does not exceed (without duplication) at the time such Lien is created an aggregate principal amount of $500,000,000 outstanding, provided that Liens permitted under this clause (vi) together with Debt permitted under Section 5.02(c)(viii) below shall not exceed (without duplication) an aggregate principal amount of $750,000,000 at any time outstanding;

(vii)    the replacement, extension or renewal of any Lien permitted by clause (ii), (iv) or (v) above upon or in the same property theretofore subject thereto, provided that the replacement, extension or renewal of the Debt secured thereby shall have occurred without any (A) increase in the amount thereof other than to finance fees and expenses incurred in connection with such extension, renewal, refinancing or replacement, or (B) change in any direct or contingent obligor thereunder;

(viii)    Liens securing Debt owing to the Company or any of its Subsidiaries;

(ix)    Liens that are within the general parameters customary in the industry and incurred in the ordinary course of business securing obligations under Hedge Agreements designed solely to protect the Company or any of its Subsidiaries from fluctuations in interest rates, currencies or the price of commodities;

(x)    Liens in favor of customs and revenue authorities arising in the ordinary course of business and as a matter of law to secure payment of customs duties in connection with the importation of goods;

58

NYDOCS01/1357750.4

(xi)    Liens consisting of any rights retained by a seller or shipper of goods in such goods prior to receipt of payment therefor during the shipment of such goods from the seller to the buyer;

(xii)    Liens consisting of the rights of consignors of goods, whether or not perfected;

(xiii)    Liens in favor of lessors securing obligations (not constituting Debt) under operating leases; and

(xiv)    any financing statement reflecting a security interest that would otherwise be permitted under this Section 5.02(a).

(b)    Mergers, Etc. Merge or consolidate with or into any Person, or permit any of its Material Subsidiaries to do so, except:

(i)    mergers between the Company and its Subsidiaries in which the Company is the surviving entity;

(ii)    mergers between Subsidiaries of the Company, provided that if one of such Subsidiaries is a Borrower hereunder, the surviving entity is, or becomes, a Borrower hereunder;

(iii)    mergers with a third-party in which the Company is the surviving entity or where the surviving entity is, or becomes, a Subsidiary of the Company;

(iv)    mergers of a Subsidiary of the Company with a third-party as part of a sale or other disposition of all or any part of such Subsidiary not prohibited by Section 5.02(d); and

(v)    liquidations of any Subsidiary of the Company; provided that, if such Subsidiary is a Borrower, its parent is or becomes a Borrower;

provided, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom.

(c)    Subsidiary Debt. Permit any of its Wholly-Owned Subsidiaries that are not Guarantors to create or suffer to exist any Debt, other than:

(i)    Debt in connection with Qualified Receivables Transactions and Third-Party Vendor Financing Programs;

(ii)    Debt existing on the Effective Date;

(iii)    Debt owed to the Company or to any Subsidiary of the Company;

(iv)    Debt (including, without limitation, capital leases) incurred solely for the purpose of financing the acquisition, construction or improvement of any real

59

NYDOCS01/1357750.4

property, business, equipment or fixed or capital asset acquired or held by the Company or any Subsidiary, in each case incurred within 180 days of any such acquisition, construction or improvement;

(v)    Debt secured by Liens permitted under Section 5.02(a)(v) and Debt existing at the time any Person is merged into or consolidated with the Company or any Subsidiary of the Company or becomes a Subsidiary of the Company;

(vi)    Debt incurred by Foreign Subsidiaries for working capital purposes or otherwise in the ordinary course of business (but excluding, in any event, any public capital markets Debt);

(vii)    Debt in respect of acceptances, letters of credit or similar extensions of credit that (A) do not support obligations for borrowed money prohibited hereby and (B) are not drawn upon (or, if drawn upon, are reimbursed within five Business Days following payment thereof);

(viii)    other Debt which, together with Debt secured by Liens permitted under Section 5.02(a)(vi) above, does not exceed (without duplication) at the time such Debt is incurred an aggregate principal amount of $750,000,000 outstanding;

(ix)    indorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;

(x)    Debt arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided that such Debt is extinguished within five Business Days of incurrence;

(xi)    Debt under direct or indirect guarantees in respect of, or obligations (contingent or otherwise) to purchase or acquire, or otherwise to assure a creditor against loss in respect of, Debt of another Wholly-Owned Subsidiary of the Company not prohibited by this Section 5.02(c);

(xii)    Debt extending the maturity of, or refunding or refinancing, in whole or in part, the Debt existing or permitted to be incurred under clauses (ii), (iv) and (v) above or Debt incurred by a Finance SPE, provided that such extension, renewal, refinancing or replacement shall have occurred without (A) increase in the amount thereof other than to finance fees and expenses incurred in connection with such extension, renewal, refinancing or replacement, or (B) unless the Debt extending, renewing, refinancing or replacing secured Debt is unsecured, any change in any direct or contingent obligor thereunder;

(xiii)    Debt under this Agreement and the Notes; and

(xiv)    Debt of the type permitted to be secured under Section 5.02(a)(ix) (whether or not secured by Liens).

60

NYDOCS01/1357750.4

(d)    Sale of All or Substantially All Assets. Sell, lease, transfer or otherwise dispose of all or substantially all of its assets, in each case for the Company and the Company and its Subsidiaries taken as a whole, except in connection with (i) a transaction authorized by Section 5.02(b) or (ii) any Qualified Receivables Transaction or Third-Party Vendor Financing Programs. For the avoidance of doubt, the Company and its Subsidiaries may sell inventory and excess, damaged, obsolete or worn-out assets, in each case in the ordinary course of business.

(e)    Payment Restrictions Affecting Subsidiaries. Directly or indirectly, enter into or suffer to exist, or permit any of its Material Subsidiaries to enter into or suffer to exist, any agreement or arrangement limiting the ability of any of its Material Subsidiaries (x) to create or permit to exist any Lien on any of its property or (y) to declare or pay dividends or other distributions in respect of its Equity Interests or repay or prepay any Debt owed to, make loans or advances to, or otherwise transfer assets to or make investments in, the Company or any Material Subsidiary of the Company (including through a covenant restricting dividends, loans, asset transfers or investments or a financial covenant which has the effect thereof), except (i) restrictions, limitations, conditions and prohibitions existing on the Effective Date, (ii) restrictions, limitations, conditions and prohibitions under or imposed by any indenture, agreement or instrument existing on the Effective Date (including this Agreement) and any similar indentures, agreements or instruments to the extent such restrictions, limitations conditions and prohibitions are no more restrictive than those set forth in such existing indentures, agreements or instruments, (iii) any agreement in effect at the time a Person first became a Material Subsidiary of the Company, so long as such agreement was not entered into solely in contemplation of such Person becoming a Material Subsidiary of the Company, (iv) any restrictions consisting of customary provisions restricting assignment, subletting or other transfers contained in leases, licenses and joint ventures and other agreements so long as such restrictions do not extend to assets other than those that are the subject of such lease, license, joint venture or other agreement, (v) restrictions with respect to any asset or Subsidiary of the Company pending the close of the sale of such asset or such Subsidiary, (vi) any restriction or encumbrance on the transfer of any assets subject to the Liens permitted by Section 5.02(a), (vii) any restriction or encumbrance imposed by applicable law, regulation, court order, rule or decree (including at the direction of any regulatory agency or department), or (viii) restrictions, limitations, conditions and prohibitions imposed in respect of the types of assets subject to, and any other restrictions consisting of customary provisions in connection with, any Third-Party Vendor Financing Program or any Qualified Receivables Transaction.

(f)    Change in Nature of Business. Engage, together with its Wholly-Owned Subsidiaries (other than IP Companies), in any business as their principal lines of business, taken as a whole, other than the principal lines of business engaged in by the Company and its Subsidiaries, taken as a whole, on the Effective Date and similar or related businesses. For purposes of the foregoing, “IP Company” means any Person, whether now existing or hereafter formed, in which the Company or any of its Wholly-Owned Subsidiaries owns or acquires any Equity Interests, which Person has, as its sole primary business, one or more of the following: (i) research and development, (ii) the generation or management of

61

NYDOCS01/1357750.4

intellectual property, (iii) the commercialization or maximization of the value of intellectual property developed by or transferred to such Person by the Company or one or more of its Wholly-Owned Subsidiaries, and (iv) activities incidental thereto.

(g)    Use of Proceeds. Request, or permit any other Borrower to request, any Borrowing or Letter of Credit, or knowingly use, or permit any other Borrower, its Subsidiaries or its or their respective directors, officers, employees and agents to knowingly use, the proceeds of any Borrowing or Letter of Credit (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in material violation of any Anti-Corruption Laws, (ii) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (iii) in any manner that would result in the material violation of any Sanctions applicable to any party hereto.

SECTION 5.03. Financial Covenants. So long as any Advance shall remain unpaid, any Letter of Credit is outstanding or any Lender shall have any Commitment hereunder, the Company will, with respect to each Fiscal Quarter occurring after the Effective Date:

(a)    Leverage Ratio. Maintain a ratio of Debt for Borrowed Money as of the end of such Fiscal Quarter to Consolidated EBITDA for the period of four Fiscal Quarters then ended of not greater than 3.75:1.

(b)    Interest Coverage Ratio. Maintain a ratio of Consolidated EBITDA to Consolidated Interest Expense, in each case for the period of four Fiscal Quarters then ended of not less than 3.00:1.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default. If any of the following events (“Events of Default”) shall occur and be continuing:

(a)    The Company or any other Borrower shall fail to pay any principal of any Advance or any reimbursement obligation in respect of a Letter of Credit when the same becomes due and payable; or the Company or any other Borrower shall fail to pay any interest on any Advance or make any other payment of fees or other amounts payable under this Agreement or any Note within five Business Days after the same becomes due and payable; or

(b)    Any representation or warranty made by any Borrower herein or by any Borrower in connection with this Agreement or by any Designated Subsidiary in the Designation Agreement pursuant to which such Designated Subsidiary became a Borrower hereunder shall prove to have been incorrect in any material respect when made; or

(c)    (i) The Company shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d) (with respect to any Borrower), (h), (i)(iii) or (i)(v), 5.02 or 5.03, (ii) the Company shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(i)(i), (ii), (iv) or (vi) if such failure shall remain

62

NYDOCS01/1357750.4

unremedied for five Business Days after written notice thereof shall have been given to the Company by the Agent at the request of any Lender, or (iii) the Company shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Company by the Agent at the request of any Lender; or

(d)    The Company or any of its Wholly-Owned Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal amount, or net obligations in respect of Hedge Agreements, of at least $100,000,000 in the aggregate (but excluding Debt outstanding hereunder) of the Company or such Wholly-Owned Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt or Hedge Agreement obligations and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt or Hedge Agreement obligations; or any such Debt or Hedge Agreement obligations shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption, or in the case of secured Debt that becomes due as a result of a voluntary sale or transfer of the property securing such Debt), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt or Hedge Agreement obligations shall be required to be made (other than in the case of secured Debt that becomes due as a result of a voluntary sale or transfer of the property securing such Debt), in each case prior to the stated maturity thereof; or

(e)    The Company, any of its Material Subsidiaries or any other Borrower shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Company, any of its Material Subsidiaries or any other Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Company, any of its Material Subsidiaries or any other Borrower shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or

63

NYDOCS01/1357750.4

(f)    Judgments or orders for the payment of money in excess of $100,000,000 in the aggregate shall be rendered against the Company or any of its Wholly-Owned Subsidiaries and either (i) enforcement proceedings to attach or levy upon any assets of the Company or its Wholly-Owned Subsidiaries shall have been commenced by any creditor to enforce such judgment or order or (ii) such judgment or order shall not be discharged and there shall be any period of 45 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment or order shall not be subject to this Section 6.01(f) to the extent and for so long as (x) the amount of such judgment or order is covered by a valid and binding policy of insurance between the defendant and the insurer covering payment thereof and (y) such insurer, which shall be rated at least “A-” by A.M. Best Company, has been notified of, and has not denied in writing the claim made for payment of, the amount of such judgment or order; or

(g)    (i) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the Company (or other securities convertible into such Voting Stock) representing 35% or more of the combined voting power of all Voting Stock of the Company; or (ii) during any period of up to 24 consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of the Company, together with individuals who were either (x) elected by a majority of the remaining members of the board of directors of the Company, (y) nominated for election by a majority of the remaining members of the board of directors of the Company or (z) appointed by directors so nominated, shall cease for any reason to constitute a majority of the board of directors of the Company; or

(h)    The Company or any of its ERISA Affiliates shall incur, or shall be reasonably likely to incur liability in excess of $100,000,000 in the aggregate in any year as a result of one or more of the following: (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of the Company or any of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan; or

(i)    so long as any Subsidiary of the Company is a Borrower, any provision of Article VII shall for any reason cease to be valid and binding on or enforceable against the Company, or the Company shall so state in writing; or

(j)    so long as any Subsidiary of the Company is a Borrower, 80% (90% in the case of PARC) of the Equity Interest of such Borrower shall for any reason cease to be owned, directly or indirectly, by the Company;

then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrowers, declare the obligation of each Lender to make Advances (other than Advances to be made by an Issuing Bank or a Lender pursuant to Section 2.03(c)) and of the Issuing Banks to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrowers, declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such interest and all

64

NYDOCS01/1357750.4

such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by each Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Company or any other Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances (other than Advances to be made by an Issuing Bank or a Lender pursuant to Section 2.03(c)) and of the Issuing Banks to issue Letters of Credit shall automatically be terminated and (B) the Advances, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by each Borrower.

SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If any Event of Default shall have occurred and be continuing, the Agent may with the consent, or shall at the request, of the Required Lenders, irrespective of whether it is taking any of the actions described in Section 6.01 or otherwise, make demand upon the Borrowers to, and forthwith upon such demand the Borrowers will, (a) pay to the Agent on behalf of the Lenders in same day funds at the Agent’s office designated in such demand, for deposit in the L/C Cash Deposit Account, an amount equal to the aggregate Available Amount of all Letters of Credit then outstanding or (b) make such other arrangements in respect of the outstanding Letters of Credit as shall be acceptable to the Required Lenders and not more disadvantageous to the Borrowers than clause (a); provided, however, that in the event of an actual or deemed entry of an order for relief with respect to any Borrower under the Federal Bankruptcy Code, an amount equal to the aggregate Available Amount of all outstanding Letters of Credit shall be immediately due and payable to the Agent for the account of the Lenders without notice to or demand upon the Borrowers, which are expressly waived by each Borrower, to be held in the L/C Cash Deposit Account. If at any time an Event of Default is continuing the Agent determines that any funds held in the L/C Cash Deposit Account are subject to any right or claim of any Person other than the Agent and the Lenders or that the total amount of such funds is less than the aggregate Available Amount of all Letters of Credit, the Borrowers will, forthwith upon demand by the Agent, pay to the Agent, as additional funds to be deposited and held in the L/C Cash Deposit Account, an amount equal to the excess of (a) such aggregate Available Amount over (b) the total amount of funds, if any, then held in the L/C Cash Deposit Account that the Agent determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit, to the extent funds are on deposit in the L/C Cash Deposit Account, such funds shall be applied to reimburse the Issuing Banks to the extent permitted by applicable law. After all such Letters of Credit shall have expired or been fully drawn upon and all other obligations of the Borrowers hereunder and under the Notes shall have been paid in full, the balance, if any, in such L/C Cash Deposit Account shall be returned to the Borrowers.

ARTICLE VII

GUARANTY

SECTION 7.01. Unconditional Guaranty. The Company hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all obligations of each other Borrower now or hereafter existing under or in respect of this Agreement

65

NYDOCS01/1357750.4

and the Notes (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such obligations being the “Guaranteed Obligations”), and agrees to pay any and all out-of-pocket expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Agent or any Lender in enforcing any rights under this Agreement. Without limiting the generality of the foregoing, the Company’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by such Borrower to the Agent or any Lender under or in respect of this Agreement and the Notes but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such Borrower.

SECTION 7.02. Guaranty Absolute. (a) The Company guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of this Agreement and the Notes, regardless of any law, regulation, decree or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or any Lender with respect thereto. The obligations of the Company under or in respect of this Guaranty are independent of the Guaranteed Obligations or any other obligations of any other Borrower under or in respect of this Agreement and the Notes, and a separate action or actions may be brought and prosecuted against the Company to enforce this Guaranty, irrespective of whether any action is brought against any Borrower or whether any Borrower is joined in any such action or actions. The guaranty hereunder is a guaranty of payment and not of collection. The liability of the Company under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and the Company hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

(a)    any lack of validity or enforceability of this Agreement, any Note or any agreement or instrument relating thereto;

(b)    any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other obligations of any Borrower under or in respect of this Agreement and the Notes, or any other amendment or waiver of or any consent to departure from this Agreement or any Note, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Borrower or any of its Subsidiaries or otherwise;

(c)    any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations;

(d)    any manner of application of any collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any other obligations of any Borrower under this Agreement and the Notes or any other assets of any Borrower or any of its Subsidiaries;

66

NYDOCS01/1357750.4

(e)    any change, restructuring or termination of the corporate structure or existence of any Borrower or any of its Subsidiaries;

(f)    any failure of the Agent or any Lender to disclose to the Company any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any Borrower now or hereafter known to the Agent or such Lender (the Company waiving any duty on the part of the Agent and the Lenders to disclose such information);

(g)    the failure of any other Person to execute or deliver this Guaranty or any other guaranty or agreement or the release or reduction of liability of the Company or other guarantor or surety with respect to the Guaranteed Obligations; or

(h)    any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Agent or any Lender that might otherwise constitute a defense available to, or a discharge of, any Borrower or any other guarantor or surety (other than payment of such Guaranteed Obligations).

This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Agent or any Lender or any other Person upon the insolvency, bankruptcy or reorganization of any Borrower or otherwise, all as though such payment had not been made.

SECTION 7.03. Waivers and Acknowledgments. (a) The Company hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Agent or any Lender protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Borrower or any other Person or any collateral.

(b)    The Company hereby unconditionally and irrevocably waives any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

(c)    The Company hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by the Agent or any Lender that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of the Company or other rights of the Company to proceed against any Borrower, any other guarantor or any other Person or any collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the obligations of the Company hereunder (other than payment of such Guaranteed Obligations).

(d)    The Company hereby unconditionally and irrevocably waives any duty on the part of the Agent or any Lender to disclose to the Company any matter, fact or thing

67

NYDOCS01/1357750.4

relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any Borrower or any of its Subsidiaries now or hereafter known by the Agent or such Lender.

(e)    The Company acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by this Agreement and the Notes and that the waivers set forth in Section 7.02 and this Section 7.03 are knowingly made in contemplation of such benefits.

SECTION 7.04. Subrogation. The Company hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against any Borrower or any other insider guarantor that arise from the existence, payment, performance or enforcement of the Company’s obligations under or in respect of this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Agent or any Lender against any Borrower or any other insider guarantor or any collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Borrower or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, all Letters of Credit shall have expired or been terminated and the Commitments shall have expired or been terminated. If any amount shall be paid to the Company in violation of the immediately preceding sentence at any time prior to the latest of (a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, (b) the latest Termination Date of any Lender and (c) the latest date of expiration or termination of all Letters of Credit, such amount shall be received and held in trust for the benefit of the Agent and the Lenders, shall be segregated from other property and funds of the Company and shall forthwith be paid or delivered to the Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of this Agreement and the Notes, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) the Company shall make payment to the Agent or any Lender of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash, (iii) the latest Termination Date of any Lender shall have occurred and (iv) all Letters of Credit shall have expired or been terminated, the Agent and the Lenders will, at the Company’s request and expense, execute and deliver to the Company appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Company of an interest in the Guaranteed Obligations resulting from such payment made by the Company pursuant to this Guaranty.

SECTION 7.05. Subordination. The Company hereby subordinates any and all debts, liabilities and other obligations owed to the Company by any Borrower (the “Subordinated Obligations”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 7.05:

68

NYDOCS01/1357750.4

(a)    Prohibited Payments, Etc. Except during the continuance of an Event of Default for which the Agent has notified the Company that remedies will be exercised pursuant to this Agreement (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to such Borrower), the Company may receive regularly scheduled payments from such Borrower on account of the Subordinated Obligations. After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to such Borrower) for which the Agent has notified the Company that remedies will be exercised pursuant to this Agreement, the Company shall not demand, accept or take any action to collect any payment on account of the Subordinated Obligations unless the Required Lenders otherwise agree.

(b)    Prior Payment of Guaranteed Obligations. In any proceeding under any Bankruptcy Law relating to such Borrower, the Company agrees that the Agent and the Lenders shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the commencement of a proceeding under any Bankruptcy Law, whether or not constituting an allowed claim in such proceeding (“Post Petition Interest”)) before the Company receives payment of any Subordinated Obligations.

(c)    Turn-Over. After the occurrence and during the continuance of any Event of Default for which the Agent has notified the Company that remedies will be exercised pursuant to this Agreement (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to such Borrower), the Company shall, if the Agent so requests, collect, enforce and receive payments on account of the Subordinated Obligations as trustee for the Agent and the Lenders and deliver such payments to the Agent on account of the Guaranteed Obligations (including all Post Petition Interest), together with any necessary endorsements or other instruments of transfer, but without reducing or affecting in any manner the liability of the Company under the other provisions of this Guaranty.

(d)    Agent Authorization. After the occurrence and during the continuance of any Event of Default for which the Agent has notified the Company that remedies will be exercised pursuant to this Agreement (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to such Borrower), the Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of the Company, to collect and enforce, and to submit claims in respect of, Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post Petition Interest), and (ii) to require the Company (A) to collect and enforce, and to submit claims in respect of, Subordinated Obligations and (B) to pay any amounts received on such obligations to the Agent for application to the Guaranteed Obligations (including any and all Post Petition Interest).

SECTION 7.06. Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the latest of (i) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty, (ii) the

69

NYDOCS01/1357750.4

Termination Date and (iii) the latest date of expiration or termination of all Letters of Credit, (b) be binding upon the Company, its successors and assigns and (c) inure to the benefit of and be enforceable by the Agent and the Lenders and their successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, the Agent or any Lender may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Agent or such Lender herein or otherwise, in each case as and to the extent provided in Section 9.07.

ARTICLE VIII

THE AGENT

SECTION 8.01. Appointment and Authority. Each of the Lenders and the Issuing Banks hereby irrevocably appoints Citibank to act on its behalf as the Agent hereunder and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Agent, the Lenders and the Issuing Banks, and no Borrower shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein (or any other similar term) with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

SECTION 8.02. Rights as a Lender. The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Company or any Subsidiary or other Affiliate thereof as if such Person were not the Agent hereunder and without any duty to account therefor to the Lenders.

SECTION 8.03.  Exculpatory Provisions. (a) The Agent shall not have any duties or obligations except those expressly set forth herein, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Agent:

(i)    shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(ii)    shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Agent is required to exercise as directed in writing by

70

NYDOCS01/1357750.4

the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein); provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to this Agreement or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any debtor relief law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any debtor relief law; and

(iii)    shall not, except as expressly set forth herein, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company or any of its Affiliates that is communicated to or obtained by the Person serving as the Agent or any of its Affiliates in any capacity.

(b)    The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 9.01 and 6.01), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. The Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Agent in writing by the Company, a Lender or an Issuing Bank.

(c)    The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent.

SECTION 8.04. Reliance by Agent. The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) reasonably believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Agent also may rely upon any statement made to it orally or by telephone and reasonably believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of an Advance, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Bank, the Agent may presume that such condition is satisfactory to such Lender or Issuing Bank unless the Agent shall have received notice to the contrary from such Lender or Issuing Bank prior to the making of such Advance or the issuance of such Letter of Credit. The Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected

71

NYDOCS01/1357750.4

by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

SECTION 8.05. Indemnification. (a) Each Lender severally agrees to indemnify the Agent, in its capacity as such (to the extent not reimbursed by the Company), from and against such Lender’s Ratable Share of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under this Agreement (collectively, the “Indemnified Costs”), provided that no Lender shall be liable for any portion of the Indemnified Costs resulting from the Agent’s gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Company. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 8.05 applies whether any such investigation, litigation or proceeding is brought by the Agent, any Lender or a third party.

(b)    Each Lender severally agrees to indemnify the Issuing Banks, in their respective capacities as such (to the extent not promptly reimbursed by the Company), from and against such Lender’s Ratable Share of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against any such Issuing Bank in any way relating to or arising out of this Agreement or any action taken or omitted by such Issuing Bank hereunder or in connection herewith; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Issuing Bank’s gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse any such Issuing Bank promptly upon demand for its Ratable Share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Company under Section 9.04, to the extent that such Issuing Bank is not promptly reimbursed for such costs and expenses by the Company.

(c)    The failure of any Lender to reimburse the Agent or any Issuing Bank promptly upon demand for its Ratable Share of any amount required to be paid by the Lenders to the Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Agent or any Issuing Bank for its Ratable Share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Agent or any Issuing Bank for such other Lender’s Ratable Share of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 8.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes. Each of the Agent and each Issuing Bank agrees to return to the Lenders their respective Ratable Shares of any amounts paid under this Section 8.05 that are subsequently reimbursed by the Company.

72

NYDOCS01/1357750.4

SECTION 8.06. Delegation of Duties. The Agent may perform any and all of its duties and exercise its rights and powers hereunder by or through any one or more sub‑agents appointed by the Agent. The Agent and any such sub‑agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub‑agent and to the Related Parties of the Agent and any such sub‑agent, and shall apply to their respective activities in connection with the syndication of the Commitments as well as activities as Agent. The Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Agent acted with gross negligence or willful misconduct in the selection of such sub‑agents.

SECTION 8.07. Resignation of Agent. (a) The Agent may at any time give notice of its resignation to the Lenders, the Issuing Banks and the Company. Upon receipt of any such notice of resignation, the Required Lenders shall have the right to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States, provided that, unless an Event of Default has occurred and is continuing, such successor Agent shall be reasonably satisfactory to the Company. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Agent may (but shall not be obligated to), on behalf of the Lenders and the Issuing Banks, appoint a successor Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.

(b)    If the Person serving as Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Company and such Person remove such Person as Agent and appoint a successor, provided that, unless an Event of Default has occurred and is continuing, such successor Agent shall be reasonably satisfactory to the Company. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

(c)    With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Agent shall be discharged from its duties and obligations hereunder (except that in the case of any collateral security held by the Agent on behalf of the Lenders or the Issuing Banks under this Agreement, the retiring or removed Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) except for any indemnity payments owed to the retiring or removed Agent, all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender and Issuing Bank directly, until such time, if any, as the Required Lenders appoint a successor Agent as provided for above. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Agent (other than any rights to

73

NYDOCS01/1357750.4

indemnity payments owed to the retiring or removed Agent), and the retiring or removed Agent shall be discharged from all of its duties and obligations hereunder. The fees payable by the Company to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor. After the retiring or removed Agent’s resignation or removal hereunder, the provisions of this Article and Section 9.04 shall continue in effect for the benefit of such retiring or removed Agent, its sub‑agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as Agent.

SECTION 8.08. Non-Reliance on Agent and Other Lenders. Each Lender and Issuing Bank acknowledges that it has, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and Issuing Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any related agreement or any document furnished hereunder.

SECTION 8.09. No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the Bookrunners or Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement, except in its capacity, as applicable, as the Agent, a Lender or an Issuing Bank hereunder.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Notes, nor consent to any departure by any Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all affected Lenders, do any of the following: (a) reduce the principal of, or rate of interest on, the Advances, any reimbursement obligation in respect of a Letter of Credit or any fees or other amounts payable hereunder; (b) postpone any date fixed for any payment of principal of, or interest on, the Advances, any reimbursement obligation in respect of a Letter of Credit or any fees or other amounts payable hereunder other than in accordance with Section 2.19; (c) increase the Commitments of the Lenders other than in accordance with Section 2.18 or extend the Commitments of the Lenders other than in accordance with Section 2.19; (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder; (e) release the Company from any of its obligations under Article VII or release any other guarantor from its obligations under its guaranty (except as expressly provided therein) or (f) amend this Section 9.01; and providedfurther that (x) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the

74

NYDOCS01/1357750.4

rights or duties of the Agent under this Agreement or any Note, and (y) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Banks in addition to the Lenders required above to take such action, adversely affect the rights or obligations of the Issuing Banks in their capacities as such under this Agreement. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have the right to approve or disapprove any amendment, waiver or consent hereunder, except that (a) the Commitment of such Defaulting Lender may not be increased or extended without the consent of such Defaulting Lender, (b) the principal amount of any Advances outstanding to such Defaulting Lender may not be waived, forgiven or reduced without such Lender’s consent (unless all Lenders affected thereby are treated similarly) and (c) the final maturity date(s) of such Defaulting Lender’s Advances or any other extensions of credit or obligations of the Borrowers owing to such Defaulting Lender may not be extended without such Defaulting Lender’s consent.

SECTION 9.02. Notices, Etc. (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows:

(i)    if to the Company or any other Borrower, to it at 45 Glover Avenue, Norwalk, Connecticut 06850, Attention of Vice President and Treasurer (Telephone No. 203-849-2664);

(ii)    if to the Agent, to Citibank at 1615 Brett Road, Building #3, New Castle, Delaware 19720, Attention of Bank Loan Syndications (GLAgentOfficeOps@citi.com; Facsimile No. 212 994-0961; Telephone No. 302-323-2478);

(iii)    if any Issuing Bank, to it at the address provided in writing to the Agent and the Company at the time of its appointment as an Issuing Bank hereunder;

(iv)    if to a Lender, to it at its address (or facsimile number) set forth in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b)    Electronic Communications. Notices and other communications to the Lenders and the Issuing Banks hereunder may be delivered or furnished by electronic communication (including e‑mail and Internet or intranet websites) pursuant to procedures approved by the Agent, provided that the foregoing shall not apply to notices to any Lender or Issuing Bank

75

NYDOCS01/1357750.4

pursuant to Article II if such Lender or Issuing Bank, as applicable, has notified the Agent that it is incapable of receiving notices under such Article by electronic communication. The Agent or any Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless the Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c)    Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

(d)    Platform.

(i)    Each Borrower agrees that the Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Issuing Banks and the other Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”).

(ii)    The Platform is provided “as is” and “as available.” The Agent and its Related Parties (collectively, the “Agent Parties”) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Agent Parties have any liability to the Company or the other Borrowers, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Borrower’s or the Agent’s transmission of communications through the Platform. “Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Borrower pursuant to this Agreement or the transactions contemplated herein which is distributed to the Agent, any Lender or any Issuing Bank by means of electronic communications pursuant to this Section, including through the Platform.

76

NYDOCS01/1357750.4

SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 9.04. Costs and Expenses. (a) The Company agrees to pay on demand all documented reasonable out-of-pocket costs and expenses of the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable fees and expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under this Agreement. The Company further agrees to pay on demand all out-of-pocket costs and expenses of the Agent and the Lenders, if any, in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 9.04(a).

(b)    The Company agrees to indemnify and hold harmless the Agent and each Lender and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against any and all claims, damages, losses (other than lost profits), liabilities and documented out-of-pocket expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances or Letters of Credit or (ii) the actual or alleged presence of Hazardous Materials on any property of the Company or any of its Subsidiaries or any Environmental Action relating in any way to the Company or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Company, its directors, equityholders or creditors or an Indemnified Party or any other Person, whether or not any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Company also agrees not to assert any claim for special, indirect, consequential or punitive damages against the Agent, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, arising out of or otherwise relating to the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances.

77

NYDOCS01/1357750.4

(c)    If any payment of principal of, or Conversion of, any Eurocurrency Rate Advance is made by any Borrower to or for the account of a Lender (i) other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.08, 2.10 or 2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender other than on the last day of the Interest Period for such Advance upon an assignment of rights and obligations under this Agreement pursuant to Section 9.07 as a result of a demand by the Company pursuant to Section 2.21 or (ii) as a result of a payment or Conversion pursuant to Section 2.08, 2.10 or 2.12, such Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses (other than lost profits), costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. If the amount of the Committed Currency purchased by any Lender in the case of a Conversion or exchange of Advances in the case of Section 2.08 or 2.12 exceeds the sum required to satisfy such Lender’s liability in respect of such Advances, such Lender agrees to remit to the applicable Borrower such excess.

(d)    Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in Sections 2.11, 2.14 and 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes.

SECTION 9.05. Right of Set-off. Upon (a) the occurrence and during the continuance of any Event of Default under Section 6.01(a) or (b) (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Advances due and payable pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Affiliate to or for the credit or the account of the Company or any Borrower against any and all of the obligations of the Company or any Borrower now or hereafter existing under this Agreement to such Lender and the Note held by such Lender, whether or not such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify the Company or the applicable Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have.

SECTION 9.06. Binding Effect. This Agreement shall become effective (other than Section 2.01, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Company and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Company, the Agent and each

78

NYDOCS01/1357750.4

Lender and their respective successors and assigns, except that neither the Company nor any other Borrower shall have the right to assign its rights hereunder or any interest herein without the prior written consent of each of the Lenders (and any other attempted assignment or transfer by any party hereto shall be null and void).

SECTION 9.07. Assignments and Participations. (a) Successors and Assigns Generally. No Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)    Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i)    Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Advances at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in paragraph (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Advances outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Advances of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $10,000,000 unless each of the Agent and, so long as no Event of Default has occurred and is continuing, the Company otherwise consents (each such consent not to be unreasonably withheld or delayed).

(ii)    Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Advance or the Commitment assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and

79

NYDOCS01/1357750.4

obligations among the Letter of Credit Facility and the Revolving Credit Commitments on a non-pro rata basis.

(iii)    Required Consents. No consent shall be required for any assignment except to the extent required by paragraph (b)(i)(B) of this Section and, in addition:

(A) the consent of the Company (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Defaulthas occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Company shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Agent within five Business Days after having received notice thereof;

(B) the consent of the Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(C) the consent of each Issuing Bank (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of the Revolving Credit Commitments.

(iv)    Assignment and Assumption. The parties to each assignment shall execute and deliver to the Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that the Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Agent an Administrative Questionnaire.

(v)    No Assignment to Certain Persons. No such assignment shall be made to (A) the Company or any of the Company’s Affiliates or Subsidiaries or (B) any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).

(vi)    No Assignment to Natural Persons. No such assignment shall be made to a natural Person.

(vii)    Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Company and the Agent, the applicable pro rata share of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the

80

NYDOCS01/1357750.4

Agent, each Issuing Bank and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Advances and participations in Letters of Credit in accordance with its Ratable Share. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

Subject to acceptance and recording thereof by the Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.11 and 9.04with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section.

(c)    Register. The Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at one of its offices in the United States a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Advances owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Company and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(d)    Participations. Any Lender may at any time, without the consent of, or notice to, the Company, the Agent or any Issuing Bank, sell participations to any Person (other than a natural Person or the Company or any of the Company’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Revolving Credit Commitment and/or the Advances owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrowers, the Agent, the Issuing Banks and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under

81

NYDOCS01/1357750.4

this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 8.05 with respect to any payments made by such Lender to its Participant(s).

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the proviso to Section 9.01 that affects such Participant. Each Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.11, 9.04(c)and 2.14 (subject to the requirements and limitations therein, including the requirements under Section 2.14(e) (it being understood that the documentation required under Section 2.14(e) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 2.21 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 2.11or 2.14, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a change in law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Company’s request and expense, to use reasonable efforts to cooperate with the Company to effectuate the provisions of Section 2.21(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.05as though it were a Lender; provided that such Participant agrees to be subject to Section 2.15as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Advances or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under this Agreement) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.

(e)    Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 9.08. Confidentiality. Neither the Agent nor any Lender may disclose to any Person any confidential, proprietary or non-public information of the Company or any of its

82

NYDOCS01/1357750.4

Subsidiaries furnished to the Agent or the Lenders by the Company or any of its Subsidiaries (such information being referred to collectively herein as the “Company Information”), except that each of the Agent and each of the Lenders may disclose Company Information (i) to its and its affiliates’ employees, officers, directors, agents and advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Company Information and instructed to keep such Company Information confidential on substantially the same terms as provided herein), (ii) to the extent requested by any regulatory authority, (iii) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (iv) to any other party to this Agreement, (v) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section 9.08, to any assignee or Participant or prospective assignee or Participant or to any credit insurance provider, direct, indirect, actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement, (vii) to the extent such Company Information (A) is or becomes generally available to the public on a non-confidential basis other than as a result of a breach of this Section 9.08 by the Agent or such Lender, or (B) is or becomes available to the Agent or such Lender on a nonconfidential basis from a source other than the Company, the Agent or another Lender, (viii)  to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Borrowers received by it from the Agent or any Lender, (ix) disclosure on a confidential basis to the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Advances and (x) with the consent of the Company.

SECTION 9.09. Designated Subsidiaries. (a) Designation. The Company may at any time, and from time to time, upon not less than 15 Business Days’ notice in the case of any direct or indirect Wholly-Owned Subsidiary so designated after the Restatement Date, notify the Agent that the Company intends to designate a Subsidiary as a “Designated Subsidiary” for purposes of this Agreement. On or after the date that is 15 Business Days after such notice, upon delivery to the Agent and each Lenderof a Designation Letter duly executed by the Company and the respective Subsidiary and substantially in the form of Exhibit F hereto, such Subsidiary shall thereupon become a “Designated Subsidiary” for purposes of this Agreement and, as such, shall have all of the rights and obligations of a Borrower hereunder. The Agent shall promptly notify each Lender of the Company’s notice of such pending designation by the Company and the identity of the respective Subsidiary. Following the giving of any notice pursuant to this Section 9.07(a), if the designation of such Designated Subsidiary obligates the Agent or any Lender to comply with “know your customer”, the Patriot Act or similar identification procedures in circumstances where the necessary information is not already available to it, the Company shall, promptly upon the request of the Agent or any Lender, supply such documentation and other evidence as is reasonably requested by the Agent or any Lender in order for the Agent or such Lender to carry out and be satisfied it has complied with the results of all necessary “know your customer” or other similar checks under all applicable laws and regulations.

If the Company shall designate as a Designated Subsidiary hereunder any Subsidiary not organized under the laws of the United States or any State thereof, any Lender, subject to Section

83

NYDOCS01/1357750.4

2.14(f), may, with notice to the Agent and the Company, fulfill its Commitment by causing an Affiliate or any branch of such Lender to act as the Lender in respect of such Designated Subsidiary.

As soon as practicable after receiving notice from the Company or the Agent of the Company’s intent to designate a direct or indirect Wholly-Owned Subsidiary as a Designated Subsidiary, and in any event no later than five Business Days after the delivery of such notice, for a Designated Subsidiary that is organized under the laws of a jurisdiction other than of the United States or a political subdivision thereof, any Lender that may not legally lend to, establish credit for the account of and/or do any business whatsoever with such Designated Subsidiary directly or through an Affiliate of such Lender as provided in the immediately preceding paragraph (a “Protesting Lender”) shall so notify the Company and the Agent in writing. With respect to each Protesting Lender, the Company shall, effective on or before the date that such Designated Subsidiary shall have the right to borrow hereunder, either (A) notify the Agent and such Protesting Lender that the Commitments of such Protesting Lender shall be terminated or cause such Protesting Lender to assign all of its Commitments to an Eligible Assignee identified by the Company in accordance with Section 2.21(b); provided that such Protesting Lender shall have received payment of an amount equal to the outstanding principal of its Advances and/or Letter of Credit reimbursement obligations, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company or the relevant Designated Subsidiary (in the case of all other amounts), or (B) cancel its request to designate such Subsidiary as a “Designated Subsidiary” hereunder.

(b)    Termination. Upon the indefeasible payment and performance in full of all of the indebtedness, liabilities and obligations under this Agreement of any Designated Subsidiary then, so long as at the time no Notice of Borrowing or Notice of Issuance in respect of such Designated Subsidiary is outstanding, such Subsidiary’s status as a “Designated Subsidiary” shall terminate upon notice to such effect from the Agent to the Lenders (which notice the Agent shall give promptly, and only upon its receipt of a request therefor from the Company). Thereafter, the Lenders shall be under no further obligation to make any Advance hereunder to such Designated Subsidiary unless it is re-designated as a Designated Subsidiary pursuant to Section 9.09(a).

SECTION 9.10. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 9.11. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 9.12. Judgment. (a) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in Dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase

84

NYDOCS01/1357750.4

Dollars with such other currency at Citibank’s principal office in London at 11:00 A.M. (London time) on the Business Day preceding that on which final judgment is given.

(b)    If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in a Committed Currency into Dollars, the parties agree to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase such Committed Currency with Dollars at Citibank’s principal office in London at 11:00 A.M. (London time) on the Business Day preceding that on which final judgment is given.

(c)    The obligation of any Borrower in respect of any sum due from it in any currency (the “Primary Currency”) to any Lender or the Agent hereunder shall, notwithstanding any judgment in any other currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Agent (as the case may be), of any sum adjudged to be so due in such other currency, such Lender or the Agent (as the case may be) may in accordance with normal banking procedures purchase the applicable Primary Currency with such other currency; if the amount of the applicable Primary Currency so purchased is less than such sum due to such Lender or the Agent (as the case may be) in the applicable Primary Currency from a Borrower, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Agent (as the case may be) against such loss, and if the amount of the applicable Primary Currency so purchased exceeds such sum due to any Lender or the Agent (as the case may be) in the applicable Primary Currency, such Lender or the Agent (as the case may be) agrees to remit to such Borrower such excess.

SECTION 9.13. Jurisdiction, Etc. (a) Each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the Notes, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in any such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or the Notes in the courts of any jurisdiction. Each Designated Subsidiary hereby agrees that service of process in any such action or proceeding brought in any such New York State court or in such federal court may be made upon the Company at its address set forth in Section 9.02 and each Designated Subsidiary hereby irrevocably appoints the Company its authorized agent to accept such service of process, and agrees that the failure of the Company to give any notice of any such service shall not impair or affect the validity of such service or of any judgment rendered in any action or proceeding based thereon. The Company and each Designated Subsidiary hereby further irrevocably consent to the service of process in any action or proceeding in such courts by the mailing thereof by any parties hereto by registered or certified mail, postage prepaid, to the Company at its address set forth in Section 9.02. To the extent that

85

NYDOCS01/1357750.4

each Designated Subsidiary has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, each Designated Subsidiary hereby irrevocably waives such immunity in respect of its obligations under this Agreement.

(b)    Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the Notes in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 9.14. Substitution of Currency. If a change in any Committed Currency occurs pursuant to any applicable law, rule or regulation of any governmental, monetary or multi-national authority, this Agreement (including, without limitation, the definition of Eurocurrency Rate) will be amended to the extent determined by the Agent (acting reasonably and in consultation with the Company) to be necessary to reflect the change in currency and to put the Lenders and the Borrowers in the same position, so far as possible, that they would have been in if no change in such Committed Currency had occurred.

SECTION 9.15. No Liability of the Issuing Banks. The Borrowers assume all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither an Issuing Bank nor any of its officers or directors shall be liable or responsible for: (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the applicable Borrower shall have a claim against such Issuing Bank, and such Issuing Bank shall be liable to such Borrower, to the extent of any direct, but not consequential, damages suffered by such Borrower that such Borrower proves were caused by such Issuing Bank’s willful misconduct or gross negligence when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. In furtherance and not in limitation of the foregoing, such Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; provided that nothing herein shall be deemed to excuse such Issuing Bank if it acts with gross negligence or willful misconduct in accepting such documents.

SECTION 9.16. Patriot Act Notice. Each Lender and the Agent (for itself and not on behalf of any Lender) hereby notifies each Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of each Borrower and other information that will

86

NYDOCS01/1357750.4

allow such Lender or the Agent, as applicable, to identify each Borrower in accordance with the Patriot Act. Each Borrower shall provide such information and take such actions as are reasonably requested by the Agent or any Lenders in order to assist the Agent and the Lenders in maintaining compliance with the Patriot Act.

SECTION 9.17. Power of Attorney. Each Subsidiary of the Company may from time to time authorize and appoint the Company as its attorney-in-fact to execute and deliver (a) any amendment, waiver or consent in accordance with Section 9.01 on behalf of and in the name of such Subsidiary and (b) any notice or other communication hereunder, on behalf of and in the name of such Subsidiary. Such authorization shall become effective as of the date on which such Subsidiary delivers to the Agent a power of attorney enforceable under applicable law and any additional information to the Agent as necessary to make such power of attorney the legal, valid and binding obligation of such Subsidiary.

SECTION 9.18. No Fiduciary Duties. Each Borrower agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, such Borrower and its Affiliates, on the one hand, and the Agent, the Issuing Banks, the Lenders and their respective Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Agent, the Issuing Banks, the Lenders and or respective Affiliates and no such duty will be deemed to have arisen in connection with any such transactions or communications.

SECTION 9.19. Waiver of Jury Trial. Each of the Company, the other Borrowers, the Agent and the Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the Notes or the actions of the Agent or any Lender in the negotiation, administration, performance or enforcement thereof.

87

NYDOCS01/1357750.4

EXHIBIT 4(c)

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

XEROX CORPORATION
By	/S/ Rhonda L. Seegal
	Name: Rhonda L. Seegal
	Title: Vice President and Treasurer

CITIBANK, N.A.,
	as Agent
By	/S/ Lisa Huang
	Name: Lisa Huang
	Title: Vice President

[Xerox Credit Agreement Signature Page]

Lenders

CITIBANK, N.A., as a Lender and as an Initial Issuing Bank
By	/S/ Lisa Huang
	Name: Lisa Huang
	Title: Vice President
JPMORGAN CHASE BANK, N.A., as a Lender and as an Initial Issuing Bank
By	/S/ Robert D. Bryant
	Name: Robert D. Bryant
	Title: Vice President
BANK OF AMERICA, N.A.
By	/S/ Darren Bielauoski
	Name: Darren Bielauoski
	Title: Vice President
BNP PARIBAS
By	/S/ Nicolas Rabier
	Name: Nicolas Rabier
	Title: Managing Director
By	/S/ Louise Roussel
	Name: Louise Roussel
	Title: Vice President
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
By	/S/ Vipul Dhadda
	Name: Vipul Dhadda
	Title: Authorized Signatory
By	/S/ Samuel Miller
	Name: Samuel Miller
	Title: Authorized Signatory

[Xerox Credit Agreement Signature Page]

GOLDMAN SACHS BANK USA
By	/S/ Rebecca Kratz
	Name: Rebecca Kratz
	Title: Authorized Signatory

[Xerox Credit Agreement Signature Page]

HSBC BANK USA, NATIONAL ASSOCIATION
By	/S/ David Wagstaff
	Name: David Wagstaff
	Title: Managing Director
MIZUHO BANK, LTD.
By	/S/ Bertram H. Tang
	Name: Bertram H. Tang
	Title: Authorized Signatory
UBS AG, STAMFORD BRANCH
By	/S/ Lana Gifas
	Name: Lana Gifas
	Title: Director, Banking Products Services, US
By	/S/ Kenneth Chin
	Name: Kenneth Chin
	Title: Director, Banking Products Services, US
LLOYDS BANK PLC
By	/S/ Stephen Giacolone
	Name: Stephen Giacolone
	Title: Assistant Vice President - G011
By	/S/ Karen Weich
	Name: Karen Weich
	Title: Vice President - W011
WELLS FARGO BANK, NATIONAL ASSOCIATION
By	/S/ Tom Molitor
	Name: Tom Molitor
	Title: Managing Director

[Xerox Credit Agreement Signature Page]

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD
By	/S/ Lillian Kim
	Name: Lillian Kim
	Title: Director

[Xerox Credit Agreement Signature Page]

THE BANK OF NEW YORK MELLON
By	/S/ Donald G. Cassidy, Jr.
	Name: Donald G. Cassidy, Jr.
	Title: Managing Director
PNC BANK, NATIONAL ASSOCIATION
By	/S/ Michael A. Richards
	Name: Michael A. Richards
	Title: Senior Vice President
STATE STREET BANK AND TRUST COMPANY
By	/S/ Mary H. Carey
	Name: Mary H. Carey
	Title: Vice President
DANSKE BANK A/S
By	/S/ Jergen Linnet
	Name: Jergen Linnet
	Title: Chief Loan Manager
By	/S/ Merete Ryvald-Christensen
	Name: Merete Ryvald-Christensen
	Title: Chief Loan Manager
THE BANK OF NOVA SCOTIA
By	/S/ Diane Emanuel
	Name: Diane Emanuel
	Title: Managing Director
U.S. BANK NATIONAL ASSOCIATION
By	/S/ Michael E. Temmick
	Name: Michael E. Temmick
	Title: Vice President

[Xerox Credit Agreement Signature Page]

COMERICA BANK
By	/S/ Timothy O'Rourke
	Name: Timothy O'Rourke
	Title: Vice President

[Xerox Credit Agreement Signature Page]

EXHIBIT 4(c)

SCHEDULE I

COMMITMENTS

Name of Initial Lender	Revolving Credit Commitment		Letter of Credit Commitment
Bank of America, N.A.		$200,000,000
The Bank of New York Mellon		$50,000,000
The Bank of Nova Scotia		$50,000,000
The Bank of Tokyo-Mitsubishi UFJ, Ltd.		$124,000,000
BNP Paribas		$200,000,000
Citibank, N.A.		$200,000,000		$150,000,000
Comerica Bank		$25,000,000
Credit Suisse AG, Cayman Islands Branch		$124,000,000
Danske Bank A/S		$25,000,000
Goldman Sachs Bank USA		$124,000,000
HSBC Bank USA, National Association		$100,000,000
JPMorgan Chase Bank, N.A.		$200,000,000		$150,000,000
Lloyds Bank plc		$50,000,000
Mizuho Bank, Ltd.		$124,000,000
PNC Bank National Association		$100,000,000
State Street Bank and Trust Company		$30,000,000
UBS AG, Stamford Branch		$124,000,000
U.S. Bank National Association		$50,000,000
Wells Fargo Bank, National Association		$100,000,000
Total:		$2,000,000,000		$300,000,000

EXHIBIT A

FORM OF REVOLVING CREDIT PROMISSORY NOTE

U.S.$_______________                    Dated: _______________, 20__

FOR VALUE RECEIVED, the undersigned, [NAME OF BORROWER], a __________ [corporation] (the “Borrower”), HEREBY PROMISES TO PAY to the order of _________________________ (the “Lender”) for the account of its Applicable Lending Office on the Termination Date (each as defined in the Credit Agreement referred to below) the principal sum of U.S.$[amount of the Lender’s Revolving Credit Commitment in figures] or, if less, the aggregate outstanding principal amount of the Advances made by the Lender to the Borrower, pursuant to the Amended and Restated Credit Agreement dated as of March 18, 2014 among the Borrower, [Xerox Corporation], the other borrowers parties thereto, the Lender and certain other lenders parties thereto, and Citibank, N.A., as Agent for the Lender and such other lenders (as amended or modified from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined) outstanding on the Termination Date.

The Borrower promises to pay interest on the unpaid principal amount of each Advance made by the Lender to the Borrower from the date of such Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement.

Both principal and interest in respect of each Advance made by the Lender to the Borrower (i) in Dollars are payable in lawful money of the United States of America to the Agent at its account maintained at 388 Greenwich Street, New York, New York 10013, in same day funds and (ii) in any Committed Currency are payable in such currency at the applicable Payment Office in same day funds. Each Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note.

This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i) provides for the making of Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Advance being evidenced by this Promissory Note, (ii) contains provisions for determining the Dollar Equivalent of Advances denominated in Committed Currencies and (iii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.

[NAME OF BORROWER]

By

Title:

ADVANCES AND PAYMENTS OF PRINCIPAL

Date Amount of Advance Amount of Principal Paid or Prepaid Unpaid Principal Balance Notation Made By

NYDOCS01/1357750.4    2

EXHIBIT B

FORM OF NOTICE OF REVOLVING CREDIT BORROWING

Citibank, N.A., as Agent

for the Lenders parties

to the Credit Agreement

referred to below

1615 Brett Road, Building #3

New Castle, Delaware 19720

[Date]

Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

The undersigned, [Name of Borrower], refers to the Amended and Restated Credit Agreement, dated as of March 18, 2014 (as amended or modified from time to time, the “Credit Agreement”, the terms defined therein being used herein as therein defined), among the undersigned, [Xerox Corporation], the other borrowers parties thereto, certain Lenders parties thereto and Citibank, N.A., as Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “Proposed Borrowing”) as required by Section 2.02(a) of the Credit Agreement:

(i)    The Business Day of the Proposed Borrowing is __________, 20__.

(ii)    The Type of Advances comprising the Proposed Borrowing is [Base Rate Advances] [Eurocurrency Rate Advances].

(iii)    The aggregate amount of the Proposed Borrowing is $__________ [for a Borrowing in a Committed Currency, list currency and amount of Borrowing].

[(iv)    The initial Interest Period for each Eurocurrency Rate Advance made as part of the Proposed Borrowing is _____ month[s].]

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

(A)    the representations and warranties contained in Section 4.01 of the Credit Agreement (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f)(i) thereof) and, in the case of any Borrowing made to a Designated Subsidiary, in the Designation Agreement for such Designated Subsidiary, are correct, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date (except to the extent such representations

and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true on and as of such earlier date); and

NYDOCS01/1357750.4    2

(B)    no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default.

Very truly yours,

[NAME OF BORROWER]

By

Title:

NYDOCS01/1357750.4    3

EXHIBIT C

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between the Assignor identified in item 1 below (the “Assignor”) and the Assignee identified in item 2 below (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including without limitation any letters of credit, guarantees, and swingline loans included in such facilities), and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by the Assignor to the Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1.    Assignor:        ________________________________

________________________________

[Assignor [is] [is not] a Defaulting Lender]

2. Assignee:        ________________________________

________________________________

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]

3. Borrower(s):        ________________________________

4. Agent:            Citibank, N.A., as the administrative agent under the Credit Agreement

-2-

5. Credit Agreement:    The $2,000,000,000 Amended and Restated Credit Agreement dated as of March 18, 2014 among Xerox Corporation, the Lenders parties thereto, Citibank, N.A., as Agent, and the other agents parties thereto

6. Assigned Interest:

Assignor	Assignee	Facility Assigned1	Aggregate Amount of Commitment/Advances for all Lenders2	Amount of Commitment/Advances Assigned8	Percentage Assigned of Commitment/ Advances3	CUSIP Number
			$	$	%
			$	$	%
			$	$	%

[7.    Trade Date:        ______________]⁴ 

[Page break]

______________________

¹  Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g., “Revolving Credit Commitment,” “Letter of Credit Commitment,” etc.)

²  Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

³  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

⁴  To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.

-3-

Effective Date: _____________ ___, 20___ [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:______________________________

Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:______________________________

Title:

[Consented to and]⁵ Accepted:

[NAME OF AGENT], as

Agent

By: _________________________________

Title:

[Consented to:]⁶

[NAME OF RELEVANT PARTY]

By: ________________________________

Title:

______________________

⁵  To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

⁶  To be added only if the consent of the Company and/or other parties (e.g. Issuing Bank) is required by the terms of the Credit Agreement.

-4-

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1.    Representations and Warranties.

1.1    Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any collateral thereunder, (iii) the financial condition of any Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of the Credit Agreement, or (iv) the performance or observance by any Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under the Credit Agreement.

1.2.    Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 9.07(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 9.07(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.01(i) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, and (vii) if it is organized under the laws of a jurisdiction outside of the United States attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, and (ii) it will perform

-5-

in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

2.    Payments. From and after the Effective Date, the Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to, on or after the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by the Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves. Notwithstanding the foregoing, the Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date to the Assignee.

3.    General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.

-1-

EXHIBIT D-1

FORM OF OPINION OF COUNSEL FOR THE INITIAL BORROWER

March 18, 2014

Citibank, N.A.,

as Administrative Agent

1615 Brett Road, Building #3

New Castle, DE 19720

and each Lender identified on Schedule I hereto

Re: Xerox Corporation/Amended and Restated Credit Agreement

Ladies and Gentlemen:

We have acted as special counsel to Xerox Corporation, a New York corporation (the “Company”), in connection with the preparation, execution and delivery of (a) the Amended and Restated Credit Agreement dated as of the date hereof (the “Credit Agreement”), among the Company, the lenders from time to time party thereto (the “Lenders”), Citibank, N.A., as administrative agent for the Lenders (in such capacity, the “Agent”), and Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and BNP Paribas Securities Corp., as Joint Lead Arrangers and Joint Bookrunners, and (b) certain other agreements, instruments and documents related to the Credit Agreement. This opinion is being delivered pursuant to Section 3.01(f)(iv)(A) of the Credit Agreement. Capitalized terms used herein and not otherwise defined herein shall have the same meanings herein as ascribed thereto in the Credit Agreement.

In our examination we have assumed the genuineness of all signatures including endorsements, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as facsimile, electronic, certified or photostatic copies, and the authenticity of the originals of such copies. As to any facts material to this opinion which we did not independently establish or verify, we have relied upon statements and representations of the Company and their officers and other representatives and of public officials, including the facts and conclusions set forth therein.

-2-

In rendering the opinions set forth herein, we have examined and relied on originals or copies of the following:

(a) an executed copy of the Credit Agreement;

(b) executed copies of the Notes issued to each of __________;

(c) a certificate of Rhonda L. Seegal, Vice President and Treasurer of the Company, dated the date hereof, a copy of which is attached as Exhibit A hereto (the “Opinion Certificate”); and

(d) such other documents as we have deemed necessary or appropriate as a basis for the opinions set forth below.

We express no opinion as to the laws of any jurisdiction other than (i) the Applicable Laws of the State of New York and (ii) the Applicable Laws of the United States of America (including, without limitation, Regulations U and X of the Federal Reserve Board).

“Applicable Laws” shall mean those laws, rules and regulations which, in our experience, are normally applicable to transactions of the type contemplated by the Credit Agreement, without our having made any special investigation as to the applicability of any specific law, rule or regulation, and which are not the subject of a specific opinion herein referring expressly to a particular law or laws. “Governmental Approval” means any consent, approval, license, authorization or validation of, or filing, recording or registration with, any governmental authority pursuant to the Applicable Laws of the State of New York or the Applicable Laws of the United States of America. “New York UCC” means the Uniform Commercial Code as in effect on the date hereof in the State of New York (without regard to laws referenced in Section 9-201 thereof).

Based upon the foregoing and subject to the limitations, qualifications, exceptions and assumptions set forth herein, we are of the opinion that:

1. The Credit Agreement and the Notes constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms under the Applicable Laws of the State of New York.

2. Neither the execution, delivery or performance by the Company of the Credit Agreement and the Notes nor the compliance by

-3-

the Company with the terms and provisions thereof will contravene any provision of any Applicable Law of the State of New York or any Applicable Law of the United States of America.

3. No Governmental Approval, which has not been obtained or taken and is not in full force and effect, is required to authorize, or is required in connection with, the execution or delivery of the Credit Agreement and the Notes by the Company or the enforceability of the Credit Agreement against the Company.

Our opinions are subject to the following assumptions and qualifications:

(a) enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in equity or at law);

(b) we have assumed that the Credit Agreement constitutes the valid and binding obligation of each party to the Credit Agreement (other than the Company) enforceable against each such other party in accordance with its terms;

(c) we express no opinion as to the effect on the opinions expressed herein of (i) the compliance or non-compliance of any party (other than the Company to the extent expressly set forth herein) to the Credit Agreement with any state, federal or other laws or regulations applicable to them or (ii) the legal or regulatory status or the nature of the business of any party (other than the Company to the extent expressly set forth herein);

(d) we express no opinion as to the enforceability of any rights to contribution or indemnification provided for in the Credit Agreement which are violative of the public policy underlying any law, rule or regulation (including any federal or state securities law, rule or regulation);

(e) we express no opinion with respect to any provision of the Credit Agreement to the extent it excuses the issuer of a letter of credit from liability to the extent such provision is unenforceable pursuant to Section 5-103 of the UCC;

(f) we express no opinion on the enforceability of any provision in the Credit Agreement purporting to prohibit, restrict or

-4-

condition the assignment of rights under the Credit Agreement to the extent such restriction on assignability is governed by the New York UCC;

(g) we express no opinion as to the enforceability of Article VII of the Credit Agreement; and

(h) we express no opinion with respect to any provision of the Credit Agreement to the extent it authorizes or permits any purchaser of a participation interest to set-off or apply any deposit, property or indebtedness with respect to any participation interest.

In rendering the foregoing opinions, we have assumed, with your consent, that:

(a) the Company is duly organized under the laws of the State of New York;

(b) the Company is validly existing and in good standing as a corporation, under the laws of the State of New York;

(c) the Company has the corporate power and authority to execute, deliver and perform all of its obligations under the Credit Agreement and the Notes and the execution and delivery by the Company of the Credit Agreement and the Notes and the consummation by the Company of the transactions contemplated thereby have been duly authorized by all requisite corporate action on the part of the Company;

(d) the Credit Agreement and the Notes have been duly executed and delivered by the Company;

(e) the execution, delivery and performance by the Company of any of its obligations under the Credit Agreement and the Notes does not and will not conflict with, contravene, violate or constitute a default under (i) the certificate of incorporation or the by-laws of the Company; (ii) any lease, indenture, instrument or other agreement to which the Company or its property is subject, (iii) any rule, law or regulation to which the Company is subject (other than the Applicable Laws of the State of New York or Applicable Laws of the United States of America as to which we express our opinion in paragraph 3 herein) or (iv) any judicial or administrative order or decree of any governmental authority; and

(f) no authorization, consent or other approval of, notice to or filing with any court, governmental authority or regulatory body (other than Governmental Approvals as to which we express our opinion in paragraph 4 herein) is required to authorize or is required in connection

-5-

with the execution, delivery or performance by the Company of the Credit Agreement or the Notes or the transactions contemplated thereby.

We understand that you are separately receiving an opinion with respect to certain of the foregoing assumptions from Don H. Liu, General Counsel of the Company, and we are advised that such opinion contain qualifications. Our opinions herein stated are based on the assumptions specified above and we express no opinion as to the effect on the opinions herein stated of the qualifications contained in such other opinions.

This opinion is being furnished only to you in connection with the Credit Agreement and is solely for your benefit and is not to be used, circulated, quoted or otherwise referred to for any other purpose or relied upon by any other person or entity for any purpose without our prior written consent, except that any assignee that becomes a Lender in accordance with the provisions of Section 9.07 of the Credit Agreement may rely on this opinion as if addressed and delivered to such assignee on the date hereof; provided that each prospective assignee or assignee of any Lender may be shown this opinion, except that such prospective assignee or assignee may not rely on this opinion unless and until such prospective assignee or assignee becomes a Lender in accordance with the provisions of Section 9.07 of the Credit Agreement.

Very truly yours,

-6-

SCHEDULE I

LENDERS

Citibank, N.A

JPMorgan Chase Bank, N.A

Bank of America, N.A.

BNP Paribas

Credit Suisse AG, Cayman Islands Branch

Goldman Sachs Bank USA

HSBC Bank USA, National Association

Mizuho Bank, Ltd.

UBS AG, Stamford Branch

Lloyds Bank plc

Wells Fargo Bank, National Association

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

PNC Bank, National Association

The Bank of New York Mellon

State Street Bank and Trust Company

Danske Bank A/S

The Bank of Nova Scotia

U.S. Bank National Association

Comerica Bank

EXHIBIT D-2

FORM OF OPINION OF COUNSEL OF THE COMPANY

March 18, 2014

To the Lenders and Administrative Agent parties to

the Credit Agreement

referred to below

XEROX CORPORATION

Dear Sirs:

The undersigned, an attorney-at-law admitted to practice in the State of New York, is General Counsel of Xerox Corporation, a New York corporation (the “Company”). As such I or other lawyers in the Office of General Counsel of the Company who report directly or indirectly to me (“my reports”) are familiar with the proceedings taken by the Company in connection with the preparation, execution and delivery of the Credit Agreement and the Notes referred to below. This opinion is furnished to you pursuant to Section 3.01(f)(iv)(B) of the Amended and Restated Credit Agreement, dated as of the date hereof (the “Credit Agreement”), among the Company, the lenders party thereto (the “Lenders”), Citibank, N.A., as administrative agent for the Lenders (the “Administrative Agent”), and Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and BNP Paribas Securities Corp., as Joint Lead Arrangers and Joint Bookrunners. All capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.

In rendering the opinions set forth herein, either I or my reports have examined the following:

(1)the Credit Agreement;

(2)Notes issued to each of __________;

(3)the documents relating to the Company furnished pursuant to Section 3.01(f) of the Credit Agreement, which include the following:

(i)certified copies of (y) the resolutions of the Board of Directors of the Company approving the Credit Agreement and the Notes and (z) all documents evidencing other necessary corporate or similar action and governmental approvals, if any, with respect to the Credit Agreement and the Notes; and

(ii)the Restated Certificate of Incorporation and the By-laws of the Company, each as amended to the date hereof (the “Charter” and the “By-Laws”, respectively); and

(4)such other documents, agreements and instruments, and such laws, rules, regulations, orders, decrees, writs, judgments, awards, injunctions, and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed.

In the foregoing examination of the documents referred to above, I and my reports have assumed the authenticity of all such documents submitted to us as originals, the genuineness of all signatures (other than signatures of the Company), and the conformity to the originals of such documents submitted to us as copies. I have relied, as to factual matters, on the documents I and my reports have examined. I also have assumed that each of the lenders, the Agent and the other parties thereto (other than the Company) has duly executed and delivered, pursuant to due authorization, the Credit Agreement.

Based upon the foregoing, it is my opinion that:

(i) The Company is duly organized, validly existing and in good standing under the laws of the State of New York.

(ii) The Company has corporate power and authority to execute, deliver and perform the Credit Agreement and the Notes and the consummation by the Company of the transactions contemplated thereby have been duly authorized by all requisite corporate or similar action on the part of the Company.

(iii) The Credit Agreement and the Notes have been duly executed and delivered by the Company.

(iv) There is no pending or, to my knowledge, threatened action, suit, investigation, litigation or proceeding affecting the Company or any of its Subsidiaries before any court, governmental agency or arbitrator that purports to affect the legality, validity or enforceability of the Credit Agreement or any Note or the consummation of the transactions contemplated thereby.

(v) The due authorization, execution or delivery by the Company of the Credit Agreement and the Notes, the performance by the Company of its obligations thereunder, the consummation of the transactions contemplated by the Credit Agreement and the Notes and the fulfillment of the terms of the Credit Agreement and each of the Notes will not conflict with, result in a breach of, or constitute a default under the Charter or By-Laws of the Company or the terms of any indenture or other material agreement or instrument to which the Company or any of the Company’s subsidiaries is a party or bound, or any order, decree,

judgment or regulation (other than any federal or state securities or blue sky laws, rules or regulations) known to me to be generally applicable to the Company or any of the Company’s subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of the Company’s subsidiaries.

My opinions are subject to the following qualifications:

(a)I am qualified to practice law in the State of New York. The opinions expressed herein are limited to the law of the State of New York and the Federal law of the United States.

(b)The opinions expressed herein are given as of the date hereof and I undertake no obligation and hereby disclaim any obligation to advise you of any change after the date of this opinion pertaining to any matter referred to herein.

This opinion is being furnished only to you in connection with the Credit Agreement and the Notes and is solely for your benefit and is not to be used, circulated, quoted or otherwise referred to for any other purpose or relied upon by any other person or entity for any purpose without my prior written consent, except that any assignee who becomes a Lender in accordance with the provisions of Section 9.07 of the Credit Agreement may rely on this opinion as if addressed and delivered to such assignee on the date hereof; provided that each prospective assignee or assignee of any Lender may be shown this opinion, except that such prospective assignee or assignee may not rely on this opinion unless and until such prospective assignee or assignee becomes a Lender in accordance with the provisions of Section 9.07 of the Credit Agreement.

Very truly yours,

Don H. Liu

General Counsel

EXHIBIT D-3

FORM OF OPINION OF COUNSEL FOR DESIGNATED SUBSIDIARY

[Date]

To each of the Lenders and Agent parties to

to the Credit Agreement

referred to below

Xerox Corporation

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Section 3.02(f) of the Amended and Restated Credit Agreement dated as of March 18, 2014 (the “Credit Agreement”), among Xerox Corporation, a New York corporation (the “Company”), the lenders party thereto, Citibank N.A., as Agent, and Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and BNP Paribas Securities Corp., as Joint Lead Arrangers and Joint Bookrunners. Terms defined in the Credit Agreement are used herein as therein defined.

We have acted as counsel for [__________________], a [corporation] organized under the laws of [______] (the “Designated Subsidiary”) in connection with the preparation, execution and delivery of the Designation Agreement dated as of [this date] between the Company and the Designated Subsidiary (the “Designation Agreement”).

In that connection, we have examined:

(1) the Designation Agreement;

(2) the Credit Agreement;

(3) the revolving notes (the “Notes”) of the Designated Subsidiary contemplated by the Credit Agreement and delivered on the date hereof;

(4) [the [Articles] [Certificate] of Incorporation of the Designated Subsidiary and all amendments thereto (the “Charter”)];

(5) [the by-laws and all amendments thereto (the “By-laws”)] and the resolutions of the [Board of Directors] of the Designated Subsidiary dated [Date], in each case, as amended and in effect as of this date];

(6) [a certificate of the Secretary of State of __________, dated _______________, 2014, attesting to the continued corporate existence and good standing of the Designated Subsidiary in that State]; and

(7) such other documents, agreements and instruments, and such laws, rules, regulations, orders, decrees, writs, judgments, awards, injunctions, and the like, as we have deemed necessary as a basis for the opinions hereinafter expressed.

We have also examined the originals, or copies certified to our satisfaction, of the documents listed in a certificate of the chief financial officer of the Designated Subsidiary, dated the date hereof (the “Certificate”), certifying that the documents listed in such certificate are all of the indentures, loan or credit agreements, guarantees, mortgages, security agreements, bonds, notes and other material agreements or instruments, and all of the orders, writs, judgments, awards, injunctions and decrees, that affect or purport to affect the Designated Subsidiary’s right to borrow money or the Designated Subsidiary’s obligations under the Designation Agreement, the Credit Agreement or the Notes. In our examination we have assumed the genuineness of all signatures including endorsements, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as facsimile, electronic, certified or photostatic copies, and the authenticity of the originals of such copies. As to questions of fact material to such opinions, we have, when relevant facts were not independently established by us, relied upon statements and representations of the Designated Subsidiary or its officers or of public officials. We have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Initial Lenders and the Agent.

Our opinions expressed below are limited to the laws of [the State of [New York], the General Corporation Law of the State of [__________] and the Federal law of the United States] / [Country].

Based upon the foregoing and upon such investigation as we have deemed necessary, we are of the following opinion:

1The Designated Subsidiary is a [corporation] duly organized, validly existing and in good standing under the laws of [__________].

2The execution, delivery and performance by the Designated Subsidiary of the Designation Agreement, and the consummation of the transactions contemplated by the Designation Agreement, the Credit Agreement and the Notes, are within the Designated Subsidiary’s corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the [Charter or the By-laws] or (ii) any law, rule or regulation applicable to the Designated Subsidiary [(including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System)] or (iii) any contractual or legal restriction contained in any document listed in the Certificate or, to our knowledge, contained in any other similar document. The Designation Agreement has been duly executed and delivered on behalf of the Designated Subsidiary.

3[No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the Designated Subsidiary of the Designation Agreement, and the consummation of the transactions contemplated by the Designation Agreement, the Credit Agreement and the Notes.] / [No authorization or approval or other action by, and no notice to or filing with, any [Country] governmental authority or [Country] regulatory body or any third party is required for (a) the due execution, delivery, recordation, filing or performance by the Designated Subsidiary of the Designation Agreement, and the consummation of the transactions contemplated by the Designation Agreement, the Credit Agreement and the Notes, except for the authorizations, approvals, actions, notices and filings that have been duly obtained, taken, given or made and are in full force and effect, or (b) the exercise by the Agent, any Lender or the Issuing Bank of its rights under the Designation Agreement, the Credit Agreement and the Notes.]

4The Designation Agreement and the Credit Agreement are, and after giving effect to the initial Borrowing, the Notes will be, legal, valid and binding obligations of the Designated Subsidiary enforceable against the Designated Subsidiary in accordance with their respective terms.

5There are no pending or, to our knowledge, threatened actions or proceedings against the Designated Subsidiary or any of its Subsidiaries before any court, governmental agency or arbitrator that that purports to affect the legality, validity or enforceability of the Designation Agreement, the Credit Agreement or any Note or the consummation of the transactions contemplated thereby.

6[The governing law provisions of the Designation Agreement, the Credit Agreement or any Note (which provide that such Designation Agreement, Credit Agreement or Notes shall be governed by the laws of the State of New York) are valid under the laws of [Country]. In any action or proceeding arising out of or relating to the Designation Agreement, the Credit Agreement or the Notes in any court of [Country], such court would recognize and give effect to the provisions of the Designation Agreement and Section 9.10 of the Credit Agreement wherein the parties thereto agree that the Designation Agreement, the Credit Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.]⁷ 

7[Assuming that the Designation Agreement, the Credit Agreement or any Note is the legal, valid and binding obligation of the Designated Subsidiary, enforceable against the Designated Subsidiary in accordance with its terms under the laws of the State of New York which expressly govern the Designation Agreement, the Credit Agreement or any Note, the Designation Agreement, the Credit Agreement or any Note is the legal, valid and binding obligation of the Designated Subsidiary enforceable against the Designated Subsidiary in accordance with its terms under the laws of [Country].]

_____________________

⁷  Paragraphs 6 through 9 to be used if the Designated Subsidiary is a Foreign Subsidiary. Subject to appropriate qualifications reasonably acceptable to the Agent, depending on the jurisdiction of the Foreign Subsidiary.

8[None of the terms of the Designation Agreement, the Credit Agreement or any Note violates an important public policy of [Country].]

9[A judgment obtained from any federal or state court of the United States in respect of any of the Designation Agreement, the Credit Agreement or any Note would be enforceable without reconsideration on the merits in the courts of [Country].]

The opinions set forth above are subject to the following assumptions and qualifications:

(a)    Our opinion in paragraph 4 above⁸ as to enforceability is subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar law affecting creditors’ rights generally.

(b)    Our opinion in paragraph 4 above³ as to enforceability is subject to the effect of general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law).

(c)    We express no opinion as to (i) Section 2.14 of the Credit Agreement insofar as it provides that any Lender purchasing a participation from another Lender pursuant thereto may exercise set-off or similar rights with respect to such participation and (ii) the effect of the law of any jurisdiction other than [____________] wherein any Lender may be located or wherein enforcement of the Designation Agreement, the Credit Agreement or the Notes may be sought that limits the rates of interest legally chargeable or collectible.

(d)    [Other assumptions and qualifications reasonably acceptable to the Agent to be added.]

This opinion is being furnished only to you in connection with the Credit Agreement and is solely for your benefit and is not to be used, circulated, quoted or otherwise referred to for any other purpose or relied upon by any other person or entity for any purpose without our prior written consent, except that any assignee that becomes a Lender in accordance with the provisions of Section 9.07 of the Credit Agreement may rely on this opinion as if addressed and delivered to such assignee on the date hereof; provided that each prospective assignee or assignee of any Lender may be shown this opinion, except that such prospective assignee or assignee may not rely on this opinion unless and until such prospective assignee or assignee becomes a Lender in accordance with the provisions of Section 9.07 of the Credit Agreement.

Very truly yours,

______________________

⁸  If paragraph 7 is used, this should be modified to refer to “paragraph 7 above”.

EXHIBIT E

FORM OF COMMITMENT INCREASE OPINION

[Date]

To the Lenders and Agent parties to

the Credit Agreement

referred to below

XEROX CORPORATION

Dear Sirs:

The undersigned, an attorney-at-law admitted to practice in the State of New York, is [General Counsel] of Xerox Corporation, a New York corporation (the “Company”). As such I or other lawyers in the Office of General Counsel of the Company who report directly or indirectly to me (“my reports”) are familiar with the proceedings taken by the Company in connection with the preparation, execution and delivery of the Credit Agreement and the Notes referred to below. This opinion is furnished to you pursuant to Section 2.18(d)(i) of the Amended and Restated Credit Agreement, dated as of March 18, 2014 (the “Credit Agreement”), among the Company, the lenders party thereto, Citibank, N.A., as Agent, and Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and BNP Paribas Securities Corp., as Joint Lead Arrangers and Joint Bookrunners. All capitalized terms used herein and not otherwise defined herein shall have the respective meanings assigned to such terms in the Credit Agreement.

In rendering the opinions set forth herein, either I or my reports have examined the following:

(1)the Credit Agreement;

(2)Notes issued to each of __________;

(3)the corporate documents relating to the Company, which include the following:

(i)certified copies of (y) the resolutions of the Board of Directors of the Company approving the Credit Agreement and the Notes and (z) all documents evidencing other necessary corporate or similar action and governmental approvals, if any, with respect to the Credit Agreement and the Notes; and

(ii)a certificate of the Secretary or Assistant Secretary of the Company, certifying the names and true signatures of the officers of the Company authorized to sign the Credit Agreement, the Notes and the other documents to be delivered by the Company thereunder; and

(iii)the Restated Certificate of Incorporation and the By-laws of the Company, each as amended to the date hereof (the “Charter” and the “By-Laws”, respectively); and

(4)such other documents, agreements and instruments, and such laws, rules, regulations, orders, decrees, writs, judgments, awards, injunctions, and the like, as I have deemed necessary as a basis for the opinions hereinafter expressed.

In the foregoing examination of the documents referred to above, I and my reports have assumed the authenticity of all such documents submitted to us as originals, the genuineness of all signatures (other than signatures of the Company), and the conformity to the originals of such documents submitted to us as copies. I have relied, as to factual matters, on the documents I and my reports have examined. I also have assumed that each of the lenders, the Agent and the other parties thereto (other than the Company) has duly executed and delivered, pursuant to due authorization, the Credit Agreement.

Based upon the foregoing, it is my opinion that:

(i) The Company is duly organized, validly existing and in good standing under the laws of the State of New York.

(ii) The Company has corporate power and authority to execute, deliver and perform the Credit Agreement (after giving effect to the Commitment Increase as of the Increase Date) and the Notes and the consummation by the Company of the transactions contemplated thereby have been duly authorized by all requisite corporate or similar action on the part of the Company.

(iii) The Credit Agreement (after giving effect to the Commitment Increase as of the Increase Date) and the Notes have been duly executed and delivered by the Company.

(iv) The Credit Agreement (after giving effect to the Commitment Increase as of the Increase Date) and the Notes constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms under the laws of the State of New York.

(v) There is no pending or, to my knowledge, threatened action, suit, investigation, litigation or proceeding affecting the Company or any of its Subsidiaries before any court, governmental agency or arbitrator that purports to affect the legality, validity or enforceability of the Credit Agreement (after giving effect to the Commitment Increase as of the Increase Date) or any Note or the consummation of the transactions contemplated thereby.

(vi) The due authorization, execution or delivery by the Company of the Credit Agreement (after giving effect to the Commitment Increase as of the Increase Date) and the Notes, the performance by the Company of its obligations

thereunder, the consummation of the transactions contemplated by the Credit Agreement (after giving effect to the Commitment Increase as of the Increase Date) and the Notes and the fulfillment of the terms of the Credit Agreement (after giving effect to the Commitment Increase as of the Increase Date) and each of the Notes will not conflict with, result in a breach of, or constitute a default under the Charter or By-Laws of the Company or the terms of any indenture or other material agreement or instrument to which the Company or any of the Company’s subsidiaries is a party or bound, or any order, decree, judgment or regulation (other than any federal or state securities or blue sky laws, rules or regulations) known to me to be generally applicable to the Company or any of the Company’s subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of the Company’s subsidiaries.

My opinions are subject to the following qualifications:

(a)I am qualified to practice law in the State of New York. The opinions expressed herein are limited to the law of the State of New York and the Federal law of the United States.

(b)The opinions expressed herein are given as of the date hereof and I undertake no obligation and hereby disclaim any obligation to advise you of any change after the date of this opinion pertaining to any matter referred to herein.

(c)[Other assumptions and qualifications reasonably acceptable to the Agent to be added.]

This opinion is being furnished only to you in connection with the Credit Agreement and the Notes and is solely for your benefit and is not to be used, circulated, quoted or otherwise referred to for any other purpose or relied upon by any other person or entity for any purpose without my prior written consent, except that any assignee who becomes a Lender in accordance with the provisions of Section 9.07 of the Credit Agreement may rely on this opinion as if addressed and delivered to such assignee on the date hereof.

Very truly yours,

EXHIBIT F

FORM OF DESIGNATION AGREEMENT

[DATE]

To each of the Lenders

parties to the Credit Agreement

(as defined below) and to Citibank, N.A.,

as Agent for such Lenders

Ladies and Gentlemen:

Reference is made to the Amended and Restated Credit Agreement dated as of March 18, 2014 (as amended or modified from time to time, the “Credit Agreement”) among Xerox Corporation, a New York corporation (the “Company”), the other borrowers parties thereto, the Lenders (as defined in the Credit Agreement) and Citibank, N.A., as agent for the Lenders (the “Agent”). Terms defined in the Credit Agreement are used herein with the same meaning.

Please be advised that the Company hereby designates its undersigned Subsidiary, ____________ (“Designated Subsidiary”), as a “Designated Subsidiary” under and for all purposes of the Credit Agreement.

The Designated Subsidiary, in consideration of each Lender’s agreement to extend credit to it under and on the terms and conditions set forth in the Credit Agreement, does hereby assume each of the obligations imposed upon a “Designated Subsidiary” and a “Borrower” under the Credit Agreement and agrees to be bound by the terms and conditions of the Credit Agreement. In furtherance of the foregoing, the Designated Subsidiary hereby represents and warrants to each Lender as follows:

(a)    The Designated Subsidiary is a corporation duly organized, validly existing and in good standing (to the extent such concept is applicable in the relevant jurisdiction) under the laws of ______________________.

(b)    The execution, delivery and performance by the Designated Subsidiary of this Designation Agreement, the Credit Agreement and the Notes to be delivered by it are within the Designated Subsidiary’s corporate or other powers, have been duly authorized by all necessary corporate or other action and do not contravene (i) the Designated Subsidiary’s organizational documents or by-laws (ii) any law applicable to the Designated Subsidiary or (iii) any indenture or other agreement governing Debt or other material agreement or other instrument binding upon the Designated Subsidiary, any of its Subsidiaries or any of their properties, or give rise to a right thereunder to require the Designated Subsidiary or any of its Subsidiaries to make any payment therefor. The

NYDOCS01/1357750.4

Designation Agreement and the Notes delivered by it have been duly executed and delivered on behalf of the Designated Subsidiary.

(c)    No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any third party is required for the due execution, delivery and performance by the Designated Subsidiary of this Designation Agreement, the Credit Agreement or the Notes to be delivered by it, except as have been obtained or made and are in full force and effect or where the failure to obtain the same would not have a Material Adverse Effect.

(d)    This Designation Agreement is, and the Notes to be delivered by the Designated Subsidiary when delivered will be, legal, valid and binding obligations of the Designated Subsidiary enforceable against the Designated Subsidiary in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(e)    There is no pending or threatened action, suit, investigation or proceeding affecting the Designated Subsidiary or any of its Subsidiaries before any court, governmental agency or arbitrator that purports to affect the legality, validity or enforceability of this Designation Agreement, the Credit Agreement or any Note of the Designated Subsidiary.

The Designated Subsidiary hereby agrees that service of process in any action or proceeding brought in any New York State court or in federal court may be made upon the Company at its offices at ___________, Attention: __________ (the “Process Agent”) and the Designated Subsidiary hereby irrevocably appoints the Process Agent to give any notice of any such service of process, and agrees that the failure of the Process Agent to give any notice of any such service shall not impair or affect the validity of such service or of any judgment rendered in any action or proceeding based thereon.

The Company hereby accepts such appointment as Process Agent and agrees with you that (i) the Company will maintain an office in Connecticut through the Termination Date and will give the Agent prompt notice of any change of address of the Company, (ii) the Company will perform its duties as Process Agent to receive on behalf of the Designated Subsidiary and its property service of copies of the summons and complaint and any other process which may be served in any action or proceeding in any New York State or federal court sitting in New York City arising out of or relating to the Credit Agreement and (iii) the Company will forward forthwith to the Designated Subsidiary at its address at ___________________ or, if different, its then current address, copies of any summons, complaint and other process which the Company received in connection with its appointment as Process Agent.

NYDOCS01/1357750.4    2

This Designation Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

Very truly yours,

XEROX CORPORATION

By _________________________

Name:

Title:

[THE DESIGNATED SUBSIDIARY]

By__________________________

Name:

Title:

NYDOCS01/1357750.4    3

EX-12

EXHIBIT 12

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

The ratio of earnings to fixed charges, the ratio of earnings to combined fixed charges and preferred stock dividends, as well as any deficiency of earnings are determined using the following applicable factors:

Earnings available for fixed chargesare calculated first, by determining the sum of: (a) income from continuing operations before income taxes and equity income; (b) distributed equity income; (c) fixed charges, as defined below; and (d) amortization of capitalized interest, if any. From this total, we subtract capitalized interest and net income attributable to noncontrolling interests.

Fixed chargesare calculated as the sum of: (a) interest costs (both expensed and capitalized); (b) amortization of debt expense and discount or premium relating to any indebtedness; and (c) that portion of rental expense that is representative of the interest factor.

Preferred stock dividends used in the ratio of earnings to combined fixed charges and preferred stock dividends consist of the amount of pre-tax earnings required to cover dividends paid on our Series A convertible preferred stock.

	Three Months Ended March 31,
(in millions)	2014			2013
Fixed Charges:
Interest expense	$	100		$	104
Capitalized interest	1			2
Portion of rental expense which represents interest factor	66			56
Total Fixed Charges	$	167		$	162
Earnings Available for Fixed Charges:
Pre-tax income	$	291		$	300
Add: Distributed equity income of affiliated companies	—			—
Add: Fixed charges	167			162
Less: Capitalized interest	(1		)	(2		)
Less: Net income-noncontrolling interests	(5		)	(4		)
Total Earnings Available for Fixed Charges	$	452		$	456
Ratio of Earnings to Fixed Charges	2.71			2.81
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends:
Fixed Charges:
Interest expense	$	100		$	104
Capitalized interest	1			2
Portion of rental expense which represents interest factor	66			56
Total Fixed Charges before preferred stock dividends pre-tax income requirements	167			162
Preferred stock dividends pre-tax income requirements	10			10
Total Combined Fixed Charges and Preferred Stock Dividends	$	177		$	172
Earnings Available for Fixed Charges:
Pre-tax income	$	291		$	300
Add: Distributed equity income of affiliated companies	—			—
Add: Fixed charges before preferred stock dividends	167			162
Less: Capitalized interest	(1		)	(2		)
Less: Net income-noncontrolling interests	(5		)	(4		)
Total Earnings Available for Fixed Charges and Preferred Stock Dividends	$	452		$	456
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends	2.55			2.65

Note: The ratios for the three months ended March 31, 2013 have been restated to reflect the disposal of the North American and Western European Paper businesses, which we began to report as Discontinued Operations in 2013. Refer to Note 5 - Acquisitions and Divestitures in the Condensed Consolidated Financial Statements for additional information regarding Discontinued Operations.

EX-31.A

EXHIBIT 31(a)

CEO CERTIFICATIONS

I, Ursula M. Burns, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Xerox Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 1, 2014

/S/  URSULA M. BURNS

Ursula M. Burns

Principal Executive Officer

EX-31.B

EXHIBIT 31(b)

CFO CERTIFICATIONS

I, Kathryn A. Mikells, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Xerox Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 1, 2014

/S/ KATHRYN A. MIKELLS

Kathryn A. Mikells
Principal Financial Officer  

EX-32

EXHIBIT 32

CERTIFICATION OF CEO AND CFO PURSUANT TO 18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO § 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Form 10-Q of Xerox Corporation, a New York corporation (the “Company”), for the quarter ending March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Ursula M. Burns, Chairman of the Board and Chief Executive Officer of the Company, and Kathryn A. Mikells, Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of his/her knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/  URSULA M. BURNS

Ursula M. Burns

Chief Executive Officer            

May 1, 2014

/S/  KATHRYN A. MIKELLS

Kathryn A. Mikells

Chief Financial Officer            

May 1, 2014

This certification accompanies this Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of § 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by § 906 has been provided to Xerox Corporation and will be retained by Xerox Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Segment Reporting, Segment Revenue and Segment Profit (Loss) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Segment Reporting Information [Line Items]
Primary Reportable Segments, Number	2
Segment Revenue	$ 5,121	$ 5,202
Segment Profit(Loss)	450	390
Services Segment [Member]
Segment Reporting Information [Line Items]
Segment Revenue	2,923	2,920
Segment Profit(Loss)	251	273
Services Segment [Member] | Outsourcing Offerings [Member]
Segment Reporting Information [Line Items]
Outsourcing Service Offerings, Number	3
Document Technology Segment [Member]
Segment Reporting Information [Line Items]
Segment Revenue	2,045	2,135
Segment Profit(Loss)	250	187
All Other Segments [Member]
Segment Reporting Information [Line Items]
Segment Revenue	153	147
Segment Profit(Loss)	$ (51)	$ (70)

XML

Financial Instruments Fair Value Hedges (Details) (Senior Notes Due 2021 [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Senior Notes Due 2021 [Member]
Derivative [Line Items]
Notional Amount	$ 300
Net Fair Value	$ (3)
Weighted Average Interest Rate Paid	2.42%
Interest Rate Received	4.50%
Basis	Libor

XML

Inventories (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Inventories, net [Abstract]
Finished goods	$ 872	$ 837
Work-in-process	65	60
Raw materials	107	101
Total Inventories	$ 1,044	$ 998

XML

Financial Instruments, Foreign Exchange Risk Management (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014		Dec. 31, 2013
Foreign Exchange Contracts [Line Items]
Average Maturity of Foreign Exchange Hedging Contracts - within Three Months	68.00%
Average Maturity of Foreign Exchange Hedging Contracts - within Three and Six Months	9.00%
Average Maturity of Foreign Exchange Hedging Contracts - within Six and Twelve Months	23.00%
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	$ 2,994
Fair Value Asset (Liability)	(25)	[1]
Foreign Currency Cash Flow Hedges [Abstract]
Net liability fair value	(16)		(50)
Euro/U.K. Pound Sterling
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	769
Fair Value Asset (Liability)	(4)	[1]
Japanese Yen/U.S. Dollar
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	487
Fair Value Asset (Liability)	(8)	[1]
Canadian Dollar/Euro
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	409
Fair Value Asset (Liability)	(4)
U.S. Dollar/Euro
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	397
Fair Value Asset (Liability)	(1)	[1]
Japanese Yen/Euro
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	378
Fair Value Asset (Liability)	(11)	[1]
U.K. Pound Sterling/Euro
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	167
Fair Value Asset (Liability)	0	[1]
Philippine Peso/U.S. Dollar
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	52
Fair Value Asset (Liability)	0	[1]
Mexican Peso/U.S. Dollar
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	47
Fair Value Asset (Liability)	1	[1]
Swiss Franc/Euro
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	44
Fair Value Asset (Liability)	0
Indian Rupee/U.S. Dollar
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	41
Fair Value Asset (Liability)	3	[1]
Euro/Danish Krone
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	29
Fair Value Asset (Liability)	0	[1]
Mexican Peso/Euro
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	24
Fair Value Asset (Liability)	0
All Other
Summary of Foreign Exchange Hedging Positions [Abstract]
Gross Notional Value	150
Fair Value Asset (Liability)	$ (1)	[1]

[1] (1)Represents the net receivable (payable) amount included in the Condensed Consolidated Balance Sheet at March 31, 2014.

XML

Finance Receivables, Net, Credit Quality Indicators (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Loss Rates Of Customers With Investment Grade Credit Quality	1.00%
Loss Rates Of Customers With Non Investment Grade Credit Quality Low Range	2.00%
Loss Rates Of Customers With Non Investment Grade Credit Quality High Range	4.00%
Loss Rates Of Customers With Substandard Doubtful Credit Quality	10.00%
Financing Receivable, Net	$ 4,636		$ 4,683
United States
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	1,676		1,666
United States | Finance and other services
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	349		325
United States | Government and education
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	644		671
United States | Graphic arts
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	310		309
United States | Industrial
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	139		135
United States | Healthcare
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	117		115
United States | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	117		111
Canada
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	402	[1]	421	[1]
Canada | Finance and other services
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	75		75
Canada | Government and education
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	97		106
Canada | Graphic arts
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	148		156
Canada | Industrial
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	37		41
Canada | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	45		43
Europe
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	2,242		2,292
France
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	728		718
U.K./Ireland
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	402		412
Central
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	695	[2]	724	[2]
Southern
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	330	[3]	347	[3]
Nordics
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	87	[4]	91	[4]
Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	316		304
Investment Grade
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	2,507		2,600
Investment Grade | United States
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	1,185		1,208
Investment Grade | United States | Finance and other services
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	191		189
Investment Grade | United States | Government and education
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	632		656
Investment Grade | United States | Graphic arts
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	138		142
Investment Grade | United States | Industrial
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	93		92
Investment Grade | United States | Healthcare
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	73		74
Investment Grade | United States | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	58		55
Investment Grade | Canada
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	237	[1]	250	[1]
Investment Grade | Canada | Finance and other services
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	45		46
Investment Grade | Canada | Government and education
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	87		96
Investment Grade | Canada | Graphic arts
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	53		56
Investment Grade | Canada | Industrial
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	21		23
Investment Grade | Canada | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	31		29
Investment Grade | Europe
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	871		916
Investment Grade | France
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	279		282
Investment Grade | U.K./Ireland
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	201		199
Investment Grade | Central
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	260	[2]	287	[2]
Investment Grade | Southern
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	105	[3]	102	[3]
Investment Grade | Nordics
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	26	[4]	46	[4]
Investment Grade | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	214		226
Non-investment Grade
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	1,557		1,530
Non-investment Grade | United States
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	273		253
Non-investment Grade | United States | Finance and other services
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	112		102
Non-investment Grade | United States | Government and education
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	8		12
Non-investment Grade | United States | Graphic arts
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	70		59
Non-investment Grade | United States | Industrial
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	30		28
Non-investment Grade | United States | Healthcare
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	24		25
Non-investment Grade | United States | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	29		27
Non-investment Grade | Canada
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	103	[1]	100	[1]
Non-investment Grade | Canada | Finance and other services
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	19		18
Non-investment Grade | Canada | Government and education
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	8		9
Non-investment Grade | Canada | Graphic arts
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	54		52
Non-investment Grade | Canada | Industrial
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	12		12
Non-investment Grade | Canada | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	10		9
Non-investment Grade | Europe
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	1,095		1,108
Non-investment Grade | France
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	304		314
Non-investment Grade | U.K./Ireland
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	162		171
Non-investment Grade | Central
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	391	[2]	394	[2]
Non-investment Grade | Southern
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	178	[3]	187	[3]
Non-investment Grade | Nordics
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	60	[4]	42	[4]
Non-investment Grade | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	86		69
Substandard
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	572		553
Substandard | United States
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	218		205
Substandard | United States | Finance and other services
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	46		34
Substandard | United States | Government and education
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	4		3
Substandard | United States | Graphic arts
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	102		108
Substandard | United States | Industrial
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	16		15
Substandard | United States | Healthcare
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	20		16
Substandard | United States | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	30		29
Substandard | Canada
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	62	[1]	71	[1]
Substandard | Canada | Finance and other services
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	11		11
Substandard | Canada | Government and education
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	2		1
Substandard | Canada | Graphic arts
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	41		48
Substandard | Canada | Industrial
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	4		6
Substandard | Canada | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	4		5
Substandard | Europe
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	276		268
Substandard | France
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	145		122
Substandard | U.K./Ireland
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	39		42
Substandard | Central
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	44	[2]	43	[2]
Substandard | Southern
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	47	[3]	58	[3]
Substandard | Nordics
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	1	[4]	3	[4]
Substandard | Other
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	$ 16		$ 9

[1] (1)Historically the Company has included certain Canadian customers with graphic arts activity in their industry sector. In 2014, these customers were reclassified to Graphic Arts to better reflect their primary business activity. The December 31, 2013 amounts have been reclassified to move $33 of graphic arts customers out of Finance and Other Services and to move $38 out of Industrial to be consistent with the March 31, 2014 presentation.

[2] Switzerland, Germany, Austria, Belgium and Holland.

[3] Italy, Greece, Spain and Portugal.

[4] Sweden, Norway, Denmark and Finland.

XML

Fair Value of Financial Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair value of financial assets and liabilities

The following table represents assets and liabilities measured at fair value on a recurring basis. The basis for the measurement at fair value in all cases is Level 2 – Significant Other Observable Inputs.

	March 31, 2014		December 31, 2013
Assets:
Foreign exchange contracts-forwards	$	9	$	6
Deferred compensation investments in cash surrender life insurance	90		88
Deferred compensation investments in mutual funds	30		28
Total	$	129	$	122
Liabilities:
Foreign exchange contracts-forwards	$	34	$	70
Interest rate swaps	3		—
Deferred compensation plan liabilities	127		125
Total	$	164	$	195

Estimated fair values of financial assets and liabilities not measured at fair value on a recurring basis

The estimated fair values of our other financial assets and liabilities not measured at fair value on a recurring basis were as follows:

	March 31, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	1,567	$	1,567	$	1,764	$	1,764
Accounts receivable, net	3,032		3,032		2,929		2,929
Short-term debt	2,109		2,114		1,117		1,126
Long-term debt	5,896		6,374		6,904		7,307

XML

Financial Instruments, Summary of Derivative Instruments Gain (Losses) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Summary of Derivative Instruments Gains (Losses) [Abstract]
Net losses recorded in AOCL expected to be reclassified to net income in the future	$ (11)
Foreign Currency Transaction Gain (Loss), before Tax	(1)	4
Foreign Exchange Forward [Member] | Foreign Currency Gain (Loss) [Member] | Derivatives Not Designated as Hedging Instruments [Member]
Summary of Derivative Instruments Gains (Losses) [Abstract]
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	0	(15)
Cash Flow Hedging [Member] | Foreign exchange contracts - forwards [Member] | Interest Expense [Member]
Summary of Derivative Instruments Gains (Losses) [Abstract]
Derivative, Gain (Loss) on Derivative, Net	(3)	0
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net	3	0
Cash Flow Hedging [Member] | Foreign Exchange Forward [Member]
Summary of Derivative Instruments Gains (Losses) [Abstract]
Derivative Gain (Loss) Recognized in OCI	18	(34)
Cash Flow Hedging [Member] | Foreign Exchange Forward [Member] | Cost of Sales [Member]
Summary of Derivative Instruments Gains (Losses) [Abstract]
Gain (Loss) Reclassified from AOCI to Income	$ (21)	$ (17)

XML

Divestitures (Tables)

3 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

The components of Discontinued Operations for the periods presented are as follows:

	Three Months Ended March 31,
	2014		2013
Revenues	$	—	$	154
Income from operations	$	—	$	5
Gain on disposal	2		—
Net Income Before Income Taxes	2		5
Income tax expense	—		(2		)
Income From Discontinued Operations, Net of Tax	$	2	$	3

XML

Restructuring Programs (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014 Employees		Mar. 31, 2013
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Number of Positions Eliminated	1,250
Restructuring reserve [Roll Forward]
Balance at beginning of period	$ 116
Provision	33
Reversals	(6)
Net Current Period Charges(1)	27	[1]	(8)
Charges against reserve and currency	(41)		(37)
Balance at end of period	102
Reconciliation to the Condensed Consolidated Statements of Cash Flows [Abstract]
Asset impairments	4		0
Effects of foreign currency and other non-cash items	1		(1)
Restructuring Cash Payments	(36)		(38)
Services Segment [Member]
Restructuring reserve [Roll Forward]
Net Current Period Charges(1)	10		(2)
Document Technology [Member]
Restructuring reserve [Roll Forward]
Net Current Period Charges(1)	16		(6)
Other [Member]
Restructuring reserve [Roll Forward]
Net Current Period Charges(1)	1		0
Severance and Related Costs [Member]
Restructuring reserve [Roll Forward]
Balance at beginning of period	109
Provision	28
Reversals	(6)
Net Current Period Charges(1)	22	[1]
Charges against reserve and currency	(35)
Balance at end of period	96
Lease Cancellation and Other Costs [Member]
Restructuring reserve [Roll Forward]
Balance at beginning of period	7
Provision	1
Reversals	0
Net Current Period Charges(1)	1	[1]
Charges against reserve and currency	(2)
Balance at end of period	6
Asset Impairments [Member]
Restructuring reserve [Roll Forward]
Balance at beginning of period	0	[2]
Provision	4	[2]
Reversals	0	[2]
Net Current Period Charges(1)	4	[1]
Charges against reserve and currency	(4)	[2]
Balance at end of period	$ 0

[1] (1)Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown.

[2] (2)Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded concurrently with the recognition of the provision.

XML

Divestitures (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Mar. 31, 2013	Dec. 31, 2013
Discontinued Operations and Disposal Groups [Abstract]
Revenues	$ 0			$ 154
Income from operations	0			5
Gain (loss) on disposal	2	(2)	(23)	0	(25)
Net Income Before Income Taxes	2			5
Income tax expense	0			(2)
Income From Discontinued Operations, Net of Tax	$ 2			$ 3

XML

Earnings per Share (Tables)

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Basic and Diluted Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share of common stock (shares in thousands):

	Three Months Ended March 31,
	2014			2013
Basic Earnings per Share:
Net income from continuing operations attributable to Xerox	$	279		$	293
Accrued dividends on preferred stock	(6		)	(6		)
Adjusted Net Income From Continuing Operations Available to Common Shareholders	273			287
Net income from discontinued operations attributable to Xerox	2			3
Adjusted Net Income Available to Common Shareholders	$	275		$	290
Weighted-average common shares outstanding	1,178,828			1,225,271
Basic Earnings per Share:
Continuing operations	$	0.23		$	0.23
Discontinued operations	—			—
Total	$	0.23		$	0.23
Diluted Earnings per Share:
Net income from continuing operations attributable to Xerox	$	279		$	293
Accrued dividends on preferred stock	—			—
Interest on convertible securities, net	—			—
Adjusted Net Income From Continuing Operations Available to Common Shareholders	$	279		$	293
Net income from discontinued operations attributable to Xerox	2			3
Adjusted Net Income Available to Common Shareholders	$	281		$	296
Weighted-average common shares outstanding	1,178,828			1,225,271
Common shares issuable with respect to:
Stock options	3,580			4,854
Restricted stock and performance shares	15,021			21,372
Convertible preferred stock	26,966			26,966
Convertible securities	332			1,992
Adjusted Weighted Average Common Shares Outstanding	1,224,727			1,280,455
Diluted Earnings per Share:
Continuing operations	$	0.23		$	0.23
Discontinued operations	—			—
Total	$	0.23		$	0.23
The following securities were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive (shares in thousands):
Stock options	7,742			25,230
Restricted stock and performance shares	19,183			18,412
Total Anti-Dilutive Securities	26,925			43,642
Dividends per Common Share	$	0.0625		$	0.0575

XML

Debt Interest Income and Expense (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Debt Disclosure [Abstract]
Interest expense	$ 100	[1]	$ 104	[1]
Interest income	$ 102	[2]	$ 120	[2]

[1] Includes Equipment financing interest, as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

[2] Includes Finance income, as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

XML

Contingencies and Litigation Other Contingencies (Details) (USD $)	Mar. 31, 2014
Letter of Credit [Member]
Guarantor Obligations [Line Items]
Maximum exposure, undiscounted	$ 490,000,000
Surety Bonds Performance Guarantee [Member]
Guarantor Obligations [Line Items]
Maximum exposure, undiscounted	740,000,000
Student FFEL Loans [Member]
Guarantor Obligations [Line Items]
Outstanding Student Loan Portfolio, Loans	3,100,000
Outstanding Principal Balance - Student Loan Portfolio	44,500,000,000
Reserves for losses on defaulted loans	$ 2,000,000

XML

Shareholders Equity (Details 1) (USD $)	3 Months Ended
	Mar. 31, 2014		Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	$ 12,300,000,000
Noncontrolling interests, Beginning Balance	119,000,000
Total Equity, Beginning Balance	12,419,000,000				11,646,000,000	11,664,000,000
Comprehensive income (loss), net, attributable to parent	222,000,000					28,000,000
Comprehensive income, net, attributable to noncontrolling interest	5,000,000					4,000,000
Comprehensive income, net, including portion attributable to noncontrolling interest	227,000,000					32,000,000
Cash dividends declared -common stock	(75,000,000)	[1]				(73,000,000)	[1]
Cash dividends declared preferred stock	(6,000,000)	[2]				(6,000,000)	[2]
Conversion of notes to common stock	9,000,000
Stock option and incentive plans, net	48,000,000					41,000,000
Payments to acquire treasury stock, including fees	(275,000,000)					(10,000,000)
Cancellation of treasury stock	0					0
Distributions to noncontrolling interests	(11,000,000)					(2,000,000)
Ending Balance	12,223,000,000		12,300,000,000
Noncontrolling interests, Ending Balance	113,000,000		119,000,000
Total Equity, Ending Balance	12,336,000,000		12,419,000,000			11,646,000,000
Dividends per common share (in dollars per share)	$ 0.0625		$ 0.0575	$ 0.0575	$ 0.0575	$ 0.0575
Dividends per preferred share (in dollars per share)	$ 20.00		$ 20	$ 20	$ 20	$ 20
Xerox Shareholders’ Equity
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	12,300,000,000					11,521,000,000
Comprehensive income (loss), net, attributable to parent	222,000,000					28,000,000
Cash dividends declared -common stock	(75,000,000)	[1]				(73,000,000)	[1]
Cash dividends declared preferred stock	(6,000,000)	[2]				(6,000,000)	[2]
Conversion of notes to common stock	9,000,000
Stock option and incentive plans, net	48,000,000					41,000,000
Payments to acquire treasury stock, including fees	(275,000,000)					(10,000,000)
Cancellation of treasury stock	0					0
Distributions to noncontrolling interests	0					0
Ending Balance	12,223,000,000					11,501,000,000
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	1,210,000,000					1,239,000,000
Comprehensive income (loss), net, attributable to parent	0					0
Cash dividends declared -common stock	0	[1]				0
Cash dividends declared preferred stock	0	[2]				0
Conversion of notes to common stock	1,000,000
Stock option and incentive plans, net	3,000,000					5,000,000
Payments to acquire treasury stock, including fees	0					0
Cancellation of treasury stock	(28,000,000)					(16,000,000)
Distributions to noncontrolling interests	0					0
Ending Balance	1,186,000,000					1,228,000,000
Additional Paid-in Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	5,282,000,000					5,622,000,000
Comprehensive income (loss), net, attributable to parent	0					0
Cash dividends declared -common stock	0	[1]				0
Cash dividends declared preferred stock	0	[2]				0
Conversion of notes to common stock	8,000,000
Stock option and incentive plans, net	45,000,000					36,000,000
Payments to acquire treasury stock, including fees	0					0
Cancellation of treasury stock	(295,000,000)					(98,000,000)
Distributions to noncontrolling interests	0					0
Ending Balance	5,040,000,000					5,560,000,000
Treasury Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	(252,000,000)					(104,000,000)
Comprehensive income (loss), net, attributable to parent	0					0
Cash dividends declared -common stock	0	[1]				0
Cash dividends declared preferred stock	0	[2]				0
Conversion of notes to common stock	0
Stock option and incentive plans, net	0					0
Payments to acquire treasury stock, including fees	(275,000,000)	[3]				(10,000,000)
Cancellation of treasury stock	323,000,000					114,000,000
Distributions to noncontrolling interests	0					0
Ending Balance	(204,000,000)					0
Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	8,839,000,000					7,991,000,000
Comprehensive income (loss), net, attributable to parent	281,000,000					296,000,000
Cash dividends declared -common stock	(75,000,000)	[1]				(73,000,000)	[1]
Cash dividends declared preferred stock	(6,000,000)	[2]				(6,000,000)	[2]
Conversion of notes to common stock	0
Stock option and incentive plans, net	0					0
Payments to acquire treasury stock, including fees	0					0
Cancellation of treasury stock	0					0
Distributions to noncontrolling interests	0					0
Ending Balance	9,039,000,000					8,208,000,000
AOCL
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance	(2,779,000,000)	[4]				(3,227,000,000)	[4]
Comprehensive income (loss), net, attributable to parent	(59,000,000)	[4]				(268,000,000)	[4]
Cash dividends declared -common stock	0	[1],[4]				0
Cash dividends declared preferred stock	0	[2],[4]				0
Conversion of notes to common stock	0
Stock option and incentive plans, net	0					0
Payments to acquire treasury stock, including fees	0	[4]				0	[4]
Cancellation of treasury stock	0	[4]				0	[4]
Distributions to noncontrolling interests	0	[4]				0
Ending Balance	(2,838,000,000)	[4]				(3,495,000,000)	[4]
Non- controlling Interests
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Noncontrolling interests, Beginning Balance	119,000,000					143,000,000
Comprehensive income, net, attributable to noncontrolling interest	5,000,000					4,000,000
Cash dividends declared -common stock	0	[1]				0
Cash dividends declared preferred stock	0	[2]				0
Conversion of notes to common stock	0
Stock option and incentive plans, net	0					0
Payments to acquire treasury stock, including fees	0					0
Cancellation of treasury stock	0					0
Distributions to noncontrolling interests	(11,000,000)					(2,000,000)
Noncontrolling interests, Ending Balance	$ 113,000,000					$ 145,000,000

[1] (2)Cash dividends declared on common stock of $0.0625 per share in the first quarter of 2014 and $0.0575 per share in the first quarter of 2013.

[2] (3)Cash dividends declared on preferred stock of $20.00 per share in the first quarter of 2014 and 2013.

[3] (1)Includes associated fees.

[4] (1)Refer to Note 16 - Other Comprehensive Income for components of AOCL.

XML

Finance Receivables, Net, Aging (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014		Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Billed portion of finance receivables, net	$ 2,772		$ 2,651
Total Finance Receivables	4,636		4,683
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	185		194
Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	94		84
Financing Receivable Recorded Investment 31 To 90 Days Past Due	27		22
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	22		18
Billed portion of finance receivables, net	143		124
Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	4,493		4,559
United States
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	1,676		1,666
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	65		65
United States | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	50		45
Financing Receivable Recorded Investment 31 To 90 Days Past Due	11		10
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	6		5
Billed portion of finance receivables, net	67		60
United States | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	1,609		1,606
Canada
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	402	[1]	421	[1]
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	20		19
Canada | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	3		4
Financing Receivable Recorded Investment 31 To 90 Days Past Due	3		3
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	3		3
Billed portion of finance receivables, net	9		10
Canada | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	393		411
Europe
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	2,242		2,292
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	100		110
Europe | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	33		27
Financing Receivable Recorded Investment 31 To 90 Days Past Due	12		8
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	13		10
Billed portion of finance receivables, net	58		45
Europe | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	2,184		2,247
France
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	728		718
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	42		40
France | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	2		0
Financing Receivable Recorded Investment 31 To 90 Days Past Due	1		0
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	3		0
Billed portion of finance receivables, net	6		0
France | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	722		718
U.K./Ireland
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	402		412
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	3		2
U.K./Ireland | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	0		1
Financing Receivable Recorded Investment 31 To 90 Days Past Due	3		1
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	1		0
Billed portion of finance receivables, net	4		2
U.K./Ireland | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	398		410
Central
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	695	[2]	724	[2]
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	20	[2]	23	[2]
Central | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	3	[2]	3	[2]
Financing Receivable Recorded Investment 31 To 90 Days Past Due	3	[2]	2	[2]
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	3	[2]	3	[2]
Billed portion of finance receivables, net	9	[2]	8	[2]
Central | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	686	[2]	716	[2]
Southern
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	330	[3]	347	[3]
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	32	[3]	45	[3]
Southern | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	26	[3]	21	[3]
Financing Receivable Recorded Investment 31 To 90 Days Past Due	5	[3]	5	[3]
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	6	[3]	7	[3]
Billed portion of finance receivables, net	37	[3]	33	[3]
Southern | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	293	[3]	314	[3]
Nordics
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	87	[4]	91	[4]
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	3	[4]	0	[4]
Nordics | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	2	[4]	2	[4]
Financing Receivable Recorded Investment 31 To 90 Days Past Due	0	[4]	0	[4]
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	0	[4]	0	[4]
Billed portion of finance receivables, net	2	[4]	2	[4]
Nordics | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	85	[4]	89	[4]
Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	316		304
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	0		0
Other | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	8		8
Financing Receivable Recorded Investment 31 To 90 Days Past Due	1		1
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	0		0
Billed portion of finance receivables, net	9		9
Other | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	307		295
Finance and other services | United States
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	349		325
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	12		12
Finance and other services | United States | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	9		7
Financing Receivable Recorded Investment 31 To 90 Days Past Due	2		2
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	1		1
Billed portion of finance receivables, net	12		10
Finance and other services | United States | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	337		315
Finance and other services | Canada
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	75		75
Government and education | United States
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	644		671
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	29		34
Government and education | United States | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	17		17
Financing Receivable Recorded Investment 31 To 90 Days Past Due	4		4
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	3		3
Billed portion of finance receivables, net	24		24
Government and education | United States | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	620		647
Government and education | Canada
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	97		106
Graphic arts | United States
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	310		309
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	9		5
Graphic arts | United States | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	13		12
Financing Receivable Recorded Investment 31 To 90 Days Past Due	2		1
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	1		0
Billed portion of finance receivables, net	16		13
Graphic arts | United States | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	294		296
Graphic arts | Canada
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	148		156
Industrial | United States
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	139		135
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	6		6
Industrial | United States | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	4		3
Financing Receivable Recorded Investment 31 To 90 Days Past Due	1		1
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	1		1
Billed portion of finance receivables, net	6		5
Industrial | United States | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	133		130
Industrial | Canada
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	37		41
Healthcare | United States
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	117		115
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	5		5
Healthcare | United States | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	4		3
Financing Receivable Recorded Investment 31 To 90 Days Past Due	1		1
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	0		0
Billed portion of finance receivables, net	5		4
Healthcare | United States | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	112		111
Other | United States
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	117		111
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	4		3
Other | United States | Billed Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Current	3		3
Financing Receivable Recorded Investment 31 To 90 Days Past Due	1		1
Financing Receivable, Recorded Investment, Equal to Greater than 90 Days Past Due	0		0
Billed portion of finance receivables, net	4		4
Other | United States | Unbilled Revenues [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Unbilled	113		107
Other | Canada
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Finance Receivables	$ 45		$ 43

[1] (1)Historically the Company has included certain Canadian customers with graphic arts activity in their industry sector. In 2014, these customers were reclassified to Graphic Arts to better reflect their primary business activity. The December 31, 2013 amounts have been reclassified to move $33 of graphic arts customers out of Finance and Other Services and to move $38 out of Industrial to be consistent with the March 31, 2014 presentation.

[2] Switzerland, Germany, Austria, Belgium and Holland.

[3] Italy, Greece, Spain and Portugal.

[4] Sweden, Norway, Denmark and Finland.

XML

Acquisitions

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

Acquisitions

Acquisitions

In January 2014, we acquired Invoco Holding GmbH (Invoco), a German company, for approximately $54 (€40 million) in cash. The acquisition of Invoco expands our European customer care services and provides our global customers immediate access to German-language customer care services and provides Invoco's existing customers access to our broad business process outsourcing capabilities. Invoco is included in our Services segment.

The operating results of this acquisition are not material to our financial statements and are included within our results from the acquisition date. The purchase price was allocated primarily to intangible assets and goodwill based on third-party valuations and management’s estimates.

XML

Shareholders Equity (Details 2) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Treasury Stock [Roll Forward]
Treasury Stock, Shares, Beginning (shares)	22,001
Treasury Stock, Shares, Ending (shares)	18,957
Treasury Stock, Value, Beginning	$ 252
Purchases	275		10
Cancellation of treasury stock	0		0
Treasury Stock, Value, Ending	204
Treasury Stock
Treasury Stock [Roll Forward]
Treasury Stock, Shares, Beginning (shares)	22,001
Purchases (in shares)	24,950	[1]
Cancellations (in shares)	(27,994)
Treasury Stock, Shares, Ending (shares)	18,957
Treasury Stock, Value, Beginning	252
Purchases	275	[1]	10
Cancellation of treasury stock	(323)		(114)
Treasury Stock, Value, Ending	$ 204

[1] (1)Includes associated fees.

XML

Accounts Receivable, Net (Details) (USD $) In Millions, unless otherwise specified			3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Accounts Receivable [Member]		Mar. 31, 2013 Accounts Receivable [Member]
Receivables [Abstract]
Amounts billed or billable	$ 2,772	$ 2,651
Unbilled amounts	364	390
Allowance for doubtful accounts	(104)	(112)
Accounts Receivable, Net	3,032	2,929
Billable contracts receivable to be invoiced in the subsequent month	1,049	1,054
Accounts Receivable Sales Arrangements [Abstract]
Deferred proceeds receivables from sales of accounts receivables	125	121
Remaining account receivable sold and derecognized	736	723
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable sales			822		854
Deferred proceeds			124		115
Loss on sales of accounts receivable			4		4
Estimated Decrease to Operating Cash Flows			$ 11	[1]	$ 16	[1]

[1] Represents the difference between current and prior period receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and (iii) currency.

XML

Investment in Affiliates, at Equity (Tables)

3 Months Ended

Mar. 31, 2014

Equity Method Investments and Joint Ventures [Abstract]

Equity in net income (loss) of unconsolidated affiliates

Our equity in net income of our unconsolidated affiliates was as follows:

	Three Months Ended March 31,
	2014		2013
Fuji Xerox	$	39	$	44
Other investments	3		3
Total Equity in Net Income of Unconsolidated Affiliates	$	42	$	47

Condensed financial data of Fuji Xerox

Condensed financial data of Fuji Xerox was as follows:

	Three Months Ended March 31,
	2014		2013
Summary of Operations:
Revenues	$	3,021	$	3,028
Costs and expenses	2,801		2,784
Income before income taxes	220		244
Income tax expense	58		61
Net Income	162		183
Less: Net income – noncontrolling interests	1		1
Net Income – Fuji Xerox	$	161	$	182
Weighted Average Exchange Rate(1)	102.67		92.64

_____________________________

(1) Represents Yen/U.S. Dollar exchange rate used to translate.

XML

Inventories (Tables)

3 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Inventories

The following is a summary of Inventories by major category:

	March 31, 2014		December 31, 2013
Finished goods	$	872	$	837
Work-in-process	65		60
Raw materials	107		101
Total Inventories	$	1,044	$	998

XML

Financial Instruments, Summary of Derivative Instruments Fair Value (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Foreign exchange contracts - forwards [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Net Derivative Asset (Liability)	$ (28)	$ (64)
Foreign exchange contracts - forwards [Member] | Other current assets [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Total Derivative Assets	9	6
Foreign exchange contracts - forwards [Member] | Other current liabilities [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Total Derivative Liabilities	(37)	(70)
Derivatives Designated as Hedging Instruments [Member] | Interest Rate Swap [Member] | Other Noncurrent Liabilities [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Total Derivative Liabilities	(3)	0
Derivatives Designated as Hedging Instruments [Member] | Foreign exchange contracts - forwards [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Net Derivative Asset (Liability)	(19)	(50)
Derivatives Designated as Hedging Instruments [Member] | Foreign exchange contracts - forwards [Member] | Other current assets [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Total Derivative Assets	4	1
Derivatives Designated as Hedging Instruments [Member] | Foreign exchange contracts - forwards [Member] | Other current liabilities [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Total Derivative Liabilities	(20)	(51)
Not Designated as Hedging Instrument [Member] | Foreign exchange contracts - forwards [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Net Derivative Asset (Liability)	(9)	(14)
Not Designated as Hedging Instrument [Member] | Foreign exchange contracts - forwards [Member] | Other current assets [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Total Derivative Assets	5	5
Not Designated as Hedging Instrument [Member] | Foreign exchange contracts - forwards [Member] | Other current liabilities [Member]
Summary Of Derivative Instruments By Hedge Designation [Abstract]
Total Derivative Liabilities	$ (14)	$ (19)

XML

Finance Receivables, Net Sale of Finance Receivables (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended				12 Months Ended
	Mar. 31, 2014		Mar. 31, 2013		Dec. 31, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net carrying value (NCV) sold					$ 676	$ 682
Allowance included in NCV					17	18
Cash proceeds received					635	630
Beneficial interests received					86	101
Net fees and expenses					5	5
Finance receivables sold and derecognized principal value	874				1,006
Finance receivables sold and derecognized sales value	952				1,098
Beneficial Interest, Interest in Other Current Assets	130				150
Beneficial interest from sale of finance receivables	108				124
Finance Receivable Beneficial Interest Weighted Average Life	2 years
Collections on beneficial interest from sales of finance receivables	21		2
Financing Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Pre-tax gain on sales					40	44
Impact from prior sales of finance receivables(1)	(149)	[1]	(91)	[1]
Collections on beneficial interest from sales of finance receivables	26		2
Estimated Decrease to Operating Cash Flows	$ (123)		$ (89)

[1] Represents cash that would have been collected if we had not sold finance receivables.

XML

Restructuring Programs (Tables)

3 Months Ended

Mar. 31, 2014

Restructuring and Related Activities [Abstract]

Restructuring Program Activity

Information related to restructuring program activity during the three months ended March 31, 2014 is outlined below:

	Severance and Related Costs			Lease Cancellation and Other Costs			Asset Impairments(2)			Total
Balance at December 31, 2013	$	109		$	7		$	—		$	116
Provision	28			1			4			33
Reversals	(6		)	—			—			(6		)
Net Current Period Charges(1)	22			1			4			27
Charges against reserve and currency	(35		)	(2		)	(4		)	(41		)
Balance at March 31, 2014	$	96		$	6		$	—		$	102

_____________________________

(1) Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown.

(2) Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded concurrently with the recognition of the provision.

Reconciliation to the Condensed Consolidated Statements of Cash Flows

Reconciliation to the Condensed Consolidated Statements of Cash Flows:

	Three Months Ended March 31,
	2014			2013
Charges against reserve	$	(41	)	$	(37	)
Asset impairments	4			—
Effects of foreign currency and other non-cash items	1			(1		)
Restructuring Cash Payments	$	(36	)	$	(38	)

Total Costs incurred with Restructuring programs, by segment

The following table summarizes the total amount of costs incurred in connection with these restructuring programs by segment:

	Three Months Ended March 31,
	2014		2013
Services	$	10	$	(2	)
Document Technology	16		(6		)
Other	1		—
Total Net Restructuring Charges	$	27	$	(8	)

XML

Debt (Tables)

3 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Schedule Of Interest Expense And Interest Income

Interest Expense and Income

Interest expense and interest income were as follows:

	Three Months Ended March 31,
	2014		2013
Interest expense(1)	$	100	$	104
Interest income(2)	102		120

____________

(1) Includes Equipment financing interest, as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

(2) Includes Finance income, as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

Net Payments/Proceeds on Debt

Net (Payments) Proceeds on Debt

Net proceeds on debt as shown on the Condensed Consolidated Statements of Cash Flows was as follows: 

	Three Months Ended March 31,
	2014			2013
Net proceeds on short-term debt	$	1		$	36
Proceeds from issuance of long-term debt	18			25
Payments on long-term debt(1)	(15		)	(4		)
Net Proceeds on Debt	$	4		$	57

____________

(1) Includes current maturities.

XML

Segment Reporting

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

Our reportable segments are aligned with how we manage the business and view the markets we serve. We report our financial performance based on the following two primary reportable segments – Services and Document Technology. Our Services segment operations involve delivery of a broad range of services, including business process, document and IT outsourcing. Our Document Technology segment includes the sale and support of a broad range of document systems from entry level to high-end.

The Services segment is comprised of three outsourcing service offerings:

• Business Process Outsourcing (BPO)

• Document Outsourcing (which includes Managed Print Services) (DO)

• Information Technology Outsourcing (ITO)

Business process outsourcing services include service arrangements where we manage a customer’s business activity or process. Document outsourcing services include service arrangements that allow customers to streamline, simplify and digitize document-intensive business processes through automation and deployment of software applications and tools and the management of their printing needs. Document outsourcing services also include revenues from our partner print services offerings. Information technology outsourcing services include service arrangements where we manage a customer’s IT-related activities, such as application management and application development, data center operations or testing and quality assurance.

Our Document Technology segment includes the sale of products that share common technology, manufacturing and product platforms. Our products groupings range from:

• “Entry,” which includes A4 devices and desktop printers; to

• “Mid-range,” which includes A3 devices that generally serve workgroup environments in midsize to large enterprises and includes products that fall into the following market categories: Color 41+ ppm priced at less than $100K and Light Production 91+ ppm priced at less than $100K; to

• “High-end,” which includes production printing and publishing systems that generally serve the graphic communications marketplace and large enterprises.

Customers range from small and mid-sized businesses to large enterprises. Customers also include graphic communication enterprises as well as channel partners including distributors and resellers. Segment revenues reflect the sale of document systems and supplies, technical services and product financing.

The segment classified as Other includes several units, none of which meet the thresholds for separate segment reporting. This group includes paper sales in our developing market countries, Wide Format Systems, licensing revenues, Global Imaging Systems network integration solutions and electronic presentation systems, non-allocated corporate items including non-financing interest, and other items included in Other expenses, net.

Operating segment revenues and profitability were as follows:

	Three Months Ended March 31,
	Segment Revenue		Segment Profit(Loss)
2014
Services	$	2,923	$	251
Document Technology	2,045		250
Other	153		(51		)
Total	$	5,121	$	450
2013
Services	$	2,920	$	273
Document Technology	2,135		187
Other	147		(70		)
Total	$	5,202	$	390

	Three Months Ended March 31,
Reconciliation to Pre-tax Income	2014			2013
Segment Profit	$	450		$	390
Reconciling items:
Restructuring and related costs(1)	(30		)	8
Restructuring charges of Fuji Xerox	(3		)	(4		)
Amortization of intangible assets	(84		)	(83		)
Litigation matters (Q1 2013 only)	—			37
Equity in net income of unconsolidated affiliates	(42		)	(47		)
Other	—			(1		)
Pre-tax Income	$	291		$	300

__________________________

(1) First quarter 2014 includes Restructuring and asset impairment charges of $27 and Business transformation costs of $3. Business transformation costs represent incremental costs incurred directly in support of our business transformation and restructuring initiatives.

XML

Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives

The following is a summary of our fair value hedges at March 31, 2014:

Debt Instrument	Year First Designated	Notional Amount		Net Fair Value			Weighted Average Interest Rate Paid		Interest Rate Received		Basis	Maturity
Senior Note 2021	2014	$	300	$	(3	)	2.42	%	4.5	%	Libor	2021

Forward Foreign Exchange Contracts

The following is a summary of the primary hedging positions and corresponding fair values as of March 31, 2014:

Currency Hedged (Buy/Sell)	Gross Notional Value		Fair  Value Asset (Liability)(1)
Euro/U.K. Pound Sterling	$	769	$	(4	)
Japanese Yen/U.S. Dollar	487		(8		)
Canadian Dollar/Euro	409		(4		)
U.S. Dollar/Euro	397		(1		)
Japanese Yen/Euro	378		(11		)
U.K. Pound Sterling/Euro	167		—
Philippine Peso/U.S. Dollar	52		—
Mexican Peso/U.S. Dollar	47		1
Swiss Franc/Euro	44		—
Indian Rupee/U.S. Dollar	41		3
Euro/Danish Krone	29		—
Mexican Peso/Euro	24		—
All Other	150		(1		)
Total Foreign Exchange Hedging	$	2,994	$	(25	)

__________________

(1) Represents the net receivable (payable) amount included in the Condensed Consolidated Balance Sheet at March 31, 2014.

Summary of Derivative Instruments Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments:

Designation of Derivatives	Balance Sheet Location	March 31, 2014			December 31, 2013
Derivatives Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	4		$	1
	Other current liabilities	(20		)	(51		)
Interest rate swaps	Other long-term liabilities	(3		)	—
	Net Designated Derivative Liability	$	(19	)	$	(50	)
Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	5		$	5
	Other current liabilities	(14		)	(19		)
	Net Undesignated Derivative Liability	$	(9	)	$	(14	)
Summary of Derivatives	Total Derivative Assets	$	9		$	6
	Total Derivative Liabilities	(37		)	(70		)
	Net Derivative Liability	$	(28	)	$	(64	)

Summary of Cash Flow Hedges Gains (Losses)

The following tables provide a summary of gains (losses) on derivative instruments:

Derivatives in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income	Derivative Gain (Loss) Recognized in income					Hedged Item Gain (Loss) Recognized in Income
		Three Months Ended March 31,					Three Months Ended March 31,
		2014			2013		2014		2013
Interest Rate Contracts	Interest Expense	$	(3	)	$	—	$	3	$	—

Derivatives in Cash Flow Hedging Relationships	Derivative Gain (Loss) Recognized in OCI (Effective Portion)					Location of Derivative Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Gain (Loss) Reclassified from AOCI to Income (Effective Portion)
	Three Months Ended March 31,						Three Months Ended March 31,
	2014		2013				2014			2013
Foreign exchange contracts – forwards	$	18	$	(34	)	Cost of sales	$	(21	)	$	(17	)

Summary of Derivatives Not Designated as Hedging Instruments Gains (Losses)

The following table provides a summary of gains (losses) on non-designated derivative instruments:

Derivatives NOT Designated as Hedging Instruments		Three Months Ended March 31,
	Location of Derivative Gain (Loss)	2014		2013
Foreign exchange contracts – forwards	Other expense – Currency losses, net	$	—	$	(15	)

XML

Segment Reporting, Reconciliation Of Operating Profit Loss (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Segment Reporting [Abstract]
Segment Profit	$ 450	$ 390
Reconciling items:
Restructuring and related costs(1)	(30)	8
Restructuring charges of Fuji Xerox	(3)	(4)
Amortization of intangible assets	(84)	(83)
Litigation matters (Q1 2013 only)	0	37
Equity in net income of unconsolidated affiliates	(42)	(47)
Other	0	(1)
Pre-tax Income	291	300
Restructuring and asset impairment charges	27	(8)
Business transformation costs	$ 3

XML

Debt Net Payments and Proceeds on Other Debt (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Debt Disclosure [Abstract]
Net (payments) proceeds on short-term debt	$ 1		$ 36
Proceeds from issuance of long-term debt	18		25
Payments on long-term debt(1)	(15)	[1]	(4)	[1]
Net Proceeds on Debt	$ 4		$ 57

[1] Includes current maturities.

XML

Condensed Consolidated Statements of Income (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues
Sales	$ 1,272	$ 1,293
Outsourcing, maintenance and rentals	3,749	3,792
Financing	100	117
Total Revenues	5,121	5,202
Costs and Expenses
Cost of sales	790	815
Cost of outsourcing, maintenance and rentals	2,748	2,758
Cost of financing	36	43
Research, development and engineering expenses	144	154
Selling, administrative and general expenses	961	1,040
Restructuring and asset impairment charges	27	(8)
Amortization of intangible assets	84	83
Other expenses, net	40	17
Total Costs and Expenses	4,830	4,902
Income before Income Taxes and Equity Income	291	300
Income tax expense	49	50
Equity in net income of unconsolidated affiliates	42	47
Income from Continuing Operations	284	297
Income from discontinued operations, net of tax	2	3
Net Income	286	300
Less: Net income attributable to noncontrolling interests	5	4
Net Income Attributable to Xerox	281	296
Net income from continuing operations	279	293
Income from discontinued operations, net of tax	2	3
Net Income Attributable to Xerox	$ 281	$ 296
Continuing operations (dollars per share)	$ 0.23	$ 0.23
Discontinued operations (dollars per share)	$ 0.00	$ 0.00
Total Basic Earnings per Share (dollars per share)	$ 0.23	$ 0.23
Continuing operations (dollars per share)	$ 0.23	$ 0.23
Discontinued operations (dollars per share)	$ 0.00	$ 0.00
Diluted Earnings per Share (dollars per share)	$ 0.23	$ 0.23

XML

Finance Receivables, Net (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	$ 154		$ 170
Provision	15		13
Charge-offs	(12)		(21)
Recoveries and other	1	[1]	(2)	[1]
Ending Balance	158		160
Financing Receivable, Collectively Evaluated for Impairment	4,636	[2]	5,262	[2]
Residual values not included in the impairment evaluation	1		2
Allowance for credit losses not included in the impairment evaluation	158		160
United States
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	45		50
Provision	3		2
Charge-offs	(1)		(2)
Recoveries and other	1	[1]	1	[1]
Ending Balance	48		51
Financing Receivable, Collectively Evaluated for Impairment	1,676	[2]	1,991	[2]
Canada
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	22		31
Provision	2		2
Charge-offs	(4)		(4)
Recoveries and other	0	[1]	0	[1]
Ending Balance	20		29
Financing Receivable, Collectively Evaluated for Impairment	402	[2]	756	[2]
Europe
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	81		85
Provision	7		9
Charge-offs	(5)		(15)
Recoveries and other	0	[1]	(3)	[1]
Ending Balance	83		76
Financing Receivable, Collectively Evaluated for Impairment	2,242	[2]	2,304	[2]
Other
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance	6	[3]	4	[3]
Provision	3	[3]	0	[3]
Charge-offs	(2)	[3]	0	[3]
Recoveries and other	0	[1],[3]	0	[1],[3]
Ending Balance	7	[3]	4	[3]
Financing Receivable, Collectively Evaluated for Impairment	$ 316	[2],[3]	$ 211	[2],[3]

[1] Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.

[2] Total Finance receivables exclude residual values of $1 and $2, and the allowance for credit losses of $158 and $160 at March 31, 2014 and 2013, respectively.

[3] Includes developing market countries and smaller units.

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

References herein to “we,” “us,” “our,” the “Company” and “Xerox” refer to Xerox Corporation and its consolidated subsidiaries unless the context suggests otherwise.

We have prepared the accompanying unaudited Condensed Consolidated Financial Statements in accordance with the accounting policies described in our 2013 Annual Report on Form 10-K (2013 Annual Report), and the interim reporting requirements of Form 10-Q. Accordingly, certain information and note disclosures normally included in our annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. You should read these Condensed Consolidated Financial Statements in conjunction with the Consolidated Financial Statements included in our 2013 Annual Report.

In our opinion, all adjustments which are necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented have been made. These adjustments consist of normal recurring items. Interim results of operations are not necessarily indicative of the results of the full year.

For convenience and ease of reference, we refer to the financial statement caption “Income before Income Taxes and Equity Income” as “pre-tax income.”

XML

Fair Value of Financial Assets and Liabilities, Nonrecurring (Details) (Fair Value, Measurements, Nonrecurring [Member], USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 1,567	$ 1,764
Accounts receivable, net	3,032	2,929
Short-term debt	2,109	1,117
Long-term debt	5,896	6,904
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	1,567	1,764
Accounts receivable, net	3,032	2,929
Short-term debt	2,114	1,126
Long-term debt	$ 6,374	$ 7,307

XML

Shareholders Equity (Tables)

3 Months Ended

Mar. 31, 2014

Stockholders' Equity Note [Abstract]

Schedule of Stockholders Equity

	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL(1)			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2013	$	1,210		$	5,282		$	(252	)	$	8,839		$	(2,779	)	$	12,300		$	119		$	12,419
Comprehensive income (loss), net	—			—			—			281			(59		)	222			5			227
Cash dividends declared- common stock(2)	—			—			—			(75		)	—			(75		)	—			(75		)
Cash dividends declared - preferred stock(3)	—			—			—			(6		)	—			(6		)	—			(6		)
Conversion of notes to common stock	1			8			—			—			—			9			—			9
Stock option and incentive plans, net	3			45			—			—			—			48			—			48
Payments to acquire treasury stock, including fees	—			—			(275		)	—			—			(275		)	—			(275		)
Cancellation of treasury stock	(28		)	(295		)	323			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(11		)	(11		)
Balance at March 31, 2014	$	1,186		$	5,040		$	(204	)	$	9,039		$	(2,838	)	$	12,223		$	113		$	12,336

	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL(1)			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2012	$	1,239		$	5,622		$	(104	)	$	7,991		$	(3,227	)	$	11,521		$	143		$	11,664
Comprehensive income (loss), net	—			—			—			296			(268		)	28			4			32
Cash dividends declared-common stock(2)	—			—			—			(73		)	—			(73		)	—			(73		)
Cash dividends declared-preferred stock(3)	—			—			—			(6		)	—			(6		)	—			(6		)
Stock option and incentive plans, net	5			36			—			—			—			41			—			41
Payments to acquire treasury stock, including fees	—			—			(10		)	—			—			(10		)	—			(10		)
Cancellation of treasury stock	(16		)	(98		)	114			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(2		)	(2		)
Balance at March 31, 2013	$	1,228		$	5,560		$	—		$	8,208		$	(3,495	)	$	11,501		$	145		$	11,646

_____________________________

(1) Refer to Note 16 - Other Comprehensive Income for components of AOCL.

(2) Cash dividends declared on common stock of $0.0625 per share in the first quarter of 2014 and $0.0575 per share in the first quarter of 2013.

(3) Cash dividends declared on preferred stock of $20.00 per share in the first quarter of 2014 and 2013.

Schedule of Treasury Stock by Class

The following is a summary of the purchases of common stock made during the three months ended March 31, 2014 under our authorized stock repurchase programs (shares in thousands):

	Shares		Amount
December 31, 2013	22,001		$	252
Purchases (1)	24,950		275
Cancellations	(27,994	)	(323		)
March 31, 2014	18,957		$	204

____________________________

(1) Includes associated fees.

XML

Earnings per Share, Anti Dilutive Securities (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total anti-dilutive securities (in shares)	26,925				43,642
Dividends per common share (in dollars per share)	$ 0.0625	$ 0.0575	$ 0.0575	$ 0.0575	$ 0.0575
Stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total anti-dilutive securities (in shares)	7,742				25,230
Restricted Stock and Performance Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total anti-dilutive securities (in shares)	19,183				18,412

XML

Earnings per Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share of common stock (shares in thousands):

	Three Months Ended March 31,
	2014			2013
Basic Earnings per Share:
Net income from continuing operations attributable to Xerox	$	279		$	293
Accrued dividends on preferred stock	(6		)	(6		)
Adjusted Net Income From Continuing Operations Available to Common Shareholders	273			287
Net income from discontinued operations attributable to Xerox	2			3
Adjusted Net Income Available to Common Shareholders	$	275		$	290
Weighted-average common shares outstanding	1,178,828			1,225,271
Basic Earnings per Share:
Continuing operations	$	0.23		$	0.23
Discontinued operations	—			—
Total	$	0.23		$	0.23
Diluted Earnings per Share:
Net income from continuing operations attributable to Xerox	$	279		$	293
Accrued dividends on preferred stock	—			—
Interest on convertible securities, net	—			—
Adjusted Net Income From Continuing Operations Available to Common Shareholders	$	279		$	293
Net income from discontinued operations attributable to Xerox	2			3
Adjusted Net Income Available to Common Shareholders	$	281		$	296
Weighted-average common shares outstanding	1,178,828			1,225,271
Common shares issuable with respect to:
Stock options	3,580			4,854
Restricted stock and performance shares	15,021			21,372
Convertible preferred stock	26,966			26,966
Convertible securities	332			1,992
Adjusted Weighted Average Common Shares Outstanding	1,224,727			1,280,455
Diluted Earnings per Share:
Continuing operations	$	0.23		$	0.23
Discontinued operations	—			—
Total	$	0.23		$	0.23
The following securities were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive (shares in thousands):
Stock options	7,742			25,230
Restricted stock and performance shares	19,183			18,412
Total Anti-Dilutive Securities	26,925			43,642
Dividends per Common Share	$	0.0625		$	0.0575

XML

Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2014

Comprehensive Income [Abstract]

Schedule of Comprehensive Income (Loss)

Other Comprehensive Income is comprised of the following:

	Three Months Ended March 31,
	2014						2013
	Pre-tax			Net of Tax			Pre-tax			Net of Tax
Translation Adjustments Gains (Losses)	$	2		$	(1	)	$	(363	)	$	(363	)
Unrealized Gains (Losses):
Changes in fair value of cash flow hedges - gains (losses)	18			13			(34		)	(22		)
Changes in cash flow hedges reclassed to earnings(1)	21			14			17			12
Other (losses) gains	(1		)	(1		)	2			2
Net Unrealized Gains (Losses)	38			26			(15		)	(8		)
Defined Benefit Plans (Losses) Gains:
Net actuarial losses	(197		)	(122		)	—			—
Prior service amortization(2)	(12		)	(7		)	(11		)	(7		)
Actuarial loss amortization(2)	28			19			75			49
Fuji Xerox changes in defined benefit plans, net(3)	27			27			(16		)	(16		)
Other (losses) gains(4)	(1		)	(1		)	77			77
Change in Defined Benefit Plans (Losses) Gains	(155		)	(84		)	125			103
Other Comprehensive Loss Attributable to Xerox	$	(115	)	$	(59	)	$	(253	)	$	(268	)

_____________________________

(1) Reclassified to Cost of sales - refer to Note 12 - Financial Instruments for additional information regarding our cash flow hedges.

(2) Reclassified to Total Net Periodic Benefit Cost - refer to Note 14 - Employee Benefit Plans for additional information.

(3) Represents our share of Fuji Xerox's benefit plan changes.

(4) Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits included in AOCL.

Schedule of Accumulated Other Comprehensive Income (Loss)

AOCL is comprised of the following:

	March 31, 2014			December 31, 2013
Cumulative translation adjustments	$	(1,011	)	$	(1,010	)
Benefit plans net actuarial losses and prior service credits(1)	(1,816		)	(1,732		)
Other unrealized losses, net	(11		)	(37		)
Total Accumulated Other Comprehensive Loss Attributable to Xerox	$	(2,838	)	$	(2,779	)

_____________________________

(1) Includes our share of Fuji Xerox.

XML

Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Operating segment revenues and profitability

Operating segment revenues and profitability were as follows:

	Three Months Ended March 31,
	Segment Revenue		Segment Profit(Loss)
2014
Services	$	2,923	$	251
Document Technology	2,045		250
Other	153		(51		)
Total	$	5,121	$	450
2013
Services	$	2,920	$	273
Document Technology	2,135		187
Other	147		(70		)
Total	$	5,202	$	390

Reconciliation to pre-tax income (loss)

	Three Months Ended March 31,
Reconciliation to Pre-tax Income	2014			2013
Segment Profit	$	450		$	390
Reconciling items:
Restructuring and related costs(1)	(30		)	8
Restructuring charges of Fuji Xerox	(3		)	(4		)
Amortization of intangible assets	(84		)	(83		)
Litigation matters (Q1 2013 only)	—			37
Equity in net income of unconsolidated affiliates	(42		)	(47		)
Other	—			(1		)
Pre-tax Income	$	291		$	300

XML

Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent accounting pronouncements

Recent Accounting Pronouncements

Except for the Accounting Standard Updates (ASU's) discussed below, the new ASU's issued by the FASB during the last year did not have any significant impact on the Company.

Cumulative Translation Adjustments:In March 2013, the FASB issued ASU 2013-05, Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.The objective of ASU 2013-05 is to resolve the diversity in practice regarding the release into net income of the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. This update was effective prospectively for our fiscal year beginning January 1, 2014, and did not have nor is it expected to have a material impact on our financial condition, results of operations or cash flows.

Income Taxes:In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. This update provides guidance on the financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss or a tax credit carryforward, exists. This update was effective prospectively for our fiscal year beginning January 1, 2014. Upon adoption of this standard, we reclassified approximately $180 of liabilities for unrecognized tax benefits against deferred tax assets.

Service Concession Arrangements:In January 2014, the FASB issued ASU 2014-05, Service Concession Arrangements (Topic 853). This update specifies that an entity should not account for a service concession arrangement within the scope of this update as a lease in accordance with Topic 840, Leases. The update does not provide specific accounting guidance for various aspects of service concession arrangements but rather indicates that an entity should refer to other Topics as applicable to account for various aspects of a service concession arrangement. The update is effective for our fiscal year beginning January 1, 2015. The adoption of this standard is not expected to have a material effect on our financial condition, results of operation or cash flows.

Discontinued Operations:In April 2014, the FASB issued ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The update changes the requirements for reporting discontinued operations in Subtopic 205-20. A discontinued operation may include a component of an entity or a group of components of an entity, or a business. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. Examples include a disposal of a major geographic area, a major line of business or a major equity method investment.

Additionally, the update requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income and expenses of discontinued operations. This update is effective prospectively for our fiscal year beginning January 1, 2015 and early adoption is permitted. The standard primarily involves presentation and disclosure and therefore is not expected to have a material impact on our financial condition, results of operations or cash flows.

XML

Condensed Consolidated Statements of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Net income	$ 286		$ 300
Less: Net income attributable to noncontrolling interests	5		4
Net Income Attributable to Xerox	281		296
Translation adjustments, net	(1)	[1]	(363)	[1]
Unrealized gains (losses), net	26	[1]	(8)	[1]
Changes in defined benefit plans, net	(84)	[1]	103	[1]
Other Comprehensive Loss, Net Attributable to Xerox	(59)	[1]	(268)	[1]
Comprehensive Income, Net	227		32
Less: Comprehensive income, net attributable to noncontrolling interests	5		4
Comprehensive Income, Net Attributable to Xerox	$ 222		$ 28

[1] (1) Refer to Note 16 - Other Comprehensive Income for gross components of Other Comprehensive Income, reclassification adjustments out of Accumulated Other Comprehensive Loss and related tax effects.

XML

Financial Instruments

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

Financial Instruments

Interest Rate Risk Management

We use interest rate swap agreements to manage our interest rate exposure and to achieve a desired proportion of variable and fixed rate debt. These derivatives may be designated as fair value hedges or cash flow hedges depending on the nature of the risk being hedged.

Fair Value Hedges

As of March 31, 2014, pay variable/receive fixed interest rate swaps with notional amounts of $300 and net liability fair value of $3 were designated and accounted for as fair value hedges. The swaps were structured to hedge the fair value of related debt by converting them from fixed rate instruments to variable rate instruments. No ineffective portion was recorded to earnings during 2014. We did not have any interest rate swaps outstanding at December 31, 2013.

The following is a summary of our fair value hedges at March 31, 2014:

Debt Instrument	Year First Designated	Notional Amount		Net Fair Value			Weighted Average Interest Rate Paid		Interest Rate Received		Basis	Maturity
Senior Note 2021	2014	$	300	$	(3	)	2.42	%	4.5	%	Libor	2021

Foreign Exchange Risk Management

We are a global company that is exposed to foreign currency exchange rate fluctuations in the normal course of our business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily forward contracts and purchased option contracts, to hedge the following foreign currency exposures, thereby reducing volatility of earnings or protecting fair values of assets and liabilities:

• Foreign currency-denominated assets and liabilities

• Forecasted purchases and sales in foreign currency

Summary of Foreign Exchange Hedging Positions

At March 31, 2014, we had outstanding forward exchange and purchased option contracts with gross notional values of $2,994, which is reflective of the amounts that are normally outstanding at any point during the year. Approximately 68% of these contracts mature within three months, 9% in three to six months and 23% in six to twelve months.

The following is a summary of the primary hedging positions and corresponding fair values as of March 31, 2014:

Currency Hedged (Buy/Sell)	Gross Notional Value		Fair  Value Asset (Liability)(1)
Euro/U.K. Pound Sterling	$	769	$	(4	)
Japanese Yen/U.S. Dollar	487		(8		)
Canadian Dollar/Euro	409		(4		)
U.S. Dollar/Euro	397		(1		)
Japanese Yen/Euro	378		(11		)
U.K. Pound Sterling/Euro	167		—
Philippine Peso/U.S. Dollar	52		—
Mexican Peso/U.S. Dollar	47		1
Swiss Franc/Euro	44		—
Indian Rupee/U.S. Dollar	41		3
Euro/Danish Krone	29		—
Mexican Peso/Euro	24		—
All Other	150		(1		)
Total Foreign Exchange Hedging	$	2,994	$	(25	)

__________________

(1) Represents the net receivable (payable) amount included in the Condensed Consolidated Balance Sheet at March 31, 2014.

Foreign Currency Cash Flow Hedges

We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases, sales and expenses. No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or loss was included in the assessment of hedge effectiveness. The net liability fair value of these contracts was $16 and $50 as of March 31, 2014 and December 31, 2013, respectively.

Summary of Derivative Instruments Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments:

Designation of Derivatives	Balance Sheet Location	March 31, 2014			December 31, 2013
Derivatives Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	4		$	1
	Other current liabilities	(20		)	(51		)
Interest rate swaps	Other long-term liabilities	(3		)	—
	Net Designated Derivative Liability	$	(19	)	$	(50	)
Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	5		$	5
	Other current liabilities	(14		)	(19		)
	Net Undesignated Derivative Liability	$	(9	)	$	(14	)
Summary of Derivatives	Total Derivative Assets	$	9		$	6
	Total Derivative Liabilities	(37		)	(70		)
	Net Derivative Liability	$	(28	)	$	(64	)

Summary of Derivative Instruments Gains (Losses)

Derivative gains (losses) affect the income statement based on whether such derivatives are designated as hedges of underlying exposures. The following is a summary of derivative gains (losses).

Designated Derivative Instruments Gains (Losses)

The following tables provide a summary of gains (losses) on derivative instruments:

Derivatives in Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income	Derivative Gain (Loss) Recognized in income					Hedged Item Gain (Loss) Recognized in Income
		Three Months Ended March 31,					Three Months Ended March 31,
		2014			2013		2014		2013
Interest Rate Contracts	Interest Expense	$	(3	)	$	—	$	3	$	—

Derivatives in Cash Flow Hedging Relationships	Derivative Gain (Loss) Recognized in OCI (Effective Portion)					Location of Derivative Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Gain (Loss) Reclassified from AOCI to Income (Effective Portion)
	Three Months Ended March 31,						Three Months Ended March 31,
	2014		2013				2014			2013
Foreign exchange contracts – forwards	$	18	$	(34	)	Cost of sales	$	(21	)	$	(17	)

No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain (loss) was included in the assessment of hedge effectiveness. In addition, no amount was recorded for an underlying exposure that did not occur or was not expected to occur.

At March 31,2014, net after-tax losses of $11 were recorded in accumulated other comprehensive loss associated with our cash flow hedging activity. The entire balance is expected to be reclassified into net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

Non-Designated Derivative Instruments Gains (Losses)

Non-designated derivative instruments are primarily instruments used to hedge foreign currency-denominated assets and liabilities. They are not designated as hedges since there is a natural offset for the re-measurement of the underlying foreign currency-denominated asset or liability.

The following table provides a summary of gains (losses) on non-designated derivative instruments:

Derivatives NOT Designated as Hedging Instruments		Three Months Ended March 31,
	Location of Derivative Gain (Loss)	2014		2013
Foreign exchange contracts – forwards	Other expense – Currency losses, net	$	—	$	(15	)

During the three months ended March 31,2014 and March 31,2013, Currency (loss) gains, net were $(1) and $4, respectively. Net Currency gains and losses are included in Other expenses, net and include the mark-to market adjustments of the derivatives not designated as hedging instruments and the related cost of those derivatives, as well as the re-measurement of foreign currency-denominated assets and liabilities.

XML

Document And Entity Information	3 Months Ended
	Mar. 31, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Xerox Corporation
Entity Central Index Key	0000108772
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding	1,167,321,219

XML

Fair Value of Financial Assets and Liabilities

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

Fair Value of Financial Assets and Liabilities

The following table represents assets and liabilities measured at fair value on a recurring basis. The basis for the measurement at fair value in all cases is Level 2 – Significant Other Observable Inputs.

	March 31, 2014		December 31, 2013
Assets:
Foreign exchange contracts-forwards	$	9	$	6
Deferred compensation investments in cash surrender life insurance	90		88
Deferred compensation investments in mutual funds	30		28
Total	$	129	$	122
Liabilities:
Foreign exchange contracts-forwards	$	34	$	70
Interest rate swaps	3		—
Deferred compensation plan liabilities	127		125
Total	$	164	$	195

We utilize the income approach to measure the fair value for our derivative assets and liabilities. The income approach uses pricing models that rely on market observable inputs such as yield curves, currency exchange rates and forward prices, and therefore are classified as Level 2.

Fair value for our deferred compensation plan investments in Company-owned life insurance is reflected at cash surrender value. Fair value for our deferred compensation plan investments in mutual funds is based on quoted market prices for actively traded investments similar to those held by the plan. Fair value for deferred compensation plan liabilities is based on the fair value of investments corresponding to employees’ investment selections, based on quoted prices for similar assets in actively traded markets.

Summary of Other Financial Assets and Liabilities Not Measured at Fair Value on a Recurring Basis

The estimated fair values of our other financial assets and liabilities not measured at fair value on a recurring basis were as follows:

	March 31, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	1,567	$	1,567	$	1,764	$	1,764
Accounts receivable, net	3,032		3,032		2,929		2,929
Short-term debt	2,109		2,114		1,117		1,126
Long-term debt	5,896		6,374		6,904		7,307

The fair value amounts for Cash and cash equivalents and Accounts receivable, net, approximate carrying amounts due to the short maturities of these instruments. The fair value of Short- and Long-term debt was estimated based on quoted market prices for publicly-traded securities or on the current rates offered to us for debt of similar maturities. The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at such date.

XML

Condensed Consolidated Balance Sheets (USD $) In Millions, except Share data in Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Assets
Cash and cash equivalents	$ 1,567	$ 1,764
Accounts receivable, net	3,032	2,929
Billed portion of finance receivables, net	134	113
Finance receivables, net	1,501	1,500
Inventories	1,044	998
Other current assets	1,184	1,207
Total current assets	8,462	8,511
Finance receivables due after one year, net	2,844	2,917
Equipment on operating leases, net	541	559
Land, buildings and equipment, net	1,438	1,466
Investments in affiliates, at equity	1,384	1,285
Intangible assets, net	2,436	2,503
Goodwill	9,243	9,205
Other long-term assets	2,520	2,590
Total Assets	28,868	29,036
Liabilities and Equity
Short-term debt and current portion of long-term debt	2,109	1,117
Accounts payable	1,568	1,626
Accrued compensation and benefits costs	803	734
Unearned income	517	496
Other current liabilities	1,603	1,713
Total current liabilities	6,600	5,686
Long-term debt	5,896	6,904
Pension and other benefit liabilities	2,310	2,136
Post-retirement medical benefits	766	785
Other long-term liabilities	611	757
Total Liabilities	16,183	16,268
Series A Convertible Preferred Stock	349	349
Common stock	1,186	1,210
Additional paid-in capital	5,040	5,282
Treasury stock, at cost	(204)	(252)
Retained earnings	9,039	8,839
Accumulated other comprehensive loss	(2,838)	(2,779)
Xerox shareholders’ equity	12,223	12,300
Noncontrolling interests	113	119
Total Equity	12,336	12,419
Total Liabilities and Equity	$ 28,868	$ 29,036
Shares of common stock issued (shares)	1,186,278	1,210,321
Treasury stock (shares)	(18,957)	(22,001)
Shares of common stock outstanding (shares)	1,167,321	1,188,320

XML

Finance Receivables, Net

3 Months Ended

Mar. 31, 2014

Finance Receivables, Net [Abstract]

Finance Receivables, Net

Accounts Receivable, Net

Accounts receivable, net were as follows:

	March 31, 2014			December 31, 2013
Amounts billed or billable	$	2,772		$	2,651
Unbilled amounts	364			390
Allowance for doubtful accounts	(104		)	(112		)
Accounts Receivable, Net	$	3,032		$	2,929

Unbilled amounts include amounts associated with percentage-of-completion accounting and other earned revenues not currently billable due to contractual provisions. Amounts to be invoiced in the subsequent month for current services provided are included in amounts billable, and at March 31, 2014 and December 31, 2013 were approximately $1,049 and $1,054, respectively.

We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. The allowance for uncollectible accounts receivable is determined principally on the basis of past collection experience as well as consideration of current economic conditions and changes in our customer collection trends.

Accounts Receivable Sales Arrangements

Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and liquidity management. We have facilities in the U.S., Canada and several countries in Europe that enable us to sell certain accounts receivable without recourse to third-parties. The accounts receivable sold are generally short-term trade receivables with payment due dates of less than 60 days.

All of our arrangements involve the sale of our entire interest in groups of accounts receivable for cash. In most instances a portion of the sales proceeds are held back by the purchaser and payment is deferred until collection of the related receivables sold. Such holdbacks are not considered legal securities nor are they certificated. We report collections on such receivables as operating cash flows in the Condensed Consolidated Statements of Cash Flows because such receivables are the result of an operating activity and the associated interest rate risk is de minimis due to its short-term nature. Our risk of loss following the sales of accounts receivable is limited to the outstanding deferred purchase price receivable. These receivables are included in the caption “Other current assets” in the accompanying Condensed Consolidated Balance Sheets and were $125 and $121 at March 31, 2014 and December 31, 2013, respectively.

Under most of the arrangements, we continue to service the sold accounts receivable. When applicable, a servicing liability is recorded for the estimated fair value of the servicing. The amounts associated with the servicing liability were not material.

Of the accounts receivable sold and derecognized from our balance sheet, $736 and $723 remained uncollected as of March 31, 2014 and December 31, 2013, respectively. Accounts receivable sales were as follows:

	Three Months Ended March 31,
	2014		2013
Accounts receivable sales	$	822	$	854
Deferred proceeds	124		115
Loss on sales of accounts receivable	4		4
Estimated increase to operating cash flows(1)	11		16

__________________________

(1) Represents the difference between current and prior period receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and (iii) currency.

Finance Receivables, Net

Sale of Finance Receivables

In the third and fourth quarters of 2013 and 2012, we transferred our entire interest in certain groups of lease finance receivables to third-party entities for cash proceeds and beneficial interests. The transfers met the requirements for derecognition according to ASC Topic 860, Transfers and Servicing and therefore were accounted for as sales with derecognition of the associated lease receivables. There were no finance receivable transfers in the three months ending March 31, 2014 and 2013. We continue to service the sold receivables and record servicing fee income over the expected life of the associated receivables. The following is a summary of our prior sales activity:

	Year Ended December 31,
(in millions)	2013		2012
Net carrying value (NCV) sold	$	676	$	682
Allowance included in NCV	17		18
Cash proceeds received	635		630
Beneficial interests received	86		101
Pre-tax gain on sales	40		44
Net fees and expenses	5		5

The principal value of the finance receivables derecognized from our balance sheet was $874 and $1,006 at March 31, 2014 and December 31, 2013, respectively (sale value of approximately $952 and $1,098, respectively).

Summary

The lease portfolios transferred and sold were all from our Document Technology segment and the gains on these sales were reported in Financing revenues within the Document Technology segment. The ultimate purchaser has no recourse to our other assets for the failure of customers to pay principal and interest when due beyond our beneficial interests which were $130 and $150 at March 31, 2014 and December 31, 2013, respectively, and are included in Other current assets and Other long-term assets in the accompanying Condensed Consolidated Balance Sheets. Beneficial interests of $108 and $124 at March 31, 2014 and December 31, 2013, respectively, are held by bankruptcy-remote subsidiaries and therefore are not available to satisfy any of our creditor obligations. We report collections on the beneficial interests as operating cash flows in the Consolidated Statements of Cash Flows because such beneficial interests are the result of an operating activity and the associated interest rate risk is de minimis considering their weighted average lives of less than 2 years.

The net impact from the sales of finance receivables on operating cash flows is summarized below:

	Three Months Ended March 31,
(in millions)	2014			2013
Net cash received for sales of finance receivables	$	—		$	—
Impact from prior sales of finance receivables(1)	(149		)	(91		)
Collections on beneficial interest	26			2
Estimated Decrease to Operating Cash Flows	$	(123	)	$	(89	)

____________________________ 

(1) Represents cash that would have been collected if we had not sold finance receivables.

Finance Receivables – Allowance for Credit Losses and Credit Quality

Finance receivables include sales-type leases, direct financing leases and installment loans. Our finance receivable portfolios are primarily in the U.S., Canada and Europe. We generally establish customer credit limits and estimate the allowance for credit losses on a country or geographic basis. Our policy and methodology used to establish our allowance for doubtful accounts has been consistently applied over all periods presented.

The following table is a rollforward of the allowance for doubtful finance receivables as well as the related investment in finance receivables:

Allowance for Credit Losses:	United States			Canada			Europe			Other(3)			Total
Balance at December 31, 2013	$	45		$	22		$	81		$	6		$	154
Provision	3			2			7			3			15
Charge-offs	(1		)	(4		)	(5		)	(2		)	(12		)
Recoveries and other(1)	1			—			—			—			1
Balance at March 31, 2014	$	48		$	20		$	83		$	7		$	158
Finance receivables as of March 31, 2014 collectively evaluated for impairment(2)	$	1,676		$	402		$	2,242		$	316		$	4,636
Balance at December 31, 2012	$	50		$	31		$	85		$	4		$	170
Provision	2			2			9			—			13
Charge-offs	(2		)	(4		)	(15		)	—			(21		)
Recoveries and other(1)	1			—			(3		)	—			(2		)
Balance at March 31, 2013	$	51		$	29		$	76		$	4		$	160
Finance receivables as of March 31, 2013 collectively evaluated for impairment(2)	$	1,991		$	756		$	2,304		$	211		$	5,262

__________________

(1) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.

(2) Total Finance receivables exclude residual values of $1 and $2, and the allowance for credit losses of $158 and $160 at March 31, 2014 and 2013, respectively.

(3) Includes developing market countries and smaller units.

We evaluate our customers based on the following credit quality indicators:

• Investment grade: This rating includes accounts with excellent to good business credit, asset quality and the capacity to meet financial obligations. These customers are less susceptible to adverse effects due to shifts in economic conditions or changes in circumstance. The rating generally equates to a Standard & Poors (S&P) rating of BBB- or better. Loss rates in this category are normally minimal at less than 1%.

• Non-investment grade: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. This rating generally equates to a BB S&P rating. Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base. In addition, the higher loss rates are largely offset by the higher rates of return we obtain on such leases. Loss rates in this category are generally in the range of 2% to 4%.

• Substandard: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. We use numerous strategies to mitigate risk including higher rates of interest, prepayments, personal guarantees, etc. Accounts in this category include customers who were downgraded during the term of the lease from investment and non-investment grade status when the lease was originated. Accordingly, there is a distinct possibility for a loss of principal and interest or customer default. The loss rates in this category are around 10%.

Credit quality indicators are updated at least annually and the credit quality of any given customer can change during the life of the portfolio. Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:

	March 31, 2014								December 31, 2013
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables		Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
Finance and other services	$	191	$	112	$	46	$	349	$	189	$	102	$	34	$	325
Government and education	632		8		4		644		656		12		3		671
Graphic arts	138		70		102		310		142		59		108		309
Industrial	93		30		16		139		92		28		15		135
Healthcare	73		24		20		117		74		25		16		115
Other	58		29		30		117		55		27		29		111
Total United States	1,185		273		218		1,676		1,208		253		205		1,666
Finance and other services	45		19		11		75		46		18		11		75
Government and education	87		8		2		97		96		9		1		106
Graphic arts	53		54		41		148		56		52		48		156
Industrial	21		12		4		37		23		12		6		41
Other	31		10		4		45		29		9		5		43
Total Canada(1)	237		103		62		402		250		100		71		421
France	279		304		145		728		282		314		122		718
U.K./Ireland	201		162		39		402		199		171		42		412
Central(2)	260		391		44		695		287		394		43		724
Southern(3)	105		178		47		330		102		187		58		347
Nordics(4)	26		60		1		87		46		42		3		91
Total Europe	871		1,095		276		2,242		916		1,108		268		2,292
Other	214		86		16		316		226		69		9		304
Total	$	2,507	$	1,557	$	572	$	4,636	$	2,600	$	1,530	$	553	$	4,683

_____________________________

(1) Historically the Company has included certain Canadian customers with graphic arts activity in their industry sector. In 2014, these customers were reclassified to Graphic Arts to better reflect their primary business activity. The December 31, 2013 amounts have been reclassified to move $33 of graphic arts customers out of Finance and Other Services and to move $38 out of Industrial to be consistent with the March 31, 2014 presentation.

(2) Switzerland, Germany, Austria, Belgium and Holland.

(3) Italy, Greece, Spain and Portugal.

(4) Sweden, Norway, Denmark and Finland.

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:

	March 31, 2014
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	9	$	2	$	1	$	12	$	337	$	349	$	12
Government and education	17		4		3		24		620		644		29
Graphic arts	13		2		1		16		294		310		9
Industrial	4		1		1		6		133		139		6
Healthcare	4		1		—		5		112		117		5
Other	3		1		—		4		113		117		4
Total United States	50		11		6		67		1,609		1,676		65
Canada	3		3		3		9		393		402		20
France	2		1		3		6		722		728		42
U.K./Ireland	—		3		1		4		398		402		3
Central(1)	3		3		3		9		686		695		20
Southern(2)	26		5		6		37		293		330		32
Nordics(3)	2		—		—		2		85		87		3
Total Europe	33		12		13		58		2,184		2,242		100
Other	8		1		—		9		307		316		—
Total	$	94	$	27	$	22	$	143	$	4,493	$	4,636	$	185
	December 31, 2013
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	7	$	2	$	1	$	10	$	315	$	325	$	12
Government and education	17		4		3		24		647		671		34
Graphic arts	12		1		—		13		296		309		5
Industrial	3		1		1		5		130		135		6
Healthcare	3		1		—		4		111		115		5
Other	3		1		—		4		107		111		3
Total United States	45		10		5		60		1,606		1,666		65
Canada	4		3		3		10		411		421		19
France	—		—		—		—		718		718		40
U.K./Ireland	1		1		—		2		410		412		2
Central(1)	3		2		3		8		716		724		23
Southern(2)	21		5		7		33		314		347		45
Nordics(3)	2		—		—		2		89		91		—
Total Europe	27		8		10		45		2,247		2,292		110
Other	8		1		—		9		295		304		—
Total	$	84	$	22	$	18	$	124	$	4,559	$	4,683	$	194

 _____________________________

(1) Switzerland, Germany, Austria, Belgium and Holland.

(2) Italy, Greece, Spain and Portugal.

(3) Sweden, Norway, Denmark and Finland.

XML

Accounts Receivable, Net

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Accounts Receivable, Net

Accounts Receivable, Net

Accounts receivable, net were as follows:

	March 31, 2014			December 31, 2013
Amounts billed or billable	$	2,772		$	2,651
Unbilled amounts	364			390
Allowance for doubtful accounts	(104		)	(112		)
Accounts Receivable, Net	$	3,032		$	2,929

Unbilled amounts include amounts associated with percentage-of-completion accounting and other earned revenues not currently billable due to contractual provisions. Amounts to be invoiced in the subsequent month for current services provided are included in amounts billable, and at March 31, 2014 and December 31, 2013 were approximately $1,049 and $1,054, respectively.

We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. The allowance for uncollectible accounts receivable is determined principally on the basis of past collection experience as well as consideration of current economic conditions and changes in our customer collection trends.

Accounts Receivable Sales Arrangements

Accounts receivable sales arrangements are utilized in the normal course of business as part of our cash and liquidity management. We have facilities in the U.S., Canada and several countries in Europe that enable us to sell certain accounts receivable without recourse to third-parties. The accounts receivable sold are generally short-term trade receivables with payment due dates of less than 60 days.

All of our arrangements involve the sale of our entire interest in groups of accounts receivable for cash. In most instances a portion of the sales proceeds are held back by the purchaser and payment is deferred until collection of the related receivables sold. Such holdbacks are not considered legal securities nor are they certificated. We report collections on such receivables as operating cash flows in the Condensed Consolidated Statements of Cash Flows because such receivables are the result of an operating activity and the associated interest rate risk is de minimis due to its short-term nature. Our risk of loss following the sales of accounts receivable is limited to the outstanding deferred purchase price receivable. These receivables are included in the caption “Other current assets” in the accompanying Condensed Consolidated Balance Sheets and were $125 and $121 at March 31, 2014 and December 31, 2013, respectively.

Under most of the arrangements, we continue to service the sold accounts receivable. When applicable, a servicing liability is recorded for the estimated fair value of the servicing. The amounts associated with the servicing liability were not material.

Of the accounts receivable sold and derecognized from our balance sheet, $736 and $723 remained uncollected as of March 31, 2014 and December 31, 2013, respectively. Accounts receivable sales were as follows:

	Three Months Ended March 31,
	2014		2013
Accounts receivable sales	$	822	$	854
Deferred proceeds	124		115
Loss on sales of accounts receivable	4		4
Estimated increase to operating cash flows(1)	11		16

__________________________

(1) Represents the difference between current and prior period receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and (iii) currency.

Finance Receivables, Net

Sale of Finance Receivables

In the third and fourth quarters of 2013 and 2012, we transferred our entire interest in certain groups of lease finance receivables to third-party entities for cash proceeds and beneficial interests. The transfers met the requirements for derecognition according to ASC Topic 860, Transfers and Servicing and therefore were accounted for as sales with derecognition of the associated lease receivables. There were no finance receivable transfers in the three months ending March 31, 2014 and 2013. We continue to service the sold receivables and record servicing fee income over the expected life of the associated receivables. The following is a summary of our prior sales activity:

	Year Ended December 31,
(in millions)	2013		2012
Net carrying value (NCV) sold	$	676	$	682
Allowance included in NCV	17		18
Cash proceeds received	635		630
Beneficial interests received	86		101
Pre-tax gain on sales	40		44
Net fees and expenses	5		5

The principal value of the finance receivables derecognized from our balance sheet was $874 and $1,006 at March 31, 2014 and December 31, 2013, respectively (sale value of approximately $952 and $1,098, respectively).

Summary

The lease portfolios transferred and sold were all from our Document Technology segment and the gains on these sales were reported in Financing revenues within the Document Technology segment. The ultimate purchaser has no recourse to our other assets for the failure of customers to pay principal and interest when due beyond our beneficial interests which were $130 and $150 at March 31, 2014 and December 31, 2013, respectively, and are included in Other current assets and Other long-term assets in the accompanying Condensed Consolidated Balance Sheets. Beneficial interests of $108 and $124 at March 31, 2014 and December 31, 2013, respectively, are held by bankruptcy-remote subsidiaries and therefore are not available to satisfy any of our creditor obligations. We report collections on the beneficial interests as operating cash flows in the Consolidated Statements of Cash Flows because such beneficial interests are the result of an operating activity and the associated interest rate risk is de minimis considering their weighted average lives of less than 2 years.

The net impact from the sales of finance receivables on operating cash flows is summarized below:

	Three Months Ended March 31,
(in millions)	2014			2013
Net cash received for sales of finance receivables	$	—		$	—
Impact from prior sales of finance receivables(1)	(149		)	(91		)
Collections on beneficial interest	26			2
Estimated Decrease to Operating Cash Flows	$	(123	)	$	(89	)

____________________________ 

(1) Represents cash that would have been collected if we had not sold finance receivables.

Finance Receivables – Allowance for Credit Losses and Credit Quality

Finance receivables include sales-type leases, direct financing leases and installment loans. Our finance receivable portfolios are primarily in the U.S., Canada and Europe. We generally establish customer credit limits and estimate the allowance for credit losses on a country or geographic basis. Our policy and methodology used to establish our allowance for doubtful accounts has been consistently applied over all periods presented.

The following table is a rollforward of the allowance for doubtful finance receivables as well as the related investment in finance receivables:

Allowance for Credit Losses:	United States			Canada			Europe			Other(3)			Total
Balance at December 31, 2013	$	45		$	22		$	81		$	6		$	154
Provision	3			2			7			3			15
Charge-offs	(1		)	(4		)	(5		)	(2		)	(12		)
Recoveries and other(1)	1			—			—			—			1
Balance at March 31, 2014	$	48		$	20		$	83		$	7		$	158
Finance receivables as of March 31, 2014 collectively evaluated for impairment(2)	$	1,676		$	402		$	2,242		$	316		$	4,636
Balance at December 31, 2012	$	50		$	31		$	85		$	4		$	170
Provision	2			2			9			—			13
Charge-offs	(2		)	(4		)	(15		)	—			(21		)
Recoveries and other(1)	1			—			(3		)	—			(2		)
Balance at March 31, 2013	$	51		$	29		$	76		$	4		$	160
Finance receivables as of March 31, 2013 collectively evaluated for impairment(2)	$	1,991		$	756		$	2,304		$	211		$	5,262

__________________

(1) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.

(2) Total Finance receivables exclude residual values of $1 and $2, and the allowance for credit losses of $158 and $160 at March 31, 2014 and 2013, respectively.

(3) Includes developing market countries and smaller units.

We evaluate our customers based on the following credit quality indicators:

• Investment grade: This rating includes accounts with excellent to good business credit, asset quality and the capacity to meet financial obligations. These customers are less susceptible to adverse effects due to shifts in economic conditions or changes in circumstance. The rating generally equates to a Standard & Poors (S&P) rating of BBB- or better. Loss rates in this category are normally minimal at less than 1%.

• Non-investment grade: This rating includes accounts with average credit risk that are more susceptible to loss in the event of adverse business or economic conditions. This rating generally equates to a BB S&P rating. Although we experience higher loss rates associated with this customer class, we believe the risk is somewhat mitigated by the fact that our leases are fairly well dispersed across a large and diverse customer base. In addition, the higher loss rates are largely offset by the higher rates of return we obtain on such leases. Loss rates in this category are generally in the range of 2% to 4%.

• Substandard: This rating includes accounts that have marginal credit risk such that the customer’s ability to make repayment is impaired or may likely become impaired. We use numerous strategies to mitigate risk including higher rates of interest, prepayments, personal guarantees, etc. Accounts in this category include customers who were downgraded during the term of the lease from investment and non-investment grade status when the lease was originated. Accordingly, there is a distinct possibility for a loss of principal and interest or customer default. The loss rates in this category are around 10%.

Credit quality indicators are updated at least annually and the credit quality of any given customer can change during the life of the portfolio. Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:

	March 31, 2014								December 31, 2013
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables		Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
Finance and other services	$	191	$	112	$	46	$	349	$	189	$	102	$	34	$	325
Government and education	632		8		4		644		656		12		3		671
Graphic arts	138		70		102		310		142		59		108		309
Industrial	93		30		16		139		92		28		15		135
Healthcare	73		24		20		117		74		25		16		115
Other	58		29		30		117		55		27		29		111
Total United States	1,185		273		218		1,676		1,208		253		205		1,666
Finance and other services	45		19		11		75		46		18		11		75
Government and education	87		8		2		97		96		9		1		106
Graphic arts	53		54		41		148		56		52		48		156
Industrial	21		12		4		37		23		12		6		41
Other	31		10		4		45		29		9		5		43
Total Canada(1)	237		103		62		402		250		100		71		421
France	279		304		145		728		282		314		122		718
U.K./Ireland	201		162		39		402		199		171		42		412
Central(2)	260		391		44		695		287		394		43		724
Southern(3)	105		178		47		330		102		187		58		347
Nordics(4)	26		60		1		87		46		42		3		91
Total Europe	871		1,095		276		2,242		916		1,108		268		2,292
Other	214		86		16		316		226		69		9		304
Total	$	2,507	$	1,557	$	572	$	4,636	$	2,600	$	1,530	$	553	$	4,683

_____________________________

(1) Historically the Company has included certain Canadian customers with graphic arts activity in their industry sector. In 2014, these customers were reclassified to Graphic Arts to better reflect their primary business activity. The December 31, 2013 amounts have been reclassified to move $33 of graphic arts customers out of Finance and Other Services and to move $38 out of Industrial to be consistent with the March 31, 2014 presentation.

(2) Switzerland, Germany, Austria, Belgium and Holland.

(3) Italy, Greece, Spain and Portugal.

(4) Sweden, Norway, Denmark and Finland.

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:

	March 31, 2014
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	9	$	2	$	1	$	12	$	337	$	349	$	12
Government and education	17		4		3		24		620		644		29
Graphic arts	13		2		1		16		294		310		9
Industrial	4		1		1		6		133		139		6
Healthcare	4		1		—		5		112		117		5
Other	3		1		—		4		113		117		4
Total United States	50		11		6		67		1,609		1,676		65
Canada	3		3		3		9		393		402		20
France	2		1		3		6		722		728		42
U.K./Ireland	—		3		1		4		398		402		3
Central(1)	3		3		3		9		686		695		20
Southern(2)	26		5		6		37		293		330		32
Nordics(3)	2		—		—		2		85		87		3
Total Europe	33		12		13		58		2,184		2,242		100
Other	8		1		—		9		307		316		—
Total	$	94	$	27	$	22	$	143	$	4,493	$	4,636	$	185
	December 31, 2013
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	7	$	2	$	1	$	10	$	315	$	325	$	12
Government and education	17		4		3		24		647		671		34
Graphic arts	12		1		—		13		296		309		5
Industrial	3		1		1		5		130		135		6
Healthcare	3		1		—		4		111		115		5
Other	3		1		—		4		107		111		3
Total United States	45		10		5		60		1,606		1,666		65
Canada	4		3		3		10		411		421		19
France	—		—		—		—		718		718		40
U.K./Ireland	1		1		—		2		410		412		2
Central(1)	3		2		3		8		716		724		23
Southern(2)	21		5		7		33		314		347		45
Nordics(3)	2		—		—		2		89		91		—
Total Europe	27		8		10		45		2,247		2,292		110
Other	8		1		—		9		295		304		—
Total	$	84	$	22	$	18	$	124	$	4,559	$	4,683	$	194

 _____________________________

(1) Switzerland, Germany, Austria, Belgium and Holland.

(2) Italy, Greece, Spain and Portugal.

(3) Sweden, Norway, Denmark and Finland.

XML

Contingencies and Litigation

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Contingencies and Litigation

Contingencies and Litigation

Legal Matters

As more fully discussed below, we are involved in a variety of claims, lawsuits, investigations and proceedings concerning securities law, intellectual property law, environmental law, employment law and the Employee Retirement Income Security Act (ERISA). We determine whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We assess our potential liability by analyzing our litigation and regulatory matters using available information. We develop our views on estimated losses in consultation with outside counsel handling our defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in our determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts, they could have a material adverse effect on our results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs.

Brazil Tax and Labor Contingencies

Our Brazilian operations are involved in various litigation matters and have received or been the subject of numerous governmental assessments related to indirect and other taxes, as well as disputes associated with former employees and contract labor. The tax matters, which comprise a significant portion of the total contingencies, principally relate to claims for taxes on the internal transfer of inventory, municipal service taxes on rentals, gross revenue taxes and import taxes and duties. We are disputing these tax matters and intend to vigorously defend our position. Based on the opinion of legal counsel and current reserves for those matters deemed probable of loss, we do not believe that the ultimate resolution of these matters will materially impact our results of operations, financial position or cash flows.The labor matters principally relate to claims made by former employees and contract labor for the equivalent payment of all social security and other related labor benefits, as well as consequential tax claims, as if they were regular employees.

As of March 31, 2014, the total amounts related to the unreserved portion of the tax and labor contingencies, inclusive of any related interest, amounted to approximately $1 billion with the increase from December 31, 2013 balance of approximately $933, primarily related to currency and interest. With respect to the unreserved balance of $1 billion, the majority has been assessed by management as being remote as to the likelihood of ultimately resulting in a loss to the company. In connection with the above proceedings, customary local regulations may require us to make escrow cash deposits or post other security of up to half of the total amount in dispute. As of March 31, 2014, we had $171 of escrow cash deposits for matters we are disputing, and there are liens on certain Brazilian assets with a net book value of $8 and additional letters of credit of approximately $254, which include associated indexation. Generally, any escrowed amounts would be refundable and any liens would be removed to the extent the matters are resolved in our favor. We routinely assess all these matters as to probability of ultimately incurring a liability against our Brazilian operations and record our best estimate of the ultimate loss in situations where we assess the likelihood of an ultimate loss as probable.

Litigation Against the Company

In re Xerox Corporation Securities Litigation: A consolidated securities law action (consisting of 17 cases) is pending in the United States District Court for the District of Connecticut. Defendants are the Company, Barry Romeril, Paul Allaire and G. Richard Thoman. The consolidated action is a class action on behalf of all persons and entities who purchased Xerox Corporation common stock during the period October 22, 1998 through October 7, 1999 inclusive (Class Period) and who suffered a loss as a result of misrepresentations or omissions by Defendants as alleged by Plaintiffs (the “Class”). The Class alleges that in violation of Section 10(b) and/or 20(a) of the Securities Exchange Act of 1934, as amended (1934 Act), and SEC Rule 10b-5 thereunder, each of the defendants is liable as a participant in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of the Company’s common stock during the Class Period by disseminating materially false and misleading statements and/or concealing material facts relating to the defendants’ alleged failure to disclose the material negative impact that the April 1998 restructuring had on the Company’s operations and revenues. The complaint further alleges that the alleged scheme: (i) deceived the investing public regarding the economic capabilities, sales proficiencies, growth, operations and the intrinsic value of the Company’s common stock; (ii) allowed several corporate insiders, such as the named individual defendants, to sell shares of privately held common stock of the Company while in possession of materially adverse, non-public information; and (iii) caused the individual plaintiffs and the other members of the purported class to purchase common stock of the Company at inflated prices. The complaint seeks unspecified compensatory damages in favor of the plaintiffs and the other members of the purported class against all defendants, jointly and severally, for all damages sustained as a result of defendants’ alleged wrongdoing, including interest thereon, together with reasonable costs and expenses incurred in the action, including counsel fees and expert fees. In 2001, the Court denied the defendants’ motion for dismissal of the complaint. The plaintiffs’ motion for class certification was denied by the Court in 2006, without prejudice to refiling. In February 2007, the Court granted the motion of the International Brotherhood of Electrical Workers Welfare Fund of Local Union No. 164, Robert W. Roten, Robert Agius (Agius) and Georgia Stanley to appoint them as additional lead plaintiffs. In July 2007, the Court denied plaintiffs’ renewed motion for class certification, without prejudice to renewal after the Court holds a pre-filing conference to identify factual disputes the Court will be required to resolve in ruling on the motion. After that conference and Agius’s withdrawal as lead plaintiff and proposed class representative, in February 2008 plaintiffs filed a second renewed motion for class certification. In April 2008, defendants filed their response and motion to disqualify Milberg LLP as a lead counsel. On September 30, 2008, the Court entered an order certifying the class and denying the appointment of Milberg LLP as class counsel. Subsequently, on April 9, 2009, the Court denied defendants’ motion to disqualify Milberg LLP. On November 6, 2008, the defendants filed a motion for summary judgment. On March 29, 2013, the Court granted defendants' motion for summary judgment in its entirety. On April 26, 2013, plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit. The appeal process is ongoing. The individual defendants and we deny any wrongdoing and are vigorously defending the action. At this time, we do not believe it is reasonably possible that we will incur additional material losses in excess of the amount we have already accrued for this matter. In the course of litigation, we periodically engage in discussions with plaintiffs’ counsel for possible resolution of this matter. Should developments cause a change in our determination as to an unfavorable outcome, or result in a final adverse judgment or a settlement for a significant amount, there could be a material adverse effect on our results of operations, cash flows and financial position in the period in which such change in determination, judgment or settlement occurs.

Other Contingencies

We have issued or provided the following guarantees as of March 31, 2014:

• $490 for letters of credit issued to (i) guarantee our performance under certain services contracts; (ii) support certain insurance programs; and (iii) support our obligations related to the Brazil tax and labor contingencies.

• $740 for outstanding surety bonds. Certain contracts, primarily those involving public sector customers, require us to provide a surety bond as a guarantee of our performance of contractual obligations.

In general, we would only be liable for the amount of these guarantees in the event of default in our performance of our obligations under each contract; the probability of which we believe is remote. We believe that our capacity in the surety markets as well as under various credit arrangements (including our Credit Facility) is sufficient to allow us to respond to future requests for proposals that require such credit support.

We have service arrangements where we service third party student loans in the Federal Family Education Loan program (FFEL) on behalf of various financial institutions. We service these loans for investors under outsourcing arrangements and do not acquire any servicing rights that are transferable by us to a third party. At March 31, 2014, we serviced a FFEL portfolio of approximately 3.1 million loans with an outstanding principal balance of approximately $44.5 billion. Some servicing agreements contain provisions that, under certain circumstances, require us to purchase the loans from the investor if the loan guaranty has been permanently terminated as a result of a loan default caused by our servicing error. If defaults caused by us are cured during an initial period, any obligation we may have to purchase these loans expires. Loans that we purchase may be subsequently cured, the guaranty reinstated and the loans repackaged for sale to third parties. We evaluate our exposure under our purchase obligations on defaulted loans and establish a reserve for potential losses, or default liability reserve, through a charge to the provision for loss on defaulted loans purchased. The reserve is evaluated periodically and adjusted based upon management’s analysis of the historical performance of the defaulted loans. As of March 31, 2014, other current liabilities include reserves of approximately $2 for losses on defaulted loans purchased.

XML

Employee Benefit Plans

3 Months Ended

Mar. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows for the three months ended March 31:

	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Retiree Health
	2014			2013			2014			2013			2014			2013
Components of Net Periodic Benefit Costs:
Service cost	$	2		$	2		$	9		$	22		$	2		$	2
Interest cost	40			37			69			64			9			9
Expected return on plan assets	(38		)	(44		)	(87		)	(77		)	—			—
Recognized net actuarial loss	2			7			14			19			—			1
Amortization of prior service credit	—			—			(1		)	—			(11		)	(11		)
Recognized settlement loss	12			48			—			—			—			—
Defined Benefit Plans	18			50			4			28			—			1
Defined contribution plans	16			19			11			7			—			—
Net Periodic Benefit Cost	34			69			15			35			—			1
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income:
Net actuarial loss(1)	197			—			—			—			—			—
Amortization of prior service credit	—			—			1			—			11			11
Amortization of net actuarial loss	(14		)	(55		)	(14		)	(19		)	—			(1		)
Total Recognized in Other Comprehensive Income(2)	183			(55		)	(13		)	(19		)	11			10
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	$	217		$	14		$	2		$	16		$	11		$	11

_____________________________

(1) The net actuarial loss for U.S. Plans in the first quarter 2014 is related to the remeasurement of our primary U.S. pension plans as a result of the payment of periodic settlements. The loss in the first quarter 2014 primarily reflects the decrease in discount rates during the period as compared to the discount rates from our annual measurement of the plans at December 31, 2013.

(2) Amounts represent the pre-tax effect included within Other comprehensive income. Refer to Note 16 - Other Comprehensive Income for related tax effects and the after-tax amounts.

Contributions

During the three months ended March 31, 2014, we made cash contributions of $37 ($6 U.S. and $31 Non-U.S.) to our defined benefit pension plans and $25 to our retiree health benefit plans. We presently anticipate additional cash contributions of $213 ($84 U.S. and $129 Non-U.S.) to our defined benefit pension plans and $46 to our retiree health benefit plans in 2014 for total full-year cash contributions of approximately $250 ($90 U.S. and $160 Non-U.S.) to our defined benefit pension plans and $71 to our retiree health benefit plans.

XML

Restructuring Programs

3 Months Ended

Mar. 31, 2014

Restructuring and Related Activities [Abstract]

Restructuring Programs

Restructuring Programs

During the three months ended March 31, 2014, we recorded net restructuring and asset impairment charges of $27, which included approximately $28 of severance costs related to headcount reductions of approximately 1,250 employees worldwide, $1 of lease cancellations and $4 of asset impairments. These costs were offset by $6 of net reversals, primarily resulting from changes in estimated reserves from prior period initiatives.

Information related to restructuring program activity during the three months ended March 31, 2014 is outlined below:

	Severance and Related Costs			Lease Cancellation and Other Costs			Asset Impairments(2)			Total
Balance at December 31, 2013	$	109		$	7		$	—		$	116
Provision	28			1			4			33
Reversals	(6		)	—			—			(6		)
Net Current Period Charges(1)	22			1			4			27
Charges against reserve and currency	(35		)	(2		)	(4		)	(41		)
Balance at March 31, 2014	$	96		$	6		$	—		$	102

_____________________________

(1) Represents net amount recognized within the Condensed Consolidated Statements of Income for the period shown.

(2) Charges associated with asset impairments represent the write-down of the related assets to their new cost basis and are recorded concurrently with the recognition of the provision.

Reconciliation to the Condensed Consolidated Statements of Cash Flows:

	Three Months Ended March 31,
	2014			2013
Charges against reserve	$	(41	)	$	(37	)
Asset impairments	4			—
Effects of foreign currency and other non-cash items	1			(1		)
Restructuring Cash Payments	$	(36	)	$	(38	)

The following table summarizes the total amount of costs incurred in connection with these restructuring programs by segment:

	Three Months Ended March 31,
	2014		2013
Services	$	10	$	(2	)
Document Technology	16		(6		)
Other	1		—
Total Net Restructuring Charges	$	27	$	(8	)

XML

Employee Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income:
Net actuarial loss(1)	$ (197)		$ 0
Amortization of prior service credit	(12)	[1]	(11)	[1]
Amortization of net actuarial loss	28	[1]	75	[1]
Pension Benefits
Contributions [Abstract]
Defined Benefit Plan, Contributions by Employer	37
Anticipated additional contributions to the defined benefit and post retirement plans in current fiscal year	213
Anticipated total cash contributions to defined benefit and post retirement plans in the current year	250
Retiree Health
Components of Net Periodic Benefit Costs:
Service cost	2		2
Interest cost	9		9
Expected return on plan assets	0		0
Recognized net actuarial loss	0		1
Amortization of prior service credit	(11)		(11)
Recognized settlement loss	0		0
Defined Benefit Plans	0		1
Defined contribution plans	0		0
Net Periodic Benefit Cost	0		1
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income:
Net actuarial loss(1)	0	[2]	0	[2]
Amortization of prior service credit	11		11
Amortization of net actuarial loss	0		(1)
Total Recognized in Other Comprehensive Income	11	[2],[3]	10	[2],[3]
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	11		11
Contributions [Abstract]
Defined Benefit Plan, Contributions by Employer	25
Anticipated additional contributions to the defined benefit and post retirement plans in current fiscal year	46
Anticipated total cash contributions to defined benefit and post retirement plans in the current year	71
U.S. Plans | Pension Benefits
Components of Net Periodic Benefit Costs:
Service cost	2		2
Interest cost	40		37
Expected return on plan assets	(38)		(44)
Recognized net actuarial loss	2		7
Amortization of prior service credit	0		0
Recognized settlement loss	12		48
Defined Benefit Plans	18		50
Defined contribution plans	16		19
Net Periodic Benefit Cost	34		69
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income:
Net actuarial loss(1)	197	[2]	0	[2]
Amortization of prior service credit	0		0
Amortization of net actuarial loss	(14)		(55)
Total Recognized in Other Comprehensive Income	183	[2],[3]	(55)	[2],[3]
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	217		14
Contributions [Abstract]
Defined Benefit Plan, Contributions by Employer	6
Anticipated additional contributions to the defined benefit and post retirement plans in current fiscal year	84
Anticipated total cash contributions to defined benefit and post retirement plans in the current year	90
Non-U.S. Plans | Pension Benefits
Components of Net Periodic Benefit Costs:
Service cost	9		22
Interest cost	69		64
Expected return on plan assets	(87)		(77)
Recognized net actuarial loss	14		19
Amortization of prior service credit	(1)		0
Recognized settlement loss	0		0
Defined Benefit Plans	4		28
Defined contribution plans	11		7
Net Periodic Benefit Cost	15		35
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income:
Net actuarial loss(1)	0	[2]	0	[2]
Amortization of prior service credit	1		0
Amortization of net actuarial loss	(14)		(19)
Total Recognized in Other Comprehensive Income	(13)	[3]	(19)	[3]
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	2		16
Contributions [Abstract]
Defined Benefit Plan, Contributions by Employer	31
Anticipated additional contributions to the defined benefit and post retirement plans in current fiscal year	129
Anticipated total cash contributions to defined benefit and post retirement plans in the current year	$ 160

[1] Reclassified to Total Net Periodic Benefit Cost - refer to Note 14 - Employee Benefit Plans for additional information.

[2] (1)The net actuarial loss for U.S. Plans in the first quarter 2014 is related to the remeasurement of our primary U.S. pension plans as a result of the payment of periodic settlements. The loss in the first quarter 2014 primarily reflects the decrease in discount rates during the period as compared to the discount rates from our annual measurement of the plans at December 31, 2013.

[3] (2)Amounts represent the pre-tax effect included within Other comprehensive income. Refer to Note 16 - Other Comprehensive Income for related tax effects and the after-tax amounts.

XML

Inventories

3 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Inventories

Inventories

The following is a summary of Inventories by major category:

	March 31, 2014		December 31, 2013
Finished goods	$	872	$	837
Work-in-process	65		60
Raw materials	107		101
Total Inventories	$	1,044	$	998

XML

Investment in Affiliates, at Equity

3 Months Ended

Mar. 31, 2014

Equity Method Investments and Joint Ventures [Abstract]

Investment in Affiliates, at Equity

Investment in Affiliates, at Equity

Our equity in net income of our unconsolidated affiliates was as follows:

	Three Months Ended March 31,
	2014		2013
Fuji Xerox	$	39	$	44
Other investments	3		3
Total Equity in Net Income of Unconsolidated Affiliates	$	42	$	47

Fuji Xerox

Equity in net income of Fuji Xerox is affected by certain adjustments required to reflect the deferral of profit associated with intercompany sales. These adjustments may result in recorded equity income that is different from that implied by our 25% ownership interest.

Condensed financial data of Fuji Xerox was as follows:

	Three Months Ended March 31,
	2014		2013
Summary of Operations:
Revenues	$	3,021	$	3,028
Costs and expenses	2,801		2,784
Income before income taxes	220		244
Income tax expense	58		61
Net Income	162		183
Less: Net income – noncontrolling interests	1		1
Net Income – Fuji Xerox	$	161	$	182
Weighted Average Exchange Rate(1)	102.67		92.64

_____________________________

(1) Represents Yen/U.S. Dollar exchange rate used to translate.

XML

Debt

3 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Debt

Debt

Credit facility

On March 18, 2014, we entered into an Amended and Restated Credit Agreement that extended the maturity date of our $2.0 billion unsecured revolving Credit Facility to March 18, 2019 from December 2016. The amendment also included modest improvements in pricing and minor changes in the composition of the group of lenders. The amended and restated Credit Facility retains certain provisions from the existing Credit Facility including the $300 letter of credit sub-facility and the accordion feature that would allow us to increase (from time to time, with willing lenders) the overall size of the facility up to an aggregate amount not to exceed $2.75 billion. We also have the right to request a one year extension on each of the first and second anniversary of the amendment date.

We deferred $7 of debt issuance costs in connection with this amendment, which includes approximately $4 of unamortized deferred debt issue costs associated with the existing Credit Facility. The write-off of debt issuance costs associated with lenders that reduced their participation in the amended and restated Credit Facility was not material.

At March 31, 2014, we had no outstanding borrowings or letters of credit under our Credit Facility.

Interest Expense and Income

Interest expense and interest income were as follows:

	Three Months Ended March 31,
	2014		2013
Interest expense(1)	$	100	$	104
Interest income(2)	102		120

____________

(1) Includes Equipment financing interest, as well as non-financing interest expense that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

(2) Includes Finance income, as well as other interest income that is included in Other expenses, net in the Condensed Consolidated Statements of Income.

Net (Payments) Proceeds on Debt

Net proceeds on debt as shown on the Condensed Consolidated Statements of Cash Flows was as follows: 

	Three Months Ended March 31,
	2014			2013
Net proceeds on short-term debt	$	1		$	36
Proceeds from issuance of long-term debt	18			25
Payments on long-term debt(1)	(15		)	(4		)
Net Proceeds on Debt	$	4		$	57

____________

(1) Includes current maturities.

XML

Earnings per Share, Reconciliation (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Basic Earnings per Share:
Net income from continuing operations attributable to Xerox	$ 279	$ 293
Adjusted Net Income From Continuing Operations Available to Common Shareholders	273	287
Net income from discontinued operations attributable to Xerox	2	3
Adjusted Net Income Available to Common Shareholders	275	290
Weighted-average common shares outstanding	1,178,828	1,225,271
Continuing operations (dollars per share)	$ 0.23	$ 0.23
Discontinued operations (dollars per share)	$ 0.00	$ 0.00
Total Basic Earnings per Share (dollars per share)	$ 0.23	$ 0.23
Diluted Earnings per Share:
Net income from continuing operations attributable to Xerox	279	293
Interest on convertible securities, net	0	0
Adjusted Net Income From Continuing Operations Available to Common Shareholders	279	293
Net income from discontinued operations attributable to Xerox	2	3
Adjusted Net Income Available to Common Shareholders	281	296
Weighted-average common shares outstanding	1,178,828	1,225,271
Common shares issuable with respect to:
Adjusted Weighted Average Common Shares Outstanding	1,224,727	1,280,455
Continuing operations (dollars per share)	$ 0.23	$ 0.23
Discontinued operations (dollars per share)	$ 0.00	$ 0.00
Diluted Earnings per Share (dollars per share)	$ 0.23	$ 0.23
Stock options [Member]
Common shares issuable with respect to:
Stock options and Restricted stock and performance shares (in shares)	3,580	4,854
Restricted Stock and Performance Shares [Member]
Common shares issuable with respect to:
Stock options and Restricted stock and performance shares (in shares)	15,021	21,372
Convertible Preferred Stock [Member]
Common shares issuable with respect to:
Convertible preferred stock	26,966	26,966
Convertible Debt Securities [Member]
Common shares issuable with respect to:
Convertible securities	332	1,992
Earnings (loss) per share, basic [Member]
Basic Earnings per Share:
Accrued dividends on preferred stock	(6)	(6)
Earnings (loss) per share, diluted [Member]
Basic Earnings per Share:
Accrued dividends on preferred stock	$ 0	$ 0

XML

Contingencies and Litigation (Details) (Brazil Tax And Labor Contingencies [Member], USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Brazil Tax And Labor Contingencies [Member]
Loss Contingencies [Line Items]
Unreserved tax and labor contingencies	$ 1,000	$ 933
Escrow cash deposits	171
Net book value of assets with liens	8
Letters of credit	$ 254

XML

Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013		Dec. 31, 2013
Comprehensive Income [Abstract]
Translation Adjustments, Pre-tax	$ 2		$ (363)
Translation Adjustments, Net of Tax	(1)	[1]	(363)	[1]
Changes in fair value of cash flow hedges, pre-tax	18		(34)
Changes in fair value of cash flow hedges, net of tax	13		(22)
Changes in cash flow hedges reclassed to earnings, pre-tax	21	[2]	17	[2]
Changes in cash flow hedges reclassed to earnings, net of tax	14	[2]	12	[2]
Other (losses) gains, pre-tax	(1)		2
Other (losses) gains, net of tax	(1)		2
Net Unrealized Gains (Losses), Pre-tax	38		(15)
Net Unrealized Gains (Losses), Net of Tax	26	[1]	(8)	[1]
Net actuarial loss, pre-tax	(197)		0
Net actuarial loss, net of tax	(122)		0
Prior service amortization, pre-tax	(12)	[3]	(11)	[3]
Prior service amortization, net of tax	(7)	[3]	(7)	[3]
Actuarial loss amortization, pre-tax	28	[3]	75	[3]
Actuarial loss amortization, net of tax	19	[3]	49	[3]
Fuji Xerox changes in defined benefit plans, net, pre-tax	27	[4]	(16)	[4]
Fuji Xerox changes in defined benefit plans, net, net of tax	27	[4]	(16)	[4]
Other (losses) gains, pre-tax	(1)	[5]	77	[5]
Other (losses) gains, net of tax	(1)	[5]	77	[5]
Change in Defined Benefit Plans (Losses) Gains, Pre-tax	(155)		125
Change in Defined Benefit Plans (Losses) Gains, Net of Tax	(84)	[1]	103	[1]
Other Comprehensive Loss Attributable to Xerox, Pre-tax	(115)		(253)
Other Comprehensive Loss, Net Attributable to Xerox	(59)	[1]	(268)	[1]
Cumulative translation adjustments	(1,011)				(1,010)
Benefit plans net actuarial losses and prior service credits	(1,816)	[6]			(1,732)	[6]
Other unrealized losses, net	(11)				(37)
Total Accumulated Other Comprehensive Loss Attributable to Xerox	$ (2,838)				$ (2,779)

[1] (1) Refer to Note 16 - Other Comprehensive Income for gross components of Other Comprehensive Income, reclassification adjustments out of Accumulated Other Comprehensive Loss and related tax effects.

[2] Reclassified to Cost of sales - refer to Note 12 - Financial Instruments for additional information regarding our cash flow hedges.

[3] Reclassified to Total Net Periodic Benefit Cost - refer to Note 14 - Employee Benefit Plans for additional information.

[4] Represents our share of Fuji Xerox's benefit plan changes.

[5] Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits included in AOCL.

[6] (1)Includes our share of Fuji Xerox.

XML

Employee Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Components of net periodic benefit cost and other changes in plan assets and benefit obligations

The components of Net periodic benefit cost and other changes in plan assets and benefit obligations were as follows for the three months ended March 31:

	Pension Benefits
	U.S. Plans						Non-U.S. Plans						Retiree Health
	2014			2013			2014			2013			2014			2013
Components of Net Periodic Benefit Costs:
Service cost	$	2		$	2		$	9		$	22		$	2		$	2
Interest cost	40			37			69			64			9			9
Expected return on plan assets	(38		)	(44		)	(87		)	(77		)	—			—
Recognized net actuarial loss	2			7			14			19			—			1
Amortization of prior service credit	—			—			(1		)	—			(11		)	(11		)
Recognized settlement loss	12			48			—			—			—			—
Defined Benefit Plans	18			50			4			28			—			1
Defined contribution plans	16			19			11			7			—			—
Net Periodic Benefit Cost	34			69			15			35			—			1
Other changes in plan assets and benefit obligations recognized in Other Comprehensive Income:
Net actuarial loss(1)	197			—			—			—			—			—
Amortization of prior service credit	—			—			1			—			11			11
Amortization of net actuarial loss	(14		)	(55		)	(14		)	(19		)	—			(1		)
Total Recognized in Other Comprehensive Income(2)	183			(55		)	(13		)	(19		)	11			10
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	$	217		$	14		$	2		$	16		$	11		$	11

_____________________________

(1) The net actuarial loss for U.S. Plans in the first quarter 2014 is related to the remeasurement of our primary U.S. pension plans as a result of the payment of periodic settlements. The loss in the first quarter 2014 primarily reflects the decrease in discount rates during the period as compared to the discount rates from our annual measurement of the plans at December 31, 2013.

(2) Amounts represent the pre-tax effect included within Other comprehensive income. Refer to Note 16 - Other Comprehensive Income for related tax effects and the after-tax amounts.

XML

Debt Credit Facility (Details) (USD $)	1 Months Ended
	Mar. 31, 2014
Credit Facility [Abstract]
Line of Credit Facility, Current Borrowing Capacity	$ 2,000,000,000
Line of Credit Facility, Expiration Period	Mar. 18, 2019
Long-term Line of Credit	300,000,000
Line of Credit Facility, Maximum Borrowing Capacity	2,750,000,000
Debt Issuance Cost	7,000,000
unamortized debt issuance costs	$ 4,000,000

XML

Other Comprehensive Income

3 Months Ended

Mar. 31, 2014

Comprehensive Income [Abstract]

Other Comprehensive Income

Other Comprehensive Income

Other Comprehensive Income is comprised of the following:

	Three Months Ended March 31,
	2014						2013
	Pre-tax			Net of Tax			Pre-tax			Net of Tax
Translation Adjustments Gains (Losses)	$	2		$	(1	)	$	(363	)	$	(363	)
Unrealized Gains (Losses):
Changes in fair value of cash flow hedges - gains (losses)	18			13			(34		)	(22		)
Changes in cash flow hedges reclassed to earnings(1)	21			14			17			12
Other (losses) gains	(1		)	(1		)	2			2
Net Unrealized Gains (Losses)	38			26			(15		)	(8		)
Defined Benefit Plans (Losses) Gains:
Net actuarial losses	(197		)	(122		)	—			—
Prior service amortization(2)	(12		)	(7		)	(11		)	(7		)
Actuarial loss amortization(2)	28			19			75			49
Fuji Xerox changes in defined benefit plans, net(3)	27			27			(16		)	(16		)
Other (losses) gains(4)	(1		)	(1		)	77			77
Change in Defined Benefit Plans (Losses) Gains	(155		)	(84		)	125			103
Other Comprehensive Loss Attributable to Xerox	$	(115	)	$	(59	)	$	(253	)	$	(268	)

_____________________________

(1) Reclassified to Cost of sales - refer to Note 12 - Financial Instruments for additional information regarding our cash flow hedges.

(2) Reclassified to Total Net Periodic Benefit Cost - refer to Note 14 - Employee Benefit Plans for additional information.

(3) Represents our share of Fuji Xerox's benefit plan changes.

(4) Primarily represents currency impact on cumulative amount of benefit plan net actuarial losses and prior service credits included in AOCL.

Accumulated Other Comprehensive Loss (AOCL)

AOCL is comprised of the following:

	March 31, 2014			December 31, 2013
Cumulative translation adjustments	$	(1,011	)	$	(1,010	)
Benefit plans net actuarial losses and prior service credits(1)	(1,816		)	(1,732		)
Other unrealized losses, net	(11		)	(37		)
Total Accumulated Other Comprehensive Loss Attributable to Xerox	$	(2,838	)	$	(2,779	)

_____________________________

(1) Includes our share of Fuji Xerox.

XML

Accounts Receivable, Net (Tables)

3 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Schedule of accounts receivable, net

Accounts receivable, net were as follows:

	March 31, 2014			December 31, 2013
Amounts billed or billable	$	2,772		$	2,651
Unbilled amounts	364			390
Allowance for doubtful accounts	(104		)	(112		)
Accounts Receivable, Net	$	3,032		$	2,929

Schedule of accounts receivables sales

Accounts receivable sales were as follows:

	Three Months Ended March 31,
	2014		2013
Accounts receivable sales	$	822	$	854
Deferred proceeds	124		115
Loss on sales of accounts receivable	4		4
Estimated increase to operating cash flows(1)	11		16

__________________________

(1) Represents the difference between current and prior period receivable sales adjusted for the effects of: (i) the deferred proceeds, (ii) collections prior to the end of the quarter and (iii) currency.

XML

Investment in Affiliates, at Equity (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Schedule of Equity Method Investments [Line Items]
Total Equity in Net Income of Unconsolidated Affiliates	$ 42	$ 47
Summary of Operations:
Weighted Average Exchange Rate(1)	102.67	92.64
Fuji Xerox
Schedule of Equity Method Investments [Line Items]
Total Equity in Net Income of Unconsolidated Affiliates	39	44
Ownership percentage	25.00%
Summary of Operations:
Revenues	3,021	3,028
Costs and expenses	2,801	2,784
Income before income taxes	220	244
Income tax expense	58	61
Net Income	162	183
Less: Net income – noncontrolling interests	1	1
Net Income – Fuji Xerox	161	182
Other investments
Schedule of Equity Method Investments [Line Items]
Total Equity in Net Income of Unconsolidated Affiliates	$ 3	$ 3

XML

Acquisitions (Details) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014 USD ($)	Mar. 31, 2013 USD ($)	Mar. 31, 2013 Invoco Holding GmbH [Member] USD ($)	Mar. 31, 2013 Invoco Holding GmbH [Member] EUR (€)
Business Acquisition [Line Items]
Business Acquisition, Effective Date of Acquisition			Jan. 15, 2014	Jan. 15, 2014
Payments to Acquire Businesses, Net of Cash Acquired	$ 54	$ 53	$ 54	€ 40

XML

Condensed Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash Flows from Operating Activities:
Net income	$ 286	$ 300
Adjustments required to reconcile net income to cash flows from operating activities:
Depreciation and amortization	345	329
Provision for receivables	16	26
Provision for inventory	10	9
Net gain on sales of businesses and assets	(30)	0
Undistributed equity in net income of unconsolidated affiliates	(42)	(47)
Stock-based compensation	26	31
Restructuring and asset impairment charges	27	(8)
Payments for restructurings	(36)	(38)
Contributions to defined benefit pension plans	(37)	(45)
Increase in accounts receivable and billed portion of finance receivables	(239)	(363)
Collections of deferred proceeds from sales of receivables	120	115
Increase in inventories	(60)	(107)
Increase in equipment on operating leases	(57)	(59)
Decrease in finance receivables	36	96
Collections on beneficial interest from sales of finance receivables	21	2
Increase in other current and long-term assets	(94)	(101)
Increase (decrease) in accounts payable and accrued compensation	8	(94)
Decrease in other current and long-term liabilities	(26)	(66)
Net change in income tax assets and liabilities	29	17
Net change in derivative assets and liabilities	(1)	(47)
Other operating, net	(16)	(37)
Net cash provided by (used in) operating activities	286	(87)
Cash Flows from Investing Activities:
Cost of additions to land, buildings and equipment	(84)	(85)
Proceeds from sales of land, buildings and equipment	33	3
Cost of additions to internal use software	(19)	(22)
Acquisitions, net of cash acquired	(54)	(53)
Other investing, net	4	4
Net cash used in investing activities	(120)	(153)
Cash Flows from Financing Activities:
Net proceeds on debt	4	57
Common stock dividends	(68)	(52)
Preferred stock dividends	(6)	(6)
Proceeds from issuances of common stock	20	22
Excess tax benefits from stock-based compensation	3	1
Payments to acquire treasury stock, including fees	(275)	(10)
Repurchases related to stock-based compensation	(1)	(10)
Distributions to noncontrolling interests	(16)	(3)
Other financing	(10)	0
Net cash used in financing activities	(349)	(1)
Effect of exchange rate changes on cash and cash equivalents	(14)	(12)
Decrease in cash and cash equivalents	(197)	(253)
Cash and cash equivalents at beginning of period	1,764	1,246
Cash and Cash Equivalents at End of Period	$ 1,567	$ 993

XML

Divestitures

3 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

Divestitures

In 2013, in connection with our decision to exit from the Paper distribution business, we completed the sale of our North American and European Paper businesses. As a result of these transactions, we reported these paper-related operations as Discontinued Operations and reclassified their results from the Other segment to Discontinued Operations in 2013. We recorded a net pre-tax loss on disposal of $25 in 2013 for the disposition of these businesses - $23 in third quarter 2013 and $2 in the fourth quarter 2013. In the first quarter 2014, we recorded net income of $2 in Discontinued Operation primarily representing adjustments of amounts previously recorded due to changes in estimates.

The components of Discontinued Operations for the periods presented are as follows:

	Three Months Ended March 31,
	2014		2013
Revenues	$	—	$	154
Income from operations	$	—	$	5
Gain on disposal	2		—
Net Income Before Income Taxes	2		5
Income tax expense	—		(2		)
Income From Discontinued Operations, Net of Tax	$	2	$	3

XML

Fair Value of Financial Assets and Liabilities, Recurring (Details) (Fair Value, Measurements, Recurring [Member], Significant Other Observable Inputs (Level 2) [Member], USD $) In Millions, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets:
Foreign exchange contracts-forwards	$ 9	$ 6
Deferred compensation investments in cash surrender life insurance	90	88
Deferred compensation investments in mutual funds	30	28
Total	129	122
Liabilities:
Foreign exchange contracts-forwards	34	70
Interest rate swaps	3	0
Deferred compensation plan liabilities	127	125
Total	$ 164	$ 195

XML

Finance Receivables, Net (Tables)

3 Months Ended

Mar. 31, 2014

Finance Receivables, Net [Abstract]

Finance Receivables Sales Activity

The following is a summary of our prior sales activity:

	Year Ended December 31,
(in millions)	2013		2012
Net carrying value (NCV) sold	$	676	$	682
Allowance included in NCV	17		18
Cash proceeds received	635		630
Beneficial interests received	86		101
Pre-tax gain on sales	40		44
Net fees and expenses	5		5

Sales of Finance Receivables

The net impact from the sales of finance receivables on operating cash flows is summarized below:

	Three Months Ended March 31,
(in millions)	2014			2013
Net cash received for sales of finance receivables	$	—		$	—
Impact from prior sales of finance receivables(1)	(149		)	(91		)
Collections on beneficial interest	26			2
Estimated Decrease to Operating Cash Flows	$	(123	)	$	(89	)

____________________________ 

(1) Represents cash that would have been collected if we had not sold finance receivables.

Allowance for Credit Losses on Financing Receivables

The following table is a rollforward of the allowance for doubtful finance receivables as well as the related investment in finance receivables:

Allowance for Credit Losses:	United States			Canada			Europe			Other(3)			Total
Balance at December 31, 2013	$	45		$	22		$	81		$	6		$	154
Provision	3			2			7			3			15
Charge-offs	(1		)	(4		)	(5		)	(2		)	(12		)
Recoveries and other(1)	1			—			—			—			1
Balance at March 31, 2014	$	48		$	20		$	83		$	7		$	158
Finance receivables as of March 31, 2014 collectively evaluated for impairment(2)	$	1,676		$	402		$	2,242		$	316		$	4,636
Balance at December 31, 2012	$	50		$	31		$	85		$	4		$	170
Provision	2			2			9			—			13
Charge-offs	(2		)	(4		)	(15		)	—			(21		)
Recoveries and other(1)	1			—			(3		)	—			(2		)
Balance at March 31, 2013	$	51		$	29		$	76		$	4		$	160
Finance receivables as of March 31, 2013 collectively evaluated for impairment(2)	$	1,991		$	756		$	2,304		$	211		$	5,262

__________________

(1) Includes the impacts of foreign currency translation and adjustments to reserves necessary to reflect events of non-payment such as customer accommodations and contract terminations.

(2) Total Finance receivables exclude residual values of $1 and $2, and the allowance for credit losses of $158 and $160 at March 31, 2014 and 2013, respectively.

(3) Includes developing market countries and smaller units.

Financing Receivable Credit Quality Indicators

Details about our finance receivables portfolio based on industry and credit quality indicators are as follows:

	March 31, 2014								December 31, 2013
	Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables		Investment Grade		Non-investment Grade		Substandard		Total Finance Receivables
Finance and other services	$	191	$	112	$	46	$	349	$	189	$	102	$	34	$	325
Government and education	632		8		4		644		656		12		3		671
Graphic arts	138		70		102		310		142		59		108		309
Industrial	93		30		16		139		92		28		15		135
Healthcare	73		24		20		117		74		25		16		115
Other	58		29		30		117		55		27		29		111
Total United States	1,185		273		218		1,676		1,208		253		205		1,666
Finance and other services	45		19		11		75		46		18		11		75
Government and education	87		8		2		97		96		9		1		106
Graphic arts	53		54		41		148		56		52		48		156
Industrial	21		12		4		37		23		12		6		41
Other	31		10		4		45		29		9		5		43
Total Canada(1)	237		103		62		402		250		100		71		421
France	279		304		145		728		282		314		122		718
U.K./Ireland	201		162		39		402		199		171		42		412
Central(2)	260		391		44		695		287		394		43		724
Southern(3)	105		178		47		330		102		187		58		347
Nordics(4)	26		60		1		87		46		42		3		91
Total Europe	871		1,095		276		2,242		916		1,108		268		2,292
Other	214		86		16		316		226		69		9		304
Total	$	2,507	$	1,557	$	572	$	4,636	$	2,600	$	1,530	$	553	$	4,683

_____________________________

(1) Historically the Company has included certain Canadian customers with graphic arts activity in their industry sector. In 2014, these customers were reclassified to Graphic Arts to better reflect their primary business activity. The December 31, 2013 amounts have been reclassified to move $33 of graphic arts customers out of Finance and Other Services and to move $38 out of Industrial to be consistent with the March 31, 2014 presentation.

(2) Switzerland, Germany, Austria, Belgium and Holland.

(3) Italy, Greece, Spain and Portugal.

(4) Sweden, Norway, Denmark and Finland.

Finance Receivables Aging

The aging of our billed finance receivables is based upon the number of days an invoice is past due and is as follows:

	March 31, 2014
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	9	$	2	$	1	$	12	$	337	$	349	$	12
Government and education	17		4		3		24		620		644		29
Graphic arts	13		2		1		16		294		310		9
Industrial	4		1		1		6		133		139		6
Healthcare	4		1		—		5		112		117		5
Other	3		1		—		4		113		117		4
Total United States	50		11		6		67		1,609		1,676		65
Canada	3		3		3		9		393		402		20
France	2		1		3		6		722		728		42
U.K./Ireland	—		3		1		4		398		402		3
Central(1)	3		3		3		9		686		695		20
Southern(2)	26		5		6		37		293		330		32
Nordics(3)	2		—		—		2		85		87		3
Total Europe	33		12		13		58		2,184		2,242		100
Other	8		1		—		9		307		316		—
Total	$	94	$	27	$	22	$	143	$	4,493	$	4,636	$	185
	December 31, 2013
	Current		31-90 Days Past Due		>90 Days Past Due		Total Billed		Unbilled		Total Finance Receivables		>90 Days and Accruing
Finance and other services	$	7	$	2	$	1	$	10	$	315	$	325	$	12
Government and education	17		4		3		24		647		671		34
Graphic arts	12		1		—		13		296		309		5
Industrial	3		1		1		5		130		135		6
Healthcare	3		1		—		4		111		115		5
Other	3		1		—		4		107		111		3
Total United States	45		10		5		60		1,606		1,666		65
Canada	4		3		3		10		411		421		19
France	—		—		—		—		718		718		40
U.K./Ireland	1		1		—		2		410		412		2
Central(1)	3		2		3		8		716		724		23
Southern(2)	21		5		7		33		314		347		45
Nordics(3)	2		—		—		2		89		91		—
Total Europe	27		8		10		45		2,247		2,292		110
Other	8		1		—		9		295		304		—
Total	$	84	$	22	$	18	$	124	$	4,559	$	4,683	$	194

 _____________________________

(1) Switzerland, Germany, Austria, Belgium and Holland.

(2) Italy, Greece, Spain and Portugal.

(3) Sweden, Norway, Denmark and Finland.

XML

Recent Accounting Pronouncements (Details) (USD $) In Millions, unless otherwise specified	Jan. 02, 2014
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
New Accounting Pronouncement or Change in Accounting Principle, Cumulative Effect of Change on Equity or Net Assets	$ 180

XML

Shareholders Equity

3 Months Ended

Mar. 31, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Shareholders’ Equity

	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL(1)			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2013	$	1,210		$	5,282		$	(252	)	$	8,839		$	(2,779	)	$	12,300		$	119		$	12,419
Comprehensive income (loss), net	—			—			—			281			(59		)	222			5			227
Cash dividends declared- common stock(2)	—			—			—			(75		)	—			(75		)	—			(75		)
Cash dividends declared - preferred stock(3)	—			—			—			(6		)	—			(6		)	—			(6		)
Conversion of notes to common stock	1			8			—			—			—			9			—			9
Stock option and incentive plans, net	3			45			—			—			—			48			—			48
Payments to acquire treasury stock, including fees	—			—			(275		)	—			—			(275		)	—			(275		)
Cancellation of treasury stock	(28		)	(295		)	323			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(11		)	(11		)
Balance at March 31, 2014	$	1,186		$	5,040		$	(204	)	$	9,039		$	(2,838	)	$	12,223		$	113		$	12,336

	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			AOCL(1)			Xerox Shareholders’ Equity			Non- controlling Interests			Total Equity
Balance at December 31, 2012	$	1,239		$	5,622		$	(104	)	$	7,991		$	(3,227	)	$	11,521		$	143		$	11,664
Comprehensive income (loss), net	—			—			—			296			(268		)	28			4			32
Cash dividends declared-common stock(2)	—			—			—			(73		)	—			(73		)	—			(73		)
Cash dividends declared-preferred stock(3)	—			—			—			(6		)	—			(6		)	—			(6		)
Stock option and incentive plans, net	5			36			—			—			—			41			—			41
Payments to acquire treasury stock, including fees	—			—			(10		)	—			—			(10		)	—			(10		)
Cancellation of treasury stock	(16		)	(98		)	114			—			—			—			—			—
Distributions to noncontrolling interests	—			—			—			—			—			—			(2		)	(2		)
Balance at March 31, 2013	$	1,228		$	5,560		$	—		$	8,208		$	(3,495	)	$	11,501		$	145		$	11,646

_____________________________

(1) Refer to Note 16 - Other Comprehensive Income for components of AOCL.

(2) Cash dividends declared on common stock of $0.0625 per share in the first quarter of 2014 and $0.0575 per share in the first quarter of 2013.

(3) Cash dividends declared on preferred stock of $20.00 per share in the first quarter of 2014 and 2013.

Treasury Stock

The following is a summary of the purchases of common stock made during the three months ended March 31, 2014 under our authorized stock repurchase programs (shares in thousands):

	Shares		Amount
December 31, 2013	22,001		$	252
Purchases (1)	24,950		275
Cancellations	(27,994	)	(323		)
March 31, 2014	18,957		$	204

____________________________

(1) Includes associated fees.