<PAGE>

                                   Schedule
                                    to the
                               Master Agreement

                         dated as of December 7, 2000

                                    between

Lehman Brothers Special Financing Inc.     and             IKON Receivables, LLC

       ("Party A")                                               ("Party B")



                                    Part 1
                            Termination Provisions

In this Agreement:

(a)   Specified Entity. "Specified Entity" is not applicable to Party A or Party
      B.

(b)   Specified Transactions. "Specified Transaction" has the meaning specified
      in Section 14.

(c)   Breach of Agreement. The "Breach of Agreement" provision of Section
      5(a)(ii) will not apply to either Party A or Party B.

(d)   Credit Support Default. The "Credit Support Default" provision of Section
      5(a)(iii) is hereby amended by adding, at the end thereof, the following:
      "provided that, not withstanding anything to the contrary contained in
      this Agreement or this Section 5, an Event of Default relative to the
      Party B Credit Support Provider (as herein defined) will not constitute an
      Event of Default with respect to Party B."

(e)   Misrepresentation. The "Misrepresentation" provision of Section 5(a)(iv)
      will not apply to either Party A or Party B.

(f)   Default under Specified Transaction. The "Default under Specified
      Transaction" provision of Section 5(a)(v) will not apply to either Party A
      or Party B.

(g)   Cross Default. The "Cross Default" provisions of Section 5(a)(vi) will not
      apply to either Party A or Party B.

(h)   Tax Event. The "Tax Event" provisions of Section 5(b)(ii) will not apply
      to either Party A or Party B.

(i)   Tax Event Upon Merger. The "Tax Event Upon Merger" provision of Section
      5(b)(iii) will not apply to either Party A or Party B.

(j)   Credit Event upon Merger. The "Credit Event Upon Merger" provision
      (Section 5(b)(iv)) will not apply to Party A or Party B.

(k)   Automatic Early Termination. The "Automatic Early Termination" provision
      of Section 6(a) will not apply to Party A or Party B.
<PAGE>

(l)   Payments on Early Termination. For the purpose of Section 6(e) but subject
      to part 5 of this Schedule:


      (i)   Market Quotation will apply, other than for an Additional
            Termination Event.

      (ii)  The Second Method will apply, other than for an Additional
            Termination Event.

(m)   Termination Currency. "Termination Currency" shall be United States
      Dollars.

(n)   Security. On or before December 7, 2000, and from time to time thereafter,
      Party A shall deliver credit support (the "Initial Collateral"), in the
      manner and to the extent set forth in the Credit Support Annex (the
      "Credit Support Annex") between Party A and Party B, attached as Exhibit A
      hereto. In the event that the long-term unsecured debt credit rating
      assigned to the Party A Guarantor is reduced below either "A" by S&P or
      "A-2" by Moody's (such an occurrence, a "Level I Downgrade"), Party A
      shall (i) promptly, but in any event not later than two (2) Local Business
      Days following the date of the Level I Downgrade, give Party B notice of
      the Level I Downgrade and (ii) provide, at its own cost, additional credit
      support ("Level I Additional Collateral") in addition to Initial
      Collateral in the manner and to the extent set forth in the Credit Support
      Annex, on or before the seventh day after the date of the Level I
      Downgrade.

(o)   Additional Termination Event. Additional Termination Event will apply as
      follows. The occurrence of any of the following events (each such
      occurrence, a "Level II Downgrade") shall be an Additional Termination
      Event, with Party A as the sole Affected Party, and notwithstanding
      anything to the contrary in this Agreement, the provisions of Part 1(p) of
      this Schedule will apply if any Additional Termination Event occurs:

      (i)   The Party A Guarantor (including any successor to the Party
            Guarantor under this Agreement as a result of any merger,
            consolidation or transfer of assets involving the Party A Guarantor)
            at any time is rated below the applicable Specified Rating (as so
            defined) by any of the Rating Agencies (as so defined); or

      (ii)  either of the Rating Agencies withdraws its rating of the Party A
            Guarantor; or

      (iii) Party A fails to take the actions set forth in Part 1(n) of this
            Schedule upon the occurrence of a Level I Downgrade within the time
            period set forth in Part 1(n) of this Schedule.

For purposes of this Agreement, "Rating Agency" means each of Standard & Poor's
Rating Services ("S&P"), and Moody's Investors Service, Inc. ("Moody's"), and
the "Specified Rating" of the Party A Guarantor and related "Specified Ratings"
are as follows:

      Specified Rating                        Specified Rating and Rating Agency
      ----------------                        ----------------------------------
      long-term senior unsecured debt
      credit rating                                       "A-" -- S&P
                                                        "A-3" -- Moody's


(p)   Termination Rights and Consequences of an Additional Termination Event.
      Section 6(b) is hereby amended, at the end thereof, by the insertion of
      the following: "notwithstanding anything to the contrary in this Agreement
      or this Section 6(b), neither party may designate an Early Termination
      Date in connection with an Event of Default relating to the Party B Credit
      Support Provider."

Notwithstanding Section 6(b)(iv) of this Agreement, upon the occurrence of any
of the Additional Termination Events listed in items (i) or (ii) of Part 1(o) of
this Schedule:

      (A) The Party A Guarantor shall promptly, but in any event, not later than
      two (2) Local Business Days following a Level II Downgrade, give Party B
      notice of the circumstances constituting the relevant Level II Downgrade.

                                       2
<PAGE>

      (B) In the event of a Level II Downgrade, Party A shall, at its own cost
      or benefit, either (x) on or before the 30th day after the date of such
      Level II Downgrade, cause a substitute swap counterparty ("X") that (i) is
      reasonably acceptable to Party B and the Party B Credit Support Provider,
      (ii) has a long-term unsecured debt rating (or a counterparty or financial
      program rating, or the equivalent) sufficient to maintain the then-current
      ratings of the Notes as required by each of the Rating Agencies to assume
      the obligations of Party A under the Transaction or replace the
      Transaction with a transaction on identical terms, with X to be "Party A";
      or (y) on or before the 7th business day after the date of such Level II
      Downgrade, deliver additional credit support ("Level II Additional
      Collateral") in addition to the Initial Collateral and the Level I
      Additional Collateral to the extent set forth in the Credit Support Annex,
      in either case in such manner (i) that is satisfactory to Party B and the
      Party B Credit Support Provider and (ii) as is necessary for the Rating
      Agencies to confirm not later than that day that the arrangements and/or
      Level II Additional Collateral delivered are sufficient to maintain or, if
      applicable, restore their respective ratings of the Notes to the ratings
      in effect immediately before the Level II Downgrade. For this purpose,
      "Notes" means the IKON Receivables, LLC Lease-Backed Notes, Series 2000-2.

      (C) If Party A shall fail to comply with the requirements of subparagraph
      (B) above and Party B designates an Early Termination Date as a result of
      the failure, Party B will calculate and certify to Party A the sum of the
      Loss, costs and expenses actually incurred by Party B as a result of the
      early termination.

                                    Part 2
                              Tax Representations

(a)   Payer Tax Representations. For the purpose of Section 3(e), Party A makes
      the following representation:

      It is not required by any applicable law, as modified by the practice of
      any relevant governmental revenue authority, of any Relevant Jurisdiction
      to make any deduction or withholding for or on account of any Tax from any
      payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) or
      amounts treated as interest under applicable tax laws) to be made by it to
      the other party under this Agreement. In making this representation, it
      may rely on:

      (i)   the accuracy of any representation made by the other party pursuant
            to Section 3(f);

      (ii)  the satisfaction of the agreement of the other party contained in
            Section 4(a)(i) or 4(a)(iii) and the accuracy and effectiveness of
            any document provided by the other party pursuant to Section 4(a)(i)
            or 4(a)(iii); and

      (iii) the satisfaction of the agreement of the other party contained in
            Section 4(d);

      provided that it shall not be a breach of this representation where
      reliance is placed on clause (ii), and the other party does not deliver a
      form or document under Section 4(a)(iii) by reason of material prejudice
      to its legal or commercial position.

(b)   Payee Tax Representations. For the purpose of Section 3(f), Party A makes
      no Payee Tax Representation. For the purpose of Section 3(f), Party B
      makes no Payee Tax Representation.

                                    Part 3
                        Agreement to Deliver Documents

For the purpose of Sections 4(a)(i) and (ii) of this Agreement, each party
agrees to deliver the following documents, as applicable (and each party's
representation in Section 3(d) will apply to each document required from it as
provided below, other than any opinion of counsel):

(a)   Documents to be delivered by Party B: (1) the Indenture dated as of
      December 1, 2000 among Party B, IOS Capital, Inc. ("IOS") and The Chase
      Manhattan Bank (the "Indenture") and (2) the

                                       3
<PAGE>

      Assignment and Servicing Agreement dated as of December 1, 2000 among
      Party B, IOS Capital, Inc. and IKON Receivables-1, LLC (the "Assignment
      and Servicing Agreement").

(b)   Other documents to be delivered by Party A and Party B: evidence
      reasonably satisfactory to the other party as to the authority, incumbency
      and specimen signature of each person executing any document on its behalf
      in connection with this Agreement, Confirmation of the Transaction and any
      Credit Support Document.



                                    Part 4
                                 Miscellaneous

(a)   Addresses for Notices. For the purpose of Section 12(a):

      (i)   Addresses for notices or communications to Party A:

                           Lehman Brothers Special Financing Inc.
                           3 World Financial Center, 8th Floor
                           New York, New York 10285

            With a copy to the Party A Guarantor:

                           Lehman Brothers Holdings Inc.
                           200 Vesey Street, 24th Floor
                           New York, New York 10285

      (ii)  Address for notices or communications to Party B:

                           IKON Receivables, LLC
                           1738 Bass Road
                           P.O. Box 9115
                           Macon, Georgia  31208

            With a copy to:

                           Chief Counsel
                           IOS Capital, Inc.
                           70 Valley Stream Parkway
                           Malvern, Pennsylvania 19355

            With a copy to the Party B Credit Support Provider:

                           Ambac Assurance Corporation
                           One State Street Plaza
                           New York, New York 10004
                           Attention:  General Counsel

(b)   Process Agent. For the purpose of Section 13(c):

      Party A appoints as its Process Agent: None.

      Party B appoints as its Process Agent: None.

(c)   Offices. The provisions of Section 10(a) will apply to this Agreement.

(d)   Multibranch Party. For the purpose of Section 10(c):

                                       4
<PAGE>

      Party A is not a Multibranch Party.

      Party B is not a Multibranch Party.

(e)   Calculation Agent. The Calculation Agent is Party A unless Party A is a
      Defaulting Party, in which case Party B or its designee will be the
      Calculation Agent.

(f)   Credit Support Document.

      With respect to Party A:

      (i)   the Credit Support Annex; and

      (ii)  that certain Guarantee of Lehman Brothers Holdings Inc., dated as of
            December 7, 2000 (the "Guarantee Agreement") by Lehman Brothers
            Holdings Inc, a Delaware corporation (the "Party A Guarantor"), in
            favor of Party B, as the same may be amended from time to time.

      With respect to Party B: that certain Financial Guaranty Insurance Policy
      issued by Ambac Assurance Corporation (the "Party B Credit Support
      Provider") in favor of Party A dated as of December 7, 2000 (the
      "Policy"), as the same may be amended from time to time.

(g)   Credit Support Providers.

      Credit Support Provider in relation to Party A: Lehman Brothers Holdings
      Inc., a Delaware corporation (the "Party A Guarantor"), pursuant to the
      Guarantee Agreement.

      Credit Support Provider in relation to Party B: Ambac Assurance
      Corporation, a Wisconsin stock insurance corporation (the "Party B Credit
      Support Provider"), pursuant to the Policy.

(h)   Governing Law. This Agreement will be governed by and construed in
      accordance with the law of the State of New York, without reference to
      choice of laws doctrine.

(i)   Netting of Payments. Sub-paragraph (ii) of Section 2(c) of this Agreement
      will apply.

(j)   Affiliate. Affiliate will have (i) with respect to Party A, the meaning
      specified in Section 14, and (ii) with respect to Party B, is not
      applicable.

                                    Part 5
                               Other Provisions

(a)   Set-off. The definition of "Set-off" is hereby amended to mean the
      set-off, offset, combination of accounts, right of retention or
      withholding or similar right or requirement to which the payer of an
      amount under Section 6 is entitled or subject, arising under this
      Agreement that is exercised by, or imposed on, such payer. Neither Party A
      nor Party B may Set-off amounts which may arise under another contract or
      agreement between such parties against obligations under this Agreement.

(b)   Covenant Not to Institute Proceedings. Prior to the date that is one year
      and one day after the date on which all of the Notes (as defined in the
      Indenture) have been paid in full, Party A shall not acquiesce, petition
      or otherwise invoke or cause Party B to invoke the process of any
      bankruptcy court of other governmental authority for the purpose of
      commencing or sustaining a case against Party B under any federal or state
      bankruptcy, insolvency or similar law or appointing a receiver,
      liquidator, assignee, trustee, custodian, sequestrator or other similar
      official of Party B or any substantial part of their respective properties
      or the winding up or liquidation of affairs of Party B. Party A
      acknowledges that Party B is a legal entity separate from any other entity
      and that the holders of the Notes have relied on such separateness, and
      Party A agrees, which agreement shall be enforceable by such holders at
      law or through an action for specific

                                       5
<PAGE>

      performance, not to seek or support the substantive consolidation of Party
      B with any other entity as long as the Notes remain outstanding. The
      provisions of this clause (b) shall survive any termination of this
      Agreement.

(c)   Successors. Notwithstanding any limitation imposed by Section 7 of this
      Agreement or any other provision of this Agreement to the contrary, the
      term "Party B" shall include all successors in interest to Party B
      pursuant to its limited liability company agreement, and no consent of
      Party A shall be required for any transfer or assignment to such successor
      in interest.

(d)   Limited Recourse; No Petition for Bankruptcy. Notwithstanding the
      provisions of this Agreement which impose on Party B an obligation
      (including any indemnity given hereunder) at any time to make any payment
      to Party A, the rights of recourse of Party A for the obligations of Party
      B hereunder shall be limited to amounts available under the terms of the
      Indenture and Assignment and Servicing Agreement. Accordingly, Party A
      shall have no claim for recourse against Party B or any of its directors,
      officers, or affiliates, in respect of any amount which is or remains
      unsatisfied after the application of those funds and any obligations
      hereunder of Party B not so satisfied will automatically be extinguished.
      Party A, by entering into this Agreement, hereby covenants and agrees
      that, in connection with any obligations of Party B under this Agreement,
      Party A will not institute against Party B, or join in any institution
      against Party B of, any proceeding under any bankruptcy, insolvency or
      similar law until the Notes have been paid in full and the longest
      applicable preference period has lapsed. The provisions of this clause (e)
      shall survive any termination of this Agreement.

(e)   Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND
      ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDINGS ARISING UNDER OR IN
      CONNECTION WITH THIS AGREEMENT, ANY CREDIT SUPPORT DOCUMENT OR THE
      TRANSACTION.

(f)   Swap Exemption. Each party hereto represents to the other party on and as
      of the date hereof and on each date on which a Transaction is entered into
      between them hereunder, in connection with the negotiation of, the
      entering into, and the execution of this Agreement, any Credit Support
      Document to which it is a party, each Transaction and any other
      documentation relating to this Agreement to which it is a party, that:

      (i)   This Agreement and each Transaction constitute a "swap agreement"
            within the meaning of the United States Commodity Futures Trading
            Commission Regulations ("CFTC Regulations") Section 35.1(b)(1),
            Section 101(53)(B) of the U.S. Bankruptcy Code and the CFTC Policy
            Statement concerning Swap Transactions, 54 Fed. Reg. 30694 (July 21,
            1989) (the "CFTC Swap Policy Statement").

      (ii)  It is an "eligible swap participant" as defined in Section
            35.1(b)(2) of the CFTC Regulations.

      (iii) Neither this Agreement nor any Transaction is one of a fungible
            class of agreements that are standardized as to their material
            economic terms, with the meaning of Section 35.2(b) of the CFTC
            Regulations.

      (iv)  The economic terms of this Agreement, any Credit Support Document to
            which it is a party and the Transaction have been individually
            tailored and negotiated by it, and the creditworthiness of the other
            party was a material consideration in its entering into or
            determining the terms of this Agreement, any such Credit Support
            Document and the Transaction (including, without limitation,
            pricing, cost and credit enhancement terms), within the meaning of
            Section 35.2(c) of the CFTC Regulations.

      (v)   It has entered into this Agreement and the Transaction in
            conjunction with a line of its business (including financial
            intermediation services) or the financing of its business, within
            the meaning of the CFTC Swap Policy Statement.

                                       6
<PAGE>

(g)   Relationship between Parties. In connection with the negotiation of, the
      entering into, and the confirming of this Agreement, and any other
      documentation relating to this Agreement, including any Credit Support
      Document, to which it is a party or that it is required by this Agreement
      to deliver, each party hereby represents and warrants, and, in connection
      with the negotiation of, the entering into and the confirming of the
      execution of the Transaction, each party will be deemed to represent, to
      the other party as of the date hereof (or in connection with the
      Transaction, as of the date which it entered into the Transaction) that
      (absent a written agreement between the parties that expressly imposes
      affirmative obligations to the contrary for the Transaction):

      (i)   Non Reliance. It is acting for its own account, and it has made its
            own independent decisions to enter into the Transaction and as to
            whether the Transaction is appropriate or proper for it based upon
            its own judgment and upon advice from such advisers as it has deemed
            necessary. It is not relying on any communication (written or oral)
            of the other party as investment advice or as a recommendation to
            enter into the Transaction; it being understood that information and
            explanations related to the terms and conditions of the Transaction
            shall not be considered investment advice or a recommendation to
            enter into the Transaction. No communications (written or oral)
            received from the other party shall be deemed to be an assurance or
            guarantee as to the expected results of the Transaction.

      (ii)  Assessment and Understanding. It is capable of assessing the merits
            of and understanding (on its own behalf or through independent
            professional advice), and understands and accepts, the terms,
            conditions and risks of the Transaction. It is also capable of
            assuming, and assumes, the risks of the Transaction. It has
            determined to its satisfaction whether or not the rates, prices or
            amounts and other economic terms of the Transaction and the
            indicative quotations (if any) provided by the other party reflect
            those in the relevant market for similar transactions, and all
            trading decisions have been the result of arm's length negotiations
            between the parties.

      (iii) Status of Parties. The other party is not acting as a fiduciary for
            or an adviser to it in respect of the Transaction.

(h)   Applicable Only to One Rate Swap Transaction. This Agreement shall be
      effective only for a single rate swap transaction between the parties
      hereto with a specified Effective Date identical to the issue date for the
      Notes (as defined in Part 1(p) of this Schedule) (the "Transaction").

(i)   Amendments/waivers. Section 9(b) of this Agreement is hereby amended by
      (i) adding the words "or any Credit Support Documents" after the word
      "Agreement" in the first line thereof and (ii) by adding the words "and
      the Party B Credit Support Provider and the Party A Guarantor" after the
      word "parties" on the third line thereof.

(j)   Payments on Early Termination. Notwithstanding the printed provisions of
      this Agreement, Party B shall be under no obligation to make a payment to
      Party A pursuant to Section 6(e) of this Agreement as modified by this
      Schedule unless such termination is at the direction of the Party B Credit
      Support Provider pursuant to Part 5(r)(i) of this Schedule.

(k)   Confidential Information. Each party may share any information concerning
      the other party with any of its Affiliates.

(l)   Consent to Telephonic Recording. Each party consents to the monitoring or
      recording, at any time and from time to time and to the extent lawful, by
      the other party of the telephone conversations of trading and marketing
      personnel of the parties and their authorized representatives in
      connection with this Agreement or the Transaction; and the parties waive
      any further notice of such monitoring or recording and agree and to the
      extent lawful to give proper notice and obtain any necessary consent of
      such personnel for any such monitoring or recording, provided that, each
      party shall have the right to receive a copy of any such recording upon
      which the other party would seek to rely in the event of a dispute.


                                       7
<PAGE>

(m)   Change of Account. Section 2(b) of this Agreement is hereby amended by the
      addition of the following after the word "delivery" in the first line
      thereof:

      "to another account in the same legal and tax jurisdiction as the original
      account."

(n)   Information Relating to Assets. Party A may request Party B to obtain the
      Servicer Report (as defined in the Assignment and Servicing Agreement) and
      any other reasonably available reports, notices, financial statements or
      other information in respect of the assets of Party B that are to be
      amounts available under the Indenture for payments due to Party A under
      this Agreement.

(o)   Transfers/Assignments. Prior notice of any transfer of rights, obligations
      or interests under or in this Agreement must be given to the Rating
      Agencies and the Party B Credit Support Provider and the Party A
      Guarantor.

(p)   Notwithstanding anything to the contrary in this Agreement, Party B will
      in no circumstances be required to make any payment of additional amounts
      of the kinds contemplated in Section 2(d) of this Agreement.

(q)   Amendments. Notwithstanding anything to the contrary contained in the
      Agreement, Party A and Party B may not amend the terms of the Transaction
      in a material way without first obtaining written confirmation from each
      Rating Agency that such amendment will not result in a reduction,
      downgrade or withdrawal of the then current rating of the Notes by such
      Rating Agency.

(r)   Party B Credit Support Provider and Party A Guarantor.

      (i)   If any event which would have been an Event of Default under Section
            5(a) occurs with respect to Party B as the Defaulting Party, then
            the Party B Credit Support Provider shall have the right (but not
            the obligation) upon notice to Party A, to designate an Early
            Termination Date with respect to Party B, with the same effect as if
            such designation were made by Party A.

      (ii)  Notwithstanding Section 2(e), the Party B Credit Support Provider
            shall not have any obligation to pay any additional amount
            calculated by application of the Default Rate on any amount which
            accrued under this Agreement; provided that the Party B Credit
                                          --------
            Support Provider shall be obligated to pay interest following a
            payment default of the Party B Credit Support Provider under the
            Policy at the Default Rate minus 1.00%.

      (iii) Party A and Party B hereby acknowledge and agree that (a) (i) the
            Party B Credit Support Provider shall be a third party beneficiary
            under this Agreement and under the Confirmation, entitled to enforce
            its rights hereunder and thereunder and (ii) the Party B Credit
            Support Provider's obligations with respect to this Agreement and
            the Confirmation shall be limited to the terms of the Policy and (b)
            (i) the Party A Guarantor shall be a third party beneficiary under
            this Agreement and under the Confirmation, entitled to enforce its
            rights hereunder and thereunder and (ii) the Party A Guarantor's
            obligations with respect to this Agreement and the Confirmation
            shall be limited to the terms of the Guarantee Agreement.

      (iv)  (a) Party A and Party B hereby acknowledge that, to the extent of
            payment made by the Party B Credit Support Provider to Party A under
            the Policy, the Party B Credit Support Provider shall be fully
            subrogated to the rights of Party A against Party B under the
            Transaction to which such payments relate, including, but not
            limited to, the right to receive payment from Party B and the
            enforcement of any remedies. Party A hereby agrees to assign to the
            Party B Credit Support Provider its right to receive payment from
            Party B under the Transaction to the extent of any payment
            thereunder by the Party B Credit Support Provider to Party A. Party
            B hereby acknowledges and consents to the assignment by Party A to
            the Party B Credit Support Provider of any rights and remedies that
            Party A has under the Transaction or any other document executed in
            connection herewith.

                                       8
<PAGE>

      (b) Party A and Party B hereby acknowledge that, to the extent of payment
      made by the Party A Guarantor to Party B under the Guarantee Agreement,
      the Party A Guarantor shall be fully subrogated to the rights of Party B
      against Party A under the Transaction to which such payments relate,
      including, but not limited to, the right to receive payment from Party A
      and the enforcement of any remedies. Party B hereby agrees to assign to
      the Party A Guarantor its right to receive payment from Party A under the
      Transaction to the extent of any payment thereunder by the Party A
      Guarantor to Party B. Party A hereby acknowledges and consents to the
      assignment by Party B to the Party A Guarantor of any rights and remedies
      that Party B has under the Transaction or any other document executed in
      connection herewith.

(v)   The representations of Section 3 made by each party to the other party
      shall also be deemed made to the Party B Credit Support Provider and the
      Party A Guarantor as provided in Section 3.

(vi)  Section 10 is hereby amended to add the following subsection:

      "(c) Any notice that is required to be given to any party shall also be
      given to the Party B Credit Support Provider and the Party A Guarantor."

(vii) Party A and Party B hereby confirm that (i) in the event Party B fails to
      make a payment required by this Agreement or the Confirmation and the
      Party B Credit Support Provider makes such payment on behalf of Party B
      pursuant to the Policy, such non-payment by Party B shall not constitute
      an Event of Default with respect to Party B under this Agreement or the
      Confirmation and (ii) in the event Party A fails to make a payment
      required by this Agreement or the Confirmation and the Party A Guarantor
      makes such payment on behalf of Party A pursuant to the Guarantee
      Agreement, such non-payment by Party A shall not constitute an Event of
      Default with respect to Party A under this Agreement or the Confirmation.

                                       9
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Schedule to be
duly executed by their officer, hereunto duly authorized, with effect from the
date specified on the first page of this Schedule.



                                     IKON RECEIVABLES, LLC, as Issuer


                                     By:  IKON RECEIVABLES FUNDING, INC., its
                                     Manager


                                     By: /s/ Russell Slack
                                        -------------------------
                                      Name: Russell Slack
                                      Title:  President

                                     LEHMAN BROTHERS SPECIAL FINANCING INC.


                                     By: /s/ Sherri Venokur
                                       --------------------------
                                      Name: Sherri Venokur
                                      Title:  Vice President


                                      10
<PAGE>

                                                                December 7, 2000




                              Rate Swap Transaction

IKON RECEIVABLES, LLC, a Delaware Limited Liability Company (the "Issuer"),
formed pursuant to that certain Limited Liability Company Agreement dated as of
January 20, 1999, as amended, between IKON Receivables Funding, Inc., as Manager
and IKON Receivables-1, LLC.



Ladies and Gentlemen:

      The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the transaction entered into between us on the Trade
Date specified below (the "Transaction"). This letter agreement constitutes a
"Confirmation" as referred to in the Master Agreement specified below.

      The definitions and provisions contained in the 1998 Supplement to the
1991 ISDA Definitions and the 1991 ISDA Definitions (each, as published by the
International Swaps and Derivatives Association, Inc.) are incorporated into
this Confirmation (referred to herein as the "1998 ISDA Definitions" and the
"1991 ISDA Definitions" respectively, or collectively referred to as the "ISDA
Definitions"). For these purposes, all references in those Definitions to a
"Swap Transaction" shall be deemed to apply to the Transaction referred to
herein. In the event of any inconsistency between the 1998 ISDA Definitions and
the 1991 ISDA Definitions, the 1998 ISDA Definitions shall prevail. In the event
of any inconsistency between the ISDA Definitions and this Confirmation, this
Confirmation will govern. Each party represents and warrants to the other that
(i) it is duly authorized to enter into the Transaction and to perform its
obligations hereunder and (ii) the person executing and delivering this
Confirmation on behalf of the party is duly authorized to execute and deliver
it.

      1.    This Confirmation supplements, forms part of, and is subject to, the
Master Agreement dated as of December 7, 2000, as amended and supplemented from
time to time (the "Agreement"), between the Issuer and Lehman Brothers Special
Financing Inc. ("LBSF"). All provisions contained in the Agreement govern this
Confirmation except as expressly modified below.
<PAGE>

      2.    The terms of the particular Transaction to which this Confirmation
relates are as follows:

Notional Amount:        For each Calculation Period, the aggregate outstanding
                        principal balance of the IKON Receivables, LLC
                        Lease-Backed Notes, Series 2000-2 Class A-3 Notes and
                        Class A-4 Notes (the "Issuer Securities") used as the
                        basis for calculating the regularly scheduled Class A-3
                        Interest Payments and Class A-4 Interest Payments
                        thereunder for the interest period thereunder scheduled
                        to begin and end on the first and last days,
                        respectively, of that Calculation Period, as such
                        Interest Payment amount is identified (subject to part
                        5b hereof) to LBSF by the entity acting at the relevant
                        time as the servicer under the Assignment and Servicing
                        Agreement (the "Servicer"). The Notional Amount for the
                        initial Calculation Period is U.S. $370,706,000.

Trade Date:             November 29, 2000.

Effective Date:         December 7, 2000.

Termination             Date: The earlier of the date on which the Notional
                        Amount is reduced to zero, and July 15, 2007, subject to
                        adjustment in accordance with the Following Business Day
                        Convention.

Fixed Amounts:
-------------

    Fixed Rate Payer:   The Issuer.

    Fixed Rate:         6.475% per annum.

    Day Count Fraction: 30/360

    Fixed Rate Payer
     Period End Dates:  The 15th calendar day of each month in each year prior
                        to and excluding the Termination Date, commencing on
                        December 15, 2000, with No Adjustment.

    Fixed Rate Payer
     Payment Dates:     Each Fixed Rate Payer Period End Date, subject to
                        adjustment in accordance with the Following Business Day
                        Convention.

                                       2
<PAGE>

     Fixed Rate Payer
      Initial
      Calculation
      Period:           Accrues from and including December 7, 2000 to but
                        excluding December 15, 2000, with No Adjustment of
                        Period End Dates.

Floating Amounts:
----------------

     Floating Rate
      Payer:            LBSF.

     Floating Rate
      Payer Period End
      Dates and Payment
      Dates:            Same as Fixed Rate Payer Period End Dates and Payment
                        Dates.

     Floating Rate
      Payer Initial
      Calculation
      Period:           Accrues from and including December 7, 2000, to but
                        excluding, December 15, 2000, with No Adjustment of
                        Period End Dates.

     Floating Rate
      Option:           USD-LIBOR-BBA

Designated Maturity:    One Month

Spread:                 None

Floating Rate Day
 Count Fraction:        Actual /360

Reset Dates:            The first day of each Calculation Period.

Business Days:          New York.

Calculation Agent:      LBSF, except as otherwise provided in the Agreement.

      3.       Account Details

      Account for Payments to the Issuer:

                  The Chase Manhattan Bank
                  ABA# _______________
                  DDA# _______________
                  Reference:  Collection Account; IKON Receivables, LLC
                     Lease-Backed Notes, Series 2000-2

      Account for Payments to LBSF:

                  The Chase Manhattan Bank
                  ABA # 021-000-021
                  Account # 066-289-009
                  Reference:  IKON Receivables, LLC Lease-Backed Notes,
                     Series 2000-2

                                       3
<PAGE>

      4.      Offices

      The Office of LBSF for the Transaction is at the address specified for
notices to it in the Schedule to the Agreement. The Office of the Issuer for the
Transaction is its office at the address specified for notices to it in the
Schedule to the Agreement.

      5.      Other Terms

      The Assignment and Servicing Agreement dated as of December 7, 2000 (the
"Assignment and Servicing Agreement") by and among IKON Receivables, LLC, IOS
Capital, Inc., as originator and servicer, and IKON Receivables-1 LLC, as
seller, sets forth the agreement of IOS Capital, Inc., as Servicer, with respect
to its duties to communicate to the Issuer and LBSF information relating to the
interest scheduled to be paid by the Issuer from time to time under the Issuer
Securities. Neither party to the Transaction will have any responsibility to the
other in connection with any failure by the servicer to perform any of those
duties or any delay by it in doing so. Nothing in this provision shall affect
the rights of the parties hereto against the servicer for the failure by it to
perform its obligations under the Assignment and Servicing Agreement as set
forth herein.

      THE AGREEMENT AND THIS CONFIRMATION REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR OR
CONTEMPORANEOUS WRITTEN OR ORAL AGREEMENTS BETWEEN THE PARTIES OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

      Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter or telex substantially
similar to this letter, which letter or telex sets forth the material terms of
the Transaction to which this Confirmation relates and indicates agreement to
those terms.

                                       4
<PAGE>

Yours sincerely,

LEHMAN BROTHERS SPECIAL FINANCING INC.



By:
   --------------------------------------------------
     Name:
     Title:




Confirmed as of the date first above written:

IKON RECEIVABLES, LLC, as Issuer

By:  IKON RECEIVABLES FUNDING, INC.,
its Manager



By:
   --------------------------------------------------
     Name:
     Title:







           [Signature Page to Confirmation of Issuer Swap Agreement]