Document:

<PAGE>

                                 Exhibit 10.50
<PAGE>

                                                                  EXECUTION COPY

                        RECEIVABLES TRANSFER AGREEMENT

                        Dated as of September 19, 2000

                                     Among

                             IKON FUNDING-2, LLC,

                                As Transferor,

                              IOS CAPITAL, INC.,

                      As Originator and Collection Agent,

                     PARK AVENUE RECEIVABLES CORPORATION,

                            As Conduit Transferee,

                      THE SEVERAL FINANCIAL INSTITUTIONS
                                 PARTY HERETO
                              FROM TIME TO TIME,

                              as APA Transferees

                           THE CHASE MANHATTAN BANK

                            As Administrative Agent
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<S>                                                                          <C>
ARTICLE I   AMOUNTS AND TERMS OF TRANSFER...................................   1

     SECTION 1.01.  Facility................................................   1
     SECTION 1.02.  Consideration and Terms.................................   2
     SECTION 1.03.  Settlement Procedures...................................   3
     SECTION 1.04.  Payment of Fees and Yield...............................   6
     SECTION 1.05.  Payments and Computations, Etc..........................   6
     SECTION 1.06.  Increased Costs.........................................   7
     SECTION 1.07.  Requirements of Law.....................................   7
     SECTION 1.08.  Inability to Determine Eurodollar Rate..................   8
     SECTION 1.09.  Breakage Costs..........................................   8
     SECTION 1.10.  Retransfer of Receivables...............................   9
     SECTION 1.11.  Security Interest.......................................  10

ARTICLE II   REPRESENTATIONS AND WARRANTIES; COVENANTS; TRIGGER EVENTS......  10

     SECTION 2.01.  Representations and Warranties; Covenants...............  10
     SECTION 2.02.  Trigger Events..........................................  10

ARTICLE III  INDEMNIFICATION, REPURCHASE, ETC...............................  11

     SECTION 3.01.  Indemnities by the Transferor...........................  11
     SECTION 3.02.  Recourse for Yield......................................  12
     SECTION 3.03.  Repurchase of Ineligible and Certain Other Receivables..  13

ARTICLE IV   ADMINISTRATION AND COLLECTION OF RECEIVABLES...................  13

     SECTION 4.01.  Designation of Collection Agent.........................  13
     SECTION 4.02.  Duties of Collection Agent..............................  14
     SECTION 4.03.  Certain Rights of the Administrative Agent..............  14
     SECTION 4.04.  Rights and Remedies.....................................  15
     SECTION 4.05.  Further Actions Evidencing Transfers....................  15
     SECTION 4.06.  Covenants of the Collection Agent and the Originator....  16
     SECTION 4.07.  Indemnities by the Collection Agent.....................  16

ARTICLE V    MISCELLANEOUS..................................................  17

     SECTION 5.01.  Amendments, Etc.........................................  17
     SECTION 5.02.  Notices, Etc............................................  18
     SECTION 5.03.  Assignability...........................................  20
     SECTION 5.04.  Costs, Expenses and Taxes...............................  20
     SECTION 5.05.  No Proceedings; Limitation on Payments..................  21
     SECTION 5.06.  Confidentiality.........................................  21
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                          <C>
     SECTION 5.07.  GOVERNING LAW...........................................  21
     SECTION 5.08.  Execution in Counterparts...............................  22
     SECTION 5.09.  Termination.............................................  22
     SECTION 5.10.  Tax Treatment...........................................  22
</TABLE>

                                      ii
<PAGE>

                                   EXHIBITS

EXHIBIT I      -   Definitions
EXHIBIT II     -   Conditions of the Transfer
EXHIBIT III    -   Representations and Warranties
EXHIBIT IV     -   Covenants
EXHIBIT V      -   Trigger Events
EXHIBIT VI     -   Principal Place of Business and Location of Records

                                    ANNEXES

ANNEX A        -   Form of Contract
ANNEX B        -   Form of Transferor Report
ANNEX C        -   Form of Transfer Notice
ANNEX D        -   Form of Paydown Notice

                                   SCHEDULES

SCHEDULE I   --  Credit and Collection Policy

SCHEDULE II  --  Receivables

                                      iii
<PAGE>

                        RECEIVABLES TRANSFER AGREEMENT

                        Dated as of September 19, 2000

CAPITAL, INC., a Delaware corporation (together with its successors and assigns,
the "Originator" and in its capacity as collection agent, together with its
     ----------
successors and assigns in such capacity, the "Collection Agent"), PARK AVENUE
                                              ----------------
RECEIVABLES CORPORATION, a Delaware corporation (together with its successors
and assigns, "PARCO"or the "Conduit Transferee"), the APA TRANSFEREES from time
              -----         ------------------
to time party hereto (the "APA Transferees") and THE CHASE MANHATTAN BANK
                           ---------------
(together with its successors and assigns, "Chase"), a New York state banking
corporation, as administrative agent for the benefit of PARCO and the APA
Transferees (in such capacity, together with its successors and assigns in such
capacity, the "Administrative Agent"), agree as follows:
               --------------------

this Agreement. References in Exhibits to "the Agreement" refer to this
Agreement, as amended, modified or supplemented from time to time.

Security, and the Conduit Transferee may desire to, and the APA Transferees (if
requested) shall, accept such transfer of such undivided percentage interests,
subject to the terms and conditions of this Agreement. Accordingly, the parties
agree as follows:

ARTICLE I AMOUNTS AND TERMS OF TRANSFER SECTION 1.01. Facility. Upon the terms
                                                      --------
and subject to the conditions set forth herein, prior to the Facility
Termination Date, (a) the Transferor may, at its option from time to time,
transfer to the Administrative Agent, on behalf of the Active Transferees, and
(b) the Administrative Agent may, in its sole discretion, on behalf of PARCO
(prior to an occurrence of a PARCO Termination Event), and the Administrative
Agent shall on behalf of the APA Transferees (following an occurrence of a PARCO
Termination Event or in the event PARCO elects not to accept such transfer)
accept such transfer and assignment from the Transferor of, without recourse
except as provided herein, undivided percentage ownership interests in a pool of
Receivables, together with Related Security and Collections with respect
thereto, from time to time (each, a "Transfer"). Under no circumstances shall
                                     --------
the Administrative Agent accept any Transfer if, after giving effect to such
Transfer, the Aggregate Capital would exceed the Transfer Limit.

   (b) The Transferor may, upon at least 30 days' notice to the Administrative
Agent, terminate this facility in whole or, from time to time, reduce in part
the unused portion of the Transfer Limit; provided that each partial reduction
                                          --------
shall be in the amount of at least $10 million or an integral multiple thereof
and that, unless terminated in whole, the Transfer Limit shall in no event be
reduced below $100 million. Any such reduction in the Transfer Limit shall 1
4860144 simultaneously reduce the respective Commitments of the APA Transferees
Pro Rata in an aggregate amount equal to 102% of the amount of such reduction in
the Transfer Limit.

                                       1
<PAGE>

   SECTION 1.02. Consideration and Terms. (a) On any date prior to the Facility
                 -----------------------
Termination Date, the Transferor may request a Transfer, which Transfer shall be
in a minimum amount of $10,000,000 and increments of $100,000 in excess thereof,
by delivering to the Administrative Agent not later than 11:00 a.m. (New York
time), three Business Days prior to such requested Transfer (each, a "Transfer
                                                                      --------
Date"), written notice in the form of Annex C specifying the proposed Transfer
----
Date and setting forth detailed information regarding the Receivables to be
included in such Transfer, including an addendum to Schedule II hereto. The
total amount to be paid by the Active Transferees in respect of such Transfer
shall be equal to the Aggregate Adjusted Outstanding Balance of the Related
Contracts for the Receivables included in such Transfer (the "Consideration" for
such Receivables).

   (b) Promptly upon receipt of such notice, the Administrative Agent shall
deliver a copy thereof to each of the Transferees. By 3 p.m. (New York City
time) on each Transfer Date, upon satisfaction of the applicable conditions set
forth in Exhibit II hereto, (x) the Active Transferees shall make available to
the Administrative Agent their respective Pro Rata shares of the Consideration
in respect of such Transfer by deposit of such amounts in same day funds to the
Administrative Agent's Account and, after the receipt by the Administrative
Agent of such funds, the Administrative Agent will cause such Consideration to
be paid to the Transferor in immediately available funds prior to 4:00 p.m. (New
York City time) to the Transferor's account no. 21000-1177-1909 at First Union
Bank, Philadelphia, Pennsylvania (ABA#0312-0146-7); provided, however, that in
                                                    --------  -------
the case of each Transfer other than the initial Transfer, the applicable
Consideration may be netted against all amounts on such payments of Capital to
be deposited in the Administrative Agent's Account on such date by the
Collection Agent pursuant to Section 1.03 and (y) the Transferor does hereby
(effective on the date of each Transfer automatically and without any further
documentation) transfer to the Administrative Agent for the benefit of the
applicable Transferees all of the related Receivables, the Related Contracts,
the Related Security and the Collections in respect thereof. The Active
Transferees shall on or before the tenth day of each month (or if such day is
not a Business Day, on the preceding Business Day), notify the Administrative
Agent, and the Administrative Agent shall notify the Transferor, of the Yield
accrued with respect to the prior Settlement Period or portion thereof. Each
Transfer to the Administrative Agent on behalf of the Active Transferees
hereunder shall be allocated Pro Rata to each such Transferee.

   (c) Each APA Transferee's obligation hereunder shall be several, such that
the failure of any APA Transferee to make a payment in connection with any
Transfer hereunder shall not relieve any other APA Transferee of its obligation
hereunder to make payment for any Transfer. Further, in the event any APA
Transferee fails to satisfy its obligation to accept a Transfer as required
hereunder, upon receipt of notice of such failure from the Administrative Agent,
subject to the limitations set forth herein, each of the non-defaulting APA
Transferees shall accept a transfer of its respective Pro Rata share of such
defaulting APA Transferee's applicable share of 4860144 the related Transfer
(determined without regard to the Commitment of the defaulting APA Transferee).
Notwithstanding anything in this paragraph to the contrary, no APA Transferee
shall be required to accept a transfer pursuant to this paragraph for an amount
which would cause the Capital of such APA Transferee (after giving effect to
such transfer) to exceed its

                                       2
<PAGE>

Commitment.

     SECTION 1.03.  Settlement Procedures. (a) Collection of the Receivables
                    ---------------------
shall be administered by the Collection Agent, in accordance with the terms of
this Agreement. The Transferor shall provide to the Collection Agent on a timely
basis all information needed for such administration.

     (b)  The Collection Agent shall, on each day on which Collections are
received by it, set aside and hold in trust for the Transferees such Collections
and shall deposit into the Administrative Agent's Account,

          (i)    on each Settlement Date, from such Collections, an amount equal
     to accrued and unpaid Yield and any fees owed to the Administrative Agent
     pursuant to Section 1.04(a);

          (ii)   on each Settlement Date, an amount equal to the Collection
     Agent Fee accrued but unpaid during the preceding Settlement Period; and

          (iii)  on each Settlement Date, from such Collections, an amount equal
     to the portion of Collections received during the preceding Settlement
     Period remaining after application pursuant to the preceding clauses (i)
     and (ii); provided that prior to the Facility Termination Date, the amount
               --------
     to be deposited pursuant to this clause (iii) will not exceed the product
     of (A) a fraction, the numerator of which is the Required Balance and the
     denominator of which is the aggregate Outstanding Balance of the Related
     Contracts and (B) the amount of such Collections;

provided, however, that the aggregate amount deposited pursuant to this
--------  -------
subsection (b) shall not exceed the sum of the Aggregate Capital of, and accrued
Yield and Collection Agent Fee on, the Receivables plus the aggregate of any
other amounts then owed by the Transferor to any Transferee, the Administrative
Agent or Affected Person hereunder.

     Notwithstanding the foregoing, unless a Trigger Event or Potential Trigger
Event has occurred, for so long as the Originator is the Collection Agent, the
Collection Agent shall not be required to set aside Collections, but may
commingle the Collections with its own funds and make the deposits required to
the Administrative Agent's Account pursuant to this paragraph (b) on the dates
required. For so long as the Originator is the Collection Agent, the Collection
Agent shall not be required to deposit the Collection Agent Fee to the
Administrative Agent's Account as required by clause (ii) of this paragraph (b)
but may retain such fee from the Collections remaining after the deposits
required pursuant to clause (i) of this paragraph (b).

     (c)  (i)    Upon receipt of funds deposited into the Administrative Agent's
     Account pursuant to subsection (b)(i) or (b)(ii) above, the Administrative
     Agent shall distribute such funds, together with any funds received in
     respect of the PARCO Cap, as follows: Pro Rata to each Transferee in
     payment of accrued but unpaid Yield on the Capital of such Transferee and
     to the Administrative Agent in respect of any fees owed pursuant to

                                       3
<PAGE>

     Section 1.04(a).

          (ii)   Upon receipt of funds deposited into the Administrative Agent's
     Account pursuant to subsection (b)(ii) above, the Administrative Agent
     shall distribute such funds, in an amount equal to the accrued but unpaid
     Collection Agent Fee, to the Collection Agent on account of the Collection
     Agent Fee.

          (iii)  Upon receipt of funds deposited into the Administrative Agent's
     Account pursuant to subsection (b)(iii) above, the Administrative Agent
     shall distribute such funds as follows: first, to the Administrative Agent
                                             -----
     for Pro Rata distribution to each Transferee in reduction to zero of all
     Capital of such Transferee, second, to the Administrative Agent for the
                                 ------
     account of the Transferees, the Administrative Agent or any Affected
     Person, as applicable, in payment of any other amounts owed by the
     Transferor hereunder, and third, to the Transferor for its own account.
                               -----

     (d)  For the purposes of this Section 1.03:

          (i)    Upon discovery by the Originator or the Transferor or the
     Administrative Agent of a breach of any of the representations or
     warranties made or deemed made by the Originator in paragraph (h) of
     Exhibit III with respect to any Receivable or the Related Security, such
     party shall give prompt written notice thereof to the other party, as soon
     as practicable and in any event within three Business Days following such
     discovery. The Transferor shall be deemed to have received on such day a
     Collection in full of such Receivable and all other Receivables relating to
     the same Contract, in the amount of the Outstanding Balance of such
     Contract plus Yield accrued and to accrue thereon through the end of the
     then current Settlement Period, and the amount of each such Collection
     shall be applied as provided in this Section 1.03; and

          (ii)   if and to the extent the Administrative Agent or any Transferee
     shall be required for any reason to pay over to an Obligor any amount
     received on its behalf hereunder, such amount shall be deemed not to have
     been so received but rather to have been retained by the Transferor and,
     accordingly, the Administrative Agent or such Transferee, as the case may
     be, shall have a claim against the Transferor for such amount, payable when
     and to the extent that any distribution from or on behalf of such Obligor
     is made in respect thereof.

     (e)  Except as provided in paragraph (i) of Section 1.03(d), or as
otherwise required by 4 4860144 applicable law or the relevant Contract, all
Collections received from an Obligor of any Receivables shall be applied to the
Receivables of such Obligor in the order of the age of the due but unpaid
amounts with respect to such Receivables, starting with the oldest such due but
unpaid amount, unless such Obligor designates its payment for application to
specific Receivables.

     (f)  The Transferor shall forthwith deliver to the Collection Agent an
amount equal to all Collections deemed received by the Transferor pursuant to
Section 1.03(d)(i) above and the

                                       4
<PAGE>

Collection Agent shall hold or distribute such Collections in accordance with
Section 1.03(b). If Collections are then being paid to the Administrative Agent,
the Collection Agent shall forthwith cause such deemed Collections to be paid to
the Administrative Agent. If a Trigger Event or Potential Trigger Event has
occurred, so long as the Transferor shall hold any Collections or deemed
Collections required to be paid to the Collection Agent or the Administrative
Agent, it shall hold such Collections in trust and separate and apart from its
own funds and shall clearly mark its records to reflect such trust.

     (g)  The Transferor may reduce the Aggregate Capital upon delivery of a
notice in the form of Annex D at least ten Business Days' (in the case of
reductions in excess of $25,000,000) or at least two Business Days' (in the case
of reduction of $25,000,000 or less), to the Active Transferees and the
Administrative Agent, by remitting to the Administrative Agent's Account (i)
cash and (ii) instructions to apply such cash to the Pro Rata reduction of each
Transferee's Capital and Yield accrued and to accrue thereon (until such cash
can be used to pay commercial paper notes). The Transferor shall pay all
breakage and other costs related to such Capital reduction; provided, however,
that each of the Transferees and the Administrative Agent shall use its
reasonable best efforts to minimize any breakage costs.

     (h)  The Transferor may, upon at least ten Business Days' notice to the
Administrative Agent, repurchase all of the Receivables on any Settlement Date
(the "Repurchase Date") by remitting to the Administrative Agent's Account on or
      ---------------
prior to such Repurchase Date, for distribution in accordance with subsection
1.03(c) above, cash in an amount equal to the Aggregate Capital, plus all
accrued and unpaid Yield thereon, and all other amounts which are payable under
this Agreement. A repurchase of Receivables made pursuant to this subsection
1.03(h) shall include the Related Security and Collections with respect thereto.

     SECTION 1.04.  Payment of Fees and Yield. (a) Fees. The Transferor shall
                    -------------------------      ----
pay to the Administrative Agent certain fees in the amounts and on the dates set
forth in a separate fee agreement of even date herewith (as amended,
supplemented or otherwise modified, the "Fee Letter") between the Transferor and
                                         ----------
the Administrative Agent.

     (b)  Yield. On or before the tenth day of each month (or if such day is not
          -----
a Business Day, on the preceding Business Day), the Administrative Agent shall
calculate the Tranche Rate applicable to each Tranche funded or maintained by a
Transferee for each day in the prior Settlement Period and the Administrative
Agent shall notify the Servicer of such rates.

     (c)  Collection Agent Fee The Collection Agent shall be entitled to receive
          --------------------
a fee (the "Collection Agent Fee") of one-twelfth of 1.50% per month on the
            --------------------
average daily Aggregate Capital from the date of the first Transfer of
Receivables until the date on which such Aggregate Capital is reduced to zero,
payable on each Settlement Date. The Collection Agent Fee shall be payable
solely from Collections pursuant to, and subject to the priority of payment set
forth in, Section 1.03.

     SECTION 1.05.  Payments and Computations, Etc. (a) Unless otherwise
                    ------------------------------
specified herein, all amounts to be paid or deposited by the Transferor or the
Collection Agent hereunder

                                       5
<PAGE>

to or for the account of the Administrative Agent, PARCO or any other Transferee
shall be paid or deposited no later than 11:00 a.m. (New York City time) on the
day when due in same day funds to the Administrative Agent's Account. Upon
receipt of funds deposited into the Administrative Agent's Account, the
Administrative Agent shall distribute such funds to the Persons entitled thereto
in accordance with the provisions of this Agreement or retain such funds for its
own account, as appropriate.

     (b)  The Transferor shall, to the extent permitted by law, pay interest on
any amount not paid or deposited by the Transferor (whether as Collection Agent
or otherwise) when due hereunder, at an interest rate per annum equal to 2% per
annum above the Base Rate, payable on demand.

     (c)  Unless otherwise specified herein, all computations of interest under
subsection (b) above and all computations of Yield, fees, and other amounts
hereunder shall be made on the basis of a year of 360 days for the actual number
of days elapsed. Whenever any payment or deposit to be made hereunder shall be
due on a day other than a Business Day, such payment or deposit shall be made on
the next succeeding Business Day and such extension of time shall be included in
the computation of such payment or deposit.

     SECTION 1.06.  Increased Costs. (a) If the Administrative Agent, any
                    ---------------
Transferee, any other entity which enters into a commitment to acquire
Receivables or interests therein, or any entity which provides credit
enhancement or any of their respective Affiliates (each an "Affected Person")
                                                            ---------------
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) affects or would affect the amount of capital required
or expected to be maintained by such Affected Person and such Affected Person
determines that the amount of such capital is increased by or based upon the
existence of any commitment to accept transfers of or otherwise to maintain the
investment in Receivables or interests therein hereunder or under any
commitments to a Transferee related to this Agreement or to the funding thereof
or any related liquidity facility or credit enhancement facility (or any
participation therein) and other commitments of the same type, then, upon demand
by such Affected Person (with a copy to the Administrative Agent), the
Transferor shall immediately pay to the Administrative Agent, for the account of
such Affected Person (as a third-party beneficiary), from time to time as
specified by such Affected Person, additional amounts sufficient to compensate
such Affected Person in the light of such circumstances, to the extent that such
Affected Person reasonably determines such increase in capital to be allocable
to the existence of any of such commitments. A certificate as to such amounts
submitted to the Transferor and the Administrative Agent by such Affected Person
shall be conclusive and binding for all purposes, absent manifest error.

     (b)  If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements) in or in
the interpretation of any law or regulation or (ii) compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to a Transferee of agreeing to accept the Transfer of or accepting such
Transfers, or maintaining the ownership of the Receivables or interests therein
in respect of which Yield is

                                       6
<PAGE>

computed by reference to the Eurodollar Rate, then upon demand by such
Transferee (with a copy to the Administrative Agent), the Transferor shall
immediately pay to the Administrative Agent, for the account of such Transferee
(as a third-party beneficiary), from time to time as specified by such
Transferee, additional amounts sufficient to compensate such Transferee for such
increased costs. A certificate as to such amounts submitted to the Transferor
and the Administrative Agent by a Transferee shall be conclusive and binding for
all purposes, absent manifest error.

     SECTION 1.07.  Requirements of Law. In the event that any requirement of
                    -------------------
law or any change therein or in the interpretation or application thereof by the
relevant governmental authority to a Transferee after the date hereof or
compliance by a Transferee with any request or directive (whether or not having
the force of law) from any central bank or other governmental authority:

          (i)  does or shall subject such Transferee to any tax of any kind
     whatsoever with respect to this Agreement or change the basis of taxation
     of payments to such Transferee on account of Collections, Yield or any
     other amounts payable hereunder (excluding taxes imposed on the income of
     such Transferee, and franchise taxes imposed on such Transferee, by the
     jurisdiction under the laws of which such Transferee is organized or a
     political subdivision thereof); or

          (ii) does or shall impose, modify or hold applicable any reserve,
     special deposit, compulsory loan or similar requirement against assets held
     by, or deposits or other liabilities in or for the account of, purchases,
     advances or loans by, or other credit extended by, or any other acquisition
     of funds by, any office of such Transferee which are not otherwise included
     in the determination of the Eurodollar Rate or the Base Rate hereunder;

and the result of any of the foregoing is to increase the cost to such
Transferee of maintaining an interest in Receivables or to reduce any amount
receivable hereunder, then, in any such case, the Transferor shall pay such
Transferee, upon its demand, any additional amounts necessary to compensate such
Transferee for such additional cost or reduced amount receivable with regard to
such Transferee's Receivables. All such amounts shall be payable as incurred. A
certificate from such Transferee or the Administrative Agent, as the case may
be, to the Transferor certifying, in reasonably specific detail, the basis for,
calculation of, and amount of such additional costs shall be conclusive in the
absence of manifest error.

     SECTION 1.08.  Inability to Determine Eurodollar Rate. In the event that
                    --------------------------------------
the Administrative Agent shall have determined prior to the first day of any
Settlement Period (which determination shall be conclusive and binding upon the
parties hereto) by reason of circumstances affecting the interbank Eurodollar
market, either (a) dollar deposits in the relevant amounts and for the relevant
Settlement Period are not available, (b) adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate for such Settlement Period or (c) the
Eurodollar Rate determined pursuant hereto does not accurately reflect the cost
to the Transferees (as conclusively determined by the Administrative Agent) of
maintaining Receivables during

                                       7
<PAGE>

such Settlement Period, the Administrative Agent shall promptly give telephonic
notice of such determination, confirmed in writing, to the Transferor prior to
the first day of such Settlement Period. Until such notice has been withdrawn by
the Administrative Agent, no further Tranches shall be funded or maintained at
the Eurodollar Rate. The Administrative Agent agrees to withdraw any such notice
as soon as reasonably practicable after the Administrative Agent is notified of
a change in circumstances which makes such notice inapplicable.

     SECTION 1.09.  Breakage Costs. If (a) any payment of Capital as to which
                    --------------
Yield is computed by reference to the Eurodollar Rate or the CP Rate is made by
the Transferor to or for the account of any Transferee other than on the last
day of a Settlement Period, as a result of a payment pursuant to Sections 1.03,
1.10 or 3.03 or for any other reason, or (b) the Termination Date shall occur
during any Settlement Period, or (c) any payment of Capital is made by the
Transferor to a Transferee or an Affected Person other than on the last day of a
Settlement Period upon a purchase and assumption of rights and obligations under
this Agreement as a result of a demand by the Transferor, the Transferor shall,
upon demand by such Transferee or Affected Person (with a copy to the
Administrative Agent), immediately pay to the Administrative Agent for the
account of such Transferee or Affected Person (as a third-party beneficiary) any
amounts required to compensate such Transferee or Affected Person for any
additional losses, costs or expenses which it may reasonably incur as a result
of such payment, including, without limitation, any loss (including loss of
anticipated profits), costs or expenses incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Transferee or Affected
Person to fund or maintain its interest in the Receivables. A certificate as to
such amounts submitted to the Transferor and the Administrative Agent by such
Transferee or Affected Person shall be conclusive and binding for all purposes,
absent manifest error.

     SECTION 1.10.  Retransfer of Receivables. At any time after the Aggregate
                    -------------------------
Capital is reduced to less than 10% of the highest amount of Aggregate Capital
outstanding on or prior to the Facility Termination Date, the Transferor may, at
its option, upon not less than thirty days notice to the Administrative Agent,
accept the retransfer from the Administrative Agent on the Settlement Date next
succeeding such thirty day period or on such other date as shall be mutually
agreed to by the Administrative Agent and the Transferor (the "Retransfer
                                                               ----------
Date"), of all of the Receivables and the Related Security then held by the
----
Administrative Agent for an amount equal to the Aggregate Capital outstanding as
at the Retransfer Date (after application of all Collections received on or
prior to such date) plus any accrued and unpaid Yield as at such date plus any
other amounts then owed by the Transferor under this Agreement. The Transferor
shall be entitled to all Collections from the Receivables retransferred to the
Transferor in accordance with this Section 1.10 which are received after the
Retransfer Date and the Collection Agent shall set aside and hold in trust for,
and shall pay forthwith to, the Transferor all such Collections. The terms and
provisions of this Agreement shall continue to be effective or be reinstated, as
the case may be, if any such payment is rescinded or must otherwise be returned
to the Transferor upon the insolvency, bankruptcy or reorganization of the
Transferor or an Obligor or otherwise, all as though such payment had never been
made. On the Retransfer Date:

          (i)  all of the Receivables and Related Security shall be
     retransferred to the Transferor without any representation or warranty
     other than that they are free and clear

                                       8
<PAGE>

     of any Adverse Claims created by or through the Transferees or the
     Administrative Agent, and

          (ii) the Administrative Agent shall deliver to the Transferor executed
     UCC-3 Termination Statements, terminating the interest of the
     Administrative Agent in all such Receivables and Related Security,

thereupon the Transferor shall be vested with all right, title and interest in
such Receivables and Related Security, and the Administrative Agent and the
Transferees shall no longer hold any interest in any of such Receivables or
Related Security.

     SECTION 1.11.  Security Interest. As collateral security for the
                    -----------------
performance by the Transferor of all the terms, covenants and agreements on the
part of the Transferor (whether as Transferor or otherwise) to be performed
under this Agreement or any document delivered in connection with this Agreement
in accordance with the terms thereof, including the punctual payment when due of
all obligations of the Transferor hereunder or thereunder, whether for the
payment of Capital, Yield, indemnification payments, fees, expenses or
otherwise, the Transferor hereby assigns to the Administrative Agent for its
benefit and the ratable benefit of the Transferees, and hereby grants to the
Administrative Agent for its benefit and the ratable benefit of the Transferees,
a present and continuing security interest in, all of the Transferor's right,
title and interest in and to:

     (a)  the Transfer Agreement, including, without limitation, (i) all rights
of the Transferor to receive moneys due or to become due under or pursuant to
the Transfer Agreement, (ii) all security interests and property subject thereto
from time to time purporting to secure payment of monies due or to become due
under or pursuant to the Transfer Agreement, (iii) all rights of the Transferor
to receive proceeds of any insurance, indemnity, warranty or guaranty with
respect to the Transfer Agreement (except any rights that might arise under the
Support Agreement), (iv) claims of the Transferor for damages arising out of or
for breach of or default under the Transfer Agreement, and (v) the right of the
Transferor to compel performance and otherwise exercise all remedies thereunder,

     (b)  all Receivables and the Related Security and Collections with respect
thereto,

     (c)  all amounts due from the cap provider under the PARCO Cap, and

     (d)  to the extent not included in the foregoing, all proceeds of any and
all of the foregoing.

      ARTICLE II REPRESENTATIONS AND WARRANTIES; COVENANTS; TRIGGER EVENTS

     SECTION 2.01.  Representations and Warranties; Covenants. The Transferor
                    -----------------------------------------
hereby makes the representations and warranties, and hereby agrees to perform
and observe the covenants, set forth in Exhibits III and IV, respectively,
hereto.

                                       9
<PAGE>

     SECTION 2.02.  Trigger Events. If any of the Trigger Events set forth in
                    --------------
Exhibit V hereto shall occur and be continuing, the Administrative Agent may, by
notice to the Transferor, take either or both of the following actions: (x)
declare the Termination Date to have occurred, and (y) designate another Person
to succeed the Originator as the Collection Agent; provided, that, automatically
                                                   --------
upon the occurrence of any event (without any requirement for the passage of
time or the giving of notice) described in paragraph (h) of Exhibit V, the
Termination Date shall occur, the Originator (if it is then serving as the
Collection Agent) shall cease to be the Collection Agent, and the Administrative
Agent or its designee shall become the Collection Agent. Upon any such
declaration or designation or upon any such automatic termination, the
Transferees and the Administrative Agent shall have, in addition to the rights
and remedies which they may have under this Agreement, all other rights and
remedies provided after default under the UCC of the appropriate jurisdiction or
jurisdictions and under other applicable law, which rights and remedies shall be
cumulative.

                 ARTICLE III INDEMNIFICATION, REPURCHASE, ETC.

     SECTION 3.01.  Indemnities by the Transferor. Without limiting any other
                    -----------------------------
rights that the Administrative Agent or any Transferee or any of their
respective Affiliates or its agents (each, an "Indemnified Party") may have
                                               -----------------
hereunder or under applicable law, the Transferor hereby agrees to indemnify
each Indemnified Party from and against any and all claims, losses and
liabilities (including reasonable attorneys' fees) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of or resulting
                             -------------------
from this Agreement or the use of proceeds of any Transfer or the acceptance of
the transfer of the Receivables or in respect of any Receivable, Related
Contract or Related Security, excluding, however, (a) Indemnified Amounts to the
                              ---------  -------
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party, (b) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Receivables or (c) any income taxes or
franchise taxes imposed on such Indemnified Party by the jurisdiction under the
laws of which such Indemnified Party is organized or any political subdivision
thereof, arising out of or as a result of this Agreement or the acceptance of
the transfer of the Receivables or in respect of any Receivable, Related
Contract or Related Security. Without limiting or being limited by the
foregoing, the Transferor shall pay on demand to each Indemnified Party any and
all amounts necessary to indemnify such Indemnified Party from and against any
and all Indemnified Amounts relating to or resulting from any of the following:

          (i)  any representation or warranty or statement made by the
     Transferor (or any of its officers) under or in connection with this
     Agreement and the other Transaction Documents which shall have been
     incorrect in any material respect when made;

          (ii) the failure by the Transferor to comply with any applicable law,
     rule or regulation (including, without limitation, usury or consumer law)
     with respect to any Receivable, the related Contract or the Related
     Security; or the failure of any Receivable or the related Contract to
     conform to any such applicable law, rule or regulation;

                                       10
<PAGE>

          (iii)  the failure of the Administrative Agent (for the benefit of the
     Transferees) to acquire a valid and perfected security interest in the
     Receivables and the Related Security and Collections in respect thereof
     under Article 9 of the UCC of any applicable jurisdiction, free and clear
     of any Adverse Claim;

          (iv)   the failure to have filed, or any delay in filing, financing
     statements or other similar instruments or documents under the UCC of any
     applicable jurisdiction or other applicable laws with respect to any
     Receivables or the Related Security and Collections in respect thereof,
     whether at the time of the transfer of an interest therein or at any
     subsequent time;

          (v)    any dispute, claim, offset or defense (other than discharge in
     bankruptcy of the Obligor) of the Obligor to the payment of any Receivable
     (including, without limitation, a defense based on such Receivable or the
     related Contract not being a legal, valid and binding obligation of such
     Obligor enforceable against it in accordance with its terms), or any other
     claim resulting from the lease or sale of the related Equipment or services
     related to such Receivable or the furnishing or failure to furnish such
     Equipment or other services or alleging violation by the Transferor of any
     laws in connection with such lease or sale activities;

          (vi)   any failure of the Transferor to perform its duties or
     obligations in accordance with the provisions hereof or to perform its
     duties or obligations under the Related Contracts;

          (vii)  any products or personal liability claim arising out of or in
     connection with any Equipment or other merchandise, services or activities
     which are the subject of any Related Contract;

          (viii) the commingling by the Transferor or any of its Affiliates
     (including without limitation the Originator in its capacity as Collection
     Agent) of Collections of Receivables at any time with other funds;

          (ix)   any investigation, litigation or proceeding related to this
     Agreement or the use of proceeds of any Transfer or the acceptance of the
     transfer of Receivables or in respect of any Receivable, Related Security
     or Related Contract; or

          (x)    any fine, penalty, tax or other charge asserted against any
     Indemnified Party by any governmental authority or agency or any other
     Person resulting from any Obligor's use, possession or ownership of any
     Equipment.

     SECTION 3.02.  Recourse for Yield.  The Transferor hereby agrees to pay
                    ------------------
to the Administrative Agent, for Pro Rata distribution to each Transferee, (a)
on the last day of each Settlement Period, any deficiency between (i)
Collections applied to payment of accrued but unpaid Yield on such last day
pursuant to Section 1.03(b)(i), and (ii) the amount of accrued but

                                       11
<PAGE>

unpaid Yield on such last day on the Capital.

     SECTION 3.03.  Repurchase of Ineligible and Certain Other Receivables. (a)
                    ------------------------------------------------------
The Transferor shall, upon not less than two Business Days' notice from the
Administrative Agent, repurchase (at the repurchase price specified in Section
3.03(b) below) on the next succeeding Settlement Date:

          (i)  any Receivable that was not an Eligible Receivable at the time of
     the related Transfer; or

          (ii) any Receivable as to which the Administrative Agent (for the
     benefit of the Transferees) does not have a first priority perfected
     interest free and clear of any Adverse Claim.

     (b)  Each repurchase of a Receivable under Section 3.03(a) above shall
include the repurchase of all other Receivables relating to the same Contract.
The repurchase price shall be an amount equal to the Outstanding Balance of the
related Contract plus accrued but unpaid Yield allocable thereto to the date of
repurchase. The proceeds of any such repurchase shall be deemed to be a
Collection in respect of such Receivables received during the Settlement Period
preceding such Settlement Date and the amount of each such Collection shall be
applied as provided in Section 1.03.

             ARTICLE IV ADMINISTRATION AND COLLECTION OF RECEIVABLES

     SECTION 4.01.  Designation of Collection Agent.  The servicing,
                    -------------------------------
administration and collection of the Receivables shall be conducted by the
Collection Agent so designated hereunder from time to time.  Until the
Administrative Agent gives notice to the Transferor of the designation of a new
Collection Agent, the Originator is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Collection Agent pursuant to the
terms hereof.  The Administrative Agent at any time may designate as Collection
Agent any Person (including itself) to succeed the Originator or any successor
Collection Agent, if such Person shall consent and agree to the terms hereof.
The Collection Agent may, with the prior consent of the Administrative Agent,
subcontract with any other Person for the servicing, administration or
collection of the Receivables.  Any such subcontract shall not affect the
Collection Agent's liability for performance of its duties and obligations
pursuant to the terms hereof.

     SECTION 4.02.  Duties of Collection Agent.  (a) The Collection Agent shall
                    --------------------------
 take or cause to be taken all such actions as may be necessary or
advisable to collect each Receivable from time to time, all in accordance with
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy.  The Transferor and the
Administrative Agent hereby appoint the Collection Agent, from time to time
designated pursuant to Section 4.01, as agent for themselves and for the
Transferees to enforce their respective rights and interests in the Receivables,
the Related Security and the related Contracts.  In performing its duties as
Collection Agent, the Collection Agent shall exercise the same care

                                       12
<PAGE>

and apply the same policies as it would exercise and apply if it owned such
Receivables and shall act in the best interests of the Transferor and the
Transferees.

     (b)   The Collection Agent shall administer the Collections in accordance
with the procedures described in Section 1.03.

     (c)   The Collection Agent shall hold in trust for the Transferor and each
Transferee, in accordance with their respective interests, all documents,
instruments and records (including, without limitation, computer tapes or disks)
which evidence or relate to Receivables.

     (d)   The Collection Agent shall, as soon as practicable following receipt,
turn over to the Transferor any cash collections or other cash proceeds received
with respect to receivables not transferred to the Administrative Agent and the
Transferees pursuant to this Agreement.

     (e)   The Collection Agent shall, from time to time at the request of the
Administrative Agent, furnish to the Administrative Agent (promptly after any
such request) a calculation of the amounts set aside for the Administrative
Agent and the Transferees pursuant to Section 1.03.

     (f)   Prior to the 13th calendar day of each month, the Collection Agent
shall prepare and forward to the Administrative Agent a Transferor Report
relating to the Receivables outstanding on the last day of the immediately
preceding month.

     SECTION 4.03.  Certain Rights of the Administrative Agent.
                    ------------------------------------------

     Following the occurrence of a Trigger Event or Potential Trigger Event,

           (a) The Administrative Agent may direct the Obligors that all
     payments under the Related Contracts be made directly to the Administrative
     Agent or its designee.

           (b) At the Administrative Agent's request and at the Transferor's
     expense, the Transferor shall notify each Obligor of the interest of the
     Administrative Agent in the Receivables under this Agreement and direct
     that payments be made directly to the Administrative Agent or its designee.

           (c) At the Administrative Agent's request and at the Transferor's
     expense, the Transferor and the Collection Agent shall (A) assemble all of
     the documents, instruments and other records (including, without
     limitation, computer tapes and disks) that evidence or relate to the
     Receivables and the Related Contracts and Related Security, or that are
     otherwise necessary or desirable to collect the Receivables, and shall make
     the same available to the Administrative Agent at a place selected by the
     Administrative Agent or its designee, and (B) segregate all cash, checks
     and other instruments received by it from time to time constituting
     Collections in a manner acceptable to the Administrative Agent and,
     promptly upon receipt, remit all such cash, checks and instruments, duly
     indorsed or with duly executed instruments of transfer, to the
     Administrative Agent or its designee.

                                       13
<PAGE>

          (d)  The Transferor authorizes the Administrative Agent to take any
     and all steps in the Transferor's name and on behalf of the Transferor that
     are necessary or desirable, in the determination of the Administrative
     Agent, to collect amounts due under the Receivables, including, without
     limitation, endorsing the Transferor's name on checks and other instruments
     representing Collections and enforcing the Receivables and the Related
     Security and related Contracts.

     SECTION 4.04.  Rights and Remedies. (a) If the Collection Agent fails to
                    -------------------
perform any of its obligations under this Agreement, the Administrative Agent
may (but shall not be required to) itself perform, or cause performance of, such
obligation; and the Administrative Agent's costs and expenses incurred in
connection therewith shall be payable by the Transferor (if the Collection Agent
that fails to so perform is the Transferor or its designee).

     (b)  The Transferor and the Originator shall perform their respective
obligations under the Related Contracts to the same extent as if the Receivables
had not been transferred and the exercise by the Administrative Agent on behalf
of the Transferees of their rights under this Agreement shall not release the
Collection Agent or the Transferor from any of their duties or obligations with
respect to any Receivables or Related Contracts.  Neither the Administrative
Agent nor the Transferees shall have any obligation or liability with respect to
any Receivables or Related Contracts, nor shall any of them be obligated to
perform the obligations of the Transferor thereunder.

     (c)  In the event of any conflict between the provisions of Article IV of
this Agreement and Article VI of the Transfer Agreement, the provisions of this
Agreement shall control.

     SECTION 4.05.  Further Actions Evidencing Transfers.  The Originator
                    ------------------------------------
agrees from time to time, at its expense, to promptly execute and deliver all
further instruments and documents, and to take all further actions, that may be
reasonably necessary or desirable, or that the Administrative Agent may
reasonably request, to perfect, protect or more fully evidence the Receivables
transferred hereunder, or to enable the Transferees or the Administrative Agent
to exercise and enforce their respective rights and remedies hereunder.  Without
limiting the foregoing, the Originator will upon the request of the
Administrative Agent (i) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments and documents,
that may be reasonably necessary or desirable, or that the Administrative Agent
may reasonably request, to perfect, protect or evidence such interests in
Receivables; (ii) segregate the Related Contracts and other records in its lease
files pertaining to each Receivable; and (iii) mark its master data processing
records evidencing such Receivables and the Related Contracts, in each case in a
manner reasonably acceptable to the Administrative Agent, evidencing that such
Receivables have been transferred.

     SECTION 4.06.  Covenants of the Collection Agent and the Originator.
                    ----------------------------------------------------
(a) Audits.  The Collection Agent will, from time to time during regular
    ------
business hours as requested by the Administrative Agent, permit the
Administrative Agent, or its agents or representatives (including independent
public accountants, which may be the Collection Agent's independent

                                       14
<PAGE>

public accountants), (i) to conduct periodic audits of the Receivables, the
Related Security and the related books and records and collections systems of
the Collection Agent, (ii) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes and
disks) in the possession or under the control of the Collection Agent relating
to the Receivables and the Related Security, including, without limitation, the
Related Contracts, and (iii) to visit the offices and properties of the
Collection Agent for the purpose of examining such materials described in clause
(ii) above, and to discuss matters relating to the Receivables and the Related
Security or the Collection Agent's performance hereunder with any of the
officers or employees of the Collection Agent having knowledge of such matters.

     (b)  Change in Credit and Collection Policy.  The Originator will not make
          --------------------------------------
any change in the Credit and Collection Policy that would impair the
collectibility of any Receivable or the ability of the Originator (if it is
acting as Collection Agent) to perform its obligations under this Agreement.

     SECTION 4.07.  Indemnities by the Collection Agent.  Without limiting
                    -----------------------------------
any other rights that the Administrative Agent, any Transferee or any of their
respective Affiliates (each, a "Special Indemnified Party") may have hereunder
                                -------------------------
or under applicable law, and in consideration of its appointment as Collection
Agent, the Collection Agent hereby agrees to indemnify each Special Indemnified
Party from and against any and all claims, losses and liabilities (including
reasonable attorneys' fees) (all of the foregoing being collectively referred to
as "Special Indemnified Amounts") arising out of or resulting from any of the
    ---------------------------
following (excluding, however, (a) Special Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of such
Special Indemnified Party, (b) recourse for uncollectible Receivables or (c) any
income taxes or any other tax or fee measured by income incurred by such Special
Indemnified Party arising out of or as a result of this Agreement or the
ownership of interests in the Receivables or in respect of any Receivable or any
Contract):

          (i)   any representation or warranty or statement made or deemed made
     by the Collection Agent under or in connection with this Agreement which
     shall have been incorrect in any material respect when made;

          (ii)  the failure by the Collection Agent to comply with any
     applicable law, rule or regulation with respect to any Receivable or
     Contract; or the failure of any Receivable or Contract to conform to any
     such applicable law, rule or regulation;

          (iii) the failure to have filed, or any delay in filing, financing
     statements or other similar instruments or documents under the UCC of any
     applicable jurisdiction or other applicable laws with respect to any
     Receivables, the Related Contracts and the Related Security and Collections
     in respect thereof, whether at the time of any transfer or reinvestment or
     at any subsequent time;

          (iv)  any failure of the Collection Agent to perform its duties or
     obligations in accordance with the provisions of this Agreement;

                                       15
<PAGE>

          (v)     the commingling of Collections at any time by the Collection
     Agent with other funds other than as specifically permitted herein;

          (vi)    any action or omission by the Collection Agent reducing or
     impairing the rights of the Transferees with respect to any Receivable or
     the value of any Receivable;

          (vii)   any Collection Agent Fees or other costs and expenses payable
     to any replacement Collection Agent, to the extent in excess of the
     Collection Agent Fees payable to the Collection Agent hereunder; or

          (viii)  any claim brought by any Person other than a Special
     Indemnified Party arising from any activity by the Collection Agent or its
     Affiliates in servicing, administering or collecting any Receivable.

                            ARTICLE V MISCELLANEOUS

     SECTION 5.01.  Amendments, Etc.   No failure or delay on the part of the
                    ---------------
Administrative Agent or any Transferee in exercising any power, right or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other further
exercise thereof or the exercise of any other power, right or remedy.  The
rights and remedies herein provided shall be cumulative and nonexclusive of any
rights or remedies provided by law.  Any provision of this Agreement may be
amended if, but only if, such amendment is in writing and is signed by the
Transferor, the Collection Agent, the Administrative Agent and the Required
Transferees and, if such amendment is material, the Rating Agencies, to the
extent required by the terms and provisions of the commercial paper program of
PARCO, have provided written confirmation that such amendment will not result in
a reduction or withdrawal of the rating of the Commercial Paper; provided that
                                                                 --------
the consent of all of the Transferees hereto shall be required for any
amendment, modification or supplement relating to (i) the definitions of
"Eligible Receivables," "Facility Termination Date," "Required Transferees,"
"Required Balance," "Discount" and "Applicable Percentage" and any defined terms
incorporated therein, (ii) the reduction or postponement of the time for payment
of any fee or other amount payable to or on behalf of such Transferees or (iii)
this Section 5.01.

     SECTION 5.02.  Notices, Etc.  All notices, demands and other communications
                    ------------
provided for hereunder shall, unless otherwise stated herein, be in writing
(which shall include electronic transmission), shall be personally delivered,
express couriered, electronically transmitted (in which case a hard copy shall
also be sent by regular mail) or mailed by registered or certified mail and
shall, unless otherwise expressly provided herein, be effective when received at
the address specified below for the listed parties or at such other address as
shall be specified in a written notice furnished to the other parties hereunder.

                                       16
<PAGE>

     If to the Transferor:

          IKON FUNDING-2, LLC
          1738 Bass Road
          Macon, Georgia 31210
          Attention: Russell Slack, President
          Telephone:
          Telecopy:

     If to the Originator or Collection Agent:

          IOS CAPITAL, INC.
          1738 Bass Road
          Macon, Georgia 31210
          Attention: Harry G. Kozee
          Telephone: (912) 471-2306
          Telecopy:  (912) 471-2388

     with a copy to:

          IKON OFFICE SOLUTIONS, INC.
          70 Valley Stream Parkway
          Malvern, Pennsylvania 19355
          Attention: Jack Quinn
          Telephone: (610) 408-7165
          Telecopy:  (610) 408-7022

                                       17
<PAGE>

     If to the Administrative Agent or the APA Transferees:

          THE CHASE MANHATTAN BANK
          450 West 33rd Street
          15th Floor
          New York, NY 10001
          Attention: Lara Graff
                     CFMS-PARCO Manager
          Telephone: (212) 946-3748
          Telecopy:  (212) 946-8098

          with a copy to:

          CHASE SECURITIES INC.
          270 Park Avenue, 7/th/ Floor
          New York, NY 10017
          Attention: Paterno Luzano
          Telephone: (212) 834-5381
          Telecopy:  (212) 834-6562

     If to PARCO:

          PARK AVENUE RECEIVABLES CORPORATION
          c/o Global Securitization Services, LLC
          114 West 47th Street, Suite 1715
          New York, New York 10036
          Attention: President
          Telephone: (212) 302-5151
          Telecopy:  (212) 302-8767

     With a copy to the Administrative Agent

     SECTION 5.03.  Assignability.  (a) This Agreement and each Transferee's
                    -------------
rights and obligations herein (including rights in the Receivables) shall be
assignable by each Transferee and its successors and assigns if the
Administrative Agent shall have received confirmation from each of the Rating
Agencies that such assignment will not result in the withdrawal or downgrade of
the then-current ratings of PARCO's outstanding Commercial Paper; provided, that
                                                                  --------
no such confirmation shall be required if such assignment is made by PARCO to
any other Transferee hereunder or to any Transferee that is a party to a
liquidity facility supporting the Commercial Paper.  Each assignor of
Receivables or any interest therein shall notify the Administrative Agent and
the Transferor of any such assignment; provided, that no such notice shall be
                                       --------
required if such assignment is made by PARCO to any other Transferee hereunder
or to any Transferee that is a party to a liquidity facility supporting the
commercial paper notes of PARCO.  Each assignor of Receivables may, in
connection with the assignment or participation, disclose to the assignee or
participant any information, relating to the Transferor or the Receivables,
which was furnished to

                                       18
<PAGE>

such assignor by or on behalf of the Transferor or by the Administrative Agent;
provided that, prior to any such disclosure, the assignee or participant agrees
--------
to preserve the confidentiality of any confidential information relating to the
Transferor received by it from any of the foregoing entities.

     (b)  This Agreement and the rights and obligations of the Administrative
Agent herein shall be assignable by the Administrative Agent and its successors
and assigns; provided that any costs incurred by the Administrative Agent in
             --------
connection with such assignment shall be for the account of the Administrative
Agent.

     (c)  The Transferor may not assign its rights or obligations hereunder or
any interest herein without the prior written consent of the Administrative
Agent, which consent will not be unreasonably withheld.

     (d)  Without limiting any other rights that may be available under
applicable law, the rights of the Transferees may be enforced through them or by
their agents.

     SECTION 5.04.  Costs, Expenses and Taxes.  (a) In addition to the rights
                    -------------------------
of indemnification granted under Section 3.01 hereof, the Transferor agrees to
pay on demand all costs and expenses of the Administrative Agent and the
Transferees and their respective Affiliates in connection with the preparation,
execution, delivery, amendment and administration (including periodic auditing
of Receivables) of this Agreement, any transfer agreement or similar agreement
relating to the transfer of interests in Receivables and the other documents and
agreements to be delivered hereunder and thereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent, the Transferees and their respective Affiliates and agents
with respect thereto and with respect to advising the Administrative Agent, the
Transferees and their respective Affiliates and agents as to their rights and
remedies under this Agreement and all costs and expenses, if any (including
reasonable counsel fees and expenses) of the Administrative Agent, the
Transferees and their respective Affiliates and agents, in connection with the
enforcement of this Agreement, and the other documents and agreements to be
delivered hereunder.

     (b)  The Transferor shall pay any and all stamp and other taxes and fees
payable in connection with the execution, delivery, filing and recording of this
Agreement or the other documents or agreements to be delivered hereunder.  The
Transferor agrees to save each Indemnified Party harmless from and against any
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees, any and all stamp and other taxes and fees payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other documents or agreements to be delivered hereunder.  The Transferor
agrees to save each Indemnified Party harmless from and against any liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.

     SECTION 5.05.  No Proceedings; Limitation on Payments.  (a) Each of the
                    --------------------------------------
Originator, the Transferor, the Administrative Agent, each Transferee, each
assignee of a Receivable or any interest therein and each entity which enters
into a commitment to acquire Receivables or

                                       19
<PAGE>

interests therein hereby agrees that it will not institute against, or join any
other person in instituting against, PARCO any proceeding of the type referred
to in paragraph (h) of Exhibit V so long as any Commercial Paper issued by PARCO
shall be outstanding and there shall not have elapsed one year plus one day
since the last day on which any such Commercial Paper shall have been
outstanding. Each of the Originator, the Administrative Agent, each Transferee,
each assignee of a Receivable or any interest therein and each entity which
enters into a commitment to acquire Receivables or interests therein hereby
agrees that it will not institute against, or join any other person in
instituting against, the Transferor any proceeding of the type referred to in
paragraph (h) of Exhibit V so long as any Commercial Paper issued by PARCO to
finance the Capital shall be outstanding and there shall not have elapsed one
year plus one day since the last day on which any such Commercial Paper shall
have been outstanding.

     (b)  Notwithstanding anything in this Agreement or any other Transaction
Document to the contrary, PARCO shall have no obligation to pay any amount
required to be paid by it hereunder or thereunder in excess of any amount
available to PARCO after paying or making provision for the payment of its
Commercial Paper.  All payment obligations of PARCO hereunder are contingent on
the availability of funds in excess of the amounts necessary to pay its
Commercial Paper; and each of the Transferor, the Collection Agent, the
Administrative Agent and the Transferees agree that they shall not have a claim
under Section 101(5) of the Bankruptcy Code if and to the extent that any such
payment obligation exceeds the amount available to PARCO to pay such amount
after paying or making provision for the payment of its Commercial Paper.
Notwithstanding anything in this Agreement or any other Transaction Document to
the contrary, the Transferor shall have no obligation to pay any amount required
to be paid by it hereunder or thereunder in excess of any amount available to
the Transferor after paying or making provision for the payment of the items set
forth in Section 1.03(c)(i), (ii) and the first clause of (iii).  All payment
         ------------------  ----                         -----
obligations of the Transferor hereunder are contingent on the availability of
funds in excess of the amounts necessary to pay such items; and each of the
Collection Agent, the Administrative Agent, the Transferees and the Affected
Persons agree that they shall not have a claim under Section 101(5) of the
Bankruptcy Code if and to the extent that any such payment obligation exceeds
the amount available to the Transferor to pay such amounts after paying or
making provision for the payment thereof.

     (c)  The provisions of this Section 5.05 shall survive any termination of
                                 ------------
this Agreement.

     SECTION 5.06.  Confidentiality   .  Unless otherwise required by applicable
                    ---------------
law, the Transferor agrees to maintain the confidentiality of this Agreement
(and all drafts thereof) in communications with third parties and otherwise;

provided, that this Agreement may be disclosed to (a) third parties to the
--------
extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to the
Administrative Agent, and (b) the Transferor's legal counsel and auditors if
they agree to hold it confidential.

     SECTION 5.07.  GOVERNING LAW .  THIS AGREEMENT SHALL BE GOVERNED BY, AND
                    -------------
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF

                                       20
<PAGE>

LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE
INTERESTS OF THE TRANSFEREES IN THE RECEIVABLES OR REMEDIES HEREUNDER, IN
RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE
OF NEW YORK.

     SECTION 5.08.  Execution in Counterparts.  This Agreement may be executed
                    -------------------------
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.

     SECTION 5.09.  Termination.  (a) Except as provided in subsection (b)
                    -----------
below, this Agreement shall terminate on the Termination Date.  Upon the
occurrence of the Termination Date, the Administrative Agent will, at the
Transferor's cost and expense, take such actions as are reasonably requested to
terminate this Agreement and the Transfer contemplated thereby (including,
without limitation, executing UCC termination statements).

     (b) The provisions of Sections 1.06, 1.07, 1.08, 1.09, 3.01, 4.07, 5.04,
5.05 and 5.06 shall survive any termination of this Agreement.

     SECTION 5.10.  Tax Treatment.  It is the intention of the Transferor and
                    -------------
the Administrative Agent that for federal, state and local income and franchise
tax purposes, the Capital will be treated as evidence of indebtedness of the
Transferor secured by the Receivables, the Related Security and Collections and
other proceeds thereof.  The Transferor, the Administrative Agent, PARCO and the
other Transferees, by entering into this Agreement, intend to treat the Capital
as indebtedness.

     SECTION 5.11.  Agent Conflict Waiver.  The Administrative Agent acts in
                    ---------------------
various capacities with respect to the maintenance and administration of PARCO's
commercial paper program (including, as administrative agent for PARCO, as
issuing and paying agent, as provider of other backup facilities, and as a
provider of other services or facilities from time to time, the "Agent Roles").
                                                                 -----------
Each of the parties hereto hereby acknowledges and consents to any and all Agent
Roles, waives any objections it may have to any actual or potential conflict of
interest caused by the Administrative Agent acting as the administrative agent
for PARCO or as a related APA Transferee or as a liquidity or credit support
provider under PARCO's commercial paper program and acting as or maintaining any
of the Agent Roles, and agrees that in connection with any Agent Role, the
Administrative Agent may take, or refrain from taking, any action which it in
its discretion deems appropriate.

     The provisions of this Agreement and all related Transaction Documents
shall be construed to further such intentions of the parties hereto.

                                       21
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

     TRANSFEROR:                  IKON FUNDING-2 LLC

                                  By: IKON FUNDING, INC., its Manager

                                      By:
                                         Name:  Russell Slack
                                         Title: President

                                     S_1

<PAGE>

     ORIGINATOR               IOS CAPITAL, INC.
     AND
     COLLECTION
     AGENT:                   By:
                                    Name: J. F. Quinn
                                    Title:   Treasurer

                                      S_2
<PAGE>

     CONDUIT TRANSFEREE:            PARK AVENUE RECEIVABLES
                                    CORPORATION

                                    By:
                                          Name:
                                          Title:

                                      S_3
<PAGE>

     ADMINISTRATIVE AGENT:          THE CHASE MANHATTAN BANK

                                    By:
                                          Name:
                                          Title:

                                      S_4
<PAGE>

     APA TRANSFEREE:                THE CHASE MANHATTAN BANK

                                    By:
                                          Name:
                                          Title:

                                      S_5
<PAGE>

                                   EXHIBIT I

                                  DEFINITIONS

     As used in the Agreement (including its Exhibits), 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):

     "Active Transferees" means, (i) prior to an occurrence of a PARCO
      ------------------
Termination Event, PARCO and (ii) following an occurrence of a PARCO Termination
Event (or in the event PARCO elects not to accept a Transfer from the Transferor
hereunder), the APA Transferees.

     "Administrative Agent" shall have the meaning assigned to such term in the
      --------------------
preamble.

     "Administrative Agent's Account" means the special account (account number
      ------------------------------
###-##-####; ABA number 021-000-021) of the Administrative Agent designated "The
PARCO Funding Account."

     "Adverse Claim" means a lien, security interest or other charge or
      -------------
encumbrance, or any other type of preferential arrangement.

     "Affected Person" has the meaning set forth in Section 1.06.
      ---------------

     "Affiliate" means, as to any Person, any other Person that, directly or
      ---------
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person.

     "Aggregate Adjusted Outstanding Balance" means, with respect to any
      --------------------------------------
Receivables to be transferred pursuant to Section 1.02, the aggregate
Outstanding Balance of the Contracts related to such Receivables less the
Discount with respect to such Receivables.

     "Aggregate Capital" means, at any time, the sum of the outstanding Capital
      -----------------
of each Transferee at such time.

     "Aggregate Commitment" means, at any time, the sum of the outstanding
      --------------------
Commitments of each Transferee at such time.

     "Agreement" shall have the meaning assigned to such term in the preamble.
      ---------

     "APA Transferees" shall have the meaning assigned to such term in the
      ---------------
preamble.

     "Applicable Margin" shall mean on any date of determination 1.50%.
      -----------------

     "Applicable Percentage" means, with respect to the Consideration payable
      ---------------------
with respect to

                                      I_1
<PAGE>

Receivables, a percentage equal to the greater of (i) 15% or (ii) the product of
(a) three, (b) the weighted average life of such Receivables expressed in years
and fractions thereof and as reported in the most recent Transferor Report and
(c) the product of (i) average of the Default Ratios for the twelve months
preceding the related Transfer Date and (ii) 12; provided, however, that after
                                                 --------  -------
the occurrence of a Trigger Event, the Applicable Percentage for any date of
determination shall be the greater of (i) the percentage calculated above and
(ii) a percentage equal to (A) the product of (x) the aggregate Outstanding
Balance of the Receivables on the date of occurrence of such Trigger Event, (y)
the Applicable Percentage on the date of occurrence of such Trigger Event and
(z) 0.25, divided by (B) the aggregate Outstanding Balance of the Receivables on
such date of determination.

     "Asset Purchase Agreement" shall mean each asset purchase agreement,
      ------------------------
liquidity asset purchase agreement, or other similar agreement pursuant to which
any bank or group of banks or financial institutions agrees to purchase or make
loans secured by (or otherwise advance funds against) all or any portion of
PARCO's interest in the transferred Receivables, Related Security and
Collections in order to support PARCO's repayment of the Commercial Paper issued
to fund or maintain such interest.

     "Base Rate" shall mean with respect to PARCO, a rate per annum equal to the
      ---------
sum of (x) the greater of (i) the prime rate of interest announced by the
Administrative Agent from time to time, changing when and as said prime rate
changes (such rate not necessarily being the lowest or best rate charged by the
Administrative Agent) and (ii) the sum of (A) 1.50% and (B) the rate equal 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 for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it and
(y) the Applicable Margin.

     "Base Rate Tranche" means, with respect to any Transferee, a Tranche funded
      -----------------
or maintained by such Transferee as to which Yield is calculated at the Base
Rate.

     "Business Day" means any day on which (i) banks are not authorized or
      ------------
required to close in New York City and (ii) if this definition of "Business Day"
is utilized in connection with the Eurodollar Rate, dealings are carried out on
the London interbank market.

     "Capital" means, with respect to any Transferee, the aggregate
      -------
Consideration paid by such Transferee for all Transfers that have occurred on or
prior to such date, reduced from time to time by Collections distributed on
account of Receivables and applied to reduce Capital pursuant to Section
1.03(c)(iii) of the Agreement; provided, that if such Capital shall have been
                               --------
reduced by any distribution and thereafter all or a portion of such distribution
is rescinded or must otherwise be returned for any reason, such Capital shall be
increased by the amount of such rescinded or returned distribution, as though it
had not been made.

                                      I_2
<PAGE>

     "Closing Date" means September 21, 2000.
      ------------

     "Collection Agent" means at any time the Person then authorized pursuant to
      ----------------
Section 4.01 of the Agreement to administer and collect Receivables.

     "Collection Agent Fee" has the meaning specified in Section 1.04(c) of the
      --------------------
Agreement.

     "Collections" means, with respect to any Receivable, (i) all cash
      -----------
collections and other cash proceeds of such Receivable, including, without
limitation, any proceeds resulting from the repurchase of such Receivable by
IKON Office Solutions, Inc. and all cash proceeds of Related Security with
respect to such Receivable (including, without limitation, payments under the
related Contract due upon or in connection with (a) Obligor's default under the
Contract, (b) loss, theft or damage to the related Equipment, or (c) renewal of
the Contract), and (ii) any Collection of such Receivable deemed to have been
received pursuant to the Agreement; provided, that Collections shall not include
                                    --------
collections which represent the payment of (x) maintenance charges or (y)
insurance premiums.

     "Commercial Paper" means the short-term promissory notes of PARCO issued by
      ----------------
PARCO in the United States commercial paper market.

     "Commitment" means, respectively, the Commitment of each APA Transferee as
      ----------
set forth below such APA Transferee's name on the signature pages to the Asset
Purchase Agreement or as set forth in the assignment agreement or the assumption
agreement pursuant to which such APA Transferee became a party thereto.

     "Conduit Transferee" has the meaning set forth in the preamble.
      ------------------

     "Consideration" has the meaning set forth in Section 1.02(a) of the
      -------------
Agreement.

     "Contract" means a closed-end lease agreement between the Originator and an
      --------
Obligor having an original lease/loan term not exceeding 72 months, in
substantially the form of one of the forms of written contract set forth in
Annex A hereto or otherwise approved by the Administrative Agent, which has been
sold to Transferor pursuant to the Transfer Agreement, pursuant to or under
which such Obligor shall be obligated to pay for the lease of Equipment.

     "CP Rate" shall mean, with respect to any CP Tranche funded or maintained
      -------
by PARCO, the rate equivalent to the weighted average of (i) the weighted
average of the discount rates on all of PARCO's Commercial Paper issued at a
discount and outstanding during the related Settlement Period, converted to an
annual yield-equivalent rate on the basis of a 360-day year, which rates shall
include dealer fees and commissions and (ii) the weighted average of the annual
interest rates payable on all interest-bearing PARCO Commercial Paper
outstanding during the related Settlement Period, on the basis of a 360-day
year, which rates shall include dealer fees and commissions; provided, that to
                                                             --------
the extent that the Facility is funded by a specific issuance of PARCO's
Commercial Paper, the "CP Rate" shall equal the rate or weighted average of the
rates applicable to such issuance.

                                      I_3
<PAGE>

     "CP Tranche" means a Tranche funded or maintained by PARCO as to which
      ----------
Yield is calculated at the CP Rate.

     "Credit and Collection Policy" means those receivables collection policies
      ----------------------------
and practices of the Originator in effect on the date of the Agreement and
described in Schedule I hereto, as modified in compliance with the Agreement.

     "Debt" means (i) indebtedness for borrowed money, (ii) obligations
      ----
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as Obligor under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (v) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i) through (iv)
above, and (vi) liabilities in respect of unfunded vested benefits under plans
covered by Title IV of ERISA.

     "Default Ratio" means the ratio (expressed as a percentage) computed as of
      -------------
the last day of each calendar month by dividing (i) the aggregate Outstanding
Balance of all Receivables that became Defaulted Receivables during such month
by (ii) the aggregate Outstanding Balance of all Receivables on the last day of
such month.

     "Defaulted Receivable" means a Receivable:
      --------------------

          (i)    as to which any payment, or part thereof, remains unpaid for
     more than 120 days from the original due date for such payment;

          (ii)   as to which the Obligor thereof or any other Person obligated
     thereon or owning any Related Security in respect thereof has taken any
     action, or suffered any event to occur, of the type described in paragraph
     (h) of Exhibit V; or

          (iii)  which, consistent with the Credit and Collection Policy, would
     be written off the Transferor's books as uncollectible.

     "Delinquency Ratio" means the ratio (expressed as a percentage) computed as
      -----------------
of the last day of each calendar month by dividing (i) the aggregate amount of
all Related Contracts having one or more Receivables that were Delinquent
Receivables on such day by (ii) the aggregate amount of all Related Contracts on
such day.

     "Delinquent Receivable" means a Receivable:
      ---------------------

          (i)   as to which any payment, or part thereof, remains unpaid for 60
     or more days from the original due date for such payment; or

                                      I_4
<PAGE>

          (ii) which, consistent with the Credit and Collection Policy, would be
     classified as delinquent by the Originator or the Transferor.

     "Designated Account" means an account in the name of and owned by the
      ------------------
Administrative Agent, designated by the Administrative Agent in a writing
delivered to the Transferor, for the purpose of receiving Collections of
Receivables.

     "Discount" means, with respect to any group of Receivables, the product of
      --------
(a) the aggregate Outstanding Balance of the Related Contracts relating to such
Receivables and (b) the Applicable Percentage in respect of such Receivables.

     "Eligible Receivable" means, at any time, a Receivable:
      -------------------

          (i)   the Obligor of which is (a) a United States resident, (b) is
     not the Transferor or any Affiliate thereof, and (c) is not a Governmental
     Obligor; provided, that Obligors with respect to Contracts having an
              --------

     aggregate Outstanding Balance of not greater than 3% of the aggregate
     Outstanding Balance of all Eligible Receivables may be Governmental
     Obligors;

          (ii)  the Obligor of which has not been disapproved by the
     Administrative Agent on or prior to the date of the Transfer and which, at
     the time of the Transfer, is not the Obligor of any Defaulted Receivables;

          (iii) which is not a Defaulted Receivable or a Delinquent Receivable;
     which arises under a Contract duly authorized by the parties thereto (which
     parties had the legal capacity to enter into such Contract) which is in
     full force and effect and which is legal valid and binding obligation of
     the related Obligor, enforceable against such Obligor in accordance with
     its terms;

          (iv)  (a) which arises under a Contract with a remaining term of not
     more than 60 months; provided, that Contracts having an aggregate
                          --------
     Outstanding Balance of not greater than 5% of the aggregate Outstanding
     Balance of all Eligible Receivables may have a remaining term of up to 72
     months;

          and

                (b) which, according to such Contract, consists of substantially
          equal monthly Periodic Payments which are required to be paid within
          30 days of the billing date therefor; provided, that Contracts having
                                                --------
          an aggregate Outstanding Balance of not greater than 2% of the
          aggregate Outstanding Balance of all Eligible Receivables may have
          payments which are not substantially equal monthly payments;

          (v)   which arose pursuant to a Contract which is "chattel paper"
     within the meaning of Section 9-105 of the UCC of the applicable
     jurisdictions governing the perfection of the interest created in the
     Receivables;

                                      I_5
<PAGE>

          (vi)   which is denominated and payable in United States dollars in
     the United States;

          (vii)  which arises under a Contract (a) which has not been amended,
     modified, or altered in any material respect (except in writing and copies
     of any such writing is attached to the Contract) and (b) which has been
     duly authorized and which, together with such Receivable, is in full force
     and effect and constitutes the legal, valid and binding obligation of the
     Obligor of such Receivable enforceable against such Obligor in accordance
     with its terms and is not subject to any dispute, offset, counterclaim or
     defense whatsoever (except as limited by applicable bankruptcy law), (c) in
     respect of which, prior to the date it is transferred hereunder, the
     Equipment has been delivered and accepted, (d) which pursuant to its terms
     may not be canceled, terminated or prepaid by the Obligor before the end of
     its stated term (other than Contracts which contain early termination or
     prepayment clauses which require the Obligor to pay the remainder of all
     scheduled payments under such Contract upon cancellation or prepayment,
     and, in the case of Contracts related to Governmental Obligors, by reason
     of nonrenewal of appropriations), (e) which, if related to a Governmental
     Obligor, has not been canceled before the end of its stated term by reason
     of nonrenewal of appropriations, and (f) which is not a consumer lease;

          (viii) which, together with the Contract related thereto, does not
     contravene in any material respect any laws, rules or regulations
     applicable thereto (including, without limitation, laws, rules and
     regulations relating to usury, consumer protection, truth in lending,
     consumer leasing, fair credit billing, fair credit reporting, equal credit
     opportunity, fair debt collection practices and privacy) and with respect
     to which none of the Transferor, the Originator or the related Obligor is
     in violation of any such law, rule or regulation in any material respect;

          (ix)   with regard to which there exists only one executed original
     Contract, which is in the possession of Transferor on the Transfer Date of
     such Receivable;

          (x)    which was selected for transfer by a procedure not designed to
     adversely affect the credit quality of the Receivables;

          (xi)   which represents payments due to the Originator and does not
     represent any payments payable for the account of any Person other than the
     Originator under the Contract relating to such Receivable or any sales or
     use tax payable under such Contract;

          (xii)  which was originated by the Originator in accordance with, and
     otherwise satisfies all applicable requirements of, the Credit and
     Collection Policy;

          (xiii) which, after giving effect to the acquisition thereof, would
     not result in the aggregate Outstanding Balance of Related Contracts of any
     single Obligor exceeding 1.5% of the aggregate Outstanding Balance of all
     Related Contracts;

                                      I_6
<PAGE>

          (xiv)  as to which, at or prior to the time of the Transfer, the
     Administrative Agent has not notified the Transferor that such Receivable
     (or class of Receivables) is not acceptable for transfer to PARCO
     hereunder;

          (xv)    the transfer or assignment of which does not require the
     Obligor's consent, and which does not contravene any applicable law, rule
     or regulation;

          (xvi)   with respect to which (a) the related Obligor has not been
     released, (b) the Related Contract has not been satisfied, canceled,
     subordinated or rescinded, and (c) no Equipment subject to the Related
     Contract has been released from the Related Contract;

          (xvii)  which Equipment subject to the related Contract has not been
     released and such Contract requires the related Obligor to maintain
     insurance on such Equipment in an amount sufficient to fully insure such
     Equipment;

          (xviii) which, after giving effect to the acquisition thereof, would
     not result in the aggregate Outstanding Balance of Related Contracts of
     Obligors located in any single state exceeding 10% (except in the case of
     Texas, which may not exceed 21%, and California, Georgia and Pennsylvania,
     which may not individually exceed 15%) of the aggregate Outstanding Balance
     of all Related Contracts; and

          (xix)   which has an implied interest rate of at least 7.00% per
     annum.

     "Equipment" with respect to any Receivable means office, business or other
      ---------
equipment leased or sold to an Obligor by the Originator pursuant to a Contract
(including any modifications or substitutions of equipment pursuant to the
original Contract giving rise to such Receivable).

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

     "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.

     "Eurodollar Rate" shall mean, with respect to any Eurodollar Tranche funded
      ---------------
or maintained by any Transferee (or any liquidity or credit support provider of
PARCO), the Applicable Margin plus a rate per annum equal to the sum (rounded
upwards, if necessary, to the next higher 1/100 of 1%) of (i) the rate obtained
by dividing (A) the applicable LIBOR Rate by (B) a percentage equal to 100%
minus the reserve percentage used for determining the maximum reserve
-----
requirement as specified in Regulation D (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) that is applicable
to the Administrative Agent during the related Settlement Period in respect of
eurocurrency or eurodollar funding, lending or liabilities (or, if more than one
percentage shall be so applicable, the daily average of such percentage for
those days in such Settlement Period during which any such percentage shall

                                      I_7
<PAGE>

be applicable) plus (ii) the then daily net annual assessment rate (rounded
               ----
upwards, if necessary, to the nearest 1/100 of 1%) as estimated by the
Administrative Agent for determining the current annual assessment payable by
the Administrative Agent to the Federal Deposit Insurance Corporation in respect
of eurocurrency or eurodollar funding, lending or liabilities.

     "Facility Termination Date" means the earlier of the Scheduled Termination
      -------------------------
Date, or the Termination Date.

     "Fee Letter" has the meaning set forth in Section 1.04.
      ----------

     "Governmental Obligor" means an Obligor that is the federal government, the
      --------------------
government of any state or governmental subdivision or any agency of the federal
government or the government of any state.

     "IKON Group" means, collectively, the Transferor, the Originator and the
      ----------
Parent.

     "Indemnified Amounts" has the meaning specified in Section 3.01 of the
      -------------------
Agreement.

     "Indemnified Party" has the meaning specified in Section 3.01 of the
      -----------------
Agreement.

     "Investment Grade" means, with respect to any entity's long-term public
      ----------------
senior debt securities, a rating of at least "BBB-" by S& P and of at least
"Baa3" by Moody's.

     "LIBOR Rate" shall mean, with respect to any Eurodollar Tranche funded or
      ----------
maintained by any Transferee (or any liquidity or credit support provider of
PARCO), the rate at which deposits in dollars are offered to the Administrative
Agent, in the London interbank market at approximately 11:00 a.m. (London time)
two Business Days before the first day of the related Settlement Period in an
amount approximately equal to the portion of Capital to which the Eurodollar
Rate is to apply and for a period of time approximately equal to the applicable
Settlement Period.

     "Material Adverse Change" means any set of circumstances or events which
      -----------------------
(a) has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of the Agreement or any other
Transaction Document, (b) is or could reasonably be expected to be material and
adverse to the business, properties, assets, financial condition, results of
operations or prospects of the Transferor, the Collection Agent or the
Originator or any of their successors or assigns (the "Transferor Parties"), (c)
                                                       ------------------
impairs materially or could reasonably be expected to impair materially the
ability of the Transferor Parties to duly and punctually pay or perform their
respective obligations under the Agreement or any other Transaction Document, or
(d) impairs materially or could reasonably be expected to impair materially the
ability of the Administrative Agent or any Transferee, to the extent permitted,
to enforce their legal remedies pursuant to the Agreement or any other
Transaction Document.

     "Moody's" means Moody's Investors Service, Inc. and any successor thereto.
      -------

     "Obligor" means a Person obligated to make payments pursuant to a Contract;
      -------
provided
--------

                                      I_8
<PAGE>

that in the event that any payments in respect of a Contract are made by any
other Person, such other Person shall be deemed to be an Obligor.

     "Other Corporations" means the Parent, the Originator and all of the
      ------------------
Parent's Subsidiaries except the Transferor.

     "Originator" shall have the meaning assigned to such term in the preamble.
      ----------

     "Outstanding Balance" of any Contract or Receivables with respect thereto
      -------------------
at any date means the net present value of the total Periodic Payments due to
Transferor over the remaining term of the Contract or that have become due and
payable on or prior to such date but remain unpaid on such date (net of any
security deposits or advance rental payments received by Transferor) and not yet
paid by the Collection Agent pursuant to the provisions of Section 1.03(b),
discounted monthly at the Receivables Discount Rate in effect on the Transfer
Date of such Contract or Receivable, as determined by subtracting all amounts
representing unearned interest from the aggregate amount of such Periodic
Payments.

     "PARCO" shall have the meaning assigned to such term in the preamble.
      -----

     "PARCO Cap" means the interest rate cap or other hedging arrangement
      ---------
entered into by the Transferor (or the rights under which have been assigned to
the Transferor) for the purpose of hedging the interest rate risk associated
with transferred Receivables bearing interest at a fixed rate, which cap (A)
shall have a "strike price" equal to (i) the Receivables Discount Rate as of the
Transfer Date of such Receivables, minus (ii) the Collection Agent Fee rate
(1.50%), minus (iii) 0.25% and (B) shall be entered into with a cap provider
having a short-term rating of A-1/P-1 or the equivalent.

     "PARCO Termination Event" means (i) the providers of PARCO's program
      -----------------------
liquidity and/or letter of credit facilities shall have given notice that an
event of default has occurred and is continuing under their respective
agreements with PARCO or (ii) the expiration of the commitments of all liquidity
providers under the Asset Purchase Agreement.

     "Parent" means IKON Office Solutions, Inc., an Ohio corporation.
      ------

     "Periodic Payments" means the aggregate base rental amounts coming due on a
      -----------------
periodic basis pursuant to the Contracts giving rise to Receivables, excluding
any maintenance charges or, with respect to Contracts covering photocopiers, any
per copy charges.

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

     "Potential Trigger Event" means an event that but for notice or lapse of
      -----------------------
time or both would constitute a Trigger Event.

                                      I_9
<PAGE>

     "Pro Rata" means, with respect to any Transferee, pro rata based on such
      --------
Transferee's outstanding Capital.  So long as PARCO is the Active Transferee,
its Pro Rata share of any amount shall be equal to 100% of such amount.

     "Program Fee" is defined in the Fee Letter.
      -----------

     "Receivable" means the obligations of any Obligor under a Related Contract,
      ----------
and includes monies received subsequent to the related Transfer Date with
respect to (i) all Periodic Payments  and (ii) all obligations of such Obligor
to pay interest or finance charges and other obligations of such Obligor (other
than obligations in respect of taxes or insurance or similar escrow arrangements
of any kind) with respect thereto, and all other payments (other than in respect
of taxes or insurance or similar escrow arrangements of any kind) received by
the Transferor pursuant to such Contract,  excluding any maintenance charges or,
with respect to Contracts covering photocopiers, any per copy charges.  A
Receivable arising under a Related Contract for which the Outstanding Balance
has been collected shall no longer constitute a "Receivable" outstanding
hereunder

     "Receivables Discount Rate" means, on any Transfer Date, a rate per annum
      -------------------------
equal to the sum of (i) the CP Rate on the third Business Day prior to such
Transfer Date, (ii) the Collection Agent Fee rate (1.50%) and (iii) 0.75%.

     "Related Contract" means a Contract included in the List of Contracts
      ----------------
delivered to the Administrative Agent pursuant to paragraph (j) of Exhibit IV
hereof; provided, that after the Outstanding Balance of such Contract has been
        --------
collected, it shall no longer constitute a "Related Contract" hereunder.

     "Related Security" means with respect to any Receivable:
      ----------------

            (i)   all Equipment related to such Receivable;

            (ii)  all security interests or liens and property (including
     without limitation Equipment) securing or purporting to secure payment of
     such Receivable, whether pursuant to the Contract related to such
     Receivable or otherwise, together with all financing statements signed by
     an Obligor describing any collateral securing such Receivable;

            (iii) all guaranties (other than the Support Agreement), insurance
     and other agreements or arrangements of whatever character from time to
     time supporting or securing payment of such Receivable (or insuring for
     loss or liability with respect to the related Equipment), whether pursuant
     to the Contract related to such Receivable or otherwise and all of the
     Originator's and the Transferor's rights (if any) to recourse, repurchase
     or indemnity against any Person with respect to such Receivable; and

            (iv)  the related Contract and all other books, records and other
     information

                                     I_10
<PAGE>

     (including, without limitation, computer programs, tapes, discs, punch
     cards, data processing software and related property and rights) relating
     to such Receivable and the related Obligor.

     "Required Balance" means, with respect to any Settlement Date, an amount
      ----------------
equal to (a) the Aggregate Capital on such Settlement Date divided by (b) (i)
one minus (ii) the Applicable Percentage.

     "Required Transferees" shall mean the Transferees having Commitments which,
      --------------------
in the aggregate, equals at least 66 2/3% of the Aggregate Commitment, or, if
the Commitments have been terminated, having Capital which, in the aggregate,
equals at least equal 66 2/3% of the Aggregate Capital; provided that the
                                                        --------
Commitment or Capital of any APA Transferee that has not paid all amounts due
and owing by it in respect of Transfers (or portions thereof) that it was
obligated to make, shall not be included in any calculations made pursuant to
this definition.

     "S&P" means Standard & Poor's Ratings Services, a division of the McGraw-
      ---
Hill Companies, Inc. and any successor thereto.

     "Scheduled Termination Date" shall mean two Business Days prior to the
      --------------------------
Scheduled Commitment Termination Date as defined in the Asset Purchase
Agreement.

     "Settlement Date" means the fifteenth day of each calendar month, or, if
      ---------------
such day is not a Business Day, the next succeeding Business Day.

     "Settlement Period" means: (i) initially the period commencing on (and
      -----------------
including) the date of the initial transfer or funding of such Receivables and
ending on (and including) the last day of the calendar month in which such
Settlement Period began, and (ii) thereafter, each calendar month, provided,
                                                                   --------
that

                    (i)   any Settlement Period (other than of one day) which
          would otherwise end on a day which is not a Business Day shall be
          extended to the next succeeding Business Day;

                    (ii)  in the case of any Settlement Period which commences
          before the Facility Termination Date and would otherwise end on a date
          occurring after the Facility Termination Date, such Settlement Period
          shall end on such Facility Termination Date and the duration of each
          Settlement Period which commences on or after the Facility Termination
          Date shall be of such duration as shall be selected by the
          Administrative Agent; and

                    (iii) any Settlement Period in respect of which Yield is
          computed by reference to the CP Rate may be terminated at the election
          of, and upon notice thereof to the Transferee, by the Administrative
          Agent at any time,  in which case the Receivables allocated to such
          terminated Settlement Period shall be allocated to a new Settlement
          Period commencing on (and including) the date of such

                                     I_11
<PAGE>

          termination and ending on (but excluding) the next following
          Settlement Date, and shall accrue Yield at the Eurodollar Rate or the
          Base Rate, in the Administrative Agent's sole discretion.

     "Special Indemnified Amounts" has the meaning specified in Section 5.07 of
      ---------------------------
the Agreement.

     "Special Indemnified Party" has the meaning specified in Section 5.07 of
      -------------------------
the Agreement.

     "Subsidiary" means any corporation or other entity of which securities
      ----------
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by the Transferor, the Originator or the Parent, as the case
may be, or one or more Subsidiaries, or by the Transferor, the Originator or the
Parent, as the case may be, and one or more Subsidiaries.

     "Support Agreement" means the operating agreement, dated as of October 22,
      -----------------
1996, between the Originator and the Parent, as such agreement may be amended or
supplemented or otherwise modified from time to time.

     "Termination Date" means the earlier of (a) the date specified pursuant to
      ----------------
Section 2.02 of the Agreement, and (b) the date on which each Transferee
receives an amount equal to its Capital plus accrued Yield thereon plus all
other amounts due to it under the Agreement and the Administrative Agent
receives all amounts due to it under the Agreement.

     "Tranche" shall mean with respect to any Transferee, each portion of such
      -------
Transferee's Capital being funded or maintained by reference to a particular
interest rate basis.

     "Tranche Rate" means, with respect to any Tranche, the rate (which shall be
      ------------
either the CP Rate, Base Rate, or the Eurodollar Rate as selected at the sole
discretion of the Administrative Agent) at which such Tranche is funded or
maintained by the applicable Transferee; it being understood that at all times
on and after the occurrence and continuation of a Trigger Event, the Tranche
Rate with respect to any Tranche, for any Transferee shall be equal to the Base
Rate applicable to such Transferee, plus 2.00% per annum.

     "Transaction Document" means any of the Agreement, the Transfer Agreement
      --------------------
and all other agreements and documents delivered and/or related hereto or
thereto.

     "Transfer" has the meaning specified in Section 1.01 of the Agreement.
      --------

     "Transfer Agreement" means the Transfer Agreement dated as of the date
      ------------------
hereof between the Transferor and the Originator, as such agreement may be
amended from time to time.

     "Transfer Date" has the meaning specified in Section 1.02(a) of the
      -------------
Agreement.

     "Transfer Limit" means, at any time, the Aggregate Commitment then in
      --------------
effect divided

                                     I_12
<PAGE>

by 1.02.

     "Transferee" means PARCO and each APA Transferee, as applicable.
      ----------

     "Transferor" shall have the meaning assigned to such term in the preamble.
      ----------

     "Transferor Report" means a report, in substantially the form of Annex B
      -----------------
hereto, furnished by the Collection Agent to the Administrative Agent pursuant
to Section 4.02 of the Agreement.

     "Trigger Event" has the meaning specified in Exhibit V.
      -------------

     "UCC" means the Uniform Commercial Code as from time to time in effect in
      ---
the specified jurisdiction.

     "Yield" means, with respect to any Transferee:
      -----

          (a)   for any Tranche for any Settlement Period with respect to any
     Transferee  to the extent such Tranche will be funded by such Transferee
     during such Settlement Period through the issuance of Commercial Paper:

                                CPR x C x ED/360

          (b)   for any Tranche for any Settlement Period with respect to any
     Transferee  to the extent such Tranche will not be funded by such
     Transferee during such Settlement Period through the issuance of Commercial
     Paper:

                                TR x C x ED/Year

     where:

                    TR      =  the Eurodollar Rate or Base Rate, as applicable,
                            for such Tranche for such Settlement Period with
                            respect to such Transferee,
                    C       =  the portion of the Capital and any capitalized
                            interest allocated to such Tranche during such
                            Settlement Period with respect to such Transferee,
                    CPR     =  the CP Rate for the Tranche for such Settlement
                            Period with respect to such Transferee,
                    ED      =  the actual number of days during such Settlement
                            Period, and
                    Year    =  if such Tranche is funded based upon: (i) the
                            Eurodollar Rate, 360 days, and (ii) the Base Rate,
                            365 or 366 days, as applicable,

                                     I_13
<PAGE>

provided, that no provision of the Agreement shall require the payment or permit
--------
the collection of Yield in excess of the maximum permitted by applicable law;
and provided further, that Yield for any Tranche shall not be considered paid by
    -------- -------
any distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.

                                     - - - - - -

     Other Terms. All accounting terms not specifically defined herein shall be
     -----------
construed in accordance with generally accepted accounting principles.  All
terms used in Article 9 of the UCC in the State of New York and not specifically
defined herein, are used herein as defined in such Article 9.

                                     I_14
<PAGE>

                                  EXHIBIT II

                            CONDITIONS OF TRANSFERS

     1.   Conditions Precedent to the Initial Transfer.  The initial Transfer is
          --------------------------------------------
subject to the conditions precedent that the Administrative Agent shall have
received on or before the date of such Transfer the following, each (unless
otherwise indicated) dated such date, in form and substance satisfactory to the
Administrative Agent:

     (a)  Certified copies of the resolutions of the Board of Directors of the
Transferor approving the Transaction Documents and all related actions, and
certified copies of all documents evidencing other necessary limited liability
company action and governmental approvals, if any, with respect to the
Transaction Documents and such actions.

     (b)  Certified copies of the resolutions of the Board of Directors of the
Originator approving the Transaction Documents and all related actions, and
certified copies of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to the Transaction Documents
and such actions.

     (c)  A certificate of the Secretary or Assistant Secretary of the
Transferor certifying the names and true signatures of the officers of the
Transferor, authorized to sign the Transaction Documents and the other documents
to be delivered by it thereunder.

     (d)  A certificate of the Secretary or Assistant Secretary of the
Originator certifying the names and true signatures of the officers of the
Originator authorized to sign the Transaction Documents and the other documents
to be delivered by it thereunder.

     (e)  A copy of the organizational documents of the Transferor, and a
certificate as to the good standing of the Transferor from such Secretary of
State or other official, dated as of a recent date.

     (f)  Acknowledgment copies or time stamped receipt copies of proper
statements, duly filed on or before the Initial Transfer (or such later date as
determined by the Administrative Agent) under the UCC of all jurisdictions that
the Administrative Agent may deem necessary or desirable in order to perfect the
interests contemplated by the Agreement.

     (g)  Acknowledgment copies or time stamped receipt copies of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the (i) Receivables, Related Contracts or Related
Security previously granted by the Transferor and the Originator and (ii) the
collateral security referred to in Section 1.11.

     (h)  Completed requests for information, listing all effective financing
statements filed in the jurisdictions referred to in subsection (f) above that
name the Transferor as debtor, together with copies of such other financing
statements (none of which shall cover any Receivables,

                                     II_1
<PAGE>

Related Contracts, Related Security or the collateral security referred to in
Section 1.11).

     (i) An opinion of Mayer, Brown and Platt, addressed to the Administrative
Agent and the Transferees, in form and substance reasonably acceptable to the
Administrative Agent, regarding substantive consolidation in the event of a
bankruptcy of the Originator and such other matters as the Administrative Agent
may reasonably request.

     (j) An opinion of Mayer, Brown and Platt, addressed to the Administrative
Agent and the Transferees, in form and substance reasonably acceptable to the
Administrative Agent, regarding "true sale" between the Originator  and the
Transferor in the event of a bankruptcy of the Originator and such other matters
as the Administrative Agent may reasonably request.

     (k) An opinion of special counsel to the Originator, addressed to the
Administrative Agent and the Transferees, in form and substance reasonably
acceptable to the Administrative Agent, regarding the validity, perfection and
first priority of the security interest granted by the Originator to the
Transferor, the validity, perfection and first priority of the security interest
granted by the Transferor to the Administrative Agent, on behalf of the
Transferees, and such other matters as the Administrative Agent may reasonably
request.

     (l) An opinion of the general counsel to the Transferor and the Originator,
addressed to the Administrative Agent and the Transferees, in form and substance
reasonably acceptable to the Administrative Agent, regarding the enforceability
of the Transaction Documents to which each is a party and the validity of the
creation of the security interest.

     (m) An opinion of the general counsel of the Originator and the Transferor,
addressed to the Administrative Agent and the Transferees, in form and substance
reasonably acceptable to the Administrative Agent, regarding certain corporate
matters.

     (n) The Fee Letter duly executed by all parties thereto, and payment of all
fees required to be paid on the Closing Date, and reimbursement of the
Administrative Agent and the Transferees for all costs and expenses of the
closing of the transaction (including reasonable legal fees and costs).

     (o) The Transfer Agreement, duly executed by all parties thereto.

     (p) Satisfactory results of a review and audit by the Administrative Agent
of the Originator's collection, operating and reporting systems, Credit and
Collection Policy, historical receivables data and accounts.

     (q) The following financial information of the Transferor and the
Collection Agent and their respective Subsidiaries: (i) audited financial
statements prepared in accordance with GAAP on a consolidated and consolidating
basis (consolidating statements need not be audited by such accountants) for the
period January 1, 1999 through December 31, 1999 and (ii) consolidated and
consolidating unaudited financial statements for the fiscal quarter ended June
30, 2000.

                                     II_2
<PAGE>

     (r) A letter from each Rating Agency rating PARCO's Commercial Paper
confirming its rating of PARCO's Commercial Paper or that such rating will not
be withdrawn or downgraded after giving effect to the Agreement and the
transactions contemplated hereby.

     (s) A officer's certificate of each of the Originator and the Transferor
certifying that the representations and warranties of the Originator set forth
in the Transfer Agreement and of the Transferor set forth herein hereof are true
and correct in all material respects as of the Closing Date.

     (t) A Pro Forma Transferor Report.

     (u) The Transferor shall have entered into, or been assigned the rights
under, the PARCO Cap.

     Payment of the Consideration for the initial Transfer hereunder shall
constitute acknowledgment by the Administrative Agent that all of the conditions
set forth have been fulfilled or waived.

     2.    Additional Conditions Precedent.  Each Transfer shall be subject to
           -------------------------------
the further conditions precedent that:

     (a) on or prior to the date of such Transfer, the Collection Agent shall
have delivered to the Administrative Agent, in form and substance satisfactory
to the Administrative Agent, a completed Transferor Report dated within 30 days
prior to the date of such Transfer together with a listing by Obligor of all
Receivables and such additional information as may reasonably be requested by
the Administrative Agent;

     (b) on the date of such Transfer the following statements shall be true
(and acceptance of the proceeds of such Transfer shall be deemed a
representation and warranty by the Transferor that such statements are then
true):

          (i)   The representations and warranties of the Transferor contained
     in Exhibit III are correct on and as of the date of such Transfer as though
     made on and as of such date;

          (ii)  The representations and warranties of the Originator contained
     in the Transaction Documents are correct on and as of the date of such
     Transfer as though made on and as of such date;

          (iii) No event has occurred and is continuing, or would result from
     such Transfer, that constitutes a Trigger Event or Potential Trigger Event;

                                     II_3
<PAGE>

          (iv) The Facility Termination Date shall not have occurred or, in the
     case of PARCO, no PARCO Termination Event shall have occurred;

          (v) The Aggregate Capital does not exceed the Transfer Limit;

          (vi) The outstanding Outstanding Balance of all Eligible Receivables
     is not less than the Required Balance.

     (c) the Administrative Agent shall have received such other approvals,
opinions or documents as it may reasonably request; and

     (d) the Administrative Agent shall have received the list of the Related
Contracts to be included in such Transfer that is required to be delivered
pursuant to paragraph (j) of Exhibit IV hereof.

                                     II_4
<PAGE>

                                  EXHIBIT III

                        REPRESENTATIONS AND WARRANTIES

     The Transferor represents and warrants as follows:

     (a) The Transferor is a limited liability company duly formed, validly
existing and in good standing under the laws of Delaware, and is duly qualified
to do business, and is in good standing, in every jurisdiction where the nature
of its business requires it to be so qualified.

     (b) The execution, delivery and performance by the Transferor of the
Transaction Documents (i) are within the Transferor's limited liability company
powers, (ii) have been duly authorized by all necessary limited liability
company action, (iii) do not contravene (1) the Transferor's organizational
documents, (2) any law, rule or regulation applicable to the Transferor, (3) any
contractual restriction binding on or affecting the Transferor or its property
or (4) any order, writ, judgment, award, injunction or decree binding on or
affecting the Transferor or its property, and (iv) do not result in or require
the creation of any lien, security interest or other charge or encumbrance upon
or with respect to any of its properties (other than those created pursuant to
the Transaction Documents); and no transaction contemplated by the Agreement
requires compliance with any bulk sales act or similar law.  Each of the
Transaction Documents has been duly executed and delivered by the Transferor.

     (c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Transferor of the Transaction
Documents, except for the filing of the UCC financing statements which are
referred to therein.

     (d) Each of the Transaction Documents constitutes the legal, valid and
binding obligation of the Transferor enforceable against the Transferor in
accordance with its terms.

     (e) The balance sheets of the Originator and its Subsidiaries as at
December 31, 1999 and June 30, 2000 and the related statements of income and
retained earnings of the Originator and its Subsidiaries for the fiscal year
then ended, copies of which have been furnished to the Administrative Agent,
fairly present the financial condition of the Originator and its Subsidiaries as
at such date and the results of the operations of Originator and its
Subsidiaries for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since June 30, 2000
there has been no material adverse change in the business, operations, property
or financial or other condition of the Originator.  Since the date of its
formation, there has not been a material adverse change in the business,
operations, property or financial or other condition of the Transferor.

     (f) There is no pending or threatened action or proceeding affecting the
Originator or any of its Subsidiaries before any court, governmental agency or
arbitrator which would materially adversely affect the financial condition or
operations of the Originator or any of its

                                     III_1
<PAGE>

Subsidiaries or the ability of the Transferor or the Originator to perform their
respective obligations under the Transaction Documents, or which purports to
affect the legality, validity or enforceability of the Transaction Documents;
neither the Originator nor any Subsidiary is in default with respect to any
order of any court, arbitration or governmental body.

     (g) No proceeds of any Transfer will be used to acquire any equity security
of a class which is registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended.

     (h) Each Receivable transferred by the Transferor hereunder is an Eligible
Receivable on the date of the related Transfer, and the Transferor has the right
to transfer such Receivable and all Related Security together with the Contract
related thereto, free and clear of any Adverse Claim, other than the effect of
the Agreement and the transactions contemplated hereby.  Upon each Transfer, the
Administrative Agent (for the benefit of the Transferees) will acquire a valid
and perfected first priority interest in each Receivable and in the Related
Security (except to the extent noted above) and Collections with respect
thereto.  No effective financing statement or other instrument similar in effect
covering any Related Contract or any Receivable or the Related Security or
Collections with respect thereto is on file in any recording office except for
those filed in favor of the Administrative Agent relating to the Agreement and
those filed by the Transferor pursuant to the Transfer Agreement.

     (i) Each Transferor Report (if prepared by the Originator or one of its
Affiliates, or to the extent that information contained therein is supplied by
the Transferor, the Originator or any Affiliate thereof), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished at any time by or on behalf of the Transferor or the Originator to the
Administrative Agent or any Transferee in connection with the Agreement is or
will be accurate in all material respects as of its date or (except as otherwise
disclosed to the Administrative Agent or the Transferees, as the case may be, at
such time) as of the date so furnished, and no such document contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not misleading.

     (j) The principal place of business and chief executive office of the
Transferor and the office where the Transferor keeps its records concerning the
Receivables are located at the respective addresses identified on Exhibit VI.

     (k) The Outstanding Balance with respect to each Receivable, as of the date
of Transfer of such Receivable, is correctly set forth on Schedule II (as
supplemented pursuant to Section 1.02(a)).

     (l) Schedule II (as supplemented pursuant to Section 1.02(a)) sets forth
accurately and completely in all material respects, as of the date of Transfer
of each Receivable, the information with respect to each such Receivable
transferred on such date.

     (m) Each Contract giving rise to a Receivable provides for Periodic
Payments that will fully amortize such Receivable over the term of the Contract
related thereto and the Transferor

                                     III_2
<PAGE>

has not extended the maturity or adjusted the Outstanding Balance of any
Receivable, or amended, modified or waived the terms of any Receivable or any
Contract relating to any Receivable such that the interests of the
Administrative Agent or the Transferees would be materially and adversely
affected thereby.

     (n) The Transferor is not known by and does not use any tradename or doing-
business-as name.

     (o) The Transferor was formed on August 29, 2000.  The Transferor has no
Subsidiaries.

     (p) (i) The fair value of the property of the Transferor is greater than
the total amount of liabilities, including contingent liabilities, of the
Transferor, (ii) the present fair salable value of the assets of the Transferor
is not less than the amount that will be required to pay all probable
liabilities of the Transferor on its debts as they become absolute and matured,
(iii) the Transferor does not intend to, and does not believe that it will,
incur debts or liabilities beyond the Transferor's abilities to pay such debts
and liabilities as they mature and (iv) the Transferor is not engaged in a
business or a transaction, and is not about to engage in a business or a
transaction, for which the Transferor's property would constitute unreasonably
small capital.

     (q) With respect to each Receivable, the Transferor shall have received
such Receivable from the Originator in exchange for payment (made by the
Transferor to the Originator in accordance with the provisions of the Transfer
Agreement) of cash in an amount which constitutes fair consideration and
reasonably equivalent value.  Each such transfer referred to in the preceding
sentence shall not have been made for or on account of an antecedent debt owed
by the Originator to the Transferor and no such transfer is or may be voidable
or subject to avoidance under any section of the Federal Bankruptcy Code.

     (r) With respect to each Receivable transferred hereunder, such
Receivable is representative of all of the Receivables owned by the Transferor.

                                     III_3
<PAGE>

                                  EXHIBIT IV

                                   COVENANTS

     Until the Termination Date, unless the Administrative Agent shall otherwise
consent in writing:

     (a) Compliance with Laws, Etc.  The Transferor will comply in all material
         -------------------------
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its limited liability company existence, rights, franchises,
qualifications and privileges except to the extent that the failure so to comply
with such laws, rules and regulations or the failure so to preserve and maintain
such existence, rights, franchises, qualifications and privileges would not
materially adversely affect the collectibility of the Receivables or the ability
of the Transferor to perform its obligations under the Transaction Documents.

     (b) Offices, Records and Books of Account.  The Transferor will keep its
         -------------------------------------
principal place of business and chief executive office and the office where it
keeps its records concerning the Receivables (and all original documents
relating thereto) at the respective addresses set forth on Exhibit VI of the
Agreement or, upon 30 days' prior written notice to the Administrative Agent, at
any other locations in jurisdictions where all actions reasonably requested by
the Administrative Agent to protect and perfect the interest in the Receivables
have been taken and completed.  The Transferor also will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables and Related Contracts in
the event of the destruction of the originals thereof), and keep and maintain
all documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without limitation,
records adequate to permit the daily identification of each Receivable and all
Collections of and adjustments to each Receivable).

     (c) Performance and Compliance with Related Contracts and Credit and
         ----------------------------------------------------------------
Collection Policy.  The Transferor will, at its expense, timely and fully
-----------------
perform and comply with all material provisions, covenants and other promises
required to be observed by it under the Related Contracts, and timely and fully
comply in all material respects with the Credit and Collection Policy in regard
to each Receivable and the Related Contract.

     (d) Sales, Liens, Etc.  The Transferor will not sell, assign (by operation
         -----------------
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, its interest in any Receivable
transferred to the Administrative Agent or the Transferees under the Agreement
or any Related Security, Related Contract or Collections, or assign any right to
receive income in respect thereof.

     (e) Extension or Amendment of the Receivables.  The Transferor will not,
         -----------------------------------------
and will not permit the Collection Agent to, extend the maturity or adjust the
Outstanding Balance of any Receivable or otherwise modify the terms of any
Receivable, or amend, modify or waive any

                                     IV_1
<PAGE>

term or condition of any Related Contract such that the interests of the
Administrative Agent or the Transferees would be materially and adversely
affected thereby.

     (f) Change in Business or Credit and Collection Policy. (i) The Transferor
         --------------------------------------------------
will not make any change in the character of its business, and (ii) the
Transferor will not make, and will not permit the Originator to make, any change
in the Credit and Collection Policy that would, in either case, materially
adversely affect the collectibility of the Receivables or the ability of the
Transferor or the Originator to perform their respective obligations under the
Transaction Documents.

     (g) Change in Payment Instructions to Obligors.  The Transferor will not
         ------------------------------------------
make any change in its instructions to Obligors of Related Contracts regarding
payments to be made to the Transferor unless the Administrative Agent shall have
received notice of and agreed to such addition, termination or change.

     (h) Further Action Evidencing the Transfer.  The Transferor will from time
         --------------------------------------
to time, execute and deliver all further instruments and documents and take all
further action that the Administrative Agent may reasonably request in order to
perfect, protect or more fully evidence the interest in the Receivables, the
Related Contracts, and the Related Security and Collections with respect thereto
transferred to the Administrative Agent (for the benefit of the Transferees)
under the Agreement or to enable the Administrative Agent or any Transferee to
exercise or enforce any of its rights under the Transaction Documents.  Without
limiting the generality of the foregoing, the Transferor will, or will cause the
Collection Agent to, (i) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such other
instruments or notices, as may be necessary or appropriate, including, without
limitation, (A) filing such financing statements as may be reasonably necessary,
in the Administrative Agent's opinion, to perfect the security interest of the
Administrative Agent in the right, title and interest of the Transferor in
Equipment granted hereunder, within 30 days of the Initial Transfer Date, and
(B) provide an opinion of counsel with respect to the perfection of such
security interest, in form and substance satisfactory to the Administrative
Agent, within 30 days of the Initial Transfer Date; (ii) providing to the
Administrative Agent, from time to time, all information regarding the location
of any such Equipment as may be reasonably necessary, in the Administrative
Agent's opinion, to prepare any financing statement relating to such Equipment;
; and (iii) upon the occurrence of a Trigger Event or Potential Trigger Event,
(x) mark conspicuously each Related Contract with a legend, acceptable to the
Administrative Agent, evidencing that an interest in the Receivable has been
transferred to the Administrative Agent (for the benefit of the Transferees)
under the Agreement; and (y) code the Collection Agent's master data processing
records evidencing Receivables and Related Contracts to the foregoing effect.
The Transferor hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Receivables and the Related Security
without the signature of the Transferor where permitted by law.  A photocopy or
other reproduction of the Agreement shall be sufficient as a financing statement
where permitted by law.  If the Transferor fails after notice to perform any of
its agreements or obligations under the Transaction Documents, the
Administrative Agent may (but shall not be required to) itself perform, or cause
performance of, such agreement or

                                     IV_2
<PAGE>

obligation, and the expenses of the Administrative Agent incurred in connection
therewith shall be payable as provided in the Agreement.

     (i) Assembly of Documents.  The Transferor will, or will cause the
         ---------------------
Collection Agent to, at the Administrative Agent's request following the
occurrence of a Trigger Event or Potential Trigger Event, (A) assemble all
documents, instruments and other records (including, without limitation,
computer tapes and disks) which evidence or relate to the Receivables, and the
Related Contracts and Related Security, or which are otherwise necessary or
desirable to collect the Receivables, and make the same available to the
Administrative Agent at a place selected by the Administrative Agent or its
designee, and (B) segregate all cash, checks and other instruments received by
it or the Collection Agent from time to time constituting Collections of
Receivables in a manner acceptable to the Administrative Agent and shall,
promptly upon receipt, remit all such cash, checks and instruments, duly
endorsed or with duly executed instruments of transfer, to the Administrative
Agent or its designee.

     (j) Delivery of List of Related Contracts.  The Transferor will on or prior
         -------------------------------------
to the date of each Transfer, deliver to the Administrative Agent a complete and
accurate list of each Related Contract, together with the contract number, the
name of the Obligor and the Outstanding Balance thereof.

     (k) Reporting Requirements.  The Transferor will provide to the
         ----------------------
Administrative Agent (in multiple copies, if requested by the Administrative
Agent) the following:

          (i)   as soon as available and in any event within 60 days after the
     end of the first three quarters of each fiscal year of the Originator,
     balance sheets of the Originator and its Subsidiaries as of the end of such
     quarter and statements of income and retained earnings of the Originator
     and its Subsidiaries for the period commencing at the end of the previous
     fiscal year and ending with the end of such quarter, certified by the chief
     financial officer of the Originator;

          (ii)  as soon as available and in any event within 120 days after the
     end of each fiscal year of the Originator, a copy of the annual report for
     such year for the Parent and the Annual Report on Form 10-K for the
     Originator and its Subsidiaries, containing financial statements for such
     year audited by Price Waterhousecoopers LLP, or other independent public
     accountants acceptable to the Administrative Agent;

          (iii) as soon as possible and in any event within five days after the
     occurrence of each Trigger Event or Potential Trigger Event, a statement of
     the chief financial officer of the Transferor setting forth details of such
     Trigger Event or Potential Trigger Event and the action that the Transferor
     has taken and proposes to take with respect thereto;

          (iv)  promptly after the sending or filing thereof, copies of all
     reports that the Originator sends to any of its securityholders, and copies
     of all reports and registration statements that the Originator or any
     Subsidiary files with the Securities and Exchange Commission or any
     national securities exchange;

                                     IV_3
<PAGE>

          (v)    promptly after the filing or receiving thereof, copies of all
     reports and notices that the Originator or any Affiliate of either thereof
     files under ERISA with the Internal Revenue Service or the Pension Benefit
     Guaranty Corporation or the U.S. Department of Labor or that the Originator
     or any Affiliate of either thereof receives from any of the foregoing or
     from any multiemployer plan (within the meaning of Section 4001(a)(3) of
     ERISA) to which the Originator or any Affiliate of either thereof is or
     was, within the preceding five years, a contributing employer, in each case
     in respect of the assessment of withdrawal liability or an event or
     condition which could, in the aggregate, result in the imposition of
     liability on the Originator and/or any such Affiliate in excess of
     $5,000,000;

          (vi)   at least ten Business Days prior to any change in the
     Transferor's or Originator's name, a notice setting forth the new name and
     the effective date thereof;

          (vii)  promptly, from time to time, such other information, documents,
     records or reports respecting the Receivables or the condition or
     operations, financial or otherwise, of the Transferor, the Originator or
     any of its subsidiaries as the Administrative Agent may from time to time
     reasonably request;

          (viii) promptly after the Transferor obtains knowledge thereof,
     notice of any (a) litigation, investigation or proceeding which may exist
     at any time between the Transferor or the Originator and any governmental
     authority which, in either case, if not cured or if adversely determined,
     as the case may be, would have a material adverse effect on the business,
     operations, property or financial or other condition of the Transferor or
     the Originator; (b) litigation or proceeding adversely affecting the
     Transferor's ability to perform its obligations under the Transaction
     Documents or the Originator's ability to perform their obligations under
     the Transaction Documents or (c) litigation or proceeding adversely
     affecting the Transferor or the Originator in which in the case of the
     Originator, the amount involved is $10,000,000 or more and not covered by
     insurance or in which injunctive or similar relief is sought;

          (ix)   promptly after the occurrence thereof, notice of a material
     adverse change in the business, operations, property or financial or other
     condition of the Transferor or the Originator;

          (x)    promptly after the Transferor obtains knowledge thereof, notice
     of any "Event of Termination", "Incipient Event of Termination" or
     "Facility Termination Date" under the Transfer Agreement;

          (xi)   so long as any Capital shall be outstanding, as soon as
     possible and in any event no later than the day of occurrence thereof,
     notice that the Originator has stopped selling or contributing to the
     Transferor, pursuant to the Transfer Agreement, newly arising Receivables;

                                     IV_4
<PAGE>

          (xii)  at the time of the delivery of the financial statements
     provided for in clauses (i) and (ii) of this paragraph, a certificate of
     the chief financial officer or the treasurer of the Transferor to the
     effect that, to the best of such officer's knowledge, no Trigger Event or
     Potential Trigger Event has occurred and is continuing or, if any such
     Trigger Event or Potential Trigger Event has occurred and is continuing,
     specifying the nature and extent thereof; and

          (xiii) promptly after receipt thereof, copies of all notices received
     by the Transferor from the Originator under the Transfer Agreement.

     (l)  Separateness. (i) The Transferor shall at all times be managed by an
          ------------
entity which has  at least one independent director, who (x) is not currently
and has not been during the five years preceding the date of the Agreement an
officer, director or employee of an Affiliate of the Originator or any Other
Corporation, (y) is not a current or former officer or employee of the
Originator and (z) is not a stockholder of any Other Corporation or any of their
respective Affiliates.

          (ii)   The Transferor shall not direct or participate in the
     management of any other entity's operations.

          (iii)  The Transferor shall conduct its business from an office
     separate from that of any other entity (but which may be located in the
     same facility as one or more of the Other Corporations).

          (iv)   The Transferor shall at all times be adequately capitalized in
     light of its contemplated business.

          (v)    The Transferor shall at all times provide for its own operating
     expenses and liabilities from its own funds.

          (vi)   The Transferor shall maintain its assets and transactions
     separately from those of any other entity and reflect such assets and
     transactions in financial statements separate and distinct from those of
     any other entity and evidence such assets and transactions by appropriate
     entries in books and records separate and distinct from those of any other
     entity.  The Transferor shall hold itself out to the public under the
     Transferor's own name as a legal entity separate and distinct from all
     other entities.  The Transferor shall not hold itself out as having agreed
     to pay, or as being liable, primarily or secondarily, for, any obligations
     of any other entity.

          (vii)  The Transferor shall not become liable as a guarantor or
     otherwise with respect to any Debt or contractual obligation of any other
     entity.

          (viii) The Transferor shall not make any payment or distribution of
     assets with respect to any obligation of any other entity or grant an
     Adverse Claim on any of its assets to secure any obligation of any other
     entity.

                                     IV_5
<PAGE>

          (ix)   The Transferor shall not make loans, advances or otherwise
     extend credit to any other entity.

          (x)    Each of the Transferor's sole member and manager shall hold
     regular duly noticed meetings of its respective Board of Directors and make
     and retain minutes of such meetings.

          (xi)   The Transferor shall have bills of sale (or similar instruments
     of assignment) and, if appropriate, UCC-1 financing statements, with
     respect to all assets purchased from any other entity.

          (xii)  The Transferor shall not engage in any transaction with any of
     the Other Corporations, except as permitted by its organizational
     documents.

     (m)  Transfer Agreement. The Transferor will not amend, waive or modify any
          ------------------
provision of the Transfer Agreement or waive the occurrence of any "Event of
Termination" under the Transfer Agreement, without in each case the prior
written consent of the Administrative Agent. The Transferor will perform all of
its obligations under the Transfer Agreement in all material respects and will
enforce the Transfer Agreement in accordance with its terms in all material
respects.

     (n)  Nature of Business.  The Transferor will not engage in any business
          ------------------
other than the purchase of Receivables, Related Security and Collections from
the Originator and the transactions contemplated by the Agreement.  The
Transferor will not create or form any Subsidiary.

     (o)  Mergers, Etc.  The Transferor will not merge with or into or
          ------------
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or partnership agreement
with, any Person, other than as contemplated by the Agreement and the Transfer
Agreement.

     (p)  Distributions, Etc.  The Transferor will not declare or make any
          ------------------
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any membership interest in the
Transferor, or return any capital to its members as such, or purchase, retire,
defease, redeem or otherwise acquire for value or make any payment in respect of
any membership interest in the Transferor or any warrants, rights or options to
acquire any such shares, now or hereafter outstanding; provided, however, that
                                                       --------  -------
the Transferor may declare and pay cash distributions on its membership
interests to its members so long as (i) no Trigger Event or Potential Trigger
Event shall then exist or would occur as a result thereof, (ii) such
distributions are in compliance with all applicable law including the law of the
state of Delaware, and (iii) such distribution have been approved by all
necessary and appropriate action of the Transferor.

                                     IV_6
<PAGE>

     (q)  Debt.  The Transferor will not incur any Debt, other than any Debt
          ----
incurred pursuant to the Agreement and the Transfer Agreement.

     (r)  Limited Liability Company Agreement.  The Transferor will not amend or
          -----------------------------------
delete Section 5.1 or 5.5 of its Limited Liability Company Agreement.

     (s)  Covenant of the Transferor and the Originator. Until the latest of the
          ---------------------------------------------
Facility Termination Date, the date on which no Capital of or Yield on any
Receivable shall be outstanding or the date all other amounts owed by the
Transferor hereunder to the Transferees or the Administrative Agent are paid in
full, each of the Transferor and the Originator will, at their respective
expense, from time to time during regular business hours as requested by the
Administrative Agent, permit the Administrative Agent or its agents or
representatives (including independent public accountants, which may be the
Transferor's or the Originator's independent public accountants), (i) to conduct
periodic audits of the Receivables, the Related Security and the related books
and records and collections systems of the Transferor or the Originator, as the
case may be, (ii) to examine and make copies of and abstracts from all books,
records and documents (including, without limitation, computer tapes and disks)
in the possession or under the control of the Transferor or the Originator, as
the case may be, relating to Receivables and the Related Security, including,
without limitation, the Contracts, and (iii) to visit the offices and properties
of the Transferor or the Originator, as the case may be, for the purpose of
examining such materials described in clause (ii) above, and to discuss matters
relating to the Receivables and the Related Security or the Transferor's or the
Originator's performance under the Transaction Documents or under the Contracts
with any of the officers or employees of the Transferor or the Originator, as
the case may be, having knowledge of such matters. In addition, upon the
Administrative Agent's request at least once per year, the Transferor will, at
its expense, appoint independent public accountants (which may, with the consent
of the Administrative Agent, be the Transferor's regular independent public
accountants), or utilize the Administrative Agent's representatives or auditors,
to prepare and deliver to the Administrative Agent a written report with respect
to the Receivables and the Credit and Collection Policy (including, in each
case, the systems, procedures and records relating thereto) on a scope and in a
form reasonably requested by the Administrative Agent.

     (t)  Collections.  At all times following the designation by the
          -----------
Administrative Agent of any Designated Account, the Transferor will deposit, or
cause to be deposited, all Collections to such Designated Account.

     (u)  Deposits to Designated Accounts.  The Transferor and the Collection
          -------------------------------
Agent will not deposit or otherwise credit, or cause or permit to be so
deposited or credited, to any Designated Account cash or cash proceeds other
than Collections of Receivables.

                                     IV_7
<PAGE>

                                   EXHIBIT V

                                TRIGGER EVENTS

     Each of the following, unless waived in writing by the Administrative Agent
(other than as set forth in clause (h) which cannot be waived), shall be a
"Trigger Event":
--------------

     (a)  The Collection Agent (if the Originator or any of its Affiliates) (i)
shall fail to perform or observe any term, covenant or agreement under the
Agreement (other than as referred to in clause (ii) of this paragraph (a)) and
such failure shall remain unremedied for three Business Days after receipt of
notice or actual knowledge thereof or (ii) shall fail to make when due any
payment or deposit to be made by it under the Agreement; or

     (b)  The Transferor or the Originator shall fail (i) to transfer to the
Administrative Agent when requested any rights pursuant to the Agreement which
the Transferor or the Originator then has as Collection Agent or otherwise or
(ii) to make any payment required under Section 1.03, 3.02 or 3.03 of the
Agreement; or

     (c)  Any representation or warranty made by the Transferor or the
Originator (or any of their respective officers) under the Transaction
Documents, or any information or report delivered by the Transferor or the
Originator pursuant to the Transaction Documents shall prove to have been
incorrect or untrue in any material respect when made or delivered; or

     (d)  The Transferor shall fail to perform or observe any other term,
covenant or agreement contained in the Transaction Documents on its part to be
performed or observed and any such failure shall remain unremedied for ten days
after written notice thereof shall have been given to the Transferor by the
Administrative Agent; or

     (e)  The Originator shall fail to perform or observe any term, covenant or
agreement contained in the Transaction Documents on its part to be performed or
observed and any such failure shall remain unremedied for ten days after written
notice thereof shall have been given to the Originator by the Administrative
Agent (or, with respect to a failure to deliver the Transferor Report pursuant
to Section 4.02 of the Agreement such failure shall remain unremedied for three
days, without a requirement for notice); or

     (f)  Any member of the IKON Group or any Subsidiary thereof shall fail to
pay any principal of or premium or interest on any of its Debt which is
outstanding in a principal amount of at least $10,000,000 in the aggregate 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 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 any
such Debt shall be

                                      V_1
<PAGE>

declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), redeemed, purchased or defeased, or an
offer to repay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof; or

     (g)  Any Transfer shall for any reason cease to create, or the interest of
the Administrative Agent (for the benefit of the Transferees) in any Receivable
shall for any reason cease to be, a valid and perfected first priority interest
in each Receivable and the Related Security and Collections with respect
thereto; or the security interest created pursuant to Section 1.11 shall for any
reason cease to be a valid first priority security interest in the collateral
security referred to in such Section; or

     (h)  Any member of the IKON Group or any Subsidiary thereof 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 any
such member or any of its Subsidiaries 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 30 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
any member of the IKON Group or any of its Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this paragraph (h); or

     (i)  As of the last day of any calendar month:(i) the Default Ratio
averaged over the three-month period ending on such day exceeds 1% or (ii) the
Delinquency Ratio averaged over the three-month period ending on such day
exceeds 18%; or

     (j)  There shall have occurred any material adverse change in the business,
operations, property or financial or other condition of the Originator since
June 30, 2000 or the Transferor since the date of its formation; or there shall
have occurred any event which may materially adversely affect the collectibility
of the Receivables, the ability of the Collection Agent or the Transferor to
collect the Receivables or the ability of the Originator or the Transferor to
perform its respective obligations under the Transaction Documents; or

     (k)  Any rating of the long-term debt obligations of the Originator are
withdrawn or reduced below Investment Grade; or

     (l)  An "Event of Termination" or "Facility Termination Date" shall occur
under the Transfer Agreement, or the Transfer Agreement shall cease to be in
full force and effect; or

                                      V_2
<PAGE>

     (m)  All of the members' interests of the Transferor shall cease to be
owned, directly or indirectly, by the Originator; or

     (n)  On the last day of any calendar month, (a) the aggregate Outstanding
Balance of all Eligible Receivables is less than (b) the Required Balance.

     (o)  The Transferor shall fail to comply with the covenant contained in
clause (k)(x) of Exhibit IV.
                 ----------

                                      V_3
<PAGE>

                                  EXHIBIT VI

     The principal place of business and chief executive offices of the
Transferor are located at:

                              IKON FUNDING-2, LLC
                                1738 Bass Road
                             Macon, Georgia 31210

     The original records concerning the Receivables (and all original documents
related thereto) are located at the offices of the Collection Agent at:

                               IOS CAPITAL, INC.
                                1738 Bass Road
                             Macon, Georgia 31210

                                     VI_1
<PAGE>

                                    ANNEX A

                               Form of Contract

                                     VI_2
<PAGE>

                                    ANNEX B

                           Form of Transferor Report
<PAGE>

                                    ANNEX C

                             FORM TRANSFER NOTICE

                             ______________, _____

                           THE CHASE MANHATTAN BANK
                       450 West 33rd Street, 15th Floor
                              New York, NY 10001
                             Attention: Lara Graff

                             Ladies and Gentlemen:

     Reference is hereby made to the Receivables Transfer Agreement, dated as of
September ___, 2000 (as amended, supplemented or otherwise modified, the
"Receivables Transfer Agreement"), among IKON Funding-2, LLC, as Transferor, IOS
-------------------------------
Capital, Inc., as Originator and Collection Agent, Park Avenue Receivables
Corporation, as Conduit Transferee, the APA Transferees from time to time party
thereto and The Chase Manhattan Bank, as Administrative Agent.  Capitalized
terms used in this Transfer Notice and not otherwise defined herein shall have
the meanings assigned thereto in the Receivables Transfer Agreement.

     This letter constitutes a Transfer Notice pursuant to Section 1.02(a) of
                                                           ---------------
the Receivables Transfer Agreement.  The Transferor desires to effect a Transfer
on ____________, _____ for Consideration of $___________. /1/  The Aggregate
Adjusted Outstanding Balance of the Receivables to be transferred in connection
herewith is $____________, as shown on the attached addendum to Schedule II to
                                                                -----------
the Receivables Transfer Agreement.

     The Transferor hereby represents and warrants as of the date hereof, and as
of the date of Transfer, as follows:

          (i)    The representations and warranties of the Transferor contained
     in Exhibit III are correct on and as of the date of the Transfer as though
     made on and as of such date;

          (ii)   The representations and warranties of the Originator contained
     in the Transaction Documents are correct on and as of the date of the
     Transfer as though made on and as of such date;

          (iii)  No event has occurred and is continuing, or would result from
     the Transfer, that constitutes a Trigger Event or Potential Trigger Event;

------------------------------
/1/ Minimum amount of $10,000,000 and increments of $100,000 in excess thereof.
<PAGE>

          (iv) The Facility Termination Date has not have occurred or, in the
     case of PARCO, no PARCO Termination Event has not occurred;

          (v)  The Aggregate Capital does not exceed the Transfer Limit;

          (vi) The outstanding Outstanding Balance of all Eligible Receivables
     is not less than the Required Balance.

     Attached hereto is a true and correct schedule setting forth detailed
information regarding the Receivables to be included in the proposed Transfer,
including an addendum to Schedule II to the Receivables Transfer Agreement.

     IN WITNESS WHEREOF, the undersigned has caused this Transfer Notice to be
executed by its duly authorized officer as of the date first above written.

                                   IKON FUNDING-2, LLC

                                   By:_______________________________
                                   Name:
                                   Title:
<PAGE>

                                    ANNEX D

                             FORM OF PAYDOWN NOTICE

                             ______________, _____

THE CHASE MANHATTAN BANK
450 West 33rd Street,
15th Floor
New York, NY 10001
Attention: Lara Graff

Ladies and Gentlemen:

     Reference is hereby made to the Receivables Transfer Agreement, dated as of
September 19, 2000 (as amended, supplemented or otherwise modified, the
"Receivables Transfer Agreement"), among IKON Funding-2, LLC, as Transferor, IOS
-------------------------------
Capital, Inc., as Originator and Collection Agent, Park Avenue Receivables
Corporation, as Conduit Transferee, the APA Transferees from time to time party
thereto and The Chase Manhattan Bank, as Administrative Agent.  Capitalized
terms used in this Transfer Notice and not otherwise defined herein shall have
the meanings assigned thereto in the Receivables Transfer Agreement.

     This letter constitutes a Paydown Notice pursuant to Section 1.03(g) of the
                                                          ---------------
Receivables Transfer Agreement.  The Transferor desires to reduce the Aggregate
Capital on ____________, _____/2/ by the application of  $___________ in cash to
pay the Aggregate Capital and Yield accrued and to accrue (until such cash can
be used to pay Commercial Paper notes) with respect to such Aggregate Capital,
together with all costs related to such reduction of Capital.

     IN WITNESS WHEREOF, the undersigned has caused this Transfer Notice to be
executed by its duly authorized officer as of the date first above written.

                              IKON FUNDING-2, LLC

                              By:_______________________________
                              Name:
                              Title:

_____________________
/2/ Notice must be given at least ten Business Days' prior to the requested
paydown date, in the case of reductions in excess of $25,000,000, or at least
two Business Days' prior to the requested paydown date, in the case of
reductions of $25,000,000 or less.<PAGE>

                                 Exhibit 10.51

<PAGE>

                                                                  EXECUTION COPY

                              TRANSFER AGREEMENT

                        Dated as of September 19, 2000

                                    Between

                               IOS CAPITAL, INC.

                                 As Originator
                                 -------------

                                      And

                              IKON FUNDING-2, LLC

                                 As Transferee
                                 -------------

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                       Page
                                                                                       ----
<S>                                                                                    <C>

ARTICLE I  DEFINITIONS............................................................        1
     SECTION 1.01.  Certain Defined Terms.........................................        1
          Adverse Claim...........................................................        1
          Affiliate...............................................................        1
          Business Day............................................................        1
          Collections.............................................................        1
          Event of Termination....................................................        4
          Facility................................................................        4
          Facility Termination Date...............................................        4
          General Trial Balance...................................................        4
          Incipient Event of Termination..........................................        4
          Indemnified Amounts.....................................................        4
          Outstanding Balance.....................................................        4
          Purchase Price..........................................................        5
          Receivable..............................................................        5
          Receivables Transfer Agreement..........................................        5
          Receivables Transfer Request............................................        5
          Related Contract........................................................        5
          Settlement Date.........................................................        5
          Transfer................................................................        5
          Transfer Date...........................................................        5
          Transferred Receivable..................................................        5
     SECTION 1.02.  Other Terms...................................................        5

ARTICLE II  AMOUNTS AND TERMS OF TRANSFERS AND CONTRIBUTIONS......................        6
     SECTION 2.01.  Facility......................................................        6
     SECTION 2.02.  Making Transfers..............................................        6
     SECTION 2.03.  Collections...................................................        7
     SECTION 2.04.  Settlement Procedures.........................................        7
     SECTION 2.05.  Payments and Computations, Etc................................        7
     SECTION 2.06.  True Sales and/or Contributions...............................        8

ARTICLE III  CONDITIONS OF TRANSFERS..............................................        8
     SECTION 3.01.  Conditions Precedent to Initial Transfer from the Originator..        8
     SECTION 3.02.  Conditions Precedent to All Transfers.........................        9

ARTICLE IV  REPRESENTATIONS AND WARRANTIES........................................       10
     SECTION 4.01.  A. Representations and Warranties of the Originator...........       10

ARTICLE V  COVENANTS..............................................................       13
     SECTION 5.01.  A.  Covenants of the Originator...............................       13
                    B.  Covenants of the Transferee...............................       17
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                     <C>
ARTICLE VI  TRANSFER OF RECORDS...................................................       17

     SECTION 6.01.  Transfer of Records to Transferee.............................       17

ARTICLE VII  EVENTS OF TERMINATION................................................       18

     SECTION 7.01.  Events of Termination.........................................       18

ARTICLE VIII  INDEMNIFICATION.....................................................       20
     SECTION 8.01.  Indemnities by the Originator.................................       20

ARTICLE IX  MISCELLANEOUS.........................................................       20
     SECTION 9.01.  Amendments, Etc...............................................       20
     SECTION 9.02.  Notices, Etc..................................................       20
     SECTION 9.03.  Binding Effect: Assignability.................................       21
     SECTION 9.04.  Costs, Expenses and Taxes.....................................       21
     SECTION 9.05.  No Proceedings................................................       21
     SECTION 9.06.  Confidentiality...............................................       22
     SECTION 9.07.  GOVERNING LAW.................................................       22
     SECTION 9.08.  Third Party Beneficiary.......................................       22
     SECTION 9.09.  Tax Treatment.................................................       22
     SECTION 9.10.  Execution in Counterparts.....................................       22
</TABLE>

EXHIBIT A     Credit and Collection Policy
EXHIBIT B     Principal Place of Business and Location of Records

                                      ii
<PAGE>

                              TRANSFER AGREEMENT

                        Dated as of September 19, 2000

(the "Transferee"), agree as follows:
      ----------

defined above) are defined in Article I of this Agreement.

Receivables on the terms set forth herein.

                             ARTICLE I DEFINITIONS

          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):

          "Adverse Claim" means a lien, security interest, or other charge or
           -------------
encumbrance, or any other type of preferential arrangement.

          "Affiliate" means, as to any Person, any other Person that, directly
           ---------
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person.

          "Business Day" means any day on which banks are not authorized or
           ------------
required to close in New York City.

          "Chase" means The Chase Manhattan Bank, a New York State banking
           -----
corporation.

          "Collections" means, with respect to any Receivable, (a) all cash
           -----------
collections and other cash proceeds of such Receivable, including, without
limitation, any proceeds resulting from the repurchase of such Receivable by
IKON Office Solutions, Inc. and all cash proceeds of Related Security with
respect to such Receivable (including, without limitation, payments under the
related Contract due upon or in connection with (i) Obligor's default under the
Contract, (ii) loss, theft or damage to the related Equipment, or (iii) renewal
of the Contract); provided, that Collections shall not include collections which
                  --------
represent the payment of (x) maintenance charges or (y) insurance premiums, (b)
all Collections deemed to have been received pursuant to Section 2.04 and (c)
all other proceeds of such Receivable.

          "Eligible Receivable" means, at any time, a Receivable:
           -------------------
<PAGE>

          (i)    the Obligor of which is (a) a United States resident, (b) is
     not the Originator or any Affiliate thereof, and (c) is not a Governmental
     Obligor; provided, that Obligors with respect to Contracts having an
     aggregate Outstanding Balance of not greater than 3% of the aggregate
     Outstanding Balance of all Eligible Receivables may be Governmental
     Obligors;

          (ii)   the Obligor of which has not been disapproved by the Transferee
     on or prior to the date of the Transfer and which, at the time of the
     Transfer, is not the Obligor of any Defaulted Receivables;

          (iii)   which is not a Defaulted Receivable or a Delinquent
     Receivable; which arises under a Contract duly authorized by all parties
     thereto (and which parties had the legal capacity to enter into such
     Contract) which is in full force and effect and which is legal valid and
     binding obligation of the related Obligor, enforceable against such Obligor
     in accordance with its terms;

          (iv)    (a) which arises under a Contract with a remaining term of not
     more than 60 months; provided, that Contracts having an aggregate
                          --------
    Outstanding Balance of not greater than 5% of the aggregate Outstanding
     Balance of all Eligible Receivables may have a remaining term of up to 72
     months;

          and

                  (b) which, according to such Contract, consists of
          substantially equal monthly Periodic Payments which are required to be
          paid within 30 days of the billing date therefor; provided, that
                                                            --------
          Contracts having an aggregate Outstanding Balance of not greater than
          2% of the aggregate Outstanding Balance of all Eligible Receivables
          may have payments which are not substantially equal monthly payments;

          (v)     which arose pursuant to a Contract which is "chattel paper"
     within the meaning of Section 9-105 of the UCC of the applicable
     jurisdictions governing the perfection of the interest created in the
     Receivables;

          (vi)    which is denominated and payable in United States dollars in
     the United States;

          (vii)   which arises under a Contract (a) which has not been amended,
     modified, or altered in any material respect (except in writing and copies
     of any such writing is attached to the Contract) and (b) which has been
     duly authorized and which, together with such Receivable, is in full force
     and effect and constitutes the legal, valid and binding obligation of the
     Obligor of such Receivable enforceable against such Obligor in accordance
     with its terms and is not subject to any dispute, offset, counterclaim or
     defense whatsoever (except as limited by applicable bankruptcy law), (c) in
     respect of

                                       2
<PAGE>

     which, prior to the date it is transferred hereunder, the Equipment has
     been delivered and accepted, (d) which pursuant to its terms may not be
     canceled, terminated or prepaid by the Obligor before the end of its stated
     term (other than Contracts which contain early termination or prepayment
     clauses which require the Obligor to pay the remainder of all scheduled
     payments under such Contract upon cancellation or prepayment, and, in the
     case of Contracts related to Governmental Obligors, by reason of nonrenewal
     of appropriations), (e) which, if related to a Governmental Obligor, has
     not been canceled before the end of its stated term by reason of nonrenewal
     of appropriations, and (f) which is not a consumer lease;

          (viii)  which, together with the Contract related thereto, does not
     contravene in any material respect any laws, rules or regulations
     applicable thereto (including, without limitation, laws, rules and
     regulations relating to usury, consumer protection, truth in lending,
     consumer leasing, fair credit billing, fair credit reporting, equal credit
     opportunity, fair debt collection practices and privacy) and with respect
     to which neither the Originator nor the related Obligor is in violation of
     any such law, rule or regulation in any material respect;

          (ix)    with regard to which there exists only one executed original
     Contract, which is in the possession of Originator on the Transfer Date of
     such Receivable;

          (x)     which was selected for transfer by a procedure not designed to
     adversely affect the credit quality of the Receivables;

          (xi)    which represents payments due to the Originator and does not
     represent any payments payable for the account of any Person other than the
     Originator under the Contract relating to such Receivable or any sales or
     use tax payable under such Contract;

          (xii)   which was originated by the Originator in accordance with, and
     otherwise satisfies all applicable requirements of, the Credit and
     Collection Policy;

          (xiii)  which, after giving effect to the acquisition thereof, would
     not result in the aggregate Outstanding Balance of Related Contracts of any
     single Obligor exceeding 1.5% of the aggregate Outstanding Balance of all
     Related Contracts;

          (xiv)   as to which, at or prior to the time of the Transfer, the
     Transferee has not notified the Originator that such Receivable (or class
     of Receivables) is not acceptable for transfer to PARCO hereunder;

          (xv)    the transfer or assignment of which does not require the
     Obligor's consent, and which does not contravene any applicable law, rule
     or regulation;

          (xvi)   with respect to which (a) the related Obligor has not been
     released, (b) the Related Contract has not been satisfied, canceled,
     subordinated or rescinded, and (c) no Equipment subject to the related
     Contract has been released from the Related Contract;

                                       3
<PAGE>

          (xvii)  which Equipment subject to the related Contract has not been
     released and such Contract requires the related Obligor to maintain
     insurance on such Equipment in an amount sufficient to fully insure such
     Equipment;

          (xviii) which, after giving effect to the acquisition thereof, would
     not result in the aggregate Outstanding Balance of Related Contracts of
     Obligors located in any single state exceeding 10% (except in the case of
     Texas, which may not exceed 21%, and California, Georgia and Pennsylvania,
     which may not individually exceed 15%) of the aggregate Outstanding Balance
     of all Related Contracts; and

          (xix)   which has an implied interest rate of at least 7.00% per
     annum.

          "Event of Termination" has the meaning specified in Section 7.01.
           --------------------

          "Facility" means the willingness of the Transferee to consider
           --------
accepting Transfers of Receivables from the Originator from time to time
pursuant to the terms of this Agreement.

          "Facility Termination Date" means the earliest of (i) the Scheduled
           -------------------------
Termination Date, (ii) the date of termination of the Facility pursuant to
Section 7.01 and (iii) the date which the Originator designates by at least two
Business Days' notice to the Transferee.

          "General Trial Balance" of the Originator on any date means the
           ---------------------
Originator's accounts receivable trial balance (whether in the form of a
computer printout, magnetic tape or diskette) on such date, listing Obligors and
the Receivables respectively owed by such Obligors on such date together with
the aged Outstanding Balances of such Receivables, in form and substance
satisfactory to the Transferee.

          "Incipient Event of Termination" means an event that but for notice or
           ------------------------------
lapse of time or both would constitute an Event of Termination.

          "Indemnified Amounts" has the meaning specified in Section 8.01.
           -------------------

          "Outstanding Balance" of any Contract at any date means the net
           -------------------
present value of the total Periodic Payments due to Originator over the
remaining term of the Contract (net of any security deposits or advance rental
payments received by Originator) and not yet paid by the Obligor, discounted at
the implied interest rate used by the Originator in originating such Contract,
as determined by subtracting all amounts representing unearned interest from the
aggregate amount of such Periodic Payments.

          "Purchase Price" has the meaning set forth in Section 2.02(b).
           --------------

          "Receivables Transfer Agreement" means that certain Receivables
           ------------------------------
Transfer Agreement, dated as of the date hereof, among the Transferee, as
transferor, Park Avenue Receivables Corporation, as Conduit Transferee, Chase,
as Administrative Agent, the Originator, as Originator and Collection Agent, and
the several financial institutions as may be party from time to time, as APA
Transferees, as amended, supplemented or otherwise modified from time to

                                       4
<PAGE>

time.

          "Receivables Transfer Request" has the meaning specified in Section
           ----------------------------
2.02(a).

          "Related Contract" means, with respect to a Transfer Date, any
           ----------------
Contract included in the Contracts transferred to the Transferee pursuant to
Section 2.02 on such Transfer Date; provided, that after the Outstanding Balance
of such Contract has been collected, it shall no longer constitute a "Related
Contract" hereunder.

          "Settlement Date" means the fifteenth calendar day of each month (or
           ---------------
if such day is not a Business Day, the immediately succeeding Business Day);
provided, however, that following the occurrence of an Event of Termination,
Settlement Dates shall occur on such days as are selected from time to time by
the Transferee or its designee in a written notice to the Collection Agent.

          "Transaction Document" means any of this Agreement, the Receivables
           --------------------
Transfer Agreement and all other agreements and documents delivered and/or
related hereto or thereto.

          "Transfer" means a transfer by the Originator of Receivables to the
           --------
Transferee pursuant to Article II.

          "Transfer Date" has the meaning specified in Section 2.02(a).
           -------------

          "Transferred Receivable" means any Receivable which, pursuant to the
           ----------------------
procedure described in Section 2.02(d), has been identified as a Transferred
Receivable.

          SECTION 1.02.  Other Terms. Capitalized terms used and not defined
                         -----------
herein shall have the meanings assigned to them in the Receivables Transfer
Agreement. All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms
used in Article 9 of the UCC in the State of New York, and not specifically
defined herein, are used herein as defined in such Article 9.

          ARTICLE II AMOUNTS AND TERMS OF TRANSFERS AND CONTRIBUTIONS

          SECTION 2.01.  Facility. On the terms and conditions hereinafter set
                         --------
forth and without recourse (except to the extent as is specifically provided
herein), the Transferee may accept from the Originator Eligible Receivables of
the Originator from time to time during the period from the date hereof to the
Facility Termination Date. Each Transfer of such Receivables shall include the
transfer to the Transferee of the Related Security and Collections with respect
thereto.

          SECTION 2.02.  Making Transfers.
                         ----------------

          (a)  Transfers. Each Transfer from the Originator shall be made on
               ---------
notice from the Originator to the Transferee given no later than 10:00 a.m. (New
York City time) on the date of such Transfer. Each such request for a Transfer
(each a "Receivables Transfer Request") shall specify the date of such Transfer
         ----------------------------
(which shall be a Business Day) and the proposed Purchase Price (as determined
pursuant to Section 2.02(b)) for such Transfer. On the date of each Transfer

                                       5
<PAGE>

(each a "Transfer Date"), the Transferee shall, upon satisfaction of the
         -------------
applicable conditions set forth in Article III, make available to the Originator
the Purchase Price for such Transfer in accordance with Section 2.02(c).

          (b)  Determination of Purchase Price. The "Purchase Price" for the
               -------------------------------       --------------
Receivables that are the subject of any Transfer hereunder shall be equal to the
aggregate Outstanding Balance of such Receivables.

          (c)  Payment of Purchase Price. On each Transfer Date, the Transferee
               -------------------------
shall pay to the Originator the Purchase Price for the applicable Transfer in
cash, to the extent of funds obtained by the Transferee on such date under the
Receivables Transfer Agreement, after satisfying the Transferee's obligations
under the Receivables Transfer Agreement and after netting any amounts owed to
the Transferee by the Originator hereunder (including amounts owed under Section
2.04), and to the extent such Purchase Price remains unpaid, such remaining
portion of such Purchase Price shall be a true contribution to capital made by
the Originator to the Transferee.

          (d)  Identification of Transferred Receivables. On or prior to each
               -----------------------------------------
Transfer Date, the Originator shall deliver to the Transferee a list of Related
Contracts for the Receivables to be transferred on such Transfer Date, which
list shall also be delivered to the Administrative Agent in accordance with
paragraph (j) of Exhibit IV of the Receivables Transfer Agreement. Such list
shall evidence the Transferred Receivables for such Transfer Date.

          (e)  Conveyance. The Originator hereby conveys to the Transferee all
               ----------
of its right, title and interest in the Transferred Receivables and the Related
Security and Collections with respect thereto.

          SECTION 2.03.  Collections. (a) Unless otherwise agreed, the
                         -----------
Collection Agent shall, on each Settlement Date, deposit into an account of the
Transferee or the Transferee's assignee all Collections of Transferred
Receivables then held by the Collection Agent.

          (b)  In the event that the Originator believes that Collections which
are not Collections of Transferred Receivables have been deposited into an
account of the Transferee or the Transferee's assignee, the Originator shall so
advise the Transferee and, on the Business Day following such identification,
the Transferee shall remit, or shall cause to be remitted, all Collections so
deposited which are identified, to the Transferee's satisfaction, to be
Collections of Receivables which are not Transferred Receivables to the
Originator.

          SECTION 2.04.  Settlement Procedures. (a) Upon discovery by the
                         ---------------------
Originator or the Transferee or the Administrative Agent of a breach of any of
the representations and warranties made or deemed made by the Originator in
Section 4.01(i) with respect to any Transferred Receivable, such party shall
give prompt written notice thereof to the other party, as soon as practicable
and in any event within three Business Days following such discovery. The
Originator shall be deemed to have received a Collection in full of such
Transferred Receivable, and all other Receivables relating to the same Contract,
and make available to the Transferee on

                                       6
<PAGE>

the next succeeding Settlement Date an amount equal to the Outstanding Balance
of such Transferred Receivable plus Yield accrued and to accrue thereon through
the end of the then current Settlement Period. Upon such amount being made
available, the Transferee shall retransfer such Transferred Receivables to the
Originator. Each retransfer of a Transferred Receivable shall include the
Related Security with respect to such Transferred Receivable. If the Originator
is not the Collection Agent, the Originator shall pay to the Collection Agent on
or prior to the next Settlement Date the amount required to be paid pursuant to
this subsection.

          (b)  Except as stated in subsection (a) of this Section 2.04, or as
otherwise required by law or the underlying Contract, all Collections from an
Obligor of any Transferred Receivable shall be applied to the Receivables of
such Obligor in the order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates its payment for
application to specific Receivables.

          SECTION 2.05.  Payments and Computations, Etc. (a) All amounts to be
                         ------------------------------
paid or deposited by the Originator or the Collection Agent hereunder shall be
paid or deposited no later than 11:00 a.m. (New York City time) on the day when
due in same day funds to an account designated in writing by the Transferee to
the Originator on or prior to the initial Transfer hereunder.

          (b)  The Originator shall, to the extent permitted by law, pay to the
Transferee interest on any amount not paid or deposited by the Originator
(whether as Collection Agent or otherwise) when due hereunder at an interest
rate per annum equal to 2% per annum above the Base Rate, payable on demand.

          (c)  All computations of interest and all computations of fees
hereunder shall be made on the basis of a year of 360 days for the actual number
of days elapsed. Whenever any payment or deposit to be made hereunder shall be
due on a day other than a Business Day, such payment or deposit shall be made on
the next succeeding Business Day and such extension of time shall be included in
the computation of such payment or deposit.

          SECTION 2.06.  True Sales and/or Contributions. (a) Each of the
                         -------------------------------
Originator and the Transferee intend the transactions hereunder to constitute
true sales and/or true contributions of the Transferred Receivables, Related
Security and Collections with respect thereto by the Originator to the
Transferee providing the Transferee with all of the Originator's right, title
and interest in and to the Transferred Receivables, Related Security and
Collections with respect thereto, and no party hereto intends the transactions
contemplated hereunder to be, or for any purpose (other than for purposes of
federal or state income or franchise, sale and use or bulk sale taxes) to be
characterized as, a loan from the Transferee to the Originator.

          (b)  In the event (but only to the extent) that the conveyance of
Transferred Receivables, the Related Security and Collections with respect
thereto hereunder is characterized by a court, governmental authority or
regulatory body as a loan rather than a sale or contribution, the Originator
shall be deemed hereunder to have granted to the Transferee, and the Originator
hereby assigns and grants to Transferee, a present and continuing security
interest in all of the

                                       7
<PAGE>

Originator's right, title and interest now or hereafter existing in, to and
under all Transferred Receivables, the Related Security and all Collections with
respect thereto.

                      ARTICLE III CONDITIONS OF TRANSFERS

          SECTION 3.01.  Conditions Precedent to Initial Transfer from the
                         -------------------------------------------------
Originator. The initial Transfer of Receivables from the Originator hereunder
----------
is subject to the conditions precedent that the Transferee shall have received
on or before the date of such Transfer the following, each (unless otherwise
indicated) dated such date, in form and substance satisfactory to the
Transferee:

          (a)  Certified copies of the resolutions of the Board of Directors of
the Originator approving this Agreement and certified copies of all documents
evidencing other necessary corporate or limited liability company action and
governmental approvals, if any, with respect to this Agreement.

          (b)  A certificate of the Secretary or Assistant Secretary of the
Originator certifying the names and true signatures of the officers of the
Originator authorized to sign this Agreement and the other documents to be
delivered by it hereunder.

          (c)  Acknowledgment copies or time stamped receipt copies of proper
financing statements, duly filed on or before the date of the initial Transfer
(or such later date as determined by the Transferee), naming the Originator as
the debtor and the Transferee as the secured party, or other similar instruments
or documents, as the Transferee may deem necessary or desirable under the UCC of
all appropriate jurisdictions or other applicable law to perfect the
Transferee's security interest in the Transferred Receivables and Related
Security and Collections with respect thereto.

          (d)  Acknowledgment copies or time stamped receipt copies of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Transferred Receivables, Related Contracts or
Related Security previously granted by the Originator.

          (e)  Completed requests for information, dated on or before the date
of such initial Transfer, listing all effective financing statements filed in
the jurisdictions referred to in subsection (c) above that name the Originator
as debtor, together with copies of such other financing statements (none of
which shall cover any Transferred Receivables, Related Contracts or Related
Security).

          (f)  Payment by the Transferee to the Originator for the initial
Transfer hereunder will constitute acknowledgment that the conditions set forth
above have been satisfied or waived.

          SECTION 3.02.  Conditions Precedent to All Transfers. The obligation
                         -------------------------------------
of the Transferee to accept each Transfer (including the initial Transfer)
hereunder shall be subject to the further

                                       8
<PAGE>

conditions precedent that:

          (a)  With respect to any such Transfer, on or prior to the date of
such Transfer, the Originator shall have delivered to the Transferee, (i) if
requested by the Transferee, the Originator's General Trial Balance (which if in
magnetic tape or diskette format shall be compatible with the Transferee's
computer equipment) as of a date not more than 31 days prior to the date of such
Transfer, and (ii) a written report identifying, among other things, the
Receivables to be included in such Transfer and the then outstanding Transferred
Receivables and the aged balance thereof, in each case correlated to Transfers;

          (b)  At the request of the Transferee or its assignee, the Originator
will segregate the Related Contracts and other records in its lease files
pertaining to each Receivable and mark its master data processing records
evidencing such Receivables and the Related Contracts, in each case in a manner
reasonably acceptable to the Administrative Agent, evidencing that such
Receivables have been transferred; and

          (c)  On the date of such Transfer the following statements shall be
true (and the Originator, by accepting the amount of such Transfer, shall be
deemed to have certified that):

               (i)    The representations and warranties contained in Section
                      4.01 are correct on and as of the date of such Transfer as
                      though made on and as of such date; and

               (ii)   No event has occurred and is continuing, or would result
                      from such Transfer, that constitutes an Event of
                      Termination or would constitute an Incipient Event of
                      Termination.

          (d)  The Transferee shall have received such other approvals, opinions
or documents as the Transferee may reasonably request.

                   ARTICLE IV REPRESENTATIONS AND WARRANTIES

          SECTION 4.01. A. Representations and Warranties of the Originator. The
                           ------------------------------------------------
Originator represents and warrants as follows:

          (a)  The Originator is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware, and is duly qualified
to do business, and is in good standing, in every jurisdiction where the nature
of its business requires it to be so qualified, unless the failure to so qualify
would not have a material adverse effect on (i) the interests of the Transferee
hereunder, (ii) the collectibility of the Transferred Receivables, or (iii) the
ability of the Originator or the Collection Agent to perform their respective
obligations hereunder.

          (b)  The execution, delivery and performance by the Originator of this
Agreement and the other documents to be delivered by it hereunder, including the
Originator's transfer of Receivables hereunder, (i) are within the Originator's
corporate powers, (ii) have been duly

                                       9
<PAGE>

authorized by all necessary corporate action, (iii) do not contravene (1) the
Originator's charter or by-laws, (2) any law, rule or regulation applicable to
the Originator, (3) any contractual restriction binding on or affecting the
Originator or its property or (4) any order, writ, judgment, award, injunction
or decree binding on or affecting the Originator or its property, and (iv) do
not result in or require the creation of any lien, security interest or other
charge or encumbrance upon or with respect to any of its properties (except for
the transfer of the Originator's interest in the Transferred Receivables
pursuant to this Agreement). This Agreement has been duly executed and delivered
by the Originator.

          (c)  No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Originator of this Agreement
or any other document to be delivered thereunder.

          (d)  This Agreement constitutes the legal, valid and binding
obligation of the Originator enforceable against the Originator in accordance
with its terms.

          (e)  The balance sheets of the Originator and its subsidiaries as at
December 31, 1999 and June 30, 2000, and the related statements of income and
retained earnings of the Originator and its subsidiaries for the fiscal year
then ended, copies of which have been furnished to the Transferee, fairly
present the financial condition of the Originator and its subsidiaries as at
such date and the results of the operations of the Originator and its
subsidiaries for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since June 30, 2000
there has been no material adverse change in the business, operations, property
or financial or other condition of the Originator.

          (f)  There is no pending or threatened action or proceeding affecting
the Originator or any of its subsidiaries before any court, governmental agency
or arbitrator which would materially adversely affect the financial condition or
operations of the Originator or any of its subsidiaries or the ability of the
Originator to perform its obligations under this Agreement, or which purports to
affect the legality, validity or enforceability of this Agreement.

          (g)  No proceeds of any Transfer will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended.

          (h)  No transaction contemplated hereby requires compliance with any
bulk sales act or similar law.

          (i)  Each Receivable transferred by the Originator hereunder is an
Eligible Receivable on the date of the related Transfer and the Originator owns
and has the right to transfer each Transferred Receivable, together with the
Related Security and Collections with respect thereto, free and clear of any
Adverse Claim (other than any Adverse Claim arising solely as the result of any
action taken by the Transferee). When the Transferee accepts a Transfer, it
shall acquire a valid and perfected first priority ownership interest in each
Transferred Receivable and the Related Security and Collections with respect
thereto free and clear of any Adverse Claim (other

                                       10
<PAGE>

than any Adverse Claim arising solely as the result of any action taken by the
Transferee), and no effective financing statement or other instrument similar in
effect covering any Transferred Receivable, any interest therein, the Related
Security or Collections with respect thereto is on file in any recording office
except for those filed in favor of the Originator, as secured party, which cover
only Equipment, accessories, attachments and additions thereto (and
substitutions and proceeds thereof) and such as may be filed in favor of
Transferee in accordance with this Agreement or in connection with any Adverse
Claim arising solely as the result of any action taken by the Transferee.

     (j) Each Originator Report (if prepared by the Originator, or to the extent
that information contained therein is supplied by the Originator), information,
exhibit, financial statement, document, book, record or report furnished or to
be furnished at any time by the Originator to the Transferee in connection with
this Agreement is or will be accurate in all material respects as of its date or
(except as otherwise disclosed to the Transferee at such time) as of the date so
furnished, and no such document contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary in
order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading.

     (k) The principal place of business and chief executive office of the
Originator and the office where the Originator keeps its records concerning the
Receivables are located at the respective addresses set forth on Exhibit B
hereof.

     (l) The Originator is not known by and does not use any trade name or
doing-business-as name.

     (m) With respect to any programs used by the Originator in the servicing of
the Receivables, no sublicensing agreements are necessary in connection with the
designation of a new Collection Agent so that such new Collection Agent shall
have the benefit of such programs (it being understood that, however, the
                                   -- ----- ---------- ----
Collection Agent, if other than the Originator, shall be required to be bound by
a confidentiality agreement reasonably acceptable to the Originator).

     (n) The transfers of Receivables by the Originator to the Transferee
pursuant to this Agreement, and all other transactions between the Originator
and the Transferee, have been and will be made in good faith and without intent
to hinder, delay or defraud creditors of the Originator.

     (o) If less than all of the Receivables of the Originator have been
transferred to the Transferee pursuant to this Agreement, no selection procedure
was utilized by the Originator in selecting the Transferred Receivables to be
transferred to the Transferee hereunder which is materially adverse to the
interests of the Transferee or would reasonably be expected to result in the
Transferred Receivables containing a higher percentage of Defaulted Receivables
than the percentage of Defaulted Receivables in the Receivables retained by the
Originator.  With respect to each Transferred Receivable, such Receivable is
representative of all of the Receivables owned by the Originator.

                                       11
<PAGE>

     (p) Each Contract giving rise to a Receivable provides for Periodic
Payments that will fully amortize such Receivable over the term of the Contract
related thereto and the Originator has not extended the maturity or adjusted the
Outstanding Balance of any Receivable or otherwise amended, modified or waived
the terms of any Receivable or any Contract relating to any Receivable such that
the interests of the Transferee would be materially and adversely affected
thereby.

     B. Representation and Warranty of the Transferee.  The Transferee is
        ---------------------------------------------
acquiring the Transferred Receivables, the Related Security and Collections with
respect thereto in good faith, without knowledge of any Adverse Claim against,
interest in, or defense to the payment of such assets (other than any Adverse
Claim arising solely as the result of any action taken by the Transferee).

                              ARTICLE V COVENANTS

     SECTION 5.01.  A.  Covenants of the Originator.  From the date hereof until
                        ---------------------------
the first day following the Facility Termination Date on which all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables:

     (a) Compliance with Laws, Etc.  The Originator will comply in all material
         -------------------------
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such existence,
rights, franchises, qualifications, and privileges would not materially
adversely affect the collectibility of the Transferred Receivables or the
ability of the Originator to perform its obligations under this Agreement.

     (b) Offices, Records and Books of Account.  The Originator will keep its
         -------------------------------------
principal place of business and chief executive office and the office where it
keeps its records concerning the Transferred Receivables at the respective
addresses set forth on Exhibit B hereof or, upon 30 days' prior written notice
to the Transferee, at any other locations in jurisdictions where all actions
required by Section 5.01(i) shall have been taken and completed.  The Originator
also will maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Transferred Receivables and related Contracts in the event of the destruction of
the originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for the collection of all
Transferred Receivables (including, without limitation, records adequate to
permit the daily identification of each new Transferred Receivable and all
Collections of and adjustments to each existing Transferred Receivable).  The
Originator shall make a notation in its books and records, including its
computer files, to indicate which Receivables have been transferred to the
Transferee hereunder.

     (c) Performance and Compliance with Contracts and Credit and Collection
         -------------------------------------------------------------------
Policy.  The Originator will, at its expense, timely and fully perform and
------
comply with all material provisions, covenants and other promises required to be
observed by it under the Contracts

                                       12
<PAGE>

related to the Transferred Receivables, and timely and fully comply in all
material respects with the Credit and Collection Policy in regard to each
Transferred Receivable and the related Contract.

     (d) Sales, Liens, Etc.  Except for the transfers contemplated herein, the
         -----------------
Originator will not sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Adverse Claim upon or with respect
to, any Transferred Receivable, Related Security, related Contract or
Collections, or upon or with respect to any account to which any Collections of
any Transferred Receivables are sent, or assign any right to receive income in
respect thereof.

     (e) Extension or Amendment of Transferred Receivables.  The Originator will
         -------------------------------------------------
not extend the maturity of, or adjust the Outstanding Balance of, any
Transferred Receivable, or amend or otherwise modify the terms of any
Transferred Receivable, or amend, modify or waive any term or condition of any
Contract related thereto such that the interests of the Transferee would be
materially and adversely affected thereby.

     (f) Change in Business or Credit and Collection Policy.  The Originator
         --------------------------------------------------
will not make any change in the character of its business or in the Credit and
Collection Policy that would, in either case, materially adversely affect the
collectibility of the Transferred Receivables or the ability of the Originator
to perform its obligations under this Agreement.

     (g) Audits.  The Originator will, from time to time during regular business
         ------
hours as requested by the Transferee or its assigns, permit the Transferee, or
its agents, representatives or assigns, (i) to examine and make copies of and
abstracts from all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of the
Originator relating to Transferred Receivables and the Related Security,
including, without limitation, the related Contracts, and (ii) to visit the
offices and properties of the Originator for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating to
Transferred Receivables and the Related Security or the Originator's performance
hereunder or under the Contracts with any of the officers or employees of the
Originator having knowledge of such matters.

     (h) Change in Payment Instructions to Obligors.  The Originator will not
         ------------------------------------------
make any change in its instructions to Obligors regarding payments to be made by
it unless the Transferee shall have received notice of such change.

     (i) Further Assurances.
         ------------------

         (i)  The Originator agrees from time to time, at its expense, promptly
              to execute and deliver all further instruments and documents, and
              to take all further actions, that may be necessary or desirable,
              or that the Transferee or its assignee may reasonably request, to
              perfect, protect or more fully evidence the transfer of the
              Transferred Receivables and the Related Security and Collections
              with respect thereto under this Agreement, or to

                                       13
<PAGE>

                 enable the Transferee or its assignee to exercise and enforce
                 its respective rights and remedies under this Agreement.
                 Without limiting the foregoing, the Originator will, upon the
                 request of the Transferee or its assignee, (1) execute and file
                 such financing or continuation statements, or amendments
                 thereto, and such other instruments and documents, that may be
                 necessary or desirable to perfect, protect or evidence such
                 Transferred Receivables, including, without limitation, (A)
                 filing such financing statements as may be reasonably
                 necessary, in the Transferee's opinion, to perfect its security
                 interest in the right, title and interest of the Originator in
                 Equipment granted hereunder, within 30 days of the Initial
                 Transfer Date, and (B) provide an opinion of counsel with
                 respect to the perfection of such security interest, in form
                 and substance satisfactory to the Transferee, within 30 days of
                 the Initial Transfer Date; (2) providing to the Transferee,
                 from time to time, all information regarding the location of
                 any such Equipment as may be reasonably necessary, in the
                 Transferee's opinion, to prepare any financing statement
                 relating to such Equipment; and (3) deliver to the Transferee
                 copies of all Contracts relating to the Transferred Receivables
                 and all records relating to such Contracts and the Transferred
                 Receivables, whether in hard copy or in magnetic tape or
                 diskette format (which if in magnetic tape or diskette format
                 shall be compatible with the Transferee's computer equipment).

          (ii)   The Originator authorizes the Transferee or its assignee to
                 file financing or continuation statements, and amendments
                 thereto and assignments thereof, relating to the Transferred
                 Receivables and the Related Security, the related Contracts and
                 the Collections with respect thereto without the signature of
                 the Originator where permitted by law. A photocopy or other
                 reproduction of this Agreement shall be sufficient as a
                 financing statement where permitted by law.

          (iii)  The Originator shall perform its obligations under the
                 Contracts related to the Transferred Receivables to the same
                 extent as if the Transferred Receivables had not been
                 transferred.

     (j)  Reporting Requirements.  The Originator will provide to the Transferee
          ----------------------
the following:

          (i)    as soon as available and in any event within 60 days after the
                 end of the first three quarters of each fiscal year of the
                 Originator, balance sheets of the Originator and its
                 subsidiaries as of the end of such quarter and statements of
                 income and retained earnings of the Originator and its
                 subsidiaries for the period commencing at the end of the
                 previous fiscal year and ending with the end of such quarter,
                 certified by the chief financial officer of the Originator;

                                       14
<PAGE>

          (ii)   as soon as available and in any event within 120 days after the
                 end of each fiscal year of the Originator, a copy of the annual
                 report for such year for Ikon Office Solutions, Inc. and the
                 Annual Report on Form 10-K for the Originator and its
                 subsidiaries, containing financial statements for such year
                 audited by Price Waterhousecoopers, LLP or other independent
                 public accountants acceptable to the Administrative Agent;

          (iii)  as soon as possible and in any event within five days after the
                 occurrence of each Event of Termination or Incipient Event of
                 Termination, a statement of the chief financial officer of the
                 Originator setting forth details of such Event of Termination
                 or Incipient Event of Termination and the action that the
                 Originator has taken and proposes to take with respect thereto;

          (iv)   promptly after the sending or filing thereof, copies of all
                 reports that the Originator sends to any of its
                 securityholders, and copies of all reports and registration
                 statements that the Originator or any subsidiary files with the
                 Securities and Exchange Commission or any national securities
                 exchange;

          (v)    promptly after the filing or receiving thereof, copies of all
                 reports and notices that the Originator or any Affiliate files
                 under ERISA with the Internal Revenue Service or the Pension
                 Benefit Guaranty Corporation or the U.S. Department of Labor or
                 that the Originator or any Affiliate receives from any of the
                 foregoing or from any multiemployer plan (within the meaning of
                 Section 4001(a)(3) of ERISA) to which the Originator or any
                 Affiliate is or was, within the preceding five years, a
                 contributing employer, in each case in respect of the
                 assessment of withdrawal liability or an event or condition
                 which could, in the aggregate, result in the imposition of
                 liability on the Originator and/or any such Affiliate in excess
                 of $5,000,000;

          (vi)   at least ten Business Days prior to any change in the
                 Originator's name, a notice setting forth the new name and the
                 effective date thereof;

          (vii)  concurrently with the delivery of each Originator Report by the
                 Collection Agent, a statement as to whether or not all of the
                 Receivables under all Contracts arising during the immediately
                 preceding month have been transferred by the Originator to the
                 Transferee and, if less than all of such Receivables have been
                 transferred, a summary of those Receivables not transferred;
                 and

          (viii) such other information respecting the Transferred Receivables
                 or the condition or operations, financial or otherwise, of the
                 Originator as the Transferee may from time to time reasonably
                 request.

                                       15
<PAGE>

     (k)  Separate Conduct of Business.  The Originator will:
          ----------------------------

          (i)    maintain separate corporate records and books of account from
                 those of the Transferee;

          (ii)   conduct its business from an office separate from that of the
                 Transferee;

          (iii)  ensure that all oral and written communications, including
                 without limitation, letters, invoices, purchase orders,
                 contracts, statements and applications, will be made solely in
                 its own name;

          (iv)   not hold itself out as having agreed to pay, or as being liable
                 for, the obligations of the Transferee;

          (v)    not engage in any transaction with the Transferee except as
                 contemplated by this Agreement or as permitted by the
                 Receivables Transfer Agreement;

          (vi)   continuously maintain as official records the resolutions,
                 agreements and other instruments underlying the transactions
                 contemplated by this Agreement; and

          (vii)  disclose on its annual financial statements the effects of the
                 transactions contemplated by this Agreement in accordance with
                 generally accepted accounting principles.

     B.   Covenants of the Transferee.  From the date hereof until the
          ---------------------------
termination of this Agreement, the Transferee will:

     (a)  maintain separate corporate records and books of account from those of
          the Originator;

     (b)  conduct its business from an office separate from that of the
          Originator;

     (c)  ensure that all oral and written communications, including without
          limitation, letters, invoices, purchase orders, contracts, statements
          and applications, will be made solely in its own name;

     (d)  not hold itself out as having agreed to pay, or as being liable for,
          the obligations of the Originator; and

     (e)  continuously maintain as official records the resolutions, agreements
          and other instruments underlying the transactions contemplated by this
          Agreement.

                                       16
<PAGE>

                        ARTICLE VI TRANSFER OF RECORDS

     SECTION 6.01.  Transfer of Records to Transferee.  Each Transfer of
                    ---------------------------------
Receivables hereunder shall include the transfer to the Transferee of all of the
Originator's right and title to and interest in the records relating to such
Receivables and shall include an irrevocable non-exclusive license to the use of
the Originator's computer software system to access and create such records.
Such license shall be without royalty or payment of any kind, is coupled with an
interest, and shall be irrevocable until all of the Transferred Receivables are
either collected in full or become Defaulted Receivables.

     The Originator shall take such action requested by the Transferee, from
time to time hereafter, that may be necessary or appropriate to ensure that the
Transferee has an enforceable interest in the records relating to the
Transferred Receivables and rights to the use of the Originator's computer
software system to access and create such records.

     In recognition of the Originator's need to have access to the records
transferred to the Transferee hereunder, the Transferee hereby grants to the
Originator an irrevocable license to access such records in connection with any
activity arising in the ordinary course of the Originator's business or in
performance of its duties as Collection Agent, provided that (i) the Originator
shall not disrupt or otherwise interfere with the Transferee's use of and access
to such records during such license period and (ii) the Originator consents to
the assignment and delivery of the records (including any information contained
therein relating to the Originator or its operations) to any assignees or
transferees of the Transferee provided they agree to hold such records
confidential.

                       ARTICLE VII EVENTS OF TERMINATION

     SECTION 7.01.  Events of Termination.  If any of the following events
                    ---------------------
("Events of Termination") shall occur and be continuing:
  ---------------------

     (a) The Collection Agent (if the Originator or any of its Affiliates) (i)
shall fail to perform or observe any term, covenant or agreement under this
Agreement (other than as referred to in clause (ii) of this subsection (a)) and
such failure shall remain unremedied for three Business Days after the receipt
of notice or actual knowledge thereof or (ii) shall fail to make when due any
payment or deposit to be made by it under this Agreement; or

     (b) The Originator shall fail (i) to transfer to the Transferee when
requested any rights, pursuant to this Agreement, which the Originator then has
as Collection Agent, or (ii) to make any payment required under Section 2.04(a);
or

     (c) Any representation or warranty made or deemed made by the Originator
(or any of its officers) under or in connection with this Agreement or any
information or report delivered by the Originator pursuant to this Agreement
shall prove to have been incorrect or untrue in any material respect when made
or deemed made or delivered; or

                                       17
<PAGE>

     (d) The Originator shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such failure shall remain unremedied for 10 days after written
notice thereof shall have been given to the Originator by the Transferee; or

     (e) Any member of the IKON Group or any Subsidiary thereof shall fail to
pay any principal of or premium or interest on any of its Debt which is
outstanding in a principal amount of at least 10,000,000 in the aggregate 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 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 any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), redeemed, purchased
or defeased, or an offer to repay, redeem, purchase or defease such Debt shall
be required to be made, in each case prior to the stated maturity thereof; or

     (f) Any member of the IKON Group or any Subsidiary thereof 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 any
such member or Subsidiary 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 30 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 any such member or
Subsidiary shall take any corporate action to authorize any of the actions set
forth above in this subsection (f); or

     (g) A Trigger Event shall have occurred under the Receivables Transfer
Agreement; or

     (h) There shall have occurred any material adverse change in the financial
condition or operations of the Originator since June 30, 2000; or there shall
have occurred any event which may materially adversely affect the collectibility
of the Transferred Receivables or the ability of the Originator to collect
Transferred Receivables or otherwise perform its obligations under this
Agreement;

then, and in any such event, the Transferee may (with the consent of the
Administrative Agent),

                                       18
<PAGE>

by notice to the Originator, take either or both of the following actions: (x)
declare the Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred) and (y) without
limiting any right under this Agreement to replace the Collection Agent,
designate another Person to succeed the Originator as Collection Agent;
provided, that, automatically upon the occurrence of any event (without any
--------
requirement for the passage of time or the giving of notice) described in
paragraph (f) of this Section 7.01, the Facility Termination Date shall occur,
the Originator (if it is then serving as the Collection Agent) shall cease to be
the Collection Agent, and the Transferee (or its assigns or designees) shall
become the Collection Agent. Upon any such declaration or designation or upon
such automatic termination, the Transferee shall have, in addition to the rights
and remedies under this Agreement, all other rights and remedies with respect to
the Receivables provided after default under the UCC and under other applicable
law, which rights and remedies shall be cumulative.

                         ARTICLE VIII INDEMNIFICATION

     SECTION 8.01.  Indemnities by the Originator.  Without limiting any other
                    -----------------------------
rights which the Transferee may have hereunder or under applicable law, the
Originator hereby agrees to indemnify the Transferee and its assigns and
transferees (each, an "Indemnified Party") from and against any and all damages,
                       -----------------
claims, losses, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts"), awarded against or incurred by any
                -------------------
Indemnified Party in connection with the transactions contemplated by this
Agreement. It is expressly agreed and understood by the parties hereto (i) that
the foregoing indemnification is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Transferred Receivables and
(ii) that nothing in this Section 8.01 shall require the Originator to indemnify
any Person (1) for Receivables which are not collected, not paid or
uncollectible on account of the insolvency, bankruptcy, or financial inability
to pay of the applicable Obligor, (2) for damages, losses, claims or liabilities
or related costs or expenses resulting from such Person's gross negligence or
willful misconduct, or (3) for any income taxes or franchise taxes incurred by
such Person arising out of or as a result of this Agreement or in respect of any
Transferred Receivable or any Contract.

                           ARTICLE IX MISCELLANEOUS

     SECTION 9.01.  Amendments, Etc.   No amendment or waiver of any provision
                    ---------------
of this Agreement or consent to any departure by the Originator therefrom shall
be effective unless in a writing signed by the Transferee and consented to by
the Administrative Agent and, in the case of any amendment, also signed by the
Originator, and then such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given; provided,
                                                                       --------
however, that no such material amendment shall be effective until both Moody's
-------
and S&P have notified the Administrative Agent in writing that such action will
not result in a reduction or withdrawal of the rating of any of the Conduit
Transferee's commercial paper notes. No failure on the part of the Transferee to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.

                                       19
<PAGE>

     SECTION 9.02.  Notices, Etc.   All notices and other communications
                    ------------
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and be faxed or delivered, to each party
hereto, at its address set forth under its name on the signature pages hereof or
at such other address as shall be designated by such party in a written notice
to the other parties hereto.  Notices and communications by facsimile shall be
effective when sent (and shall be followed by hard copy sent by regular mail),
and notices and communications sent by other means shall be effective when
received.

     SECTION 9.03.  Binding Effect: Assignability.  (a) This Agreement shall
                    -----------------------------
be binding upon and inure to the benefit of the Originator, the Transferee and
their respective successors and assigns; provided, however, that the Originator
                                         --------  -------
may not assign its rights or obligations hereunder or any interest herein
without the prior written consent of the Transferee.  In connection with any
assignment by the Transferee of all or a portion of the Transferred Receivables,
the assignee shall, to the extent of its assignment, have all rights of the
Transferee under this Agreement (as if such buyer or assignee, as the case may
be, were the Transferee hereunder) except to the extent specifically provided in
the agreement between the Transferee and such assignee.

     (b) This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until such time, after the Facility Termination Date, when all
of the Transferred Receivables are either collected in full or become Defaulted
Receivables; provided, however, that rights and remedies with respect to any
             --------  -------
breach of any representation and warranty made by the Originator pursuant to
Article IV and the provisions of Article VIII and Sections 9.04, 9.05 and 9.06
shall be continuing and shall survive any termination of this Agreement.

     SECTION 9.04.  Costs, Expenses and Taxes.  (a) In addition to the rights of
                    -------------------------
indemnification granted to the Transferee pursuant to Article VIII hereof, the
Originator agrees to pay on demand all costs and expenses in connection with the
preparation, execution and delivery of this Agreement and the other documents
and agreements to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Transferee
(including the reasonable allocable fees of the Transferee's in-house counsel)
with respect thereto and with respect to advising the Transferee as to its
rights and remedies under this Agreement, and the Originator agrees to pay all
costs and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Agreement and the other documents to
be delivered hereunder excluding, however, any costs of enforcement or
                       ---------  -------
collection of Transferred Receivables.

     (b) In addition, the Originator agrees to pay any and all stamp and other
taxes and fees payable in connection with the execution, delivery, filing and
recording of this Agreement or the other documents or agreements to be delivered
hereunder, and the Originator agrees to save each Indemnified Party harmless
from and against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.

     SECTION 9.05.  No Proceedings.  The Originator hereby agrees that it will
                    --------------
not institute against the Transferee any proceeding of the type referred to in
Section 7.01(f) so long as there

                                       20
<PAGE>

shall not have elapsed one year plus one day since the later of (i) the Facility
Termination Date and (ii) the date on which all of the Transferred Receivables
are either collected in full or become Defaulted Receivables.

     SECTION 9.06.  Confidentiality.  Unless otherwise required by applicable
                    ---------------
law, each party hereto agrees to maintain the confidentiality of this Agreement
in communications with third parties and otherwise; provided that this Agreement
may be disclosed to (i) third parties to the extent such disclosure is made
pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the other party hereto, and (ii) such party's legal
counsel and auditors and the Transferee's assignees, if they agree in each case
to hold it confidential.

     SECTION 9.07.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
                    -------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT
THE PERFECTION OF THE TRANSFEREE'S INTEREST IN THE RECEIVABLES OR REMEDIES
HEREUNDER IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK.

     SECTION 9.08.  Third Party Beneficiary.  Each of the parties hereto hereby
                    -----------------------
acknowledges that the Transferee may assign all or any portion of its rights
under this Agreement and that such assignees may (except as otherwise agreed to
by such assignees) further assign their rights under this Agreement, and the
Originator hereby consents to any such assignments. All such assignees,
including parties to the Receivables Transfer Agreement in the case of
assignment to such parties, shall be third party beneficiaries of, and shall be
entitled to enforce the Transferee's rights and remedies under, this Agreement
to the same extent as if they were parties thereto, except to the extent
specifically limited under the terms of their assignment.

     SECTION 9.09.  Tax Treatment.  It is the intention of the Originator and
                    -------------
the Transferee that for federal, state and local income and franchise tax
purposes, the Transferee's Interest will be treated as evidence of indebtedness
of the Originator secured by the Receivables, the Related Security and
Collections and other proceeds thereof. The Originator and the Transferee, by
entering into this Agreement, intend to treat the Transferee's Interest as
indebtedness. The provisions of this Agreement and all related Transaction
Documents shall be construed to further such intentions of the parties hereto.

     SECTION 9.10.  Execution in Counterparts.  This Agreement may be executed
                    -------------------------
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.

                                       21
<PAGE>

                                                              Transfer Agreement

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

ORIGINATOR:                   IOS CAPITAL, INC.

                              By:__________________________
                              Name:  J.F. Quinn
                              Title: Treasurer

                              for purposes of notices, with a copy to:

                              Ikon Office Solutions, Inc.
                              70 Valley Stream Pkwy.
                              Malvern, PA 19355
                              Attn: J.F. Quinn
                              Facsimile No.: (610) 408-7022

                                      S_1
<PAGE>

                                                              Transfer Agreement

TRANSFEREE:                   IKON FUNDING-2, LLC

                              By: IKON FUNDING, INC., its Manager

                              By:__________________________________
                                Name:  Russell Slack
                                Title: President

                                      S_2
<PAGE>

                                                              Transfer Agreement

                                   EXHIBIT A
                                   ---------

                         CREDIT AND COLLECTION POLICY

                                      A_1
<PAGE>

                                                              Transfer Agreement

                                   EXHIBIT B
                                   ---------

     The principal place of business and chief executive offices of the
Transferor are located at:

                              IKON FUNDING-2, LLC
                                1738 Bass Road
                             Macon, Georgia 31210

     The original records concerning the Receivables (and all original documents
related thereto) are located at the offices of the Collection Agent at:

                               IOS CAPITAL, INC.
                                1738 Bass Road
                             Macon, Georgia 31210

                                      B_1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00019-of-00352.parquet"}]]